UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
AND EXCHANGE ACT OF 1934
For the transition period from __________________ to __________________
Commission file number: 1-13130 (Liberty Property Trust)
1-13132 (Liberty Property Limited Partnership)
LIBERTY PROPERTY TRUST
LIBERTY PROPERTY LIMITED PARTNERSHIP
(Exact name of registrants as specified in their governing documents)
MARYLAND (Liberty Property Trust) 23-7768996
PENNSYLVANIA (Liberty Property Limited Partnership) 23-2766549
(State or other jurisdiction of
incorporation or organization) (I.R.S. Employer Identification Number)
65 Valley Stream Parkway, Suite 100, Malvern, Pennsylvania 19355
(Address of Principal Executive Offices) (Zip Code)
Registrants' Telephone Number, Including Area Code (610)648-1700
Indicate by check mark whether the registrants (1) have filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding twelve (12) months (or for
such shorter period that the registrants were required to file such
reports) and (2) have been subject to such filing requirements for the
past ninety (90) days. YES X NO
On May 13, 1997, 40,842,514 Common Shares of Beneficial Interest, par
value $.001 per share, of Liberty Property Trust were outstanding.
<PAGE>
LIBERTY PROPERTY TRUST/LIBERTY PROPERTY LIMITED PARTNERSHIP
FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 1997
INDEX
- -----
Part I. Financial Information
- ------------------------------
Item 1. Financial Statements (unaudited) Page
----
Consolidated balance sheet of Liberty Property
Trust at March 31, 1997 and December 31, 1996. 4
Consolidated statement of operations of Liberty
Property Trust for the three months ended March
31, 1997 and March 31, 1996. 5
Consolidated statement of cash flows of Liberty
Property Trust for the three months ended March
31, 1997 and March 31, 1996. 6
Notes to consolidated financial statements for
Liberty Property Trust. 7
Consolidated balance sheet of Liberty Property
Limited Partnership at March 31, 1997 and
December 31, 1996. 9
Consolidated statement of operations of Liberty
Property Limited Partnership for the three months
ended March 31, 1997 and March 31, 1996. 10
Consolidated statement of cash flows of Liberty
Property Limited Partnership for the three months
ended March 31, 1997 and March 31, 1996. 11
Notes to consolidated financial statements for
Liberty Property Limited Partnership. 12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 13-17
Part II. Other Information 18
- --------------------------
Signatures 19
- --------------------------
The Private Securities Litigation Reform Act of 1995 provides a "safe
harbor" for forward-looking statements. Certain information included in
this Quarterly Report on Form 10-Q contain statements that are or will
be forward-looking, such as statements relating to acquisitions and
<PAGE>
other business development activities, future capital expenditures,
financing sources and availability, and the effects of regulation
(including environmental regulation) and competition. Such forward-
looking information involves important risks and uncertainties that
could significantly affect anticipated results in the future and,
accordingly, such results may differ from those expressed in any
forward-looking statements made by, or on behalf of, the Company. These
risks and uncertainties include, but are not limited to, uncertainties
affecting real estate businesses generally (such as entry into new
leases, renewals of leases and dependence on tenants' business
operations), risks relating to acquisition, construction and development
activities, possible environmental liabilities, risks relating to
leverage and debt service (including availability of financing terms
acceptable to the Company and sensitivity of the Company's operations to
fluctuations in interest rates), the potential for the use of borrowings
to make distributions necessary to qualify as a REIT, dependence on the
primary markets in which the Company's properties are located, the
existence of complex regulations relating to status as a REIT and the
adverse consequences of the failure to qualify as a REIT and the
potential adverse impact of market interest rates on the market price
for the Company's securities.
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET OF LIBERTY PROPERTY TRUST
(IN THOUSANDS)
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate:
Land and land improvements $ 168,376 $ 140,196
Buildings and improvements 1,027,019 908,835
Less accumulated depreciation (126,110) (119,151)
---------- ----------
Operating real estate 1,069,285 929,880
Development in progress 75,963 85,628
Land held for development 49,663 44,054
---------- ----------
Net real estate 1,194,911 l,059,562
Cash and cash equivalents 20,146 19,612
Accounts receivable 9,728 8,707
Deferred financing and leasing costs, net of
accumulated amortization (1997, $32,759;
1996, $30,985) 26,172 27,013
Prepaid expenses and other assets 40,755 37,718
---------- ----------
Total assets $1,291,712 $1,152,612
========== ==========
LIABILITIES
Mortgage loans $ 313,662 $ 240,803
Subordinated debentures 150,244 171,214
Lines of credit 152,754 266,692
Accounts payable 8,450 6,294
Accrued interest 3,919 7,411
Dividend payable 17,781 14,248
Other liabilities 33,980 28,923
---------- ----------
Total liabilities 680,790 735,585
Minority interest 51,655 41,495
SHAREHOLDERS' EQUITY
Common shares of beneficial interest, $.001 par value,
200,000,000 shares authorized, 39,989,463 and
31,400,361 shares issued and outstanding as of
March 31, 1997 and December 31, 1996,
respectively 40 31
Additional paid-in capital 560,281 370,813
Unearned compensation (1,303) (1,408)
Retained earnings 249 6,096
---------- ----------
Total shareholders' equity 559,267 375,532
---------- ----------
Total liabilities and shareholders' equity $1,291,712 $1,152,612
========== ==========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS OF LIBERTY PROPERTY TRUST
(UNAUDITED AND IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<CAPTION>
THREE THREE
MONTHS ENDED MONTHS ENDED
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
REVENUE
Rental $ 34,641 $25,952
Operating expense reimbursement 10,849 8,905
Management fees 153 505
Interest and other 839 1,201
-------- -------
Total revenue 46,482 36,563
-------- -------
OPERATING EXPENSES
Rental property expenses 8,639 7,817
Real estate taxes 3,280 2,565
General and administrative 2,487 1,637
Depreciation and amortization 7,970 6,456
-------- -------
Total operating expenses 22,376 18,475
-------- -------
Operating income 24,106 18,088
Interest expense 12,582 9,134
-------- -------
Income before minority interest 11,524 8,954
Minority interest 975 965
-------- -------
Net income $ 10,549 $ 7,989
======== =======
Net income per common share - primary $ 0.32 $ 0.28
======== =======
Dividends declared per common share $ 0.41 $ 0.40
======== =======
Weighted average number of common shares outstanding 32,781 28,473
======== =======
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS OF LIBERTY PROPERTY TRUST
(UNAUDITED AND IN THOUSANDS)
<CAPTION>
THREE THREE
MONTHS ENDED MONTHS ENDED
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 10,549 $ 7,989
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 7,970 6,456
Amortization of deferred financing costs 1,139 1,157
Minority interest in net income 975 965
Gain on sale - (377)
Noncash compensation 105 22
Changes in operating assets and liabilities:
Accounts receivable (1,021) (1,620)
Prepaid expense and other assets (1,854) 50
Accounts payable 2,156 (338)
Accrued interest on existing debt (3,492) (4,656)
Other liabilities 5,624 (3,489)
--------- ---------
Net cash provided by operating activities 22,151 6,159
--------- ---------
INVESTING ACTIVITIES
Investment in properties (68,887) (7,979)
Investment in development in progress (31,321) (15,473)
Investment in land held for development (5,609) (2,089)
Increase in deferred leasing costs (1,644) (336)
--------- ---------
Net cash used in investing activities (107,461) (25,877)
--------- ---------
FINANCING ACTIVITIES
Net proceeds from sale of common stock 174,173 -
Proceeds from mortgage loans 42,465 -
Repayments of mortgage loans (647) (195)
Proceeds from lines of credit 56,062 42,063
Repayments on line of credit (170,000) -
(Increase) decrease in deposits on pending
acquisitions (1,293) 1,446
(Increase) decrease in deferred financing costs (390) 179
Dividends (12,862) (11,339)
Distributions to partners (1,664) (1,329)
--------- ---------
Net cash provided by financing activities 85,844 30,825
Increase in cash and cash equivalents 534 11,107
Cash and cash equivalents at beginning of period 19,612 10,629
--------- ---------
Cash and cash equivalents at end of period $ 20,146 $ 21,736
========= =========
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
Write-off of fully depreciated property and
deferred costs $ 257 $ 898
Acquisition of properties (36,574) -
Assumption of mortgage loans 31,041 -
Issuance of operating partnership units 5,533 -
Noncash compensation 567 353
Conversion of subordinated debentures 20,970 5,052
========= =========
</TABLE>
See accompanying notes.
<PAGE>
LIBERTY PROPERTY TRUST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited consolidated financial statements of Liberty
Property Trust (the "Trust") and its subsidiaries, including Liberty
Property Limited Partnership (the "Operating Partnership") (the Trust,
Operating Partnership and their respective subsidiaries referred to
collectively as the "Company"), have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements and should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Annual Report on Form 10-K of the Trust and the Operating Partnership
for the year ended December 31, 1996. In the opinion of management, all
adjustments (consisting solely of normal recurring adjustments)
necessary for a fair presentation of the financial statements for these
interim periods have been included. The results of interim periods are
not necessarily indicative of the results to be obtained for a full
fiscal year. Certain amounts from prior periods have been restated to
conform to current period presentation.
In February, 1997, the Financial Accounting Standards Board issued
Statement No. 128, Earnings per Share, which is required to be adopted
on December 31, 1997. At that time, the Company will be required to
change the method currently used to compute earnings per share and to
restate all prior periods. Under the new requirements for calculating
primary earnings per share, the dilutive effect of stock options will be
excluded. The impact of Statement 128 on the calculation of primary and
fully diluted earnings per share for the quarters ended March 31, 1997
and 1996 is not expected to be material.
Note 2 - Organization
- ---------------------
The Trust, a self-administered and self-managed real estate investment
trust (a "REIT"), was formed in the State of Maryland on March 28, 1994
and commenced operations on June 23, 1994 upon completion of its initial
public offering (the "Share Offering"). The Trust conducts all of its
operations through the Operating Partnership. At March 31, 1997, the
Trust owned an 91.52% interest in the Operating Partnership as its sole
general partner and a .02% interest as a limited partner. Concurrent
with the Share Offering, the Operating Partnership completed a public
offering of $230 million of Exchangeable Subordinated Debentures (the
"Debentures") due 2001. The Debentures are guaranteed by the Trust.
<PAGE>
After June 23, 1995, the Debentures are exchangeable, at the option of
the holder thereof, at any time prior to maturity, into Common Shares at
a rate of one share for each $20 outstanding principal amount of
Debentures, subject to certain adjustments.
The Company completed a follow-on offering (the "Follow-on Offering") on
March 24, 1997 of 7,500,000 Common Shares. On April 1, 1997, the
overallotment option was exercised, resulting in the issuance of an
additional 750,000 Common Shares.
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEET OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(IN THOUSANDS)
<CAPTION>
MARCH 31, 1997 DECEMBER 31, 1996
-------------- -----------------
(UNAUDITED)
<S> <C> <C>
ASSETS
Real estate:
Land and land improvements $ 168,376 $ 140,196
Buildings and improvements 1,027,019 908,835
Less accumulated depreciation (126,110) (119,151)
---------- ----------
Operating real estate 1,069,285 929,880
Development in progress 75,963 85,628
Land held for development 49,663 44,054
---------- ----------
Net real estate 1,194,911 l,059,562
Cash and cash equivalents 20,146 19,612
Accounts receivable 9,728 8,707
Deferred financing and leasing costs, net of
accumulated amortization (1997, $32,759;
1996, $30,985) 26,172 27,013
Prepaid expenses and other assets 40,755 37,718
---------- ----------
Total assets $1,291,712 $1,152,612
========== ==========
LIABILITIES
Mortgage loans $ 313,662 $ 240,803
Subordinated debentures 150,244 171,214
Lines of credit 152,754 266,692
Accounts payable 8,450 6,294
Accrued interest 3,919 7,411
Dividend payable 17,781 14,248
Other liabilities 33,980 28,923
---------- ----------
Total liabilities 680,790 735,585
OWNERS' EQUITY
General partner's equity 559,267 375,532
Limited partners' equity 51,655 41,495
---------- ----------
Total owners' equity 610,922 417,027
---------- ----------
Total liabilities and owners' equity $1,291,712 $1,152,612
========== ==========
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF OPERATIONS OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
(UNAUDITED AND IN THOUSANDS)
<CAPTION>
THREE THREE
MONTHS ENDED MONTHS ENDED
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
REVENUE
Rental $34,641 $25,952
Operating expense reimbursement 10,849 8,905
Management fees 153 505
Interest and other 839 1,201
------- -------
Total revenue 46,482 36,563
------- -------
OPERATING EXPENSES
Rental property expenses 8,639 7,817
Real estate taxes 3,280 2,565
General and administrative 2,487 1,637
Depreciation and amortization 7,970 6,456
------- -------
Total operating expenses 22,376 18,475
------- -------
Operating income 24,106 18,088
Interest expense 12,582 9,134
------- -------
Net income $11,524 $ 8,954
======= =======
Net income allocated to general partner $10,549 $ 7,989
Net income allocated to limited partners 975 965
======= =======
</TABLE>
See accompanying notes.
<PAGE>
<TABLE>
CONSOLIDATED STATEMENT OF CASH FLOWS OF LIBERTY PROPERTY LIMITED PARTNERSHIP
(UNAUDITED AND IN THOUSANDS)
<CAPTION>
THREE THREE
MONTHS ENDED MONTHS ENDED
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 11,524 $ 8,954
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation and amortization 7,970 6,456
Amortization of deferred financing costs 1,139 1,157
Gain on sale - (377)
Noncash compensation 105 22
Changes in operating assets and liabilities:
Accounts receivable (1,021) (1,620)
Prepaid expense and other assets (1,854) 50
Accounts payable 2,156 (338)
Accrued interest on existing debt (3,492) (4,656)
Other liabilities 5,624 (3,489)
--------- ---------
Net cash provided by operating activities 22,151 6,159
--------- ---------
INVESTING ACTIVITIES
Investment in properties (68,887) (7,979)
Investment in development in progress (31,321) (15,473)
Increase in land held for development (5,609) (2,089)
Increase in deferred leasing costs (1,644) (336)
--------- ---------
Net cash used in investing activities (107,461) (25,877)
--------- ---------
FINANCING ACTIVITIES
Proceeds from mortgage loans 42,465 -
Repayments of mortgage loans (647) (195)
Proceeds from lines of credit 56,062 42,063
Repayments on line of credit (170,000) -
(Increase) decrease in deposits on pending
acquisitions (1,293) 1,446
(Increase) decrease in deferred financing costs (390) 179
Capital contributions 174,173 -
Distribution to partners (14,526) (12,668)
--------- ---------
Net cash provided by financing activities 85,844 30,825
Increase in cash and cash equivalents 534 11,107
Cash and cash equivalents at beginning of period 19,612 10,629
--------- ---------
Cash and cash equivalents at end of period $ 20,146 $ 21,736
========= =========
SUPPLEMENTAL DISCLOSURE OF NONCASH TRANSACTIONS
Write-off of fully depreciated property and
deferred costs $ 257 $ 898
Acquisition of properties (36,574) -
Assumption of mortgage loans 31,041 -
Issuance of operating partnership units 5,533 -
Noncash compensation 567 353
Conversion of subordinated debentures 20,970 5,052
========= =========
</TABLE>
See accompanying notes.
<PAGE>
LIBERTY PROPERTY LIMITED PARTNERSHIP
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
MARCH 31, 1997
NOTE 1 - BASIS OF PRESENTATION
- ------------------------------
The accompanying unaudited consolidated financial statements of Liberty
Property Limited Partnership (the "Operating Partnership") and its
direct and indirect subsidiaries have been prepared in accordance with
generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information
and footnotes required by generally accepted accounting principles for
complete financial statements and should be read in conjunction with the
consolidated financial statements and notes thereto included in the
Annual Report on Form 10-K of the Trust and the Operating Partnership
for the year ended December 31, 1996. In the opinion of management, all
adjustments (consisting solely of normal recurring adjustments)
necessary for a fair presentation of the financial statements for these
interim periods have been included. The results of interim periods are
not necessarily indicative of the results to be obtained for a full
fiscal year. Certain amounts from prior periods have been restated to
conform to current period presentation.
NOTE 2 - ORGANIZATION
- ---------------------
Liberty Property Trust (the "Trust", and together with the Operating
Partnership referred to as the "Company"), a self-administered and self-
managed real estate investment trust (a "REIT"), was formed in the State
of Maryland on March 28, 1994 and commenced operations on June 23, 1994
upon completion of its initial public offering (the "Share Offering").
The Trust conducts all of its operations through the Operating
Partnership. At March 31, 1997, the Trust owned an a 91.52% interest in
the Operating Partnership as its sole general partner and a .02%
interest as a limited partner. Concurrent with the Share Offering, the
Operating Partnership completed a public offering of $230 million of
Exchangeable Subordinated Debentures (the "Debentures") due 2001. The
Debentures are guaranteed by the Trust. After June 23, 1995, the
Debentures are exchangeable, at the option of the holder thereof, at any
time prior to maturity, into Common Shares at a rate of one share for
each $20 outstanding principal amount of Debentures, subject to certain
adjustments.
The Company also completed a follow-on offering (the "Follow-on
Offering") on March 24, 1997 of 7,500,000 Common Shares. On April 1,
1997, the overallotment option was exercised, resulting in the issuance
of an additional 750,000 Common Shares.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
- ------------------------------------------------------------------------
The following discussion compares the activities of the Company for the
three month period ended March 31, 1997 (unaudited) with the activities
of the Company for the three month period ended March 31, 1996
(unaudited). As used herein, the term "Company" includes the Trust, the
Operating Partnership and their subsidiaries.
This information should be read in conjunction with the accompanying
consolidated financial statements and notes included elsewhere in this
report.
RESULTS OF OPERATIONS
- ---------------------
For the three month period ended March 31, 1997 compared to the three
- ------------------------------------------------------------------------
month period ended March 31, 1996.
- -----------------------------------
Rental revenues increased from $26.0 million to $34.6 million, or by 33%
for the three month periods ended March 31, 1996 to 1997. This increase
is primarily due to the increase in the number of properties in
operation ("Operating Properties") during the respective periods. As of
March 31, 1996, the Company had 213 Operating Properties, and as of
March 31, 1997, the Company had 285 Operating Properties. From January
1, 1996 through March 31, 1996, the Company acquired 5 properties, for a
Total Investment of approximately $18.4 million. From January 1, 1997
through March 31, 1997, the Company acquired or completed the
development on 26 properties for a Total Investment of approximately
$158.9 million. The "Total Investment" for a property is defined as the
property's purchase price plus closing costs and management's estimate,
as determined at the time of acquisition, of the cost of necessary
building improvements in the case of acquisitions, or land costs and
land and building improvement costs in the case of development projects,
and where appropriate, other development costs and carrying costs
required to reach rent commencement.
Operating expense reimbursement increased from $8.9 million for the
three month period ended March 31, 1996 to $10.8 million for the three
month period ended March 31, 1997. This increase is a result of the
reimbursement from tenants for increases in rental property expenses and
real estate taxes. The operating expense recovery percentage (the ratio
of operating expense reimbursement to rental property expenses and real
estate taxes) increased from 85.8% for the three month period ended
March 31, 1996 to 91.0% for the three month period ended March 31, 1997,
due to the increase in occupancy.
Rental property and real estate tax expenses increased from $10.4
million for the three month period ended March 31, 1996 to $11.9 million
for the three month period ended March 31, 1997. This increase is due
<PAGE>
to the increase in the number of properties owned during the respective
periods, partly offset by a reduction in snow removal and other seasonal
operating costs during the mild 1997 winter compared to the severe 1996
winter.
Property level operating income for the "Same Store" properties
(properties owned as of January 1, 1996) increased from $23.8 million
for the three month period ended March 31, 1996 to $25.3 million for the
three month period ended March 31, 1997, and increase of 6.6%. This
increase is due principally to increases in the occupancy and increases
in the rental rates for the properties.
Set forth below is a schedule comparing the property level operating
income for the Same Store properties for the three month periods ended
March 31, 1997 and 1996.
Three Months Ended
------------------------------
(In thousands)
------------------------------
March 31, 1997 March 31, 1996
-------------- --------------
Rental revenue $26,237 $25,108
Operating expense reimbursement 7,983 8,575
------- -------
34,220 33,683
Rental property expenses 6,471 7,478
Real estate taxes 2,429 2,444
------- -------
Property level operating income $25,320 $23,761
======= =======
General and administrative expenses increased by $850,000 from the three
months ended March 31, 1996 to the comparable period in 1997, due to the
increase in personnel and other related overhead costs necessitated by
the increase in the number of properties owned during the respective
periods.
Depreciation and amortization expense increased from $6.5 million for
the three month period ended March 31, 1996 to $8.0 million for the
three month period ended March 31, 1997. This increase is due to an
increase in the number of properties owned during the respective
periods.
Interest expense increased from $9.1 million for the three month period
ended March 31, 1996 to $12.6 million for the three month period ended
March 31, 1997. This increase is due to an increase in the average debt
outstanding for the first quarter of 1996 compared to the first quarter
of 1997, which equalled $492.3 million and $647.7 million, respectively,
and increases in interest rates, partially offset by reduced interest as
a result of the Debenture conversions.
As a result of the foregoing, the Company's operating income increased
from $18.1 million for the three month period ended March 31, 1996 to
$24.1 million for the three month period ended March 31, 1997. In
<PAGE>
addition, income before minority interest for the three month periods
increased by 28%, from $9.0 million for the three month period ended
March 31, 1996 to $11.5 million for the three month period ended March
31, 1997.
LIQUIDITY AND CAPITAL RESOURCES
As of March 31, 1997, the Company had cash and cash equivalents of $20.1
million. Working capital at March 31, 1997 was $17.5 million.
Net cash flow provided by operating activities increased from $6.2
million for the three month period ended March 31, 1996, to $22.2
million for the three month period ended March 31, 1997. This $16.0
million increase was primarily due to the cash provided by the
additional Operating Properties in service during the latter period.
Net cash used in investing activities increased from $25.9 million for
the three month period ended March 31, 1996, to $107.5 million for the
three month period ended March 31, 1997. This increase was a result of
increased acquisition activity in the first quarter of 1997, including
the acquisition of a portfolio of 16 properties in the Minneapolis,
Minnesota marketplace.
Net cash provided by financing activities increased from $30.8 million
for the three month period ended March 31, 1996, to $85.8 million for
the three month period ended March 31, 1997. This increase was
attributable to the Follow-On Offering which was completed on March 24,
1997 which resulted in the issuance of 7,500,000 Common Shares.
The Company believes that its undistributed cash flow from operations
are adequate to fund its short-term liquidity requirements.
The Company has funded its long-term liquidity requirements such as
property acquisition and development activities primarily through
secured line of credit facilities. As of March 31, 1997, the Company
had in place two line of credit facilities with separate lenders; one
for a maximum of $250 million (the "$250 Million Line of Credit"), and
the other for a maximum of $100 million (the "$100 Million Line of
Credit").
The $250 Million Line of Credit matures on June 15, 1998, subject to the
Company's option to extend the maturity of the loan as described below.
As of March 31, 1997, $72.8 million was outstanding under the $250
Million Line of Credit. The $250 Million Line of Credit is recourse to
the Company only with respect to 50% of the outstanding principal amount
thereof. Funds borrowed under the $250 Million Line of Credit bear
interest at an annual rate of 175 basis points over LIBOR. Subject to
certain conditions and the payment of a fee equal to 0.5% of the then
outstanding loan balance, the Company may exercise a one-time option to
convert the loan balance into a two-year term loan upon the maturity of
the $250 Million Line of Credit. Following such conversion, the
interest rate on the term loan would be LIBOR plus 4%.
<PAGE>
The $100 Million Line of Credit matures on December 13, 1998, however,
at any time prior to December 13, 1998, maturity may be extended for one
year subject to certain conditions and the payment of an extension fee
equal to 1/4% of the total commitment (as defined). As of March 31,
1997 $80.0 million was outstanding under the $100 Million Line of
Credit. The interest rate on the $100 Million Line of Credit is 1.60%
over LIBOR.
Periodically, the Company pays down borrowings on the Lines of Credit
facilities with funds from long term capital sources. In 1997, the
Company used $170.0 million of the proceeds from the Follow-on Offering
to paydown the Lines of Credit.
As of March 31, 1997, $313.7 million in mortgage loans were outstanding
with maturities ranging from 1997 to 2013. The interest rates on $279.6
million of mortgage loans are fixed and range from 6% to 10%. Interest
rates on $34.1 million of mortgage loans float with LIBOR or prime, of
which $10.3 million is subject to certain caps. The weighted average
interest rate for the mortgage loans is 7.7%, and the weighted average
life is 7.9 years.
General
The Company expects to incur variable rate debt, including borrowings
under the Lines of Credit, from time to time. The Company has entered
into a swap agreement, with a notional amount of $114.5 million, to
hedge against possible fluctuations in interest rates in anticipation of
a debt issuance in 1997 for a five to seven year term. The Company
believes that its existing sources of capital will provide sufficient
funds to finance its continued acquisition and development activities.
In this regard, the Company continues to evaluate its long term capital
sources which generally include the availability of debt financing and
access to equity.
In July 1995, the Company filed a shelf registration with the Securities
and Exchange Commission that enabled the Company to offer up to an
aggregate of $350.0 million of securities, including common stock,
preferred stock and debt (the "Initial Shelf Registration"). On
November 27, 1995, the Company completed a follow-on public offering of
7,200,000 common shares resulting in proceeds of $140.4 million.
On October 15, 1996, the Company filed a Registration Statement of
1,000,000 shares to be issued through a Dividend Reinvestment and Share
Purchase Plan.
On February 21, 1997, the Company filed a shelf registration with the
Securities and Exchange Commission that enables the Company to offer up
to an aggregate of $850.0 million of securities, including common stock,
preferred stock and debt (the "Second Shelf Registration"). On March
24, 1997, the Company completed the Follow-on Offering which resulted in
the issuance of an additional 7,500,000 Common Shares, and on April 1,
1997, the overallotment option was exercised, resulting in the issuance
<PAGE>
of an additional 750,000 Common Shares. The issuance of these Common
Shares resulted in gross proceeds of $202.1 million. Collectively, the
Initial Shelf Registration and the Second Shelf Registration are
referred to as the "Shelf Registration".
Presently, the Shelf Registration provides Liberty Property Trust and
Liberty Property Limited Partnership with the ability to offer up to
$479.4 million and $400.0 million of securities, respectively.
On February 8, 1996, Moody's Investors Service assigned a prospective
rating of Ba2 for senior unsecured debt issued by Liberty Property
Limited Partnership under the shelf registration.
Calculation of Funds from Operations
Management considers Funds from Operations an appropriate measure of the
performance of an equity REIT. Funds from Operations is defined by
NAREIT as net income or loss (computed in accordance with generally
accepted accounting principles), excluding gains or losses from debt
restructuring and sales of property plus depreciation and amortization
excluding the amortization of deferred financing costs and depreciation
of non-real estate assets. Funds from Operations should not be
considered as an alternative to net income or as an alternative to cash
flow or as a measure of liquidity. Funds from Operations for the three
month periods ended March 31, 1997 and 1996 are as follows:
THREE MONTHS ENDED
(IN THOUSANDS)
-------------------------------
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
Net Income $10,549 $ 7,989
Add Back:
Minority Interest 975 965
Depreciation and amortization 7,859 6,388
Gain on sale - (377)
------- -------
Funds from operations $19,383 $14,965
======= =======
INFLATION
- ---------
Inflation has remained relatively low during the last three years, and
as a result, it has not had a significant impact on the Company during
this period. The Lines of Credit bear interest at a variable rate;
therefore, the amount of interest payable under the Lines of Credit will
be influenced by changes in short-term interest rates, which tend to be
sensitive to inflation. To the extent an increase in inflation would
result in increased operating costs, such as in insurance, real estate
taxes and utilities, substantially all of the tenants' leases require
the tenants to absorb these costs as part of their rental obligations.
In addition, inflation also may have the effect of increasing market
rental rates.
<PAGE>
PART II: OTHER INFORMATION
- -----------------------------
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
a. Exhibits
3.1 Fourth Amendment to Agreement of Limited
Partnership of Liberty Property Limited Partnership dated March 21,
1997.
10.1 First Amendment to Loan Agreement by and among
Liberty Property Limited Partnership and Liberty Property Trust and The
First National Bank of Boston and the other banks named therein, dated
March 11, 1997.
10.2 Contract of Sale by and between NWBC
Associates Limited Partnership and Liberty Property Limited Partnership
dated January 22, 1997.
10.3 Amendment to Contract of Sale by and between
NWBC Associates Limited Partnership and Liberty Property Limited
Partnership dated March 20, 1997.
10.4 Contract of Sale by and between 330 Associates
Limited Partnership and Liberty Property Limited Partnership dated
January 22, 1997.
10.5 Amendment to Contract of Sale by and between
330 Associates Limited Partnership and Liberty Property Limited
Partnership dated March 20, 1997.
<PAGE>
10.6 Contract of Sale by and between SOBC
Associates, LLC and Liberty Property Limited Partnership dated January
22, 1997.
10.7 Amendment to Contract of Sale by and between
SOBC Associates, LLC and Liberty Property Limited Partnership dated
March 20, 1997.
10.8 Agreement by and between The Varde Fund III-A,
A, L.P. and Liberty Property Limited Partnership dated February 21,
1997.
10.9 Agreement by and between Crosstown Asset Corp.
I., and Liberty Property Limited Partnership dated February 21, 1997.
10.10 Contribution and Acquisition Agreement by and
among The Liberty Corporation, the Land Seller, and the Contributors
(defined within) and Liberty Property Limited Partnership and Liberty
Property Trust dated March 5, 1997.
10.11 Form of Contributors Rights Agreement by and
among The Liberty Corporation, and certain subsidiaries, and Liberty
Property Trust.
10.12 Registration Rights Agreement by and among
Liberty Property Trust and Robert C. Lux, Stewart R. Stender, 330
Associates, Inc., NWBC Associates, Inc., and APEX Asset Management
Corporation dated March 20, 1997.
27 Financial Data Schedule (EDGAR VERSION ONLY)
b. Reports on Form 8-K
Report on Form 8-K dated February 10, 1997 filed under
Item 5 relating to the acquisition of four properties during the period
from January 1, 1997 to February 10, 1997. The report included a
Combined Statement of Operating Revenue and Certain Operating Expenses
for a majority of the properties, Pro Forma Condensed Consolidated
Balance Sheets for Liberty Property Trust and Liberty Property Limited
Partnership, and Pro Forma Consolidated Statements of Operations for
Liberty Property Trust and Liberty Property Limited Partnership.
Report on Form 8-K dated March 5, 1997 filed under Item 5 relating to
the acquisition of one property and the probable acquisition of 39
additional properties during the period from February 10, 1997 to
February 28, 1997. The report included a Combined Statement of
Operating Revenue and Certain Operating Expenses for a majority of the
properties, Pro Forma Condensed Consolidated Balance Sheets for Liberty
Property Trust and Liberty Property Limited Partnership, and Pro Forma
Consolidated Statements of Operations for Liberty Property Trust and
Liberty Property Limited Partnership.
<PAGE>
Report on Form 8-K dated March 21, 1997 filed under Item 5 relating to
the Secondary Offering which was completed on March 24, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
each registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
LIBERTY PROPERTY TRUST
/s/ JOSEPH P. DENNY May 14, 1997
- --------------------------------- --------------------------
Joseph P. Denny Date
President
/s/ GEORGE J. ALBURGER, JR. May 14, 1997
- --------------------------------- --------------------------
George J. Alburger, Jr. Date
Chief Financial Officer
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: LIBERTY PROPERTY TRUST, GENERAL PARTNER
/s/ JOSEPH P. DENNY May 14, 1997
- ---------------------------------- -------------------------
Joseph P. Denny Date
President
/s/ GEORGE J. ALBURGER, JR. May 14, 1997
- ---------------------------------- -------------------------
George J. Alburger, Jr. Date
Chief Financial Officer
<PAGE>
EXHIBIT 3.1
FOURTH AMENDMENT
TO
AGREEMENT OF LIMITED PARTNERSHIP
OF
LIBERTY PROPERTY LIMITED PARTNERSHIP
THIS FOURTH AMENDMENT, dated as of March 21, 1997, amends the
Partnership Agreement (as defined below) of LIBERTY PROPERTY LIMITED
PARTNERSHIP, a Pennsylvania limited partnership (the "Partnership").
Capitalized terms used herein but not defined herein shall have the
meanings given such terms in Partnership Agreement.
BACKGROUND
A. On March 28, 1994, Rouse General Corp., a Pennsylvania corporation
(the "Initial General Partner"), and Willard G. Rouse, III, George
Congdon and Joseph Denny (the "Initial Limited Partners") formed a
Pennsylvania limited partnership under the name "Liberty Property
Limited Partnership" (the "Partnership") with the Initial General
Partner and the Initial Limited Partners as the sole general partner and
the sole limited partners, respectively of the Partnership;
B. Certain Persons were admitted to the Partnership on June 23, 1994
as additional limited partners; (i) effective as of June 23, 1994, the
Initial General Partner and the Initial Limited Partners withdrew from
the Partnership and their partnership interests in the Partnership were
redeemed for $100; and (ii) effective as of June 23, 1994, Liberty
Property Trust, a Maryland real estate investment trust, was admitted to
the Partnership as the sole general partner thereof;
C. The Partners as of June 23, 1994 entered into that certain
Agreement of Limited Partnership dated as of June 23, 1994, which was
subsequently amended on March 1, 1995 and on June 19, 1995. On June 19,
1995, the Partners restated and amended the Agreement of Limited
Partnership such that the terms of the amended and restated Agreement of
Limited Partnership superseded and replaced in their entireties the
terms of the Agreement of Limited Partnership and the amendments thereto
(the "First Restated and Amended Agreement of Limited Partnership"); and
D. The First Restated and Amended Agreement of Limited Partnership was
amended by agreements executed on December 22, 1995 and December 30,
1996. The First Restated and Amended Agreement of Limited Partnership
as amended prior to the date of this Agreement is referred to as the
"Partnership Agreement."
E. The Partnership is a party to the following Contracts of Sale:
(a) Contract of Sale by and between the Partnership and 330
Associates Limited Partnership, a Minnesota limited partnership ("330
Associates"), dated January 22, 1997;
(b) Contract of Sale by and between the Partnership and SOBC
Associates LLC, a Minnesota limited liability company ("SOBC
Associates"), dated January 22, 1997;
(c) Contract of Sale by and between the Partnership and NWBC
Associates Limited Partnership, a Minnesota limited partnership ("NWBC
Associates"), dated January 22, 1997; and
(d) Amended and Restated Agreement by and between the Partnership
and Apex Asset Management Corporation ("Apex") dated February 21, 1997.
(collectively, as amended, the "Contracts of Sale") pursuant to which
the Partnership has agreed to acquire certain real and personal property
owned by 330 Associates, SOBC Associates, NWBC Associates and Apex in
consideration for, among other things, Partnership Interests in the
Partnership.
F. Pursuant to Section 4.2 of the Partnership Agreement, the General
Partner of the Partnership has the power and authority to issue
additional Partnership Interests to persons on such terms and conditions
as the General Partner shall deem advisable.
G. The General Partner, pursuant to the exercise of such authority and
in accordance with Section 14.1(b)(2) of the Partnership Agreement, has
determined to execute this Amendment to the Partnership Agreement to
evidence the issuance of additional Partnership Interests and the
admission of the other signatories hereto as Limited Partners of the
Partnership.
NOW, THEREFORE, in consideration of the mutual convenants and agreements
herein contained and other good and valuable consideration, the receipt,
adequacy and sufficiency of which are hereby acknowledged, the parties
hereto, intending to be legally bound, hereby amend the Partnership
Agreement as follows:
1. The Partnership Agreement is hereby amended to reflect the
admission as a Limited Partner on the date hereof of the Persons set
forth on Schedule A attached hereto (the "Admitted Partners") and the
ownership by such Persons of the number of Partnership Interests listed
opposite each person's name on Schedule A. Attached as Schedule B is a
list of the Partners of the Partnership prior to the admission of the
Persons set forth on Schedule A, together with the number of Partnership
Interests owned by such partners.
2. The Partnership Interests issued hereby shall have the same rights,
preferences, privileges and designations as the Limited Partner
Partnership Interests which have heretofore been issued by the
Partnership, including, but not limited to, the right to convert such
Partnership Interests into Common Shares of Beneficial Interest, par
value, $.001 per share (the "Common Shares"), of the General Partner
pursuant to Section 11.1 of the Partnership Agreement; provided that
distribution to be received by the newly admitted Limited Partners in
their capacity as partners of the Partnership shall be pro-rated to
reflect the portion of the fiscal quarter of the Partnership for which
the newly admitted Limited Partners held their Partnership Interests and
shall not be pro rata in accordance with their then Percentage
Interests; and provided, further that the newly admitted Limited
Partners shall not be entitled to sell such Partnership Interests to the
General Partner.
3. Anything herein to the contrary notwithstanding, the Partnership
Interests issued to the Admitted Partners shall not be exchangeable or
convertible into Common Shares until after the first anniversary of the
date of this Amendment.
4. By execution of this Amendment to the Partnership Agreement by the
General Partner and the Persons listed on Schedule A, such Persons agree
to be bound by each and every term of the Partnership Agreement as
amended from time to time in accordance with the terms of the
Partnership Agreement.
5. On the date of this Amendment, each of the Admitted Partners shall
execute and deliver to the Liberty Property Trust an Irrevocable Proxy
coupled with an Interest in the form set forth on Exhibit 1 hereto
attached.
6. For purposes of Article XIII of the Partnership Agreement only, the
terms "Limited Partner" and "Limited Partners" shall refer only to those
persons who are admitted as Limited Partners to the Partnership
concurrently with the consummation of the transactions contemplated by
the Contracts of Sale.
7. Except as expressly set forth in this Amendment to the Partnership
Agreement, the Partnership Agreement is hereby ratified and confirmed in
each and every respect.
IN WITNESS WHEREOF, this Amendment to the Agreement of Limited
Partnership Agreement executed and delivered as of the date first above
written.
General Partner:
LIBERTY PROPERTY TRUST
By:
-----------------------------
Its:
-----------------------------
ADMITTED PARTNERS:
--------------------------------
Stewart R. Stender
--------------------------------
Robert C. Lux
NWBC ASSOCIATES, INC., A Minnesota Corporation
By:
-----------------------------
Stewart R. Stender, President
APEX ASSET MANAGEMENT CORPORATION,
A Minnesota Corporation
By:
-----------------------------
Stewart R. Stender, President
330 ASSOCIATES, INC.
By:
-----------------------------
Stewart R. Stender, President
SCHEDULE "A"
NUMBER OF
ADMITTED PARTNERS PARTNERSHIP INTERESTS
- ----------------- ---------------------
Stewart R. Stender 53,865
Robert C. Lux 53,864
NWBC Associates, Inc 28,191
330 Associates, Inc. 2,574
APEX Asset Management Corporation 85,051
SCHEDULE "B"
LIBERTY PROPERTY LIMITED PARTNERSHIP
PARTNERSHIP INTERESTS
AS OF MARCH 21, 1997
NUMBER OF
PARTNERSHIP
LIMITED PARTNERS INTERESTS
- ---------------- -----------
Peter M. Balitsaris 34,969
Claiborn M. Carr 138,198
John A. Castorina 11,094
George F. Congdon 245,419
Joseph P. Denny 260,250
Jill R. Felix 195,043
Robert E. Fenza 187,670
Edward Fitzgerald 9,344
Lawrence D. Gildea 93,319
Robert Goldschmidt 22,895
Michael T. Hagan 9,343
David C. Hammers 177,678
Robert J. Kiel 14,491
Earl Kline 18,820
James C. Lutz 27,981
James C. Mazzarelli 13,445
Steven E. Messaros 7,246
Sharon Messaros 7,245
Mary Beth Morrissey 9,344
Leslie R. Price 167,964
Joseph M. Reichert 27,242
Rouse & Associates, Inc. 4,652
Williard G. Rouse III 450,269
Trust for the Children of
George F. Congdon, dated
6/27/85, Michael M. Dean,
Trustee 92,825
Trust for the Children of
David C. Hammers, dated
6/27/85, Michael M. Dean,
Trustee 89,651
Trust for Mary Rouse 11,223
Trust for Anne Rouse 11,223
Trust for Rouse Younger Children
dated 6/27/85, Michael M. Dean,
Trustee 89,651
Trust for the Benefit of
Laurie Hammers, dated
1/1/90, Michael M. Dean, Trustee 5,506
Mike Weitzmann 42,312
Southeast Limited Partnership 168,445
Liberty Special Purpose Corp. 10,574
Rebecca Lingerfelt 8,076
J. Ryan Lingerfelt Irrevocable Trust 15,625
Justin M. Lingerfelt Irrevocable Trust 15,625
Daniel K. Lingerfelt Irrevocable Trust 15,625
Catherine E. Lingerfelt Irrecovable Trust 15,625
Alan T. Lingerfelt 317,500
L. Harold Lingerfelt 164,375
James J. Carpenter 78,750
David L. Lingerfelt 30,674
Morris U. Ferguson 6,000
Carl C. Lingerfelt 12,500
Murray H. Wright 7,500
Erle Marie Latimer 12,500
Mazel Investments LLC 28,025
---------
Total Limited Partner Interests 3,361,418
Percentage
General Partner Ownership
- ----------------------------- ----------
Liberty Property Trust 90.48% GP
GP - The Partnership units for Liberty Property Trust has not been
reflected because there is no conversion of units to shares to the
general partner.
EXHIBIT 1
IRREVOCABLE PROXY COUPLED WITH AN INTEREST
KNOWN ALL MEN BY THESE PRESENTS, that the undersigned hereby irrevocably
constitutes and appoints Liberty Property Trust, a Maryland real estate
agent and proxy with respect to all of the partnership interest of
Liberty Property Limited Partnership, a Pennsylvania limited partnership
(the "Operating Partnership"), as to which the undersigned is now or
hereafter becomes entitled to vote and/or consent, and to vote and/or
consent with respect to such partnership interest in the name, place and
stead of the undersigned, with full power of substitution and
resubstitution, at any meeting of the limited partners of the Operating
Partnership and at any adjournment thereof, or pursuant to any consent
in lieu of a meeting, and with respect to each and every action as to
which the undersigned may vote or consent. The foregoing proxy, which
is coupled with an interest and, therefore, not terminable by the
undersigned without the consent of the Proxy Holder, will remain in
effect until, and terminate only upon, termination by the Proxy Holder.
The undersigned here waives any defect which might cause the proxy
granted hereunder to be invalid or unenforceable. The undersigned
hereby agrees to execute such other instruments as the Proxy Holder or
the Operating Partnership shall reasonably request to confirm the
validity and enforceability of the proxy granted hereunder.
IN WITNESS WHEREOF, the undersigned has executed and delivered this
Proxy on this 21st day of March, 1997.
----------------------------------
(To be executed by each person/
entity receiving Partnership
Interests at or immediately after
the Closing)
EXHIBIT 10.1
FIRST AMENDMENT TO LOAN AGREEMENT
This First Amendment to Loan Agreement is made as of the 11th day
of March, 1997, by and among LIBERTY PROPERTY LIMITED PARTNERSHIP, a
Pennsylvania limited partnership (the "Borrower"), LIBERTY PROPERTY
TRUST, a Maryland trust (the "Company") and THE FIRST NATIONAL BANK OF
BOSTON, a national banking association ("PNC"), CORESTATES BANK, N.A., a
national banking association ("CoreStates") and DRESDNER BANK, AG, New
York and Grand Cayman Branches, a German Bank ("Dresdner"), (FNBB, PNC,
CoreStates and Dresdner are collectively hereinafter the "Banks") and
THE FIRST NATIONAL BANK OF BOSTON, as agent for itself and the Banks
(the "Agent").
WHEREAS, the parties hereto are parties to that certain Loan
Agreement dated as of December 13, 1996 (the "Existing Agreement"): and
WHEREAS, the parties have agreed to amend the Existing Agreement to
provide for an increase in the Total Commitment from $80,000,000 to
$100,000,000 and in certain other respects.
NOW, THEREFORE, the parties hereby agree that effective upon the
date hereof the Existing Agreement is amended as follows:
1. Increase in Total Commitment. Each of PNC, CoreStates and
Dresdner hereby increases its Commitment to the amount shown on the
revised Schedule 1.2 attached hereto effective on the First Amendment
Effective Date (hereinafter defined). The Borrower shall execute and
deliver to each of said Banks a Note (collectively the "Additional
Notes") in an amount equal to the difference between said Bank's
Commitment as shown on said revised Schedule 1.2 and the Note dated
December 27, 1996 delivered to each such Bank at the time it became a
party to the Loan Agreement. The second sentence of section 2.3 is
amended to read as follows: "One or more Notes shall be payable to the
order of each Bank and the aggregate principal amount of the Notes held
by each Bank shall be equal to such Bank's Commitment". On the First
Amendment Effective Date each of PNC, CoreStates and Dresdner shall
transfer funds to FNBB in the amount necessary so that each Bank's
percentage of each of the Loans outstanding after the First Amendment
Effective Date shall equal such Bank's Commitment Percentage as set
forth on Schedule 1.2. All outstanding Eurodollar Loans shall continue
in effect for the remainder of their applicable Interest Periods and
PNC, CoreStates and Dresdner shall accept the currently effective
interest rates on their increased percentage of each Eurodollar Loan.
FNBB shall not receive any Fixed Rate Prepayment Fee on the amounts so
received by FNBB from the other Banks.
2. Updated Schedules to Loan Agreement. The following
Schedules to the Loan Agreement are hereby updated, supplemented or
replaced as follows:
(a) Schedule 1 is replaced by Schedule 1 attached hereto.
(b) Schedule 1.1 is replaced by Schedule 1.1 attached
hereto.
(c) Schedule 1.2 is replaced by Schedule 1.2 attached
hereto.
(d) Schedule 1.3 is replaced by Schedule 1.3 attached
hereto.
(e) Schedule 6.18 is replaced by Schedule 6.18 attached
hereto.
(f) Schedule 6.22(d) is replaced by Schedule 6.22(d)
attached hereto.
(g) Schedule 6.22(I) is supplemented by adding thereto the
rent rolls for each of the Additional Properties attached to the
Borrower's Certificates delivered to the Agent with respect to the
Additional Properties.
3. Effective Date. This Amendment shall become effective on a
date to be set forth in a notice from the Agent to the Borrower and the
Banks (the "First Amendment Effective Date") which date shall be after
each of the documents listed on the closing Agenda attached hereto as
Exhibit A each in form and substance satisfactory to the Agent shall
have been received by the Agent.
4. Additional Properties. During the period after the
Effective Date to an including the First Amendment Effective Date the
following Real Estate Assets have become Mortgaged Properties pursuant
to section 5.3 and section 5.4 (collectively, the "Additional
Properties"):
(a) property owned by the Borrower located at 151 South
Warner Road, Upper Merion Township, Montgomery County, Pennsylvania:
(b) property owned by the Borrower located at 200, 220,
and 240 Gibraltar Road, Horsham Township, Montgomery County,
Pennsylvania:
(c) property owned by Liberty Property Development Corp.
located at 1821 Battery Dantzler Road, Chesterfield County, Virginia:
(d) property owned by the Borrower located at 3501 Riga
Boulevard, Tampa, Hillsborough County, Florida:
(e) property owned by the Borrower located at 650 and 680
Swedesford Road, Tredyffrin Township, Chester County, Pennsylvania: and
(f) property owned by the borrower located at 7248
Industrial Boulevard, Trexlertown, Upper Macungie Township, Lehigh
County, Pennsylvania.
5. Representations and Warranties. The Borrower and the Company
represent and warrant that each of the representations and warranties
contained in section 6 is true, correct and complete in all material
respects as of the date hereof to the same extent as though made on such
date and that no Default or Event of Default has occurred and is
continuing on the date hereof.
6. Effectiveness of Loan Documents. On even date herewith each
Guaranty and each Security Deed shall be amended to reflect the increase
of the Total commitment and the execution and delivery of the Additional
Notes. All references in the Existing Agreement to said Loan Documents
shall mean and be in reference to said Loan Documents as so amended.
The Borrower Hereby confirms that each of the Security Documents shall
continue to secure the payment and performance of all of the Obligations
under the Existing Agreements as amended hereby and the Borrower's
obligations under the Security Documents shall continue to be valid and
enforceable and shall not be impaired or limited by the execution or
effectiveness of this Amendment. Every reference contained in the Loan
Documents to the Credit Agreement shall mean and be a reference to the
Existing Agreement as amended hereby and as the Credit Agreement may be
further amended. Every reference contained in the Loan Documents to the
Notes shall be deemed to include the Additional Notes. Except as
specifically amended by this Amendment, the Existing Agreement and each
of the Loan Documents shall remain in full force and effect and are
hereby ratified and confirmed.
7. Miscellaneous. This Amendment shall be governed by
interpreted and construed in accordance with all of the same provisions
applicable under the Existing Agreement including, without limitation,
all definitions set forth in section 1.1 the rules of interpretation set
forth in section 1.2 the provisions relating to governing law set forth
in section 20. the provisions relating to counterparts in section 22 and
the provision relating to severability in section 26.
IN WITNESS WHEREOF, the undersigned have duly executed this
Amendment as a sealed instrument as of the date first set forth above.
LIBERTY PROPERTY TRUST
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: LIBERTY PROPERTY TRUST
its general partner
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
THE FIRST NATIONAL BANK OF BOSTON
as Agent
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
THE FIRST NATIONAL BANK OF BOSTON
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
PNC BANK NATIONAL ASSOCIATION
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
CORESTATES BANK, N.A.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
DRESDNER BANK AG, New York and
Grand Cayman Branches
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
EXHIBIT 10.2
CONTRACT OF SALE
NWBC
This Contract of Sale (the "Contract") dated as of this ___ day of
January, 1997 is made and entered into by and between NWBC ASSOCIATES
LIMITED PARTNERSHIP, a Minnesota limited partnership ("Seller") and
LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership
or its permitted assigns ("Buyer").
ARTICLE I
DEFINED TERMS
1.1 Definitions. As used in this Contract, the following terms have
the meanings indicated:
"330 Contract" means that Contract of Sale of even date herewith
between Buyer and 330 Associates Limited Partnership.
"Average Share Price" means the average closing price for the
twenty (20) Business Days preceding the Closing Date of a Share as
reported on the New York Stock Exchange.
"Business Day" means a day other than a Saturday, a Sunday or
another day on which commercial banks in Minneapolis, Minnesota are not
required to be open for public business.
"Closing" means the consummation of the purchase of the Property
by Buyer from Seller in accordance with Article VIII.
"Closing Date" means the date on which the Closing is actually
held.
"Earnest Money Deposit" means the portion of the Purchase Price
deposited by Buyer in escrow with the Title Company as provided in
Section 3.2, plus any interest accrued thereon. The amount of the total
Earnest Money Deposit shall be payable as provided in Section 3.2 hereof.
"Effective Date" means the date on which the Title Company
acknowledges receipt of a fully-executed counterpart of this Contract.
"Improvements" means the seven buildings, and all fixtures and
other improvements associated therewith, containing approximately 520,880
square feet of net rentable area, situated on the Land, consisting of the
following buildings:
Building Address Square Footage
----------------------------------- --------------
2905 Northwest Boulevard
(Northwest Business Campus I) 84,765
2800 Campus Drive
(Northwest Business Campus II) 64,852
2955 Xenium Lane
(Northwest Business Campus III) 24,800
9401-9443 Science Center Drive
(Science Center) 73,898
6321-6325 Bury Drive
(Westwood IV) 72,831
7115-7173 Shady Oak
(Valley Oak) 77,925
7660-7716 Golden Triangle Drive
(Technology Park VII) 89,672
7400 Flying Cloud Drive
(Eden Pointe) 32,137
"Inspection Period" means the period commencing on the Effective
Date and ending on March 7, 1997.
"Land" means all of those certain lots, tracts or parcels of
land, in Plymouth and Eden Prairie, Hennepin County, Minnesota, as more
fully described on Exhibit A, on which the Improvements are located,
together with all and singular the rights appurtenant to that land.
"Leases" means all leases and/or occupancy agreements for space
in the Project.
"Partnership Agreement" means the First Restated and Amended
Agreement of Limited Partnership dated as of June 19, 1995, as amended
on December 22, 1995, as further amended on December 31, 1996, of the
Buyer.
"Permitted Exceptions" means the Title Exceptions set forth in
the Title Commitment (defined in Section 4.1) or reflected in the survey
delivered pursuant to Section 4.2, or any other exceptions or conditions
that affect or may affect Seller's title to or use of the Property to
which Buyer has not objected pursuant to Section 4.3, or that are
approved (or deemed to be approved) by Buyer in accordance with Section
4.4.
"Personal Property" means (a) all tangible personal property
owned by Seller and located on or attached to the Project, (b) Seller's
interest in all licenses or permits relating to the Property, (c)
Seller's interest in all service, maintenance, management, or other
contracts relating to the ownership or operation of the Project, (d)
Seller's interest in all warranties or guaranties relating to the
Project, (e) Seller's interest in all representations and warranties
made to Seller by its predecessor in interest, to the extent assignable,
and (f) Seller's interest in the names of the Project.
"Project" means the Land and the Improvements.
"Property" means, collectively, the Project, the Leases, and the
Personal Property.
"Property Manager" means:
CB Commercial
330 Second Avenue South
Minneapolis MN 55402
Attn: Richard Schadegg
Phone: 612-341-8108
Fax: 612-341-9849
"Purchase Price" means the total consideration to be paid by
Buyer to Seller for the Property.
"Rent Roll" means a rent roll identifying and providing certain
information on the Leases, itemizing all security deposits, prepaid
rents, and other property held by Seller for the account of the Tenants.
"Shares" means the Common Shares of Beneficial Interest, par
value $.001 per share, of the Trust.
"SOBC Contract" means that Contract of Sale of even date
herewith between the Buyer and SOBC Associates LLC.
"Tenants" means those persons holding rights of a tenant under
the Leases.
"Title Company" means:
Commonwealth Land Title Insurance Company
51 Haddonfield Road
Suite 115
P.O. Box 5382
Cherryhill, NJ 08304
Attn: Joe Patti
Telephone No. 609-662-1500
Telecopier: 609-665-6513
The Title Company shall conduct the title examination, furnish
Seller and Buyer with evidence of title and exceptions thereto and issue
the Title Policy.
"Title Exception" means any lien, mortgage, security interest,
encumbrance, pledge, assignment, claim, charge, lease (surface, space,
mineral, or otherwise), condition, restriction, option, conditional sale
contract, right of first refusal, restrictive covenant, exception,
easement (temporary or permanent), right-of-way, encroachment, overlap,
or other outstanding claim, interest, estate, or equity of any nature.
"Trust" means the Liberty Property Trust, a Maryland real estate
investment trust and the General Partner of Buyer.
1.2 Other Defined Terms. Other defined terms have the meanings
assigned to them elsewhere in this Contract.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE
On the terms and conditions stated in this Contract, Seller hereby
agrees to sell and convey the Property to Buyer, and Buyer hereby agrees
to purchase and acquire the Property from Seller.
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. The Purchase Price (herein so called) to be
paid by Buyer to Seller is THIRTY-ONE MILLION TWO HUNDRED TWENTY-SEVEN
THOUSAND AND No/100 U.S. Dollars ($31,227,000).
3.2 Earnest Money Deposit. Within one (1) Business Day after the
Effective Date, Buyer shall have delivered $66,667 to the Title Company,
in cash or cash equivalents representing funds immediately available for
disbursement on the day of receipt by the Title Company, to be held by
the Title Company in escrow to be applied or disposed of by it as is
provided in this Contract. Buyer's failure to timely make the Deposit
(a) makes this Contract voidable at Seller's option and (b) gives Seller
the right to immediately terminate the Contract in which event the
Seller and Buyer shall have no further obligation to one another. The
Earnest Money Deposit shall be invested in an interest-bearing account
with a financial institution and in a manner reasonably acceptable to
Seller and Buyer. All interest earned is part of the Earnest Money
Deposit under this Contract. If the purchase and sale hereunder is
consummated, then the Earnest Money Deposit shall be applied to the
Purchase Price at Closing. In all other events, the Earnest Money
Deposit shall be disposed of by the Title Company as provided in this
Contract.
3.3 Payment of Purchase Price. The Purchase Price shall be payable
to Seller through the Title Company, by:
(i) Buyer assuming and paying at or after Closing, to Aetna
Life Insurance Company ("Lender"), the outstanding principal balance of
that Mortgage Note dated April 25, 1996 executed by Seller in favor of
Lender in the original principal amount of $24,150,000, together with
interest, contingent interest and all other amounts due to Lender in
connection therewith (estimated to be $28,300,000) as shown in a payoff
letter from Lender;
(ii) payment of an amount of cash equal to the sum of all
closing costs incurred by Seller in connection herewith (estimated to be
no more than $500,000); and
(iii) the balance of the Purchase Price shall be paid by the
issuance to the Seller of interests in the Buyer (the "Partnership
Interests"), with each Partnership Interest valued at the lesser of (a)
the Average Share Price as of the Closing Date, or (b) $25, and with the
number of Partnership Interests rounded to the nearest whole number. At
least ten (10) Business Days prior to the Closing Date, Seller shall
give Buyer written notice of its best estimate of the allocation of the
Purchase Price as between cash and Partnership Interests.
3.4 Other Contracts. Notwithstanding anything herein to the
contrary, in the event that Buyer, for any reason, exercises its right
to terminate this Contract, as a condition precedent to any such
termination, it shall also, simultaneously, terminate the SOBC Contract
and the 330 Contract. If the SOBC Contract or the 330 Contract is
terminated pursuant to Section 3.5 thereof, then Buyer may terminate
this Contract. In the event of such termination of this Contract, the
Earnest Money shall be promptly refunded to Buyer and Seller shall have
no further obligations, one to the other, with respect to the subject
matter of this Contract (except under Section 4.7).
3.5 The Partnership Interests.
(a) Each Partnership Interest issued as part of the Purchase
Price shall be exchangeable after the first anniversary of the Closing
Date, on a one-for-one basis, for a Share of the Trust, on the basis set
forth in and subject to the restrictions contained in the Partnership
Agreement (including, without limitation, usual and customary provisions
providing for adjustment in the number of Shares into which Partnership
Interests are convertible upon certain changes in the capitalization of
the Trust.)
(b) Buyer and Seller hereby acknowledge and confirm that they
intend for the transfer of a portion of the Property to Buyer in
exchange for Partnership Interests to qualify as a contribution pursuant
to Section 721 of the Internal Revenue Code of 1986, as amended (the
"Code"). Buyer and Seller agree to take any reasonable steps necessary
to cause such transfer to qualify as a contribution pursuant to such
section.
Buyer acknowledges that, at Closing, Seller shall
distribute the Partnership Interests to Stewart R. Stender, Robert C.
Lux and NWBC Associates, Inc., each of which are partners of Seller.
(c) Seller acknowledges and confirms that:
(i) neither the Partnership Interests nor the Shares into
which the Partnership Interests may be converted have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or
any state securities laws;
(ii) there is no obligation to register the Partnership
Interests or the Shares except pursuant to the Registration Rights
Agreement (as defined below);
(iii) neither the Partnership Interests nor the Shares into
which the Partnership Interests may be converted may be sold or
otherwise transferred by Seller except (A) pursuant to registration
under the Securities Act and state securities laws or an exemption
therefrom or (B) as a distribution at Closing to Stewart R. Stender,
Robert C. Lux and NWBC Associates, Inc. in accordance with the
respective interests in Seller.
(iv) the Partnership Interests shall not be convertible
into Shares until after the first anniversary of the Closing Date; and
(v) the Partnership Interests being acquired hereunder are
being acquired for Seller's own account and not for the account of any
other person or persons, for investment and not with a view to the
disposition thereof in violation of the Securities Act.
(d) Buyer acknowledges and confirms that:
(i) it will not sell the Property (or any portion thereof)
for two years following the Closing Date; and
(ii) Seller as a holder of Partnership Interests in Buyer
will participate in the allocations and distributions of Buyer on the
same basis as the other limited partners of Buyer as determined in
accordance with the terms and provisions of the Partnership Agreement,
provided, however, that the initial distribution to Seller or those
holding the Partnership Interests through Seller will be prorated based
upon the portion of the fiscal quarter of Buyer for which Seller or
those holding the Partnership Interests through Seller held the
Partnership Interests.
(e) Buyer has provided Seller, and Seller acknowledges receipt
of, a copy of the Partnership Agreement.
(f) Buyer and Seller hereby agree to negotiate in good faith the
terms and conditions of the following documents (the "Partnership
Documents") and to use their best efforts to conclude such negotiations
and have a mutually agreeable form of each of the Partnership Documents
on or before January 31, 1997:
(i) a proxy (the "Proxy Agreement") containing usual and
customary terms as to the appointing of the Board of Trustees of the
Trust (so long as the Trust is a general partner of Buyer), as Seller's
proxy with respect to all Partnership Interests owned by Seller, with
authority to consent or withhold consent, in the Trust's sole
discretion, with respect to any matter as to which limited partners of
Buyer may act pursuant to the terms of the Partnership Agreement;
(ii) an investment letter (the "Investment Letter")
containing usual and customary representations and agreements obtained
from purchasers of securities in private placements regarding the
restrictions on transferability of the securities being acquired and the
financial sophistication and qualification of the purchasers;
(iii) a registration rights agreement (the "Registration
Rights Agreement") containing usual and customary representations and
agreements concerning the registration of the Shares, including without
limitation, provisions for (A) Seller to have two demand registration
rights and unlimited "piggyback" registration rights with respect to the
Shares issuable upon exchange of the Partnership Interests, which rights
shall commence on the first anniversary of the Closing Date, (B) Buyer
to cover all expenses of such registration other than the fees of
Seller's counsel and the registration fee for such Shares which shall be
borne by Seller (not to exceed $2,500), (C) Seller to agree that,
notwithstanding the effectiveness of any registration statement covering
the Partnership Interests (other than in connection with an underwritten
offering), it will not sell during any week a number of Shares greater
than 10% of the average weekly trading volume for the Shares on the New
York Stock Exchange for the preceding four calendar weeks.
(iv) an amendment to the Partnership Agreement (the
"Partnership Amendment") for the purpose of evidencing, among other
things, the issuance of the Partnership Interests as a portion of the
Purchase Price.
In the event that the parties have not agreed to the form of each of the
Partnership Documents on or before January 31, 1997, either party hereto
may terminate this Agreement by notice to the other party and, upon such
termination, the Earnest Money shall be promptly refunded to Buyer and
Buyer and Seller shall have no further obligations, one to the other,
with respect to the subject matter of this Contract (except under
Section 4.7).
ARTICLE IV
TITLE AND SURVEY
4.1 Title Commitment; Exception Documents.
(a) Seller has furnished to Buyer and Buyer's counsel a copy of
Seller's Policy of Title Insurance for the Property.
(b) Buyer shall obtain a commitment for an ALTA owner's policy
of title insurance (the "Title Commitment") on the Property issued by
the Title Company and any desired endorsements to the Title Commitment
which are available, if any.
(c) Seller shall also furnish to Buyer copies of instruments
that create or evidence Title Exceptions affecting the Property, as
described in the Title Commitment (together, the "Title Documents").
(d) Seller shall not be obligated to provide Buyer an abstract
of title to the Land, but Seller shall provide any owner's duplicate
certificate of title as to the Land at closing.
4.2 Survey. Seller has provided to Buyer a copy of the most recent
survey of the Project in Seller's possession.
Seller shall deliver to Buyer, as soon as practicable, but in
any case within fifteen (15) days after the Effective Date, an as-built
survey of the Property prepared by BRW, Inc., Ron Krueger & Associates,
Inc. and Harry S. Johnson Companies, Inc. as an Urban Survey in
accordance with the Minimum Standard Detail Requirements and
Classifications for ALTA/ASCM Land Title Surveys as adopted by the
American Land Title Association and American Congress on Surveying and
Mapping in 1992 which shall (a) include items 1, 2, 3, 4, 6, 7, 8, 9,
10, 11 and 13 from Table A of such Requirements and (b) shall be
certified to Buyer and Title Company and any lender of Buyer's of which
Buyer notifies Seller in writing on or prior to the expiration of the
Inspection Period.
The legal description of the Land contained in the Survey and in
the Title Policy shall be used to describe the Land in the special
warranty deed conveying the Project from Seller to Buyer.
4.3 Review of Title Commitment, Survey and Exception Documents.
Buyer has a period of seven (7) Business Days (the "Title Review
Period") after the later of (i) January 31, 1997 and (ii) Buyer's
receipt of the Title Commitment, the Title Documents and the Survey in
which to give written notice to Seller specifying Buyer's objections to
the Title Commitment, the Survey or the Title Documents ("Objections");
provided, however, Buyer may not make any Objection to any of the
Permitted Exceptions listed on Exhibit "I" attached hereto. For
purposes of this Section 4.3, Seller shall have satisfied all of its
obligations with regard to title to the Project if Buyer has not
objected to any of the Title Documents furnished to it or any other
Title Exception referenced in the Title Commitment, within the Title
Review Period.
4.4 Seller's Obligation to Cure; Buyer's Right to Terminate. If
Buyer timely notifies Seller in writing of Objections to any of the
matters furnished to Buyer pursuant to Section 4.3, then Seller shall,
within thirty (30) days after Seller's receipt of Buyer's notice (the
"Cure Period"), make reasonable efforts in good faith to attempt to cure
the Objections. Other than (i) mortgages or other liens securing
indebtedness of Seller, judgments or tax liens against Seller or
mechanics' liens against the Property (collectively, "Liens") which
shall be satisfied, bonded or insured over by Seller at or prior to
Closing (ii) minor encroachments which do not materially affect Buyer's
or Tenant's use of the Property which Seller shall not be obligated to
correct and (iii) objections which are insured over by the Title Company
at no cost or liability to Seller, (iv) and other than the easements
described in Section 5.6(e) for which Seller's sole obligation will be
to assign the escrowed funds described therein, Seller is not obligated
to effect a cure of any Objection unless such Objection is a material
defect in the marketability of title to the Property (a "Material
Objection") and the cost of curing all such Material Objections is less
than $100,000 in the aggregate, but Buyer may, at its option, pay the
excess amounts to Title Company at Closing (which payment shall not
entitle Buyer to a reduction in the Purchase Price) and cause the Title
Company to cure such Objections, but such Objections (which Buyer
intends to pay to cure as aforesaid) shall not delay Closing nor shall
Seller have any further liability or obligation with respect thereto.
If Seller does not satisfy all Objections within the Cure Period, then,
as its sole options or remedies, Buyer may either (a) waive the
unsatisfied Objections, which then become Permitted Exceptions, and
proceed to consummate this transaction without further recourse against
Seller, (b) provide written notice of Buyer's intention to pay the cost
of curing such Objections and pay the cost of curing such Objections at
Closing as provided in the preceding sentence, but such payment shall
not entitle Buyer to a reduction in the Purchase Price except to the
extent that (i) such Objection relates to a Lien or (ii) Buyer pays the
first $100,000 of such costs to cure Material Objections (which Seller
would otherwise have paid to cure such Material Objections pursuant to
the preceding sentence), in which event Buyer shall be entitled to a
reduction in the Purchase Price only to the extent of that portion of
the first such $100,000 to the extent paid by Buyer to cure such
Material Objections, but Buyer shall have no further recourse against
Seller by reason of such Objections or (c) terminate this Contract and
receive back the Earnest Money Deposit, in which latter event Seller and
Buyer have no further obligations, one to the other, with respect to the
subject matter of this Contract (except under Section 4.7). If
unsatisfied Objections remain but Buyer does not deliver written notice
of its waiver thereof, of Buyer's intention to pay the cost of curing
such Objections or of the termination of this Contract to Seller within
five (5) Business Days after expiration of the Cure Period, then the
unsatisfied Objections shall become additional Permitted Exceptions,
with no reduction in the Purchase Price, and Buyer shall have no further
right to terminate this Contract under this Section 4.4. If Seller
shall effect a cure of the Objections within the Cure Period it shall
deliver written notice thereof to Buyer and Buyer and Seller shall
proceed to Closing as provided herein.
4.5 Title Policy. The Title Policy shall be issued by the Issuing
Title Company, in the amount of the Purchase Price, insuring that Buyer
has fee simple title to the Property, subject only to the Permitted
Exceptions. Seller shall pay for the costs of abstracting, searches
and the preparation of the Title Commitment; the premium for the Title
Policy and any additional premiums for any endorsements requested by
Buyer shall be paid by Buyer. Any closing or escrow fees charged by the
title company shall be paid one-half by Buyer and one-half by Seller.
4.6 Inspection. Buyer may, during the Inspection Period, make such
examinations, studies, inspections, and investigations of the Property
as Buyer deems advisable. Any physical inspections within the buildings
on the Property shall be made only on Business Days and during normal
business hours that will not disturb the quiet enjoyment of the Project
by Tenants, and inspections of space occupied by a Tenant shall be made
only with at least twenty-four (24) hours' advance notice to and consent
of Seller and, at Seller's election, in the presence of a representative
of Seller. Seller shall reasonably cooperate with Buyer in contacting
Tenants to permit Buyer's inspection. Buyer shall use its best efforts
to group inspections together on the same day or days in order to
minimize the number of visits to Tenants' spaces and the impact on the
Tenants. By giving written notice to Seller before the expiration of
the Inspection Period, Buyer may, in Buyer's sole discretion, terminate
this Contract and receive back the Earnest Money Deposit, if Buyer has
found the Property unsuitable for Buyer's purpose, or if Buyer has found
any agreements or information regarding the Property unacceptable, or
for any other reason, in Buyer's sole discretion. If Buyer does not
timely give that notice, then (a) Buyer shall be deemed to have accepted
the condition of the Property, the estoppel certificates to be delivered
by Seller pursuant to Section 5.2(b) hereof, (b) Buyer's right to
terminate this Contract pursuant to this Section 4.6 shall be deemed
waived, and (c) the Earnest Money Deposit shall thereafter not be
refundable and shall be deemed earned by Seller in any event other than
Seller's default or unless Buyer terminates the Contract under the
provisions of Sections 4.4, 7.1, 9.1, or 11.9 hereof.
4.7 Indemnification. Buyer shall indemnify, defend and hold Seller
harmless from any and all demands, claims, actions or causes of action,
assessments, losses, costs, damages, liabilities, interest, penalties
and reasonable attorney's fees asserted against, resulting to, imposed
on, or incurred by Seller as a result of any act or omission of Buyer,
or any of Buyer's agents, consultants, contractors, or employees, in
connection with an entry on or investigation or examination of the
Property, or any part thereof, before Closing. The indemnification
obligations of Buyer with respect to these matters shall survive the
Closing or the termination of this Contract for any reason and shall
remain in full force and effect thereafter, but any claims of
indemnification hereunder must be made by notice to Buyer within six (6)
months after the date of termination hereof or the Closing Date, as
applicable.
ARTICLE V
REPRESENTATIONS, WARRANTIES, COVENANTS,
AND AGREEMENTS OF SELLER
5.1 Representations and Warranties of Seller. Seller represents and
warrants to Buyer as of the Effective Date, except where specific
reference is made to another date or dates, that:
(a) Attached as Schedule 1 is a complete and accurate Rent Roll
showing all of the Leases which shall be updated by Seller prior to
Closing if necessary.
(b) Attached as Schedule 2 is a complete and accurate list of
all services, maintenance and management contracts relating to the
Property which shall be updated prior to Closing if necessary;
(c) Seller has no current actual knowledge of, and has received
no written notice from, any governmental authority requiring any work,
repairs, construction, alterations or installations on or in connection
with the Property, or asserting any violation of any federal, state,
county or municipal laws, ordinances, codes, orders, regulations or
requirements affecting any portion of the Property, including, without
limitation, the Americans with Disabilities Act and any applicable
environmental laws or regulations. To the current actual knowledge of
Seller, there is no action, suit or proceeding pending or, threatened
against or affecting Seller or the Property or any portion thereof or
relating to or arising out of the ownership of the Property, in any
court or before any federal, state, county or municipal department,
commission, board, bureau or agency or other governmental
instrumentality.
(d) Seller is not a foreign person under Sections 1445 and 7701
of the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder;
(e) To Seller's current actual knowledge, there is no
individual sewage treatment system on or serving the Property as such
term is defined in Minnesota Statutes Section 115.55; there are no wells
or underground storage tanks on the Property;
(f) Seller has full right, power and authority to sell the
Property to Buyer as provided in this Contract and to carry out Seller's
obligations under this Contract, and all requisite action necessary to
authorize Seller to enter into this Contract and to carry out Seller's
obligations hereunder has been taken;
(g) To Seller's current actual knowledge, there is no violation
of Environmental Laws related to the Property or the presence or release
of Hazardous Materials on or from the Property except as disclosed in
the environmental reports listed on Schedule 3 delivered by Seller to
Purchaser or made available for Purchaser's review. The term
"Environmental Laws" includes without limitation the Resource
Conservation and Recovery Act and the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA") and other federal
laws governing the environment as in effect on the date of this
Agreement together with their implementing regulations and guidelines as
of the date of this Agreement, and all state, regional, county,
municipal and other local laws, regulations and ordinances that are
equivalent or similar to the federal laws recited above or that purport
to regulate Hazardous Materials in effect as of the date of this
Agreement. "Hazardous Materials" means any substance which is (i)
designated, defined, classified or regulated as a hazardous substance,
hazardous material, hazardous waste, pollutant or contaminant under any
Environmental Law, as currently in effect as of the date of this
Agreement (ii) petroleum hydrocarbon, including crude oil or any
fraction thereof and all petroleum products, (iii) PCBs, (iv) lead, (v)
friable asbestos, (vi) flammable explosives, (vii) infectious materials
or (viii) radioactive materials.
(h) Seller has not entered into any other contracts for the
sale of the Property, nor are there any rights of first refusal or
options to purchase the Property or any other rights of others to
acquire the Property that might prevent the consummation of this
Contract.
(i) No brokerage or leasing commissions or other compensation
is or will be due or payable to any person, firm, corporation or other
entity with respect to or on account of any of the Leases or any
extensions or renewals thereof, except for Leases executed after the
Effective Date as provided in Section 5.2(c)(iii) hereof and except as
provided in Section 5.6 hereof.
(j) Seller has no current actual knowledge of any material
misstatement in the statements of income and expenses for the Property,
attached hereto as Exhibit L, to the extent such statements relate to
the period of Seller's ownership of the Property.
(k) Tax and Real Estate Investment Trust Matters.
(i) None of the Leases provides for the payment of rents
which is based on the income or profits of any person or entity, except
to the extent of amounts computed by reference to a fixed percentage or
percentages of a tenant's receipts or sales (within the meaning of
Internal Revenue Code Section 856(d)(2)(A) (the Internal Revenue Code is
referred to herein as the "Code").
(ii) The services and activities performed by the landlord
with respect to the Project are services which are customarily performed
by lessors in connection with the rental of real property similar to the
Project in the geographic area in which the Project is located. The
services and activities performed are necessary for the operation of the
Project and are not performed primarily for the convenience of tenants.
(iii) The landlord of the Project does not lease any
substantial personal property to the tenants at the Project other than
personal property which has been installed upon the Project and has
become a part of the real property.
(iv) Except as provided on Exhibit M attached hereto, to
the extent the Project provides parking lots for tenants and their
employees and customers, the parking lots are offered on an unreserved,
complimentary basis, other than with respect to spaces required to be
reserved for handicapped persons under law. The landlord of the Project
does not provide parking attendants, reserved parking or other services
in connection with the parking areas.]
(v) The landlord of the Project does not provide any
utility services to tenants at the Project other than usual and
customary utility services, such as electricity, gas, water and sewer
service. In some instances, utility services are separately metered and
paid by the tenants. In other cases, the landlord master meters
electric and water services, in which case the cost of the utility
service is allocated among the tenants on a prorata basis on the basis
of usage or area. The billing mechanism for any master metering
arrangement with respect to Project is usual and customary for the
geographic area in which the Project is located.
(vi) Neither the Land nor any of the Improvements is "held
for sale" within the meaning of the Code.
Seller shall deliver a certificate at Closing as to the correctness of
the representations and warranties set forth above as of the Closing
Date and if any such representation shall not then be correct, of any
exceptions thereto.
Notwithstanding anything contained in this Agreement to the contrary,
all of the representations, warranties and certifications (the
"Representations") which are made by Seller and set forth herein or in
any of the documents or instruments required to be delivered by Seller
hereunder, shall be subject to the following conditions and limitations:
(i) there shall be no liability on the part of Seller for breaches of
Representations of which Buyer had current actual knowledge at Closing
and (ii) in the event that prior to the time of Closing, during the
course of Buyer's inspections, studies, tests and investigations or
through other sources, Buyer gains current actual knowledge of a fact or
circumstance which, by its nature, indicates that a Representation was
or has become untrue or inaccurate, and such fact or circumstance was
not intentionally withheld from Buyer by Seller with the intent to
defraud Buyer, then Buyer shall not have the right to bring any lawsuit
or other legal action against Seller, nor pursue any other remedies
against Seller, as a result of the breach of the Representation caused
thereby, but Buyer's sole right shall be to terminate this Agreement in
which event the Earnest Money Deposit shall be returned to Buyer.
5.2 Covenants and Agreements of Seller. Seller covenants and agrees
with Buyer as follows:
(a) Within ten (10) days after the Effective Date, Seller shall
deliver to Buyer (or, with respect to items (v), (vi) and (x) below,
permit inspection in the offices of the Property Manager), copies (or
where specifically indicated, original counterparts) of the following:
(i) All existing Leases;
(ii) All service, maintenance, management, and other
contracts relating to the ownership and operation of the Property;
(iii) All building permits and certificates of occupancy
or of substantial completion issued with respect to the construction and
ownership of the Project that, to Seller's current actual knowledge, are
in Seller's or the Property Manager's possession;
(iv) All available real estate and personal property tax
statements for real estate and personal property taxes due and payable
in the year of Closing with respect to the Project and, if received by
Seller, the valuation notice issued with respect to the Project for the
year of Closing, that, to Seller's current actual knowledge, are in
Seller's or the Property Manager's possession;
(v) All operating budgets, operating statements and
property reports that, to Sellers' actual knowledge are in Seller's or
the Property Manager's possession;
(vi) The plans and specifications with respect to the
Project that, to Seller's current actual knowledge, are in Seller's or
the Property Manager's possession, to be furnished with no
representation, warranty, or recourse whatsoever;
(vii) The Rent Roll, current through the first day of the
month preceding the month in which the Effective Date falls;
(viii) To the extent in Seller's or the Property Manager's
possession, all environmental reports pertaining to the Property; and
(ix) All other books and financial records with respect to
the Property that, to Seller's current actual knowledge, are in Seller's
or Property Manager's possession (other than Seller's projections and
other financial information prepared by Seller in connection with its
purchase of the Property, internal financial or performance reviews, the
closing documents relating to such purchase, Seller's partnership
agreement and other partnership financial and tax records).
Seller represents and warrants to Buyer that the information described
in this Section 5.2:
(a) constitutes all of the books and financial records in
Seller's possession (or in the possession of its Property Manager) with
respect to the Property (other than Seller's projections and other
financial information prepared by Seller in connection with its purchase
of the Property, internal financial or performance reviews, the closing
documents relating to such purchase, Seller's partnership agreement or
other partnership financial and tax records). In the event that Buyer
terminates the Contract for any reason, Buyer shall immediately return
to Seller all of the information concerning the Property supplied by
Seller or Property Manager.
(b) Within thirty (30) days after the Effective Date, Seller
shall use reasonable efforts to obtain and deliver to Buyer estoppel
certificates from the Tenants of the Property, in the form of Exhibit
"J" attached to this Contract. If Seller is unable to obtain an
estoppel certificate for each tenant substantially in the form of
Exhibit "J", Seller shall deliver to Buyer an estoppel certificate
executed by Seller as to such Tenant in the form of Exhibit "K", as
modified to make the statements therein true and correct.
(c) From the date hereof until the Closing Date or the earlier
termination of this Contract, Seller shall:
(i) Operate, insure at current insured amounts, maintain
and lease the Project in the ordinary course of Seller's business and
use reasonable efforts to reasonably preserve for Buyer the relationship
of Seller and Seller's suppliers, Tenants, and others having ongoing
business relations with Seller relating to the Project; and
(ii) Advise Buyer of any litigation, arbitration, or
administrative hearing before any governmental agency concerning of
affecting the Property in any manner that is instituted or threatened in
writing after the Effective Date and of which Seller has current actual
knowledge; and
(iii) Not, without Buyer's prior written consent (which
consent may be withheld in Buyer's sole discretion), enter into any
leases, contracts or other commitments that will survive Closing other
than service contracts that are terminable on thirty (30) days or less
notice. With respect to any lease or any renewal, extension or
amendment of any lease for any portion of the Property which is approved
by Buyer and which is entered into after the Effective Date, Buyer shall
pay (or reimburse Seller at Closing) for the cost of all tenant
improvements and leasing commissions required by the terms thereof.
Any consent or approval requested by Seller pursuant to this
Section 5.2(c)(iii) shall be deemed granted if Buyer does not object
within five (5) Business Days after Buyer's receipt of Seller's written
request.
5.3 Survival Beyond Closing. Except to the extent that Buyer has
current actual knowledge of any breach at or prior to Closing (which
Buyer, by closing the purchase contemplated hereby, shall be deemed to
have waived), the representations, warranties, and covenants of Seller
contained in this Contract shall survive the Closing. In the event of
any such breach or misrepresentation discovered by Buyer after Closing,
Buyer may bring an action against Seller for Buyer's actual damages
resulting from such breach, but not for any incidental or consequential
damages, provided, however, that any action with regard to an alleged
breach of any such representation, warranty or covenant of Seller must
be brought within two (2) years after Closing.
5.4 Current Actual Knowledge; Authority. The term "Buyer's current
actual knowledge," as used in the Contract, means matters of which John
Gattuso is presently aware at the relevant time by virtue of Buyer's
inspections and due diligence with respect to the Property, but without
being required to undertake any further investigation or inquiry
whatsoever. The term "Seller's current actual knowledge," as used in
this Contract, means matters of which Seller, Stewart R. Stender or
Robert C. Lux is presently aware at the relevant time, by virtue of
Seller's ownership of the Property, without undertaking any further
investigation or inquiry whatsoever, but does not include matters of
which any other person or entity (including, but not limited to, the
Property Manager or any prior manager of the Property) other than
Seller, Stewart R. Stender or Robert C. Lux is or may be aware but
Seller acknowledges that it has made good faith inquiry of the Property
Manager with regard to the correctness of the representations and
warranties set forth in Section 5.1. and the delivery of the documents
referenced in Section 5.2(a). No brokers, agents or other third parties
(including, but not limited to, the Property Manager or any prior
manager of the Property) are authorized by make any representations and
warranties binding on Seller. In particular, but without limitation,
except as is expressly represented or warranted in Section 5.2(a)
hereof, Seller hereby disclaims, and makes no representation or
warranty, as to the accuracy of the contents or the completeness of any
item delivered by either Seller or the Property Manager of the Project
to Buyer or made available for inspection or review by Buyer.
5.5 "AS-IS" Sale. Seller has advised Buyer that Seller has retained
an independent contractor to manage the Project and that Seller recently
acquired the Project. Accordingly, Seller's current personnel have
limited personal knowledge regarding the construction of the Project,
the operation of the Project, and other matters that an owner of
property similar to the Project might ordinarily have. A material
consideration in negotiating the Purchase Price is Buyer's agreement
that Buyer shall rely solely on its own investigation in consummating
this transaction, except as expressly stated to the contrary in this
Contract and that SELLER HAS MADE NO EXPRESSED OR IMPLIED
REPRESENTATIONS OR WARRANTIES RESPECTING THE SUBJECT MATTER OF THIS
TRANSACTION, EXCEPT AS EXPRESSLY STATED TO THE CONTRARY IN THIS
CONTRACT. (See Section 11.6)
5.6 Due Diligence Disclosure. Seller has disclosed to Buyer and
Buyer acknowledges and agrees that the Purchase Price is based upon the
following disclosure relating to the Property:
(a) Seller will cause the roof of the Science Center building
(9401-9443 Science Center Drive) to be replaced by April 30, 1997, at
Seller's sole cost and expense. Other than to replace such roof by such
date, Seller shall have no obligations with respect to the roof of the
Science Center Building after the Closing Date.
(b) Seller shall complete the repaving of the parking lot of the
Valley Oak Building by no later than June 15, 1997, at Seller's sole
cost and expense. Other than to complete the repaving of the parking
lot by such date, Seller shall have no obligations with respect to the
parking lot of the Valley Oak Building after the Closing Date.
(c) Seller has given Buyer notice of an expansion joint issue in
the Science Center Project, costing approximately $20,000 to repair.
Seller shall have no obligations with respect to the expansion joint of
the Science Center Project after the Closing Date.
(d) Seller shall pay (or credit Buyer for) a $10,000 commission
payable with respect to the Sox Appeal Lease (6321-6315 Bury Drive
Building) in December, 1997 and a $13,678 commission payable with
respect to the Mamac Lease in February, 1997 7400 Flying Cloud Drive
Building).
(e) Seller will transfer to Buyer an escrow with the Title
Company executed with respect to certain title defects with respect to
the 7660-7716 Golden Triangle Drive and 7115-7173 Shady Oak Drive
Buildings.
(f) In connection with the building of the age and use of the
Improvements, there may be minor defects discovered by Buyer during the
Inspection Period which shall not permit Buyer to renegotiate the
Purchase Price.
(g) Seller has certain obligations under the Cipirco Lease to
provide additional leasable areas to such Tenant and to provide
additional tenant improvements, which obligations will be assumed by
Buyer.
ARTICLE VI
REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF BUYER
6.1 Representations and Warranties of Buyer.Buyer represents,
warrants, covenants, and agrees with Seller as of the Effective Date and
as of the Closing Date, except where specific reference is made to
another date or dates that:
(a) Buyer has the full right, power, and authority to purchase
the Property from Seller as provided in this Contract and to carry out
Buyer's obligations under this Contract, and all requisite action
necessary to authorize Buyer to enter into this Contract and to carry
out Buyer's obligations hereunder has been taken;
(b) Buyer shall rely solely on its own investigation in
consummating this transaction and, except for express representations
and warranties of Seller contained herein or as expressly stated herein
to the contrary, Buyer has not relied on any representation, warranty or
assurance, expressed or implied;
(c) Buyer shall promptly advise Seller in writing if Buyer's
investigation of the Property reveals the presence of hazardous wastes
or other environmental contamination (including asbestos), or facts that
would cause a reasonable person to investigate further the possibility
of such contamination.
(d) Within seven (7) days after the date hereof, Buyer and the
Trust will deliver to Seller copies of Buyer's and the Trust's Annual
Report on Form 10-K for the year ended December 31, 1995, Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 31, 1996 and
June 30, 1996, as amended, and September 30, 1996, each as filed with
the Securities and Exchange Commission (the "SEC") (collectively, the
"Securities Filings"). As of their respective filing dates with the
SEC, the Securities Filings complied as to form in all material respects
with the applicable requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the respective rules and
regulations promulgated thereunder, and did not contain any untrue
statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. No
event has occurred since the filing of Buyer's and the Trust's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1996
which is required to be disclosed in a report filed either by Buyer or
the Trust pursuant to Section 13(a) or 15(d) of the Exchange Act which
has not been so disclosed.
(e) The Partnership Interests to be issued to Seller will be,
when issued, duly authorized, validly issued, fully paid and non-
assessable. The Shares to be issued upon exchange of the Partnership
Interests will be, when issued, duly authorized, validly issued, fully
paid and non-assessable, and no liability shall attach to Seller related
thereto.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S AND SELLER'S PERFORMANCE
7.1 Performance of Buyer's Obligations. Seller is not obligated to
perform under this Contract unless:
(a) Buyer has performed all obligations and agreements
performable by Buyer on or before Closing;
(b) Buyer is simultaneously closing on the 330 Contract and the
SOBC Contract; and
(c) all representations and warranties of Buyer are true and
correct in all material respects as of the Closing Date.
7.2 Performance of Seller's Obligations. Buyer is not obligated to
perform under this Contract unless:
(a) Seller has performed all obligations and agreements
performable by Seller on or before Closing;
(b) all representations and warranties of Seller are true and
correct in all material respects as of the Closing Date;
(c) as of the Closing, there have been no material adverse
changes in the physical condition of the Project from the condition
thereof as of the end of the Inspection Period; and
(d) no material default, vacation, termination, bankruptcy or
other adverse material change in status has occurred with respect to any
Tenant or Tenants representing an aggregate of more than 5% of the total
net operating income with respect to the Property, as shown on the Rent
Roll for the Property.
7.3 Approval of Seller's Lender. Seller's performance hereunder is
subject to receipt of Seller's lender's approval of the execution and
performance of this Contract by not later than January 31, 1997. If for
any reason such approval has not been obtained by Seller by such date,
Seller shall have the right to terminate this Agreement by notice to
Buyer on or before January 31, 1997; provided, however, if Seller is
unable to secure such approval on or before January 31, 1997, Buyer may,
at Buyer's option, by notice to Seller, extend said deadline to the end
of the Inspection Period. If Seller terminates this Contract by reason
of this Section 7.3, the Earnest Money shall be promptly refunded to
Buyer and Buyer and Seller shall have no further obligations, one to the
other, with respect to the subject matter of this Contract (except under
Section 4.7).
ARTICLE VIII
CLOSING
8.1 Date and Place of Closing. The Closing shall take place in the
offices of the Title Company in Minneapolis, Minnesota. The Closing Date
shall be March 20, 1997, unless an earlier date is agreed on in writing
by Seller and Buyer.
8.2 Items to be Delivered at the Closing.
(a) Seller. At the Closing, Seller shall deliver or cause to be
delivered to Buyer or the Title Company, the following items:
(i) the Title Policy, in the form specified by Section 4.5,
with the cost thereof to be paid as provided in Section 4.5;
(ii) a Special Warranty Deed, duly executed and
acknowledged by Seller, in substantially the form attached as Exhibit
"B", subject to the Permitted Exceptions;
(iii) the original Leases or, if original Leases are not in
Seller's possession, copies thereof certified by Seller to be true and
correct copies of original Lease;
(iv) duplicate originals of the Assignment and Assumption
of Leases of substantially the form attached as Exhibit "C", duly
executed and acknowledged by Seller;
(v) a Bill of Sale and Assignment and Assumption of
Contracts, Bonds, Warranties and Guaranties in substantially the forms
attached as Exhibits "D" and "F", respectively, fully executed and
acknowledged by Seller;
(vi) a Non-Foreign Certification, in substantially the form
attached as Exhibit "G", in compliance with Section 1445 of the Internal
Revenue Code of 1986, as amended, and regulations promulgated thereunder,
stating under penalty of perjury the Seller's United States
identification number and that Seller is not a "foreign person" as
defined in Section 1445, duly executed and acknowledged by Seller;
provided, however that if Seller fails to deliver this affidavit, Buyer
may withhold from the Purchase Price and pay to the Internal Revenue
Service the amounts required by Section 1445, and regulations promulgated
thereunder;
(vii) keys to all locks located in the Project that are in
Seller's possession;
(viii) the Rent Roll, substantially in the form attached
hereto as Exhibit "E", certified by Seller to its current actual
knowledge through the Closing Date;
(ix) a Tenant Notice Letter in substantially the form
attached as Exhibit "H" (the "Tenant Notice Letters") for each of the
Tenants, duly executed by Seller;
(x) originals (or, if originals are not in Seller's
possession, copies certified by Seller to be true and correct copies
thereof) of all service contracts, plans, warranties, guaranties, and
other contracts and agreements relating to the ownership and operation of
the Project that, to its current actual knowledge, are in Seller's
possession, but Seller shall not be obligated to deliver copies of the
purchase agreement or closing documents relating to the purchase of the
Property by Seller;
(xi) appropriate evidence of authorization, satisfactory to
Buyer and the Title Company, in their reasonable discretion, for (A) the
sale of the Property in accordance with this Contract, (B) the execution
and delivery of this Contract on behalf of Seller, and (C) the
consummation of the transactions contemplated by this Contract on behalf
of Seller;
(xii) a standard form seller's affidavit in form acceptable
to the Title Company;
(xiii) The Proxy Agreement, Investment Letter and
Registration Rights Agreement substantially in the forms agreed upon
pursuant to Section 3.5 and executed by Seller and Robert C. Lux, Stewart
R. Stender and NWBC Associates, Inc.;
(xiv) Seller's written agreement to indemnify and hold
Buyer harmless of and from all liabilities, losses, damages, costs,
expenses (including reasonable attorney's fees) that Buyer suffers or
incurs by reason of any act or cause of action occurring or accruing
prior to Closing Date and arising out of any act or failure to act of
Seller's agents, representatives and employees relating to this Contract
or to the Project.
(xv) other items reasonably requested by the Title Company
as administrative requirements for consummating the Closing.
(b) Buyer.At the Closing, Buyer shall deliver to Seller or the
Title Company:
(i) the cash sum required by Section 3.3;
(ii) duplicate originals of the Assignment and Assumption
of Leases, duly executed and acknowledged by Buyer;
(iii) duplicate originals of the Assignment and Assumption
of Contracts, Bond, Warranties and Guaranties, duly executed by Buyer;
(iv) the Tenant Notice Letters, duly executed by Buyer;
(v) appropriate evidence of authorization, satisfactory to
Seller and the Title Company, in their reasonable discretion, for (A) the
purchase of the Property in accordance with this Contract, (B) the
execution and delivery of this Contract on behalf of Buyer, and (C) the
consummation of the transactions contemplated by this Contract on behalf
of Buyer;
(vi) other items reasonably requested by the Title Company
as administrative requirements for consummating the Closing;
(vii) The Registration Rights Agreement substantially in
the form agreed upon pursuant to Section 3.5 and executed by the Trust,
and the Partnership Amendment substantially in the form agreed upon
pursuant to Section 3.5 and executed by or on behalf of the Trust and the
limited partners of Buyer;
(viii) Assumption of the Lender Loan Documents; and
(ix) Buyer's written agreement to indemnify and hold Seller
harmless of and from all liabilities, losses, damages, costs, expenses
(including reasonable attorney's fees) that Seller suffers or incurs by
reason of any act or cause of action occurring or accruing on or after
the Closing Date and arising out of any act or failure to act of Buyer's
agents, representatives and employees relating to this Contract or to the
Project.
8.3 Adjustments at Closing. The following items shall be adjusted or
prorated between Seller and Buyer with respect to the Property:
(a) Ad valorem taxes and installments of special assessments
(collectively, "Taxes") relating to the Property due and payable in the
calendar year of Closing shall be prorated between Seller and Buyer as of
Closing Date, with the Seller being responsible for the number of days in
such calendar year of the Seller's ownership and Buyer being responsible
for the number of days in such calendar year of the Buyer's ownership.
If the actual amount of Taxes due and payable in the
calendar year of Closing is not known or cannot be calculated based on
tax rates and assessed values as of the Closing Date, the proration shall
be based on the amount of Taxes due and payable with respect to the
Property in the calendar year preceding the calendar year of Closing. If
the amount of actual Taxes due and payable in the calendar year in which
the Closing takes place more or are less than the amount used to prorate
for Taxes as of the Closing Date, then an adjustment for actual Taxes due
shall be made after Closing with fifteen days after receipt of the
property tax statements by Buyer. Any amounts now or hereafter received
by Buyer (net of costs and expenses incurred in connection with such
protest) or Seller by reason of tax protests for real estate taxes due
and payable with respect to periods prior to the Closing Date shall be
the property of Seller, subject only to the rights of Tenants therein.
(b) Subject to the provisions of subsection (f) below, rents
(including Tenants' contributions for operating costs and taxes) actually
paid to and received by Seller in collected funds before Closing with
respect to the Project for the month in which Closing occurs shall be
prorated as of Closing, with Seller to be charged and Buyer to be
credited with their respective portions. Rents payable with respect to
the Project for the month in which Closing occurs which have not been
paid to and received by Seller in collected funds before Closing shall be
prorated as of Closing, but with no cash credit or debit provided at
Closing. Nothing in this subparagraph shall prohibit, limit, or restrict
Seller from collecting or attempting to collect directly from any Tenant
after Closing in any lawful manner, but excluding Seller's bringing a
unlawful detainer action against a Tenant in connection with Seller's
collection efforts, any rents delinquent at the time of Closing. Rents
received after Closing shall be applied first to current rents and rents
that become delinquent after Closing and then to rents that are
delinquent as of the Closing (with Seller's portion to be promptly paid
by Buyer to Seller).
(c) Seller shall pay over to Buyer and shall deliver to Buyer an
accounting for the following: unforfeited deposits paid to Seller (but
not Seller's predecessor) by Tenants, including all rental, security,
utility, key, damage, and other deposits; prepaid rents paid to Seller by
the Tenants for periods subsequent to the Closing Date; and any other
money held by Seller for the account of the Tenants.
(d) All insurance policies and property management and leasing
agreements shall be terminated as of the Closing and there shall be no
prorations as to these items.
(e) All other income and ordinary operating expenses of the
Property (other than for public utilities, for which each party shall
deal directly with the service provider), including maintenance,
management, and other service charges, and all other normal operating
charges with respect to the Project shall be prorated effective at
Closing based on reasonable estimates of such operating expenses, and
appropriate cash adjustments shall be made by Buyer and Seller at
Closing.
(f) With respect to amounts paid or payable by Tenants under the
Leases pursuant to provisions relating to escalations or pass-throughs of
operating expenses and real estate taxes ("Additional Rents"), Seller
shall provide to Buyer at closing a certified statement itemizing by
Tenant the amount of Additional Rents collected from such Tenant and a
computation of the actual Additional Rents due from such Tenant for the
period from January 1, 1997 (or, if such Tenant pays Additional Rents on
other than a calendar year basis, from the commencement of the fiscal
year on which such Tenant pays Additional Rents) through the last day of
the month prior to the month in which Closing occurs (the "Additional
Rent Statement"). Promptly after Closing, but in no event more than
thirty (30) days after Closing, Seller shall provide a final certified
Additional Rent Statement updating the statement previously provided
through the date of Closing. At the time each such Additional Rent
Statement is provided, Seller shall also provide to Buyer the supporting
data upon which such Additional Rent Statement is based. As soon as
practical after Closing, Seller shall attempt to reconcile with the
Tenants for the period prior to Closing.
If the final Additional Rent Statement shows that Seller has
over collected the Additional Rents due from the Tenants under the Leases
in force (including month to month and other holdover or extension
arrangements with such Tenants) at the Closing, Seller shall pay to Buyer
the amount of such over collected Additional Rents at the time the final
Additional Rent Statement is provided to Buyer. If the final Additional
Rent Statement shows that Seller has under collected the Additional Rents
due from the Tenants under the Leases in force at the Closing, Buyer
shall make appropriate adjustments to the monthly amounts payable by such
Tenants and shall invoice such under collected amounts to such Tenants as
part of Buyer's year end billing to reconcile estimated Additional Rents
to actual amounts received from each such Tenant. Buyer shall pay to
Seller such uncollected amounts as, if and when received by Buyer. Buyer
shall use reasonable efforts to collect such amounts due and shall be
entitled to recover the cost of collections incurred in connection with
such efforts (apportioned proportionately between the amounts due to
Seller and to Buyer) other than Buyer's administrative and overhead costs
in billing and collection in connection with normal operations at the
Property. The foregoing notwithstanding, Buyer shall have no liability
to Seller for any uncollected amounts and shall not be required to
commence any legal action to collect any such amounts.
Notwithstanding Seller's provision to Buyer of the final
certified Additional Rent Statement and the payment if any, of over
collected amounts at the time of the provision of such statement, Seller
shall remain obligated to refund to any Tenant any additional amounts
finally determined to have been overcollected from such Tenant with
respect to the period prior to Closing by an independent arbitral or
judicial authority.
With respect to Additional Rents due to Seller from Tenants
not in occupancy as of the date of Closing, Seller shall retain all
rights relating thereto and all amounts collected by Seller relating
thereto shall be retained by Seller.
As between Seller and Buyer, Additional Rents shall be
allocated and apportioned over the period with regard to which operating
expenses or real estate taxes are incurred, notwithstanding the date on
which such Additional Rents become payable.
The provisions of this subsection (f) shall survive Closing.
(g) Buyer shall be entitled to a credit against the Purchase
Price as provided in Sections 4.4 and 5.2(d) hereof.
8.4 Possession and Closing. Possession of the Property shall be
delivered to Buyer by Seller at the Closing, subject to the rights of the
Tenants. Buyer shall make its own arrangements for the provision of
public utilities to the Project and Seller shall terminate its contracts
with such utility companies that provide services to the Project.
8.5 Costs of Closing. Each party is responsible for paying the legal
fees of its counsel in negotiating, preparing, and closing the
transaction contemplated by this Contract. Seller shall be responsible
for paying the state deed tax (if any) due upon recording of the Special
Warranty Deed and Buyer shall be responsible for paying the recording
fees for such deed. Any other expense not specifically allocated herein
shall be allocated between the parties in the customary manner for
closings of real property similar to the Property in the geographic area
in which the Property is located.
ARTICLE IX
DEFAULTS AND REMEDIES
9.1 Seller's Defaults; Buyer's Remedies. In addition to Buyer's
remedy for the breaches described in Section 5.3 hereof, if Seller is in
default hereunder after expiration of any applicable cure period provided
herein, Buyer may, at Buyer's sole option, do any of the following, as
Buyer's sole and exclusive remedies:
(a) Terminate this Contract by giving written notice to Seller
on or before the Closing Date, in which event the Earnest Money Deposit
shall be returned to Buyer; or
(b) If the default is Seller's failure to cure Objections, cure
the Objections not cured by Seller at Closing (thereby waiving any
further recourse against Seller by reason thereof) and reduce the
Purchase Price only to the extent of up to the first $100,000 (in the
aggregate) of the cost of curing any Material Objections and the full
amount of the cost of discharging any Lien, to the extent paid by Buyer
and not by Seller pursuant to Section 4.4 hereof, and proceed to
consummate this transaction in accordance with this Contract, or
(c) Enforce specific performance of this Contract.
9.2 Buyer's Default; Seller's Remedies. If Buyer is in default under
this Contract or under the SOBC Contract or the 330 Contract, and such
default continues for ten (10) days after written notice thereof from
Seller to Buyer, Seller may, as Seller's sole and exclusive remedy,
terminate this Contract and receive the Earnest Money Deposit from the
Title Company.
9.3 Payment of Earnest Money Deposit. Upon the termination of this
Contract by reason of a default by Buyer hereunder and expiration of any
applicable cure period provided herein, the Earnest Money Deposit shall
forthwith be tendered by the Title Company to Seller. If the Earnest
Money Deposit may be properly delivered to Seller under this Section 9.3,
then Buyer shall, promptly on written request from Seller, execute and
deliver any documents necessary to cause the Title Company to deliver the
Earnest Money Deposit to Seller.
9.4 Waiver of Claims. As a further material inducement to Seller to
enter into this Contract and the transactions contemplated herein, Buyer
represents and warrants to Seller that Buyer is acquiring the Property
for commercial or business use, has knowledge and experience in financial
and business matters that enable Buyer to evaluate the merits and risks
of the transaction herein contemplated, has bargained for and obtained a
Purchase Price and other terms under this Contract which make the
acceptance of a contract which substantially limits its recourse against
the Seller acceptable and has been and will continue to be represented by
counsel in connection with the transactions contemplated herein.
9.5 Statutory Cancellation. The parties agree that if Seller
commences a statutory cancellation of this Agreement by reason of Buyer's
default, the Buyer's cure period shall be limited to thirty (30) days.
ARTICLE X
BROKERAGE COMMISSIONS
10.1 Amount. Seller shall pay a real estate brokerage commission to
Tom Holtz of CB Commercial (the "Seller's Broker") in the amount of
$200,000 for Broker's services in connection with this transaction, if,
as and when Closing occurs and Seller conveys the Property to Buyer.
Seller's obligation to pay such commission is totally contingent
upon the consummation of the Closing and the payment to Seller of the
Purchase Price and shall not be payable if Closing and such payment shall
not occur for any reason, including Seller's default. Seller's Broker
may divide its commission with other licensed real estate brokers,
agents, or salespersons, but Seller's only obligation to pay a commission
with respect to the Property, regardless of the nature or extent of
Seller's contact with any other broker or salesman is to Seller's Broker
pursuant to this Contract. Notwithstanding the foregoing, Seller may, at
its option, require the Buyer to pay the Seller's Broker in which event
the Purchase Price shall be reduced by the amount of such payment. Buyer
shall be responsible to pay the commission or fee due to Tim Leary &
David Ryder of CB Commercial ("Buyer's Broker") in connection with this
Contract Buyer's Broker shall have no right to share in the commission
payable by Seller to Seller's Broker. Buyer's obligation to pay such
commission is totally contingent upon the consummation of the Closing and
the payment to Seller of the Purchase Price and shall not be payable if
Closing and such payment shall not occur for any reason, including
Buyer's default.
10.2 Indemnity. Seller represents and warrants to Buyer that Seller
has not contacted or entered into any agreement with any real estate
broker, agent, finder, or any other party in connection with this
transaction, other than as identified in Section 10.1 and that Seller has
not taken any action that would result in any real estate broker's,
finder's, or other fees or commissions being due to any other party with
respect to this transaction. Seller acknowledges and agrees that Buyer
shall have no obligation to pay any commission by reason of the purchase
and sale contemplated hereby to Seller's Broker and that any commission
payable to any such persons or entities by reason of the purchase and
sale contemplated hereby shall be paid by Seller; such agreement shall
not create any obligation by Seller to such person or entity absent a
written agreement with Seller to such effect. Buyer represents and
warrants to Seller that Buyer has not contacted or entered into any
agreement with any real estate broker, agent, finder, or other party in
connection with this transaction, other than as identified in Section
10.1 and that Buyer has not taken any action that would result in any
real estate broker's, finder's, or other fees or commissions being due to
any other party with respect to this transaction. Buyer acknowledges and
agrees that Seller shall have no obligation to pay any commission by
reason of the purchase and sale anticipated hereby to Buyer's Broker.
Each party hereby indemnifies and agrees to hold the other party harmless
from any loss, liability, damage, cost, or expense (including, but not
limited to, reasonable attorney's fees) resulting to the other party from
a breach of the representation and warranty made by such party herein.
The indemnities set forth in this Section 10.2 shall survive the Closing.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices, demands, requests, and other
communications given with respect to the subject matter of this Contract
shall be in writing, and shall be deemed to be delivered (a) on receipt
if delivered by hand delivery, (b) on receipt if faxed to the number
provided below (provided that a copy of such fax is also sent by U.S.
mail or by a recognized overnight courier service), or (c) when delivered
to a recognized overnight courier service, or whether actually received
or not, if addressed as provided below:
If to Seller: c/o Apex Asset Management Corporation
600 South Highway 169, Suite 1970
Minneapolis MN 55426
Attn: Stewart R. Stender
Fax No: 612-545-1510
Copies to: Fabyanske, Svoboda, Westra & Hart
1100 Kinnard Financial Center
920 Second Avenue South
Minneapolis MN 55402
Attn: Mark W. Westra
Fax No: 612-338-3857
If to Buyer: Liberty Property Limited Partnership
65 Valley Stream Parkway
Great Valley Corporate Center
Malvern, PA 19355
Fax No: 610-644-4129
Phone No: 610-648-1754
With a copy to: Liberty Property Limited Partnership
65 Valley Stream Parkway
Great Valley Corporate Center
Malvern, PA 19355
Attention: Anne Sheppard
Fax No: 610-644-4129
Phone No: 610-648-1700
Copies to: Dorsey & Whitney
220 South Sixth Street
Suite 2200
Minneapolis MN 55402
Attention: Jeff Benson
Phone No: 612-340-2600
Fax No: 612-340-7800
11.2 Governing Law. This Contract is being executed and delivered,
and is intended to be performed, in the State of Minnesota, and the laws
of Minnesota shall govern the validity, construction, enforcement, and
interpretation of this Contract, unless otherwise specified herein. This
Contract is performable in, and the exclusive venue for any action
brought with respect hereto shall lie in, Hennepin County, Minnesota.
11.3 Entirety and Amendments. This Contract embodies the entire
agreement between the parties and supersedes all prior agreements and
understandings, if any, relating to the Property, including any letter of
intent executed relating to the Property, and may be amended or
supplemented only by an instrument in writing executed by the party
against whom enforcement is sought.
11.4 Parties Bound. This Contract is binding on and inures to the
benefit of Seller and Buyer, and their respective heirs, executors,
administrators, successors, and assigns.
11.5 Further Acts. In addition to the acts and deeds recited in this
Contract and contemplated to be performed, executed, and/or delivered
under this Contract, Seller and Buyer agree to perform, execute, and/or
deliver or cause to be performed, executed, and/or delivered at the
Closing of after the Closing all further acts, deeds, and assurances
reasonably necessary to consummate the transactions contemplated hereby.
11.6 Condition of the Property. EXCEPT FOR ANY REPRESENTATIONS AND
WARRANTIES OF SELLER PROVIDED HEREIN, BUYER ACKNOWLEDGES AND AGREES THAT
THE PROPERTY SHALL BE CONVEYED AND TRANSFERRED TO BUYER "AS IS, WHERE IS,
AND WITH ALL FAULTS", AND THAT, EXCEPT FOR ANY EXPRESS REPRESENTATIONS
AND WARRANTIES OF SELLER PROVIDED HEREIN, SELLER DOES NOT WARRANT OR MAKE
ANY REPRESENTATION, EXPRESSED OR IMPLIED, AS TO THE MERCHANTABILITY,
QUANTITY, QUALITY, CONDITION, SUITABILITY OR FITNESS FOR ANY PURPOSE
WHATSOEVER OF THE PROPERTY AND HAS NO OBLIGATION WHATSOEVER TO UNDERTAKE
ANY REPAIRS, ALTERATIONS, OR OTHER WORK OF ANY KIND WITH RESPECT TO ANY
PORTION OF THE PROPERTY.
BUYER AGREES THAT IN THE EVENT OF ANY SUCH CONSTRUCTION DEFECTS, ERRORS,
OMISSIONS OR ON ACCOUNT OF ANY OTHER CONDITIONS AFFECTING THE PROPERTY,
BUYER SHALL LOOK SOLELY TO SELLER'S PREDECESSORS OR TO SUCH CONTRACTORS
AND CONSULTANTS AS MAY HAVE CONTRACTED FOR WORK IN CONNECTION WITH THE
PROPERTY FOR ANY REDRESS OR RELIEF. EXCEPT FOR ANY REPRESENTATIONS AND
WARRANTIES OF SELLER PROVIDED HEREIN, UPON THE ASSIGNMENT BY SELLER OR
ITS CLAIMS, BUYER RELEASES SELLER OF ALL RIGHTS, EXPRESS OR IMPLIED,
BUYER MAY HAVE AGAINST SELLER ARISING OUT OF OR RESULTING FROM ANY
ERRORS, OMISSIONS OR DEFECTS IN THE PROPERTY.
SUBJECT TO THE DELIVERY BY SELLER OF THE INFORMATION DESCRIBED IN SECTION
5.2(a) HEREOF, TO THE EXTENT IN SELLER'S, SELLER'S PARTNERS OR THE
PROPERTY MANAGER'S POSSESSION, BUYER ALSO ACKNOWLEDGES AND AGREES THAT
THE PROVISIONS IN THIS CONTRACT FOR INSPECTION AND INVESTIGATION OF THE
PROPERTY ARE ADEQUATE TO ENABLE BUYER TO MAKE BUYER'S OWN DETERMINATION
WITH RESPECT TO THE MERCHANTABILITY, QUANTITY, QUALITY, CONDITION, AND
SUITABILITY OR FITNESS FOR ANY PURPOSE OF THE PROPERTY, INCLUDING,
WITHOUT LIMITATION, ITS COMPLIANCE WITH APPLICABLE ENVIRONMENTAL LAWS.
11.7 Time of the Essence. It is agreed by Seller and Buyer that time
is of the essence with respect to this Contract.
11.8 Exhibits. The Exhibits referred to in, and attached to, this
Contract are incorporated in and made a part of this Contract for all
purposes.
11.9 Risk of Loss. Seller shall promptly notify Buyer of any fire or
other casualty affecting the Project or of any actual or threatened (to
the extent that Seller has current actual knowledge thereof) taking or
condemnation of all or any portion of the Project. If between the
Effective Date of the Contract and the Closing Date, there occurs:
(a) damage to the Project caused by fire or other casualty that
would cost $500,000 or more to repair or would be likely to result in
Buyer's judgment, in the loss of any Tenant or Tenants representing an
aggregate of more than 5% of the total net operating income with respect
to the Property; or
(b) the taking or condemnation of all or a portion of the
Project that would materially interfere with the present use of the
Project or if any taking or condemnation occurs for which Buyer does not
approve the amount of the condemnation award;
then, Buyer may terminate this Contract by giving written
notice to Seller within ten (10) Business Days after Buyer has received
notice from Seller. If Buyer does not so timely elect to terminate this
Contract, then the Closing shall take place as provided herein and there
shall be assigned to Buyer at the Closing all interest of Seller in and
to any insurance proceeds (and Seller shall pay to Buyer the amount of
any deductible) or condemnation awards payable to Seller on account of
that event, less sums that Seller incurs before the Closing to repair any
of the damage.
If between the Effective Date of the Contract and the
Closing Date, there occurs:
(c) damage to the Project caused by fire or other casualty that
would cost less than $500,000 to repair or would be likely to result, in
Buyer's judgment, in the loss of any Tenant or Tenants representing an
aggregate of less than 5% of the total net operating income with respect
to the Property; or
(d) the taking or condemnation of all or a portion of the
Project that would not materially interfere with the present use of the
Project and Buyer approves of the condemnation award;
then, Buyer may not terminate this Contract and there shall
be assigned to Buyer at the Closing all interest of Seller in and to
insurance proceeds (and Seller shall pay to Buyer the amount of any
deductible) or condemnation awards payable to Seller on account of that
event, less sums that Seller incurs before the Closing to repair any of
the damage.
The provisions of the Section 11.9 shall survive Closing.
11.10 Assignment. This Agreement shall apply to, inure to the benefit
of and be binding upon and enforceable against the parties hereto and
their respective successors and assigns. No such assignment will release
Buyer from any of its obligations hereunder.
11.11 Attorney's Fees. If either party hereto employs an attorney to
enforce or defend its rights hereunder, the prevailing party shall be
entitled to recover its reasonable attorney's fees.
11.12 Non-Disclosure; Non-Recordation. Neither party shall make public
disclosure with respect to this transaction before the Closing except:
(a) as may be required by law, including without limitation
disclosures required under securities laws; and
(b) to such lenders, attorneys, accountants, partners, directors,
officers, employees and representatives of either party or of such
party's advisors who need to know such information for the purpose of
evaluating and consummating the transaction, including the financing of
the transaction; and
(c) to present or prospective sources of financing.
Neither this Contract, nor a memorandum hereof, shall be recorded
in any public records.
11.13 Enforceability. If a provision of this Contract is held to be
illegal, invalid, or unenforceable under present or future laws effective
during this Contract, the legality, validity, and enforceability of the
remaining provisions of this Contract shall not be affected thereby, and
in lieu of each illegal, invalid or unenforceable provision there shall
be added automatically as a part of this Contract a provision as similar
in terms to such illegal, invalid, or unenforceable provision as may be
possible and be legal, valid, and enforceable.
11.14 Business Day. Notwithstanding any other provision herein, if the
Closing Date or the expiration of the Inspection Period, Title Review
Period or Cure Period occurs on a day that is not a Business Day, then
the Closing Date or the expiration date for such period shall be extended
to 4:00 p.m. on the first Business Day following that date.
11.15 Expiration of Offer. If a fully-executed counterpart of this
Contract is not received by Seller and Title Company on or before January
24, 1997, as indicated below, the offer contained in this Contract shall
be null and void.
11.16 Counterpart Signatures. This Contract may be executed in any
number of counterparts, which, when assembled and taken together, is to
be regarded as a single agreement.
SIGNATURE PAGE FOR
CONTRACT OF SALE
NWBC
EXECUTED by Buyer on the day of January, 1997
BUYER:
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: Liberty Property Trust,
its sole general partner
By:
------------------------------
Its:
------------------------------
EXECUTED by Seller on __ day of January, 1997.
SELLER:
NWBC ASSOCIATES LIMITED PARTNERSHIP,
a Minnesota limited partnership
By: NWBC ASSOCIATES, INC.,
a Minnesota corporation, its general
partner
By:
------------------------------
Its:
------------------------------
JOINDER OF BROKERS
Brokers have executed this Contract solely for the purposes of evidencing
its agreement to the terms of Section 10.1 of this Contract. No consent
by Brokers shall be required to amend any other term of this Contract.
Date executed: January __, 1997
CB COMMERCIAL
By:
------------------------------
Name: Tom Holtz
Title:
By:
------------------------------
Name: Jim Leary
Title:
By:
------------------------------
Name: David Ryder
Title:
JOINDER OF TITLE COMPANY
The undersigned has received a counterpart of this Contract, fully
executed by Seller and Buyer, on the day of January, 1997.
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By:
------------------------------
Name:
Title:
JOINDER OF SELLER'S PARTNERS
The undersigned partners in Seller agree that the Partnership Interests
in Buyer acquired pursuant hereto shall be pledged as security for the
performance of the obligations, duties and liabilities of Seller that
survive Closing, provided however, that if no action is commenced with
regard to an alleged breach in the performance of said obligations,
duties and liabilities of Seller that survive Closing within one (1) year
after Closing, such Partnership Interest shall thereafter be free and
clear of any such pledge. The undersigned partners in Seller agree to
execute and/or deliver such instruments as Buyer may reasonably request
to perfect such pledge.
Dated: January __, 1997
------------------------------
Stewart R. Stender
------------------------------
Robert C. Lux
NWBC ASSOCIATES, INC.
By:
------------------------------
Its:
------------------------------
EXHIBIT 10.3
AMENDMENT
TO
CONTRACT OF SALE
NWBC
This Amendment (the "Amendment") dated as of the __ day of March, 1997,
is made and entered into by and between NWBC ASSOCIATES LIMITED
PARTNERSHIP, a Minnesota limited partnership ("Seller") and LIBERTY
PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership or its
permitted assigns ("Buyer").
WITNESSETH
WHEREAS, Seller and Buyer entered into that Contract of Sale dated
January 22, 1997, as amended by Amendment No. 1 thereto dated January 31,
1997 and by letter agreements dated March 7, 1997 and March 13, 1997 (the
"Contract") with regard to certain property owned by Seller in Hennepin
County, Minnesota; and
WHEREAS, Section 7.3 of the Contract requires that the approval of
Seller's lender be obtained, which approval has been obtained subject to
certain conditions; and
WHEREAS, Seller and Buyer have agreed to amend the Contract in order to
evidence their agreement to certain changes to the Contract to
accommodate the conditions of such lender's approval, as provided
hereinafter; and
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms. Unless the context otherwise indicates or unless
otherwise defined herein, capitalized terms used herein shall have the
meanings set forth in the Contract.
2. Amendments.
a. Seller has delivered to Buyer the approval of Alegis Realty
Investors LLC, as agent for Aetna Life Insurance Company ("Lender") of
the prepayment of Seller's indebtedness, subject to the Buyer's agreement
with the terms and conditions hereof.
b. Section 3.3, through 3.3(iii), of the Agreement is hereby
amended in its entirety to read as follows:
"At Closing the following shall occur:
(i) Buyer will assume at Closing $22,000,000 of the
outstanding principal balance of that Mortgage Note (the "Note") dated
April 25, 1996, executed by Seller in favor of Lender, in the original
principal amount of $24,150,000;
(ii) Buyer will pay at Closing the balance of said Note to
the extent in excess of $22,000,000, including unpaid interest,
contingent interest and other amounts due to Lender in connection
therewith in the amount of $7,543,763.40, which shall be credited against
the Purchase Price, provided that the Note and the other loan documents
evidencing and securing the Note are amended (the "Amended Loan
Documents") by Buyer and Lender to:
(1) acknowledge that the outstanding principal
balance of the Note is $22,000,000 and that the Note and such other loan
documents are in full force and effect and that Seller is not in default
thereunder;
(2) amend the interest rate to 8% per annum,
interest only payable monthly, with a maturity date of three (3) years
following Closing;
(3) delete all contingent interest provisions
which provide Lender with a share of the cash flow or of the value of the
Property, and terminate the Option Agreement entered into in connection
with the loan;
(4) provide for prepayment at par at any time
after nine (9) months following Closing;
(5) provide that Lender may call the Note for
payment, at par, on or after six (6) months following Closing, upon sixty
(60) days' written notice to Buyer which notice may be given to Buyer at
any time after four (4) months following Closing;
(6) provide for a release of Seller, Lux, Stender
and NWBC Associates, Inc. from all liability thereunder;
(7) acknowledge that Buyer has no interest in the
Deferred Maintenance Escrow Agreement;
(8) acknowledge that all other reserve and escrow
accounts required by Lender will be transferred to Buyer, without
adjustment to the Purchase Price (except that the Purchase Price will be
adjusted by reason of any overfunded or underfunded real estate tax or
insurance escrow account); and
(9) contain such other modifications as Buyer may
reasonably require and such other terms to which Buyer and Lender may
reasonably agree."
(iii) Buyer will pay adjusted costs (including the closing
costs) shown on the attachment to the Closing Statement in the amount of
$283,236.60; and
(iv) Buyer shall issue to Seller 56,381 partnership
interests in Buyer (the "Partnership Interests"), with each Partnership
Interest valued at the lesser of (a) the Average Share Price as of the
Closing Date, or (b) $25, and with the number of Partnership Interests
rounded to the nearest whole number."
c. Section 3.5(f)(iii) of the Contract and the Registration
Rights Agreement previously approved by Buyer and Seller is hereby
amended to increase the permitted weekly trading by Seller from 10% to
20% of the average weekly trading volume for the Shares.
d. Section 7.3 is hereby deleted.
e. Section 8.2(b)(viii) of the Contract is hereby amended
to read:
"(viii) Assumption of the Note and execution of
the Amended Loan Documents."
f. Section 7.2 of the Contract is hereby amended to add the
following new subsection (e):
"(e)Buyer is satisfied, in its reasonable discretion, with
the form and content of the Amended Loan Documents."
g. Subject to the terms of this Amendment, Buyer has accepted
the condition of the Property pursuant to Section 4.6 of the Contract.
3. Leasing Commissions.
a. With respect to leases entered into after the effective date
of the Contract, Seller hereby certifies to Buyer that the Hex
Graphics/Howmedica tenant improvements have been fully completed and paid
in full in the amount of $18,000.00 and that the Hex Graphics leasing
commission in the amount of $3,499.73, the Howmedica leasing commission
in the amount of $4,085.81 and the Multi-Ad Services leasing commission
in the amount of $6,554.55 have been paid in full and Buyer agrees to
reimburse Seller for such tenant improvement costs and leasing
commissions at Closing.
b. With respect to the Sox Appeal lease and the Mamac lease
described in Section 5.6(d) of the Contract, Seller hereby certifies to
Buyer that the leasing commissions for such leases have been paid in
full.
4. Full Force and Effect. Seller and Buyer agree that the Contract
is in full force and effect and has not been amended, modified or
supplemented in any respect, except as provided herein.
5. Governing Law. This Amendment is being executed and delivered and
is intended to be performed in the State of Minnesota, and the laws of
Minnesota shall govern the validity, construction, enforcement and
interpretation of this Amendment, unless otherwise specified herein.
6. Parties Bound. This Amendment is binding on and inures to the
benefit of Seller and Buyer, and their respective heirs, executors,
administrators, successors and assigns.
7. Counterpart Signatures. This Amendment may be executed in any
number of counterparts, which, when assembled and taken together, is to
be regarded as a single agreement.
SIGNATURE PAGE FOR
AMENDMENT
TO
CONTRACT OF SALE
NWBC
EXECUTED by Buyer on the day of March, 1997
BUYER:
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: Liberty Property Trust,
its sole general partner
By:
------------------------------
Its:
------------------------------
By:
------------------------------
Its:
------------------------------
EXECUTED by Seller on __ day of March, 1997.
SELLER:
NWBC ASSOCIATES LIMITED PARTNERSHIP,
a Minnesota limited partnership
By: NWBC ASSOCIATES, INC.,
a Minnesota corporation, its general
partner
By:
------------------------------
Its:
------------------------------
EXHIBIT 10.4
CONTRACT OF SALE
330 ASSOCIATES LIMITED PARTNERSHIP
This Contract of Sale (the "Contract") dated as of this ___ day of
January, 1997, is made and entered into by and between 330 ASSOCIATES
LIMITED PARTNERSHIP, a Minnesota limited partnership ("Seller") and
LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership
or its permitted assigns ("Buyer").
ARTICLE I
DEFINED TERMS
1.1 Definitions. As used in this Contract, the following terms
have the meanings indicated:
"Average Share Price" means the average closing price for the twenty
(20) Business Days preceding the Closing Date of a Share as reported on
the New York Stock Exchange.
"Business Day" means a day other than a Saturday, a Sunday or another
day on which commercial banks in Minneapolis, Minnesota are not required
to be open for public business.
"Closing" means the consummation of the purchase of the Property by
Buyer from Seller in accordance with Article VIII.
"Closing Date" means the date on which the Closing is actually held.
"Earnest Money Deposit" means the portion of the Purchase Price
deposited by Buyer in escrow with the Title Company as provided in
Section 3.2, plus any interest accrued thereon. The amount of the total
Earnest Money Deposit shall be payable as provided in Section 3.2
hereof.
"Effective Date" means the date on which the Title Company
acknowledges receipt of a fully-executed counterpart of this Contract.
"Improvements" means the building, and all fixtures and other
improvements associated therewith, containing approximately 197,100
square feet of net rentable area, situated on the Land generally known
as the Towle Building, 330 Second Avenue South, Minneapolis, Minnesota.
"Inspection Period" means the period commencing on the Effective Date
and ending on March 7, 1997.
"Land" means the certain lot, tract or parcel of land, in
Minneapolis, Hennepin County, Minnesota, as more fully described on
Exhibit A, on which the Improvements are located, together with all and
singular the rights appurtenant to that land.
"Leases" means all leases and/or occupancy agreements for space in
the Project.
"NWBC Contract" means that Contract of Sale of even date herewith
between Buyer and NWBC Associates Limited Partnership.
"Partnership Agreement" means the First Restated and Amended
Agreement of Limited Partnership dated as of June 19, 1995, as amended
on December 22, 1995, as further amended on December 31, 1996, of the
Buyer.
"Permitted Exceptions" means the Title Exceptions set forth in the
Title Commitment (defined in Section 4.1) or reflected in the survey
delivered pursuant to Section 4.2, or any other exceptions or conditions
that affect or may affect Seller's title to or use of the Property to
which Buyer has not objected pursuant to Section 4.3, or that are
approved (or deemed to be approved) by Buyer in accordance with Section
4.4.
"Personal Property" means (a) all tangible personal property owned by
Seller and located on or attached to the Project, (b) Seller's interest
in all licenses or permits relating to the Property, (c) Seller's
interest in all service, maintenance, management, or other contracts
relating to the ownership or operation of the Project, (d) Seller's
interest in all warranties or guaranties relating to the Project, (e)
Seller's interest in all representations and warranties made to Seller
by its predecessor in interest, to the extent assignable, and (f)
Seller's interest in the names of the Project.
"Project" means the Land and the Improvements.
"Property" means, collectively, the Project, the Leases, and the
Personal Property.
"Property Manager" means:
CB Commercial
330 Second Avenue South
Minneapolis MN 55402
Attn: Richard Schadegg
Phone: 612-341-8108
Fax: 612-341-9849
"Purchase Price" means the total consideration to be paid by Buyer to
Seller for the Property.
"Rent Roll" means a rent roll identifying and providing certain
information on the Leases, itemizing all security deposits, prepaid
rents, and other property held by Seller for the account of the Tenants.
"Shares" means the Common Shares of Beneficial Interest, par value
$.001 per share, of the Trust.
"SOBC Contract" means that Contract of Sale of even date herewith
between the Buyer and SOBC Associates LLC.
"Tenants" means those persons holding rights of a tenant under the
Leases.
"Title Company" means:
Commonwealth Land Title Insurance Company
51 Haddonfield Road
Suite 115
P.O. Box 5382
Cherryhill, NJ 08304
Attn: Joe Patti
Telephone No. 609-662-1500
Telecopier: 609-665-6513
The Title Company shall conduct the title examination, furnish Seller
and Buyer with evidence of title and exceptions thereto and issue the
Title Policy.
"Title Exception" means any lien, mortgage, security interest,
encumbrance, pledge, assignment, claim, charge, lease (surface, space,
mineral, or otherwise), condition, restriction, option, conditional sale
contract, right of first refusal, restrictive covenant, exception,
easement (temporary or permanent), right-of-way, encroachment, overlap,
or other outstanding claim, interest, estate, or equity of any nature.
"Trust" means the Liberty Property Trust, a Maryland real estate
investment trust and the General Partner of Buyer.
1.2 Other Defined Terms. Other defined terms have the meanings
assigned to them elsewhere in this Contract.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE
On the terms and conditions stated in this Contract, Seller hereby
agrees to sell and convey the Property to Buyer, and Buyer hereby agrees
to purchase and acquire the Property from Seller.
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. The Purchase Price (herein so called) to be
paid by Buyer to Seller is TWELVE MILLION FOUR HUNDRED SEVENTY-EIGHT
THOUSAND EIGHTY-SEVEN No/100 U.S. Dollars ($12,478,087), subject to
adjustment as provided below.
Buyer agrees to pay to Seller, as an additional Purchase Price, the
Earn Out Amount, as defined below, in connection with the new leases of
vacant (or to become vacant) leasable areas of the Improvements and the
renewal or extension of existing leases (collectively, such new leases
and renewals and extensions of existing leases are "New Leases"). The
Earn Out Amount will be payable at Closing as to such amount thereof to
which Seller has qualified through the Closing Date, and payable on
January 15, 1998 as to such amount thereof to which Seller has qualified
on or after the Closing Date through December 31, 1997.
The Earn Out Amount shall be equal to (i) the amount of Net Operating
Income, as defined below, as of the applicable calculation date, in
excess of $1,316,000 (the agreed Net Operating Income from the Leases
existing on the date hereof), multiplied by (ii) $8.51 with regard to
the Earn Out Amount payable on the Closing Date or $7.69 with regard to
the Earn Out Amount payable after the Closing Date.
Net Operating Income as of the applicable calculation date shall be
the sum of (i) the then remaining portion of said $1,316,000 payable
pursuant to the Leases existing on the date hereof and which are in full
force and effect on the applicable calculation date, plus (ii) the
average annual gross rent payable over the primary term of the New
Leases, less (ii) tenant reimbursements for operating expenses, taxes
and utilities for the New Leases, and less (iii) Transaction Costs, as
defined below, relating to the New Leases, amortized as to the
applicable lease, over the primary term of such lease, with interest at
the rate of 10% per annum.
Transaction Costs as to any New Lease shall be all costs paid by
Buyer for tenant improvements, attorneys' fees, external and internal
commissions, space planning and other lease incentives provided to the
applicable tenant in connection with a New Lease.
Notwithstanding anything herein, a New Lease must have a minimum
primary term of three (3) years in order for the increase to be included
in the calculation of the Earn Out Agreement.
For Example:
A ten (10) year lease for 10,000 square feet at 23.00 p.s.f.
average with operating expenses of $8.05 p.s.f. and transaction costs of
$10.00 p.s.f. would earn out the following amount (provided that the
$1,316,000 Net Operating Income threshold has been exceeded):
Triple Net Rent = $23.00 p.s.f.- $8.05 p.s.f.
= $14.95 p.s.f.
Net Operating Income = $14.95 p.s.f.
= $ 1.59 p.s.f.(amortized transaction costs)
= $13.36 p.s.f.
Earn Out = $13.36 p.s.f. x $7.69 p.s.f.
= $102.74 p.s.f. x 10,000 s.f.
= $1,027,384
3.2 Earnest Money Deposit. Within one (1) Business Day after the
Effective Date, Buyer shall have delivered $66,667 to the Title Company,
in cash or cash equivalents representing funds immediately available for
disbursement on the day of receipt by the Title Company, to be held by
the Title Company in escrow to be applied or disposed of by it as is
provided in this Contract. Buyer's failure to timely make the Deposit
(a) makes this Contract voidable at Seller's option and (b) gives Seller
the right to immediately terminate the Contract in which event the
Seller and Buyer shall have no further obligation to one another. The
Earnest Money Deposit shall be invested in an interest-bearing account
with a financial institution and in a manner reasonably acceptable to
Seller and Buyer. All interest earned is part of the Earnest Money
Deposit under this Contract. If the purchase and sale hereunder is
consummated, then the Earnest Money Deposit shall be applied to the
Purchase Price at Closing. In all other events, the Earnest Money
Deposit shall be disposed of by the Title Company as provided in this
Contract.
3.3 Payment of Purchase Price. The Purchase Price payable at
Closing shall be payable to Seller through the Title Company, by:
(i) Buyer assuming and paying, at Closing, to First Bank
National Association ("Lender"), the outstanding principal balance of
that Amendment and Restatement of Promissory Note dated March 29, 1996,
in the original principal amount of $4,950,000, together with all
interest and all other amounts due to Lender in connection therewith, as
shown on a payoff letter from Lender;
(ii) Buyer purchasing, at or prior to Closing, the partnership
interest in Seller of Crosstown Asset Corp. I., a Delaware corporation
("Crosstown"), for the amount that would otherwise be distributable to
Crosstown pursuant to the Partnership Agreement of Seller (estimated to
be in the amount of $4,300,000, based on the Purchase Price without any
Earn Out Amount payable at Closing), in connection with a sale of the
Property to Buyer for the Purchase Price and the liquidation of the
Seller. Seller shall use its best efforts, in consultation with Buyer,
to negotiate and present to Buyer on or before January 31, 1997, in form
acceptable to Buyer (in Buyer's sole discretion), an agreement with
Crosstown wherein Crosstown agrees to sell its limited partnership
interest to Buyer for a cash payment at Closing;
(iii) Buyer purchasing, at or prior to Closing, the interest of
Apex Asset Management Corporation ("Apex") in that certain Asset
Management Agreement, dated April 13, 1994 (the "Contract"), payable at
Closing in Partnership Interests (estimated to be in the amount of
$1,400,000, based on the Purchase Price without any Earn Out Amount
payable at Closing) of the Buyer ("Partnership Interests") and
relinquishing all rights to any Earn Out Amount payable after Closing.
Seller shall use its best efforts, in consultation with Buyer, to
negotiate and present to Buyer on or before January 31, 1997, in form
acceptable to Buyer (in Buyer's sole discretion), an agreement with Apex
wherein Apex agrees to sell the Contract to Buyer for Partnership
Interests at Closing.
(iv) An amount of cash equal to the sum of all closing costs
incurred by Seller in connection herewith (estimated to be no more than
$700,000); and
(v) The balance of the Purchase Price shall be paid by the
issuance to the Seller of interests in the Buyer (the "Partnership
Interests"), with each Partnership Interest valued at the lesser of (a)
the Average Share Price as of the Closing Date, or (b) $25, and with the
number of Partnership Interests rounded to the nearest whole number. At
least ten (10) Business Days prior to the Closing Date, Seller shall
give Buyer written notice of its best estimate of the allocation of the
Purchase Price as between cash and Partnership Interests.
In the event that the agreements described in (ii) or (iii) above are
not executed by January 31, 1997, in form and substance acceptable to
Buyer and Seller, either party may terminate this Agreement. In the
event of such termination of this Contract, the Earnest Money shall be
promptly refunded to Buyer and Buyer and Seller shall have no further
obligations, one to the other, with respect to the subject matter of
this Contract (except under Section 4.7).
The Earn Out Amount payable on January 11, 1998 shall be paid in cash
or immediately available funds to 330 Associates, Inc., as agent for the
current partners of Seller (i.e., 330 Associates, Inc., Robert C. Lux,
Stewart R. Stender and Crosstown, notwithstanding the purchase by Buyer
of Crosstown's interest in Seller).
The parties acknowledge that in order to accommodate Seller's desire
to transfer the Property as a contribution for Partnership Interests
under Section 721 of the Code, the Buyer has agreed to acquire certain
interests of Crosstown and Apex, as described above. The parties
acknowledge that agreements must be negotiated and entered into with
Crosstown and Apex as provided in subsections (ii) and (iii) above.
These agreements and the closing of the acquisitions contemplated by
these agreements are essential to the closing of the transaction
contemplated by this Agreement. Because this Agreement is being
executed in advance of the negotiations of the agreements with Crosstown
and Apex, it is not possible to anticipate the ways in which the
negotiation of the agreements with Crosstown and Apex might impact on
the provisions of the Agreement. The parties acknowledge that the
provisions of this Agreement (other than the Purchase Price) may need to
be modified to address specific issues which arise in connection with
the negotiation of the agreements with Crosstown and Apex, but that any
such modification shall require the written agreement of each of Buyer
and Seller. The parties further agree that, except with respect to
Section 4.7, this Agreement is terminable by Buyer or Seller if
satisfactory negotiations of the agreements with Crosstown and Apex and
related modifications to this Agreement are not entered into as provided
above on or before January 31, 1997. In the event of such termination
of this Contract, the Earnest Money shall be promptly refunded to Buyer
and Buyer and Seller shall have no further obligations, one to the
other, with respect to the subject matter of this Contract (except under
Section 4.7).
3.4 Other Contracts. Notwithstanding anything herein to the
contrary, in the event that Buyer, for any reason, exercises its right
to terminate this Contract, as a condition precedent to any such
termination, it shall also, simultaneously, terminate the SOBC Contract
and the NWBC Contract (unless previously terminated pursuant to Section
7.3 of the NWBC Contract). If the NWBC Contract is terminated pursuant
to Section 7.3 thereof or if the SOBC Contract or the NWBC Contract is
terminated pursuant to Section 3.5 thereof, then Buyer may terminate
this Contract. In the event of such termination of this Contract, the
Earnest Money shall be promptly refunded to Buyer and Buyer and Seller
shall have no further obligations, one to the other, with respect to the
subject matter of this Contract (except under Section 4.7).
3.5 The Partnership Interests.
(a) Each Partnership Interest issued as part of the Purchase
Price shall be exchangeable after the first anniversary of the Closing
Date, on a one-for-one basis, for a Share of the Trust, on the basis set
forth in and subject to the restrictions contained in the Partnership
Agreement (including, without limitation, usual and customary provisions
providing for adjustment in the number of Shares into which Partnership
Interests are convertible upon certain changes in the capitalization of
the Trust.)
(b) Buyer and Seller hereby acknowledge and confirm that they
intend for the transfer of the Property to Buyer in exchange for
Partnership Interests to qualify as a contribution pursuant to Section
721 of the Internal Revenue Code of 1986, as amended (the "Code").
Buyer and Seller agree to take any reasonable steps necessary to cause
such transfer to qualify as a contribution pursuant to such section.
Buyer shall also issue to Seller, for distribution at Closing to
Buyer in liquidation of Buyer's partnership interest in Seller,
Partnership Interests equal to the amount paid to Crosstown pursuant to
Section 3.3(ii) divided by the share price used in Section 3.3(v). At
Closing, Seller shall distribute the Partnership Interests described in
the preceding sentence to Buyer and the Partnership Interests issued
pursuant to Section 3.3(v) to Stewart R. Stender, Robert C. Lux and 330
Associates, Inc. in accordance with their respective interests in Seller
in liquidation of such partner's interest in Seller.
(c) Seller acknowledges and confirms that:
(i) neither the Partnership Interests nor the Shares into
which the Partnership Interests may be converted have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or
any state securities laws;
(ii) there is no obligation to register the Partnership
Interests or the Shares except pursuant to the Registration Rights
Agreement (as defined below);
(iii) neither the Partnership Interests nor the Shares into
which the Partnership Interests may be converted may be sold or
otherwise transferred by Seller except (A) pursuant to registration
under the Securities Act and state securities laws or an exemption
therefrom or (B) as a distribution at Closing to Robert C. Lux, Stewart
R. Stender, 330 Associates, Inc. and Buyer in accordance with their
respective interests in Seller.
(iv) the Partnership Interests shall not be convertible into
Shares until after the first anniversary of the Closing Date; and
(v) the Partnership Interests being acquired hereunder are
being acquired for Seller's own account and not for the account of any
other person or persons, for investment and not with a view to the
disposition thereof in violation of the Securities Act.
(d) Buyer acknowledges and confirms that:
(i) it will not sell the Property (or any portion thereof)
for two years following the Closing Date; and
(ii) Seller as a holder of Partnership Interests in Buyer
will participate in the allocations and distributions of Buyer on the
same basis as the other limited partners of Buyer as determined in
accordance with the terms and provisions of the Partnership Agreement,
provided, however, that the initial distribution to Seller or those
holding the Partnership Interests through Seller will be prorated based
upon the portion of the fiscal quarter of Buyer for which Seller or
those holding the Partnership Interests through Seller held the
Partnership Interests.
(e) Buyer has provided Seller, and Seller acknowledges receipt
of, a copy of the Partnership Agreement.
(f) Buyer and Seller hereby agree to negotiate in good faith the
terms and conditions of the following documents (the "Partnership
Documents") and to use their best efforts to conclude such negotiations
and have a mutually agreeable form of each of the Partnership Documents
on or before January 31, 1997:
(i) a proxy (the "Proxy Agreement") containing usual and
customary terms as to the appointing of the Board of Trustees of the
Trust (so long as the Trust is a general partner of Buyer), as Seller's
proxy with respect to all Partnership Interests owned by Seller, with
authority to consent or withhold consent, in the Trust's sole
discretion, with respect to any matter as to which limited partners of
Buyer may act pursuant to the terms of the Partnership Agreement;
(ii) an investment letter (the "Investment Letter")
containing usual and customary representations and agreements obtained
from purchasers of securities in private placements regarding the
restrictions on transferability of the securities being acquired and the
financial sophistication and qualification of the purchasers;
(iii) a registration rights agreement (the "Registration
Rights Agreement") containing usual and customary representations and
agreements concerning the registration of the Shares, including without
limitation, provisions for (A) Seller to have two demand registration
rights and unlimited "piggyback" registration rights with respect to the
Shares issuable upon exchange of the Partnership Interests, which rights
shall commence on the first anniversary of the Closing Date, (B) Buyer
to cover all expenses of such registration other than the fees of
Seller's counsel and the registration fees for such Shares which shall
be borne by Seller (not to exceed $2,500), (C) Seller to agree that,
notwithstanding the effectiveness of any registration statement covering
the Partnership Interests (other than in connection with an underwritten
offering), it will not sell during any week a number of Shares greater
than 10% of the average weekly trading volume for the Shares on the New
York Stock Exchange for the preceding four calendar weeks.
(iv) an amendment to the Partnership Agreement (the
"Partnership Amendment") for the purpose of evidencing, among other
things, the issuance of the Partnership Interests as a portion of the
Purchase Price.
In the event that the parties have not agreed to the form of each of
the Partnership Documents on or before January 31, 1997, either party
hereto may terminate this Agreement by notice to the other party and,
upon such termination, the Earnest Money shall be promptly refunded to
Buyer and Buyer and Seller shall have no further obligations, one to the
other, with respect to the subject matter of this Contract (except under
Section 4.7).
ARTICLE IV
TITLE AND SURVEY
4.1 Title Commitment; Exception Documents.
(a) Seller has furnished to Buyer and Buyer's counsel a copy of
Seller's Policy of Title Insurance for the Property.
(b) Buyer shall obtain a commitment for an ALTA owner's policy
of title insurance (the "Title Commitment") on the Property issued by
the Title Company and any desired endorsements to the Title Commitment
which are available, if any.
(c) Seller shall also furnish to Buyer copies of instruments
that create or evidence Title Exceptions affecting the Property, as
described in the Title Commitment (together, the "Title Documents").
(d) Seller shall not be obligated to provide Buyer an abstract
of title to the Land, but Seller shall provide any owner's duplicate
certificate of title as to the Land at closing.
4.2 Survey. Seller has provided to Buyer a copy of the most recent
survey of the Project in Seller's possession.
Seller shall deliver to Buyer, as soon as practicable, but in any
case within fifteen (15) days after the Effective Date, an as-built
survey of the Property prepared by Egan, Field & Nowak, Inc. as an Urban
Survey in accordance with the Minimum Standard Detail Requirements and
Classifications for ALTA/ASCM Land Title Surveys as adopted by the
American Land Title Association and American Congress on Surveying and
Mapping in 1992 which shall (a) include items 1, 2, 3, 4, 6, 7, 8, 9,
10, 11 and 13 from Table A of such Requirements and (b) shall be
certified to Buyer and Title Company and any lender of Buyer's of which
Buyer notifies Seller in writing on or prior to the expiration of the
Inspection Period.
The legal description of the Land contained in the Survey and in the
Title Policy shall be used to describe the Land in the special warranty
deed conveying the Project from Seller to Buyer.
4.3 Review of Title Commitment, Survey and Exception Documents.
Buyer has a period of seven (7) Business Days (the "Title Review
Period") after the later of (i) January 31, 1997 or (ii) Buyer's receipt
of the Title Commitment, the Title Documents and the Survey in which to
give written notice to Seller specifying Buyer's objections to the Title
Commitment, the Survey or the Title Documents ("Objections"); provided,
however, Buyer may not make any Objection to any of the Permitted
Exceptions listed on Exhibit "I" attached hereto. For purposes of this
Section 4.3, Seller shall have satisfied all of its obligations with
regard to title to the Project if Buyer has not objected to any of the
Title Documents furnished to it or any other Title Exception referenced
in the Title Commitment, within the Title Review Period.
4.4 Seller's Obligation to Cure; Buyer's Right to Terminate. If
Buyer timely notifies Seller in writing of Objections to any of the
matters furnished to Buyer pursuant to Section 4.3, then Seller shall,
within thirty (30) days after Seller's receipt of Buyer's notice (the
"Cure Period"), make reasonable efforts in good faith to attempt to cure
the Objections. Other than (i) mortgages or other liens securing
indebtedness of Seller, judgments or tax liens against Seller or
mechanics' liens against the Property (collectively, "Liens") which
shall be satisfied, bonded or insured over by Seller at or prior to
Closing, (ii) minor encroachments which do not materially affect Buyer's
or Tenant's use of the Property which Seller shall not be obligated to
correct and (iii) Objections which are insured over by the Title Company
at no cost or liability to Seller, Seller is not obligated to effect a
cure of any Objection unless such Objection is a material defect in the
marketability of title to the Property (a "Material Objection") and the
cost of curing such Material Objection is less than $50,000 in the
aggregate for all such Objections, but Buyer may, at its option, pay the
excess amounts to Title Company at Closing (which payment shall not
entitle Buyer to a reduction in the Purchase Price) and cause the Title
Company to cure such Objections, but such Objections (which Buyer
intends to pay to cure as aforesaid) shall not delay Closing nor shall
Seller have any further liability or obligation with respect thereto.
If Seller does not satisfy all Objections within the Cure Period, then,
as its sole options or remedies, Buyer may either (a) waive the
unsatisfied Objections, which then become Permitted Exceptions, and
proceed to consummate this transaction without further recourse against
Seller, (b) provide written notice of Buyer's intention to pay the cost
of curing such Objections and pay the cost of curing such Objections at
Closing as provided in the preceding sentence, but such payment shall
not entitle Buyer to a reduction in the Purchase Price except to the
extent that (i) such Objection relates to a Lien or (ii) Buyer pays the
first $50,000 of such costs to cure Material Objections (which Seller
would otherwise have paid to cure such Material Objections pursuant to
the preceding sentence), in which event Buyer shall be entitled to a
reduction in the Purchase Price only to the extent of that portion of
the first such $50,000 to the extent paid by Buyer to cure such Material
Objections, but Buyer shall have no further recourse against Seller by
reason of such Objections or (c) terminate this Contract and receive
back the Earnest Money Deposit, in which latter event Seller and Buyer
have no further obligations, one to the other, with respect to the
subject matter of this Contract (except under Section 4.7). If
unsatisfied Objections remain but Buyer does not deliver written notice
of its waiver thereof, of Buyer's intention to pay the cost of curing
such Objections or of the termination of this Contract to Seller within
five (5) Business Days after expiration of the Cure Period, then the
unsatisfied Objections shall become additional Permitted Exceptions,
with no reduction in the Purchase Price, and Buyer shall have no further
right to terminate this Contract under this Section 4.4. If Seller
shall effect a cure of the Objections within the Cure Period it shall
deliver written notice thereof to Buyer and Buyer and Seller shall
proceed to Closing as provided herein.
4.5 Title Policy. The Title Policy shall be issued by the Issuing
Title Company, in the amount of the Purchase Price, insuring that Buyer
has fee simple title to the Property, subject only to the Permitted
Exceptions. Seller shall pay for the costs of abstracting, searches
and the preparation of the Title Commitment; the premium for the Title
Policy and any additional premiums for any endorsements requested by
Buyer shall be paid by Buyer. Any closing or escrow fees charged by the
title company shall be paid one-half by Buyer and one-half by Seller.
4.6 Inspection. Buyer may, during the Inspection Period, make
such examinations, studies, inspections, and investigations of the
Property as Buyer deems advisable. Any physical inspections within the
buildings on the Property shall be made only on Business Days and during
normal business hours that will not disturb the quiet enjoyment of the
Project by Tenants, and inspections of space occupied by a Tenant shall
be made only with at least twenty-four (24) hours' advance notice to and
consent of Seller and, at Seller's election, in the presence of a
representative of Seller. Seller shall reasonably cooperate with Buyer
in contacting Tenants to permit Buyer's inspection. Buyer shall use its
best efforts to group inspections together on the same day or days in
order to minimize the number of visits to Tenants' spaces and the impact
on the Tenants. By giving written notice to Seller before the
expiration of the Inspection Period, Buyer may, in Buyer's sole
discretion, terminate this Contract and receive back the Earnest Money
Deposit, if Buyer has found the Property unsuitable for Buyer's purpose,
or if Buyer has found any agreements or information regarding the
Property unacceptable, or for any other reason, in Buyer's sole
discretion. If Buyer does not timely give that notice, then (a) Buyer
shall be deemed to have accepted the condition of the Property, subject
to the estoppel certificates to be delivered by Seller pursuant to
Section 5.2(b) hereof, (b) Buyer's right to terminate this Contract
pursuant to this Section 4.6 shall be deemed waived, and (c) the Earnest
Money Deposit shall thereafter not be refundable and shall be deemed
earned by Seller in any event other than Seller's default or unless
Buyer terminates the Contract under the provisions of Sections 4.4, 7.1,
9.1, or 11.9 hereof.
4.7 Indemnification. Buyer shall indemnify, defend and hold Seller
harmless from any and all demands, claims, actions or causes of action,
assessments, losses, costs, damages, liabilities, interest, penalties
and reasonable attorney's fees asserted against, resulting to, imposed
on, or incurred by Seller as a result of any act or omission of Buyer,
or any of Buyer's agents, consultants, contractors, or employees, in
connection with an entry on or investigation or examination of the
Property, or any part thereof, before Closing. The indemnification
obligations of Buyer with respect to these matters shall survive the
Closing or the termination of this Contract for any reason and shall
remain in full force and effect thereafter, but any claims of
indemnification hereunder must be made by notice to Buyer within six (6)
months after the date of termination hereof or the Closing Date, as
applicable.
ARTICLE V
REPRESENTATIONS, WARRANTIES, COVENANTS,AND AGREEMENTS OF SELLER
5.1 Representations and Warranties of Seller. Seller represents
and warrants to Buyer as of the Effective Date, except where specific
reference is made to another date or dates, that:
(a) Attached as Schedule 1 is a complete and accurate Rent Roll
showing all of the Leases which shall be updated by Seller prior to
Closing if necessary.
(b) Attached as Schedule 2 is a complete and accurate list of
all services, maintenance and management contracts relating to the
Property which shall be updated prior to Closing if necessary;
(c) Seller has no current actual knowledge of, and has received
no written notice from, any governmental authority requiring any work,
repairs, construction, alterations or installations on or in connection
with the Property, or asserting any violation of any federal, state,
county or municipal laws, ordinances, codes, orders, regulations or
requirements affecting any portion of the Property, including, without
limitation, the Americans with Disabilities Act and any applicable
environmental laws or regulations. Except as provided in Schedule 4
attached hereto, to the current actual knowledge of Seller, there is no
action, suit or proceeding pending or, threatened against or affecting
Seller or the Property or any portion thereof or relating to or arising
out of the ownership of the Property, in any court or before any
federal, state, county or municipal department, commission, board,
bureau or agency or other governmental instrumentality.
(d) Seller is not a foreign person under Sections 1445 and 7701
of the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder;
(e) To Seller's current actual knowledge, there is no individual
sewage treatment system on or serving the Property as such term is
defined in Minnesota Statutes Section 115.55; there are no wells or
underground storage tanks on the Property;
(f) Seller has full right, power and authority to sell the
Property to Buyer as provided in this Contract and to carry out Seller's
obligations under this Contract, and all requisite action necessary to
authorize Seller to enter into this Contract and to carry out Seller's
obligations hereunder has been taken;
(g) To Seller's current actual knowledge, there is no violation
of Environmental Laws related to the Property or the presence or release
of Hazardous Materials on or from the Property except as disclosed in
the environmental reports listed on Schedule 3 delivered by Seller to
Purchaser or made available for Purchaser's review. The term
"Environmental Laws" includes without limitation the Resource
Conservation and Recovery Act and the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA") and other federal
laws governing the environment as in effect on the date of this
Agreement together with their implementing regulations and guidelines as
of the date of this Agreement, and all state, regional, county,
municipal and other local laws, regulations and ordinances that are
equivalent or similar to the federal laws recited above or that purport
to regulate Hazardous Materials in effect as of the date of this
Agreement. "Hazardous Materials" means any substance which is (i)
designated, defined, classified or regulated as a hazardous substance,
hazardous material, hazardous waste, pollutant or contaminant under any
Environmental Law, as currently in effect as of the date of this
Agreement (ii) petroleum hydrocarbon, including crude oil or any
fraction thereof and all petroleum products, (iii) PCBs, (iv) lead, (v)
friable asbestos, (vi) flammable explosives, (vii) infectious materials
or (viii) radioactive materials.
(h) Seller has not entered into any other contracts for the sale
of the Property, nor are there any rights of first refusal or options to
purchase the Property or any other rights of others to acquire the
Property that might prevent the consummation of this Contract.
(i) No brokerage or leasing commissions or other compensation is
or will be due or payable to any person, firm, corporation or other
entity with respect to or on account of any of the Leases or any
extensions or renewals thereof, except for Leases executed after the
Effective Date as provided in Section 5.2(c)(iii) hereof and except as
provided in Section 5.6 hereof.
(j) Seller has no current actual knowledge of any material
misstatement in the statements of income and expenses for the Property,
attached hereto as Exhibit L, to the extent such statements relate to
the period of Seller's ownership of the Property.
(k) Tax and Real Estate Investment Trust Matters.
(i) None of the Leases provides for the payment of rents
which is based on the income or profits of any person or entity, except
to the extent of amounts computed by reference to a fixed percentage or
percentages of a tenant's receipts or sales (within the meaning of
Internal Revenue Code Section 856(d)(2)(A) (the Internal Revenue Code is
referred to herein as the "Code").
(ii) The services and activities performed by the landlord
with respect to the Project are services which are customarily performed
by lessors in connection with the rental of real property similar to the
Project in the geographic area in which the Project is located. The
services and activities performed are necessary for the operation of the
Project and are not performed primarily for the convenience of tenants.
(iii) The landlord of the Project does not lease any
substantial personal property to the tenants at the Project other than
personal property which has been installed upon the Project and has
become a part of the real property.
(iv) Except as provided on Exhibit M attached hereto, to the
extent the Project provides parking lots for tenants and their employees
and customers, the parking lots are offered on an unreserved,
complimentary basis, other than with respect to spaces required to be
reserved for handicapped persons under law. The landlord of the Project
does not provide parking attendants, reserved parking or other services
in connection with the parking areas.
(v) The landlord of the Project does not provide any utility
services to tenants at the Project other than usual and customary
utility services, such as electricity, gas, water and sewer service. In
some instances, utility services are separately metered and paid by the
tenants. In other cases, the landlord master meters electric and water
services, in which case the cost of the utility service is allocated
among the tenants on a prorata basis on the basis of usage or area. The
billing mechanism for any master metering arrangement with respect to
Project is usual and customary for the geographic area in which the
Project is located.
(vi) Neither the Land nor any of the Improvements is "held
for sale" within the meaning of the Code.
Seller shall deliver a certificate at Closing as to the correctness
of the representations and warranties set forth above as of the Closing
Date and if any such representation shall not then be correct, of any
exceptions thereto.
Notwithstanding anything contained in this Agreement to the contrary,
all of the representations, warranties and certifications (the
"Representations") which are made by Seller and set forth herein or in
any of the documents or instruments required to be delivered by Seller
hereunder, shall be subject to the following conditions and limitations:
(i) there shall be no liability on the part of Seller for breaches of
Representations of which Buyer had current actual knowledge at Closing
and (ii) in the event that prior to the time of Closing, during the
course of Buyer's inspections, studies, tests and investigations or
through other sources, Buyer gains current actual knowledge of a fact or
circumstance which, by its nature, indicates that a Representation was
or has become untrue or inaccurate, and such fact or circumstance was
not intentionally withheld from Buyer by Seller with the intent to
defraud Buyer, then Buyer shall not have the right to bring any lawsuit
or other legal action against Seller, nor pursue any other remedies
against Seller, as a result of the breach of the Representation caused
thereby, but Buyer's sole right shall be to terminate this Agreement in
which event the Earnest Money Deposit shall be returned to Buyer.
5.2 Covenants and Agreements of Seller. Seller covenants and
agrees with Buyer as follows:
(a) Within ten (10) days after the Effective Date, Seller shall
deliver to Buyer (or, with respect to items (v), (vi) and (x) below,
permit inspection in the offices of the Property Manager), copies (or
where specifically indicated, original counterparts) of the following:
(i) All existing Leases;
(ii) All service, maintenance, management, and other
contracts relating to the ownership and operation of the Property;
(iii) All building permits and certificates of occupancy or
of substantial completion issued with respect to the construction and
ownership of the Project that, to Seller's current actual knowledge, are
in Seller's or the Property Manager's possession;
(iv) All available real estate and personal property tax
statements for real estate and personal property taxes due and payable
in the year of Closing with respect to the Project and, if received by
Seller, the valuation notice issued with respect to the Project for the
year of Closing, that, to Seller's current actual knowledge, are in
Seller's or the Property Manager's possession;
(v) All operating budgets, operating statements and property
reports that, to Sellers' actual knowledge are in Seller's or the
Property Manager's possession;
(vi) The plans and specifications with respect to the Project
that, to Seller's current actual knowledge, are in Seller's or the
Property Manager's possession, to be furnished with no representation,
warranty, or recourse whatsoever;
(vii) The Rent Roll, current through the first day of the
month preceding the month in which the Effective Date falls;
(viii) To the extent in Seller's or the Property Manager's
possession, all environmental reports pertaining to the Property; and
(ix) All other books and financial records with respect to
the Property that, to Seller's current actual knowledge, are in Seller's
or Property Manager's possession (other than Seller's projections and
other financial information prepared by Seller in connection with its
purchase of the Property, internal financial or performance reviews, the
closing documents relating to such purchase, Seller's partnership
agreement and other partnership financial and tax records).
Seller represents and warrants to Buyer that the information
described in this Section 5.2(a) constitutes all of the books and
financial records in Seller's possession (or in the possession of its
Property Manager) with respect to the Property (other than Seller's
projections and other financial information prepared by Seller in
connection with its purchase of the Property, internal financial or
performance reviews, the closing documents relating to such purchase,
Seller's partnership agreement or other partnership financial and tax
records). In the event that Buyer terminates the Contract for any
reason, Buyer shall immediately return to Seller all of the information
concerning the Property supplied by Seller or Property Manager.
(b) Within thirty (30) days after the Effective Date, Seller
shall use reasonable efforts to obtain and deliver to Buyer estoppel
certificates from the Tenants of the Property, in the form of Exhibit
"J" attached to this Contract. If Seller is unable to obtain an
estoppel certificate for each tenant substantially in the form of
Exhibit "J", Seller shall deliver to Buyer an estoppel certificate
executed by Seller as to such Tenant in the form of Exhibit "K", as
modified to make the statements therein true and correct.
(c) From the date hereof until the Closing Date or the earlier
termination of this Contract, Seller shall:
(i) Operate, insure at current insured amounts, maintain and
lease the Project in the ordinary course of Seller's business and use
reasonable efforts to reasonably preserve for Buyer the relationship of
Seller and Seller's suppliers, Tenants, and others having ongoing
business relations with Seller relating to the Project; and
(ii) Advise Buyer of any litigation, arbitration, or
administrative hearing before any governmental agency concerning of
affecting the Property in any manner that is instituted or threatened in
writing after the Effective Date and of which Seller has current actual
knowledge; and
(iii) Not, without Buyer's prior written consent (which
consent may be withheld in Buyer's sole discretion), enter into any
leases, contracts or other commitments that will survive Closing other
than service contracts that are terminable on thirty (30) days or less
notice. With respect to any lease or any renewal, extension or
amendment of any lease for any portion of the Property which is approved
by Buyer and which is entered into after the Effective Date, Buyer shall
pay (or reimburse Seller at Closing) for the cost of all tenant
improvements and leasing commissions required by the terms thereof.
Any consent or approval requested by Seller pursuant to this
Section 5.2(c)(iii) shall be deemed granted if Buyer does not object
within five (5) Business Days after Buyer's receipt of Seller's written
request.
5.3 Survival Beyond Closing. Except to the extent that Buyer has
current actual knowledge of any breach at or prior to Closing (which
Buyer, by closing the purchase contemplated hereby, shall be deemed to
have waived), the representations, warranties, and covenants of Seller
contained in this Contract shall survive the Closing. In the event of
any such breach or misrepresentation discovered by Buyer after Closing,
Buyer may bring an action against Seller for Buyer's actual damages
resulting from such breach, but not for any incidental or consequential
damages, or may offset such amounts against any Earn Out Amount (but
this provision shall not delay the payment of the Earn Out Amount if no
such action has been commenced prior to the date payment of the Earn Out
Amount is due and payable), provided, however, that any action with
regard to an alleged breach of any such representation, warranty or
covenant of Seller must be brought within two (2) years after Closing.
5.4 Current Actual Knowledge; Authority. The term "Buyer's current
actual knowledge," as used in the Contract, means matters of which John
Gattuso is presently aware at the relevant time by virtue of Buyer's
inspections and due diligence with respect to the Property, but without
being required to undertake any further investigation or inquiry
whatsoever. The term "Seller's current actual knowledge," as used in
this Contract, means matters of which Seller, Stewart R. Stender or
Robert C. Lux is presently aware at the relevant time, by virtue of
Seller's ownership of the Property, without undertaking any further
investigation or inquiry whatsoever, but does not include matters of
which any other person or entity (including, but not limited to, the
Property Manager or any prior manager of the Property) other than
Seller, Stewart R. Stender or Robert C. Lux is or may be aware but
Seller acknowledges that it has made good faith inquiry of the Property
Manager with regard to the correctness of the representations and
warranties set forth in Section 5.1 and the delivery of the documents
referenced in Section 5.2(a). No brokers, agents or other third parties
(including, but not limited to, the Property Manager or any prior
manager of the Property) are authorized by make any representations and
warranties binding on Seller. In particular, but without limitation,
except as is expressly represented or warranted in Section 5.2(a)
hereof, Seller hereby disclaims, and makes no representation or
warranty, as to the accuracy of the contents or the completeness of any
item delivered by either Seller or the Property Manager of the Project
to Buyer or made available for inspection or review by Buyer.
5.5 "AS-IS" Sale. Seller has advised Buyer that Seller has
retained an independent contractor to manage the Project and that Seller
recently acquired the Project. Accordingly, Seller's current personnel
have limited personal knowledge regarding the construction of the
Project, the operation of the Project, and other matters that an owner
of property similar to the Project might ordinarily have. A material
consideration in negotiating the Purchase Price is Buyer's agreement
that Buyer shall rely solely on its own investigation in consummating
this transaction, except as expressly stated to the contrary in this
Contract and that SELLER HAS MADE NO EXPRESSED OR IMPLIED
REPRESENTATIONS OR WARRANTIES RESPECTING THE SUBJECT MATTER OF THIS
TRANSACTION, EXCEPT AS EXPRESSLY STATED TO THE CONTRARY IN THIS
CONTRACT. (See Section 11.6)
5.6 Due Diligence Disclosure. Seller has disclosed to Buyer and
Buyer acknowledges and agrees that the Purchase Price is based upon the
following disclosure relating to the Property:
(a) Seller has given Buyer notice of an exterior caulking issue
of the Towle Building, costing approximately $90,000 to repair. Seller
shall have no obligations with respect to the exterior caulking of the
Towle Building after the Closing Date.
(b) Seller has given Buyer a copy of the MPCA closure letter
related to the underground storage tank that was removed at the Towle
Building. Seller shall have no obligations with respect to this issue
after the Closing Date.
(c) In connection with the building of the age and use of the
Improvements, there may be minor defects discovered by Buyer during the
Inspection Period which shall not permit Buyer to renegotiate the
Purchase Price.
(d) Seller has given Northern States Power Company a Promissory
Note with an outstanding balance of approximately $23,000, the proceeds
of which were used to install certain energy efficient light fixtures.
This Note is payable in installments with the utility bills for the
Property, which bills have been included as an operating expense of the
Property for purposes of computing the operating expense reimbursements
by the Tenants. Such Note will be assumed by Buyer at Closing with no
adjustment in the Purchase Price.
ARTICLE VI
REPRESENTATIONS, WARRANTIES, COVENANTS AND AGREEMENTS OF BUYER
6.1 Representations and Warranties of Buyer. Buyer represents,
warrants, covenants, and agrees with Seller as of the Effective Date and
as of the Closing Date, except where specific reference is made to
another date or dates that:
(a) Buyer has the full right, power, and authority to purchase
the Property from Seller as provided in this Contract and to carry out
Buyer's obligations under this Contract, and all requisite action
necessary to authorize Buyer to enter into this Contract and to carry
out Buyer's obligations hereunder has been taken;
(b) Buyer shall rely solely on its own investigation in
consummating this transaction and, except for express representations
and warranties of Seller contained herein or as expressly stated herein
to the contrary, Buyer has not relied on any representation, warranty or
assurance, expressed or implied;
(c) Buyer shall promptly advise Seller in writing if Buyer's
investigation of the Property reveals the presence of hazardous wastes
or other environmental contamination (including asbestos), or facts that
would cause a reasonable person to investigate further the possibility
of such contamination.
(d) Within seven (7) days after the date hereof, Buyer and the
Trust will deliver to Seller copies of Buyer's and the Trust's Annual
Report on Form 10-K for the year ended December 31, 1995, Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 31, 1996 and
June 30, 1996, as amended, and September 30, 1996, each as filed with
the Securities and Exchange Commission (the "SEC") (collectively, the
"Securities Filings"). As of their respective filing dates with the
SEC, the Securities Filings complied as to form in all material respects
with the applicable requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the respective rules and
regulations promulgated thereunder, and did not contain any untrue
statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. No
event has occurred since the filing of Buyer's and the Trust's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1996
which is required to be disclosed in a report filed either by Buyer or
the Trust pursuant to Section 13(a) or 15(d) of the Exchange Act which
has not been so disclosed.
(e) The Partnership Interests to be issued to Seller will be,
when issued, duly authorized, validly issued, fully paid and non-
assessable. The Shares to be issued upon exchange of the Partnership
Interests will be, when issued, duly authorized, validly issued, fully
paid and non-assessable, and no liability shall attach to Seller related
thereto.
6.2 Leasing. Buyer agrees to retain CB Commercial to be its
leasing agent for the Property through December 31, 1997, on
commercially reasonable terms and conditions acceptable to Buyer. Buyer
and Seller agree to cooperate with each other in connection with
approving New Leases for the Property.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S AND SELLER'S PERFORMANCE
7.1 Performance of Buyer's Obligations. Seller is not obligated to
perform under this Contract unless:
(a) Buyer has performed all obligations and agreements
performable by Buyer on or before Closing;
(b) Buyer is simultaneously closing on the NWBC Contract and the
SOBC Contract (unless the NWBC Contract was terminated by Seller in
accordance with the terms thereof);
(c) all representations and warranties of Buyer are true and
correct in all material respects as of the Closing Date; and
(d) Buyer is simultaneously closing on, and performing at
Closing all of its closing obligations under the agreements referenced
in Section 3.3 whereby Buyer is to buy from Crosstown its Partnership
Interest in Seller and from Apex its interest in the Contract.
7.2 Performance of Seller's Obligations. Buyer is not obligated to
perform under this Contract unless:
(a) Seller has performed all obligations and agreements
performable by Seller on or before Closing;
(b) all representations and warranties of Seller are true and
correct in all material respects as of the Closing Date;
(c) as of the Closing, there have been no material adverse
changes in the physical condition of the Project from the condition
thereof as of the end of the Inspection Period;
(d) no material default, vacation, termination, bankruptcy or
other adverse material change in status has occurred with respect to any
Tenant or Tenants representing an aggregate of more than 5% of the total
net operating income with respect to the Property, as shown on the Rent
Roll for the Property; and
(e) Crosstown and Apex are simultaneously closing on, and
performing at Closing all of its closing obligations under, the
agreements referenced in Section 3.3 whereby Crosstown is to sell to
Buyer its partnership interest in Seller and whereby Apex is to sell its
interest in the Contract to Buyer.
ARTICLE VIII
CLOSING
8.1 Date and Place of Closing. The Closing shall take place in the
offices of the Title Company. The Closing Date shall be March 20, 1997,
unless an earlier date is agreed on in writing by Seller and Buyer.
8.2 Items to be Delivered at the Closing.
(a) Seller. At the Closing, Seller shall deliver or cause to be
delivered to Buyer or the Title Company, the following items:
(i) the Title Policy, in the form specified by Section 4.5,
with the cost thereof to be paid as provided in Section 4.5;
(ii) a Special Warranty Deed, duly executed and acknowledged
by Seller, in substantially the form attached as Exhibit "B", subject to
the Permitted Exceptions;
(iii) the original Leases or, if original Leases are not in
Seller's possession, copies thereof certified by Seller to be true and
correct copies of original Lease;
(iv) duplicate originals of the Assignment and Assumption of
Leases of substantially the form attached as Exhibit "C", duly executed
and acknowledged by Seller;
(v) a Bill of Sale and Assignment and Assumption of
Contracts, Bonds, Warranties and Guaranties in substantially the forms
attached as Exhibits "D" and "F", respectively, fully executed and
acknowledged by Seller;
(vi) a Non-Foreign Certification, in substantially the form
attached as Exhibit "G", in compliance with Section 1445 of the Internal
Revenue Code of 1986, as amended, and regulations promulgated
thereunder, stating under penalty of perjury the Seller's United States
identification number and that Seller is not a "foreign person" as
defined in Section 1445, duly executed and acknowledged by Seller;
provided, however that if Seller fails to deliver this affidavit, Buyer
may withhold from the Purchase Price and pay to the Internal Revenue
Service the amounts required by Section 1445, and regulations
promulgated thereunder;
(vii) keys to all locks located in the Project that are in
Seller's possession;
(viii) the Rent Roll, substantially in the form attached
hereto as Exhibit "E", certified by Seller to its current actual
knowledge through the Closing Date;
(ix) a Tenant Notice Letter in substantially the form
attached as Exhibit "H" (the "Tenant Notice Letters") for each of the
Tenants, duly executed by Seller;
(x) originals (or, if originals are not in Seller's
possession, copies certified by Seller to be true and correct copies
thereof) of all service contracts, plans, warranties, guaranties, and
other contracts and agreements relating to the ownership and operation
of the Project that, to its current actual knowledge, are in Seller's
possession, but Seller shall not be obligated to deliver copies of the
purchase agreement or closing documents relating to the purchase of the
Property by Seller;
(xi) appropriate evidence of authorization, satisfactory to
Buyer and the Title Company, in their reasonable discretion, for (A) the
sale of the Property in accordance with this Contract, (B) the execution
and delivery of this Contract on behalf of Seller, and (C) the
consummation of the transactions contemplated by this Contract on behalf
of Seller;
(xii) a standard form seller's affidavit in form acceptable
to the Title Company;
(xiii) The Proxy Agreement, Investment Letter and
Registration Rights Agreement substantially in the forms agreed upon
pursuant to Section 3.5 and executed by Seller and Robert C. Lux,
Stewart R. Stender, 330 Associates, Inc. and Apex Asset Management
Corp.;
(xiv) Seller's written agreement to indemnify and hold Buyer
harmless of and from all liabilities, losses, damages, costs, expenses
(including reasonable attorney's fees) that Buyer suffers or incurs by
reason of any act or cause of action occurring or accruing prior to
Closing Date and arising out of any act or failure to act of Seller's
agents, representatives and employees relating to this Contract or to
the Project;
(xv) an assignment to Buyer of the Note referred to in
Section 5.6(d) hereof;
(xvi) an agreement among the partners of Seller whereby
Seller is dissolved and the Partnership Interests are distributed to its
partners;
(xvii) an agreement terminating the Contract without any
further payment to the Asset Manager; and
(xvii) other items reasonably requested by the Title Company
as administrative requirements for consummating the Closing.
(b) Buyer. At the Closing, Buyer shall deliver to Seller or
the Title Company:
(i) the cash sum required by Section 3.3;
(ii) duplicate originals of the Assignment and Assumption of
Leases, duly executed and acknowledged by Buyer;
(iii) duplicate originals of the Assignment and Assumption of
Contracts, Bond, Warranties and Guaranties, duly executed by Buyer;
(iv) the Tenant Notice Letters, duly executed by Buyer;
(v) appropriate evidence of authorization, satisfactory to
Seller and the Title Company, in their reasonable discretion, for (A)
the purchase of the Property in accordance with this Contract, (B) the
execution and delivery of this Contract on behalf of Buyer, and (C) the
consummation of the transactions contemplated by this Contract on behalf
of Buyer;
(vi) other items reasonably requested by the Title Company as
administrative requirements for consummating the Closing;
(vii) The Registration Rights Agreement substantially in the
form agreed upon pursuant to Section 3.5 and executed by the Trust, and
the Partnership Amendment substantially in the form agreed upon pursuant
to Section 3.5 and executed by or on behalf of the Trust and the limited
partners of Buyer;
(viii) Assumption of the Lender Loan Documents;
(ix) Buyer's written agreement to indemnify and hold Seller
harmless of and from all liabilities, losses, damages, costs, expenses
(including reasonable attorney's fees) that Seller suffers or incurs by
reason of any act or cause of action occurring or accruing on or after
the Closing Date and arising out of any act or failure to act of Buyer's
agents, representatives and employees relating to this Contract or to
the Project;
(x) an agreement among the partners of Seller whereby Seller
is dissolved and the Partnership Interests are distributed to its
partners;
(xi) an assumption by Buyer of the Note referred to in
Section 5.6(d) hereof; and
(xii) an agreement terminating the Contract without any
further payment to the Asset Manager.
8.3 Adjustments at Closing. The following items shall be adjusted
or prorated between Seller and Buyer with respect to the Property:
(a) Ad valorem taxes and installments of special assessments
(collectively, "Taxes") relating to the Property due and payable in the
calendar year of Closing shall be prorated between Seller and Buyer as
of Closing Date, with the Seller being responsible for the number of
days in such calendar year of the Seller's ownership and Buyer being
responsible for the number of days in such calendar year of the Buyer's
ownership.
If the actual amount of Taxes due and payable in the calendar year
of Closing is not known or cannot be calculated based on tax rates and
assessed values as of the Closing Date, the proration shall be based on
the amount of Taxes due and payable with respect to the Property in the
calendar year preceding the calendar year of Closing. If the amount of
actual Taxes due and payable in the calendar year in which the Closing
takes place more or are less than the amount used to prorate for Taxes
as of the Closing Date, then an adjustment for actual Taxes due shall be
made after Closing within fifteen days after receipt of the property tax
statements by Buyer. Any amounts now or hereafter received by Buyer
(net of costs and expenses incurred in connection with such protest) or
Seller by reason of tax protests for real estate taxes due and payable
with respect to periods prior to the Closing Date shall be the property
of Seller, subject only to the rights of Tenants therein.
(b) Subject to the specific provisions of subsection (f) below,
Rents (including Tenants' contributions for operating costs and taxes)
actually paid to and received by Seller in collected funds before
Closing with respect to the Project for the month in which Closing
occurs shall be prorated as of Closing, with Seller to be charged and
Buyer to be credited with their respective portions. Rents payable with
respect to the Project for the month in which Closing occurs which have
not been paid to and received by Seller in collected funds before
Closing shall be prorated as of Closing, but with no cash credit or
debit provided at Closing. Nothing in this subparagraph shall prohibit,
limit, or restrict Seller from collecting or attempting to collect
directly from any Tenant after Closing in any lawful manner, but
excluding Seller's bringing a unlawful detainer action against a Tenant
in connection with Seller's collection efforts, any rents delinquent at
the time of Closing. Rents received after Closing shall be applied
first to current rents and rents that become delinquent after Closing
and then to rents that are delinquent as of the Closing (with Seller's
portion to be promptly paid by Buyer to Seller).
(c) Seller shall pay over to Buyer and shall deliver to Buyer an
accounting for the following: unforfeited deposits paid by Tenants,
including all rental, security, utility, key, damage, and other
deposits; prepaid rents paid to Seller by the Tenants for periods
subsequent to the Closing Date; and any other money held by Seller for
the account of the Tenants.
(d) All insurance policies and property management and leasing
agreements shall be terminated as of the Closing and there shall be no
prorations as to these items.
(e) All other income and ordinary operating expenses of the
Property (other than for public utilities, for which each party shall
deal directly with the service provider), including maintenance,
management, and other service charges, and all other normal operating
charges with respect to the Project shall be prorated effective at
Closing based on reasonable estimates of such operating expenses, and
appropriate cash adjustments shall be made by Buyer and Seller at
Closing.
(f) With respect to amounts paid or payable by Tenants under the
Leases pursuant to provisions relating to escalations or pass-throughs
of operating expenses and real estate taxes ("Additional Rents"), Seller
shall provide to Buyer at closing a certified statement itemizing by
Tenant the amount of Additional Rents collected from such Tenant and a
computation of the actual Additional Rents due from such Tenant for the
period from January 1, 1997 (or, if such Tenant pays Additional Rents on
other than a calendar year basis, from the commencement of the fiscal
year on which such Tenant pays Additional Rents) through the last day of
the month prior to the month in which Closing occurs (the "Additional
Rent Statement"). Promptly after Closing, but in no event more than
thirty (30) days after Closing, Seller shall provide a final certified
Additional Rent Statement updating the statement previously provided
through the date of Closing. At the time each such Additional Rent
Statement is provided, Seller shall also provide to Buyer the supporting
data upon which such Additional Rent Statement is based. As soon as
practical after Closing, Seller shall attempt to reconcile with the
Tenants for the period prior to Closing.
If the final Additional Rent Statement shows that Seller has over
collected the Additional Rents due from the Tenants under the Leases in
force (including month to month and other holdover or extension
arrangements with such Tenants) at the Closing, Seller shall pay to
Buyer the amount of such over collected Additional Rents at the time the
final Additional Rent Statement is provided to Buyer. If the final
Additional Rent Statement shows that Seller has under collected the
Additional Rents due from the Tenants under the Leases in force at the
Closing, Buyer shall make appropriate adjustments to the monthly amounts
payable by such Tenants and shall invoice such under collected amounts
to such Tenants as part of Buyer's year end billing to reconcile
estimated Additional Rents to actual amounts received from each such
Tenant. Buyer shall pay to Seller such uncollected amounts as, if and
when received by Buyer. Buyer shall use reasonable efforts to collect
such amounts due and shall be entitled to recover the cost of
collections incurred in connection with such efforts (apportioned
proportionately between the amounts due to Seller and to Buyer) other
than Buyer's administrative and overhead costs in billing and collection
in connection with normal operations at the Property. The foregoing
notwithstanding, Buyer shall have no liability to Seller for any
uncollected amounts and shall not be required to commence any legal
action to collect any such amounts.
Notwithstanding Seller's provision to Buyer of the final certified
Additional Rent Statement and the payment if any, of over collected
amounts at the time of the provision of such statement, Seller shall
remain obligated to refund to any Tenant any additional amounts finally
determined to have been overcollected from such Tenant with respect to
the period prior to Closing by an independent arbitral or judicial
authority.
With respect to Additional Rents due to Seller from Tenants not in
occupancy as of the date of Closing, Seller shall retain all rights
relating thereto and all amounts collected by Seller relating thereto
shall be retained by Seller.
As between Seller and Buyer, Additional Rents shall be allocated and
apportioned over the period with regard to which operating expenses or
real estate taxes are incurred, notwithstanding the date on which such
Additional Rents become payable.
The provisions of this subsection (f) shall survive Closing.
(g) Buyer shall be entitled to a credit against the Purchase
Price as provided in Sections 4.4 and 5.2(d) hereof.
8.4 Possession and Closing. Possession of the Property shall be
delivered to Buyer by Seller at the Closing, subject to the rights of
the Tenants. Buyer shall make its own arrangements for the provision of
public utilities to the Project and Seller shall terminate its contracts
with such utility companies that provide services to the Project.
8.5 Costs of Closing. Each party is responsible for paying the
legal fees of its counsel in negotiating, preparing, and closing the
transaction contemplated by this Contract. Seller shall be responsible
for paying the state deed tax (if any) due upon recording of the Special
Warranty Deed and Buyer shall be responsible for paying the recording
fees for such deed. Any other expense not specifically allocated herein
shall be allocated between the parties in the customary manner for
closings of real property similar to the Property in the geographic area
in which the Property is located.
ARTICLE IX
DEFAULTS AND REMEDIES
9.1 Seller's Defaults; Buyer's Remedies. In addition to Buyer's
remedy for the breaches described in Section 5.3 hereof, if Seller is in
default hereunder after expiration of any applicable cure period
provided herein, Buyer may, at Buyer's sole option, do any of the
following, as Buyer's sole and exclusive remedies:
(a) Terminate this Contract by giving written notice to Seller
on or before the Closing Date, in which event the Earnest Money Deposit
shall be returned to Buyer; or
(b) If the default is Seller's failure to cure Objections, cure
the Objections not cured by Seller at Closing (thereby waiving any
further recourse against Seller by reason thereof) and reduce the
Purchase Price only to the extent of up to the first $50,000 (in the
aggregate) of the cost of curing any Material Objections and the full
amount of the cost of discharging any Liens, to the extent paid by Buyer
and not by Seller pursuant to Section 4.4 hereof, and proceed to
consummate this transaction in accordance with this Contract, or
(c) Enforce specific performance of this Contract.
9.2 Buyer's Default; Seller's Remedies. If Buyer is in default
under this Contract or under the SOBC Contract or the NWBC Contract, and
such default continues for ten (10) days after written notice thereof
from Seller to Buyer, Seller may, as Seller's sole and exclusive remedy,
terminate this Contract and receive the Earnest Money Deposit from the
Title Company.
9.3 Payment of Earnest Money Deposit. Upon the termination of this
Contract by reason of a default by Buyer hereunder and expiration of any
applicable cure period provided herein, the Earnest Money Deposit shall
forthwith be tendered by the Title Company to Seller. If the Earnest
Money Deposit may be properly delivered to Seller under this Section
9.3, then Buyer shall, promptly on written request from Seller, execute
and deliver any documents necessary to cause the Title Company to
deliver the Earnest Money Deposit to Seller.
9.4 Waiver of Claims. As a further material inducement to Seller
to enter into this Contract and the transactions contemplated herein,
Buyer represents and warrants to Seller that Buyer is acquiring the
Property for commercial or business use, has knowledge and experience in
financial and business matters that enable Buyer to evaluate the merits
and risks of the transaction herein contemplated, has bargained for and
obtained a Purchase Price and other terms under this Contract which make
the acceptance of a contract which substantially limits its recourse
against the Seller acceptable and has been and will continue to be
represented by counsel in connection with the transactions contemplated
herein.
9.5 Statutory Cancellation. The parties agree that if Seller
commences a statutory cancellation of this Agreement by reason of
Buyer's default, the Buyer's cure period shall be limited to thirty (30)
days.
9.6 Crosstown/Apex Default. If Crosstown or Apex default under
their respective agreements with Buyer contemplated under subsection
(ii) and (iii) of Section 3.3 of this Agreement, including a failure by
Crosstown or Apex to perform at Closing, and Buyer notifies Seller that
it has decided not to seek specific performance of Crosstown's or Apex's
performance, as applicable, or that such specific performance is not
available, then Buyer or Seller shall have the right to terminate this
Agreement by giving written notice to the other party on or before
Closing, in which event the Earnest Money shall be returned to Buyer and
Buyer and Seller shall have no further obligations, one to the other,
with respect to the subject matter of this Contract (except under
Section 4.7) except that Seller shall reimburse Buyer for all reasonable
out-of-pocket costs and expenses incurred by Buyer in connection with
this Agreement and with the Property, including, but not limited to,
title company charges, engineering fees, environmental consultant's
fees, architect's fees, legal fees (including the cost of pursuing such
specific performance) and other similar charges.
ARTICLE X
BROKERAGE COMMISSIONS
10.1 Amount. Seller shall pay a real estate brokerage commission
to Tom Holtz of CB Commercial (the "Seller's Broker") in the amount of
2.25% of the Purchase Price for Broker's services in connection with
this transaction, if, as and when Closing occurs and Seller conveys the
Property to Buyer.
Seller's obligation to pay such commission is totally contingent upon
the consummation of the Closing and the payment to Seller of the
Purchase Price and shall not be payable if Closing and such payment
shall not occur for any reason, including Seller's default. Seller's
Broker may divide its commission with other licensed real estate
brokers, agents, or salespersons, but Seller's only obligation to pay a
commission with respect to the Property, regardless of the nature or
extent of Seller's contact with any other broker or salesman is to
Seller's Broker pursuant to this Contract. Notwithstanding the
foregoing, Seller may, at its option, require the Buyer to pay the
Seller's Broker in which event the Purchase Price shall be reduced by
the amount of such payment. Buyer shall be responsible to pay the
commission or fee due to Tim Leary & David Ryder of CB Commercial
("Buyer's Broker") in connection with this Contract Buyer's Broker shall
have no right to share in the commission payable by Seller to Seller's
Broker. Buyer's obligation to pay such commission is totally contingent
upon the consummation of the Closing and the payment to Seller of the
Purchase Price and shall not be payable if Closing and such payment
shall not occur for any reason, including Buyer's default.
10.2 Indemnity. Seller represents and warrants to Buyer that
Seller has not contacted or entered into any agreement with any real
estate broker, agent, finder, or any other party in connection with this
transaction, other than as identified in Section 10.1 and that Seller
has not taken any action that would result in any real estate broker's,
finder's, or other fees or commissions being due to any other party with
respect to this transaction. Seller acknowledges and agrees that Buyer
shall have no obligation to pay any commission by reason of the purchase
and sale contemplated hereby to Seller's Broker and that any commission
payable to any such persons or entities by reason of the purchase and
sale contemplated hereby shall be paid by Seller; such agreement shall
not create any obligation by Seller to such person or entity absent a
written agreement with Seller to such effect. Buyer represents and
warrants to Seller that Buyer has not contacted or entered into any
agreement with any real estate broker, agent, finder, or other party in
connection with this transaction, other than as identified in Section
10.1 and that Buyer has not taken any action that would result in any
real estate broker's, finder's, or other fees or commissions being due
to any other party with respect to this transaction. Buyer acknowledges
and agrees that Seller shall have no obligation to pay any commission by
reason of the purchase and sale anticipated hereby to Buyer's Broker.
Each party hereby indemnifies and agrees to hold the other party
harmless from any loss, liability, damage, cost, or expense (including,
but not limited to, reasonable attorney's fees) resulting to the other
party from a breach of the representation and warranty made by such
party herein. The indemnities set forth in this Section 10.2 shall
survive the Closing.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices, demands, requests, and other
communications given with respect to the subject matter of this Contract
shall be in writing, and shall be deemed to be delivered (a) on receipt
if delivered by hand delivery, (b) on receipt if faxed to the number
provided below (provided that a copy of such fax is also sent by U.S.
mail or by recognized overnight courier service) or (c) when delivered
to a recognized overnight courier service, or whether actually received
or not, if addressed as provided below:
If to Seller: c/o Apex Asset Management Corporation
600 South Highway 169, Suite 1970
Minneapolis MN 55426
Attn: Stewart R. Stender
Fax No: 612-545-1510
Copies to: Fabyanske, Svoboda, Westra & Hart
1100 Kinnard Financial Center
920 Second Avenue South
Minneapolis MN 55402
Attn: Mark W. Westra
Fax No: 612-338-3857
If to Buyer: Liberty Property Limited Partnership
65 Valley Stream Parkway
Great Valley Corporate Center
Malvern, PA 19355
Attn: John Gattuso
Fax No: 610-644-4129
Phone No: 610-648-1754
With a copy to:Liberty Property Limited Partnership
65 Valley Stream Parkway
Great Valley Corporate Center
Malvern, PA 19355
Attention: Anne Sheppard
Fax No: 610-644-4129
Phone No: 610-648-1700
Copies to: Dorsey & Whitney
220 South Sixth Street
Suite 2200
Minneapolis MN 55402
Attention: Jeffrey Benson
Phone No: 612-340-2757
Fax No: 612-340-7800
11.2 Governing Law. This Contract is being executed and
delivered, and is intended to be performed, in the State of Minnesota,
and the laws of Minnesota shall govern the validity, construction,
enforcement, and interpretation of this Contract, unless otherwise
specified herein. This Contract is performable in, and the exclusive
venue for any action brought with respect hereto shall lie in, Hennepin
County, Minnesota.
11.3 Entirety and Amendments. This Contract embodies the entire
agreement between the parties and supersedes all prior agreements and
understandings, if any, relating to the Property, including any letter
of intent executed relating to the Property, and may be amended or
supplemented only by an instrument in writing executed by the party
against whom enforcement is sought.
11.4 Parties Bound. This Contract is binding on and inures to
the benefit of Seller and Buyer, and their respective heirs, executors,
administrators, successors, and assigns.
11.5 Further Acts. In addition to the acts and deeds recited in
this Contract and contemplated to be performed, executed, and/or
delivered under this Contract, Seller and Buyer agree to perform,
execute, and/or deliver or cause to be performed, executed, and/or
delivered at the Closing of after the Closing all further acts, deeds,
and assurances reasonably necessary to consummate the transactions
contemplated hereby.
11.6 Condition of the Property. EXCEPT FOR ANY REPRESENTATIONS
AND WARRANTIES OF SELLER PROVIDED HEREIN, BUYER ACKNOWLEDGES AND AGREES
THAT THE PROPERTY SHALL BE CONVEYED AND TRANSFERRED TO BUYER "AS IS,
WHERE IS, AND WITH ALL FAULTS", AND THAT, EXCEPT FOR ANY EXPRESS
REPRESENTATIONS AND WARRANTIES OF SELLER PROVIDED HEREIN, SELLER DOES
NOT WARRANT OR MAKE ANY REPRESENTATION, EXPRESSED OR IMPLIED, AS TO THE
MERCHANTABILITY, QUANTITY, QUALITY, CONDITION, SUITABILITY OR FITNESS
FOR ANY PURPOSE WHATSOEVER OF THE PROPERTY AND HAS NO OBLIGATION
WHATSOEVER TO UNDERTAKE ANY REPAIRS, ALTERATIONS, OR OTHER WORK OF ANY
KIND WITH RESPECT TO ANY PORTION OF THE PROPERTY.
EXCEPT FOR ANY EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER PROVIDED
HEREIN, BUYER AGREES THAT IN THE EVENT OF ANY SUCH CONSTRUCTION DEFECTS,
ERRORS, OMISSIONS OR ON ACCOUNT OF ANY OTHER CONDITIONS AFFECTING THE
PROPERTY, BUYER SHALL LOOK SOLELY TO SELLER'S PREDECESSORS OR TO SUCH
CONTRACTORS AND CONSULTANTS AS MAY HAVE CONTRACTED FOR WORK IN
CONNECTION WITH THE PROPERTY FOR ANY REDRESS OR RELIEF. EXCEPT FOR ANY
REPRESENTATIONS AND WARRANTIES OF SELLER PROVIDED HEREIN, UPON THE
ASSIGNMENT BY SELLER OR ITS CLAIMS, BUYER RELEASES SELLER OF ALL RIGHTS,
EXPRESS OR IMPLIED, BUYER MAY HAVE AGAINST SELLER ARISING OUT OF OR
RESULTING FROM ANY ERRORS, OMISSIONS OR DEFECTS IN THE PROPERTY.
SUBJECT TO THE DELIVERY BY SELLER OF THE INFORMATION DESCRIBED IN
SECTION 5.2(a) HEREOF, TO THE EXTENT IN SELLER'S, SELLER'S PARTNERS OR
THE PROPERTY MANAGER'S POSSESSION, BUYER ALSO ACKNOWLEDGES AND AGREES
THAT THE PROVISIONS IN THIS CONTRACT FOR INSPECTION AND INVESTIGATION OF
THE PROPERTY ARE ADEQUATE TO ENABLE BUYER TO MAKE BUYER'S OWN
DETERMINATION WITH RESPECT TO THE MERCHANTABILITY, QUANTITY, QUALITY,
CONDITION, AND SUITABILITY OR FITNESS FOR ANY PURPOSE OF THE PROPERTY,
INCLUDING, WITHOUT LIMITATION, ITS COMPLIANCE WITH APPLICABLE
ENVIRONMENTAL LAWS.
11.7 Time of the Essence. It is agreed by Seller and Buyer that
time is of the essence with respect to this Contract.
11.8 Exhibits. The Exhibits referred to in, and attached to,
this Contract are incorporated in and made a part of this Contract for
all purposes.
11.9 Risk of Loss. Seller shall promptly notify Buyer of any
fire or other casualty affecting the Project or of any actual or
threatened (to the extent that Seller has current actual knowledge
thereof) taking or condemnation of all or any portion of the Project.
If between the Effective Date of the Contract and the Closing Date,
there occurs:
(a) damage to the Project caused by fire or other casualty that
would cost $500,000 or more to repair or would be likely to result in
Buyer's judgment, in the loss of any Tenant or Tenants representing an
aggregate of more than 5% of the total net operating income with respect
to the Property; or
(b) the taking or condemnation of all or a portion of the
Project that would materially interfere with the present use of the
Project or if any taking or condemnation occurs for which Buyer does not
approve the amount of the condemnation award;
then, Buyer may terminate this Contract by giving written notice to
Seller within ten (10) Business Days after Buyer has received notice
from Seller. If Buyer does not so timely elect to terminate this
Contract, then the Closing shall take place as provided herein and there
shall be assigned to Buyer at the Closing all interest of Seller in and
to any insurance proceeds (and Seller shall pay to Buyer the amount of
any deductible) or condemnation awards payable to Seller on account of
that event, less sums that Seller incurs before the Closing to repair
any of the damage.
If between the Effective Date of the Contract and the Closing Date,
there occurs:
(c) damage to the Project caused by fire or other casualty that
would cost less than $500,000 to repair or would be likely to result, in
Buyer's judgment, in the loss of any Tenant or Tenants representing an
aggregate of less than 5% of the total net operating income with respect
to the Property; or
(d) the taking or condemnation of all or a portion of the
Project that would not materially interfere with the present use of the
Project and Buyer approves of the condemnation award;
then, Buyer may not terminate this Contract and there shall be assigned
to Buyer at the Closing all interest of Seller in and to insurance
proceeds (and Seller shall pay to Buyer the amount of any deductible) or
condemnation awards payable to Seller on account of that event, less
sums that Seller incurs before the Closing to repair any of the damage.
The provisions of the Section 11.9 shall survive Closing.
11.10 Assignment. This Agreement shall apply to, inure to the
benefit of and be binding upon and enforceable against the parties
hereto and their respective successors and assigns. No such assignment
will release Buyer from any of its obligations hereunder.
11.11 Attorney's Fees. If either party hereto employs an
attorney to enforce or defend its rights hereunder, the prevailing party
shall be entitled to recover its reasonable attorney's fees.
11.12 Non-Disclosure; Non-Recordation. Neither party shall make
public disclosure with respect to this transaction before the Closing
except:
(a) as may be required by law, including without limitation
disclosures required under securities laws; and
(b) to such lenders, attorneys, accountants, partners,
directors, officers, employees and representatives of either party or of
such party's advisors who need to know such information for the purpose
of evaluating and consummating the transaction, including the financing
of the transaction; and
(c) to present or prospective sources of financing.
Neither this Contract, nor a memorandum hereof, shall be recorded in any
public records.
11.13 Enforceability. If a provision of this Contract is held to
be illegal, invalid, or unenforceable under present or future laws
effective during this Contract, the legality, validity, and
enforceability of the remaining provisions of this Contract shall not be
affected thereby, and in lieu of each illegal, invalid or unenforceable
provision there shall be added automatically as a part of this Contract
a provision as similar in terms to such illegal, invalid, or
unenforceable provision as may be possible and be legal, valid, and
enforceable.
11.14 Business Day. Notwithstanding any other provision herein,
if the Closing Date or the expiration of the Inspection Period, Title
Review Period or Cure Period occurs on a day that is not a Business Day,
then the Closing Date or the expiration date for such period shall be
extended to 4:00 p.m. on the first Business Day following that date.
11.15 Expiration of Offer. If a fully-executed counterpart of
this Contract is not received by Seller and Title Company on or before
January 24, 1997, as indicated below, the offer contained in this
Contract shall be null and void.
11.16 Counterpart Signatures. This Contract may be executed in any
number of counterparts, which, when assembled and taken together, is to
be regarded as a single agreement.
11.17 Liability of Seller. Notwithstanding anything herein to the
contrary, and notwithstanding Buyer's purchase of the limited
partnership interest of Crosstown in Seller at Closing,
a. Buyer shall have no liability hereunder as a partner in
Seller after Closing, nor shall Buyer be subject to any claims of
contribution or indemnification from the other partners in Seller for
any claim made by Buyer against Seller hereunder or under the closing
documents executed by Seller hereunder;
b. Buyer's rights and obligations against Seller shall not be
affected or impaired in any manner by Buyer's acquisition of the
partnership interests of Crosstown in Seller; and
c. The current partners in Seller (330 Associates, Inc., Robert
C. Lux, Stewart R. Stender and Crosstown), and not Buyer, shall be
liable for the obligations of Seller hereunder, if and to the extent
such partners have liability therefor under applicable law, but the
current limited partners are not, by this Section 11.17, agreeing to
assume any personal liability for the obligations of Seller hereunder.
SIGNATURE PAGE FOR CONTRACT OF SALE - 330
EXECUTED by Buyer on the day of January, 1997.
BUYER:
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: Liberty Property Trust,
its sole general partner
By:
------------------------------
Its:
------------------------------
And
By:
------------------------------
Its:
------------------------------
EXECUTED by Seller on day of January, 1997.
SELLER:
330 ASSOCIATES LIMITED PARTNERSHIP,
a Minnesota limited partnership
By: 330 Associates, Inc.,
a Minnesota corporation,
its general partner
By:
------------------------------
Its:
------------------------------
JOINDER OF SELLER'S PARTNERS
The undersigned partners in Seller agree that the Partnership Interests
in Buyer acquired pursuant hereto shall be pledged as security for the
performance of the obligations, duties and liabilities of Seller,
Crosstown and Apex that survive Closing, provided however, that if no
action is commenced with regard to an alleged breach in the performance
of said obligations, duties and liabilities of Seller, Crosstown and
Apex that survive Closing within one (1) year after Closing, such
Partnership Interest shall thereafter be free and clear of any such
pledge. The undersigned further acknowledge and agree to the limitation
on the liability and contribution right of Buyer as provided in Section
11.17. The undersigned partners in Seller agree to execute and/or
deliver such instruments as Buyer may reasonably request to perfect such
pledge.
Dated: January __, 1997
------------------------------
Stewart R. Stender
------------------------------
Robert C. Lux
330 ASSOCIATES, INC.
By:
------------------------------
Its:
------------------------------
JOINDER OF BROKERS
Brokers have executed this Contract solely for the purposes of
evidencing its agreement to the terms of Section 10.1 of this Contract.
No consent by Brokers shall be required to amend any other term of this
Contract.
Date executed: January __, 1997
CB COMMERCIAL
By:
------------------------------
Name: Tom Holtz
Title:
------------------------------
By:
------------------------------
Name: Jim Leary
Title:
------------------------------
By:
------------------------------
Name: David Ryder
Title:
------------------------------
JOINDER OF TITLE COMPANY
The undersigned has received a counterpart of this Contract, fully
executed by Seller and Buyer, on the day of January, 1997
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
EXHIBIT 10.5
AMENDMENT
TO
CONTRACT OF SALE
330
This Amendment (the "Amendment") dated as of the __ day of March, 1997,
is made and entered into by and between 330 ASSOCIATES LIMITED
PARTNERSHIP, a Minnesota limited partnership ("Seller") and LIBERTY
PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership or its
permitted assigns ("Buyer").
WITNESSETH
WHEREAS, Seller and Buyer entered into that Contract of Sale dated
January 22, 1997, as amended by Amendment No. 1 thereto dated January 31,
1997 and by letter agreements dated March 7, 1997 and March 13, 1997 (the
"Contract") with regard to certain property owned by Seller in Hennepin
County, Minnesota; and
WHEREAS, Seller and Buyer have agreed to amend the Contract in order to
evidence their agreement to certain changes to the Contract, as provided
hereinafter; and
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Defined Terms. Unless the context otherwise indicates or unless
otherwise defined herein, capitalized terms used herein shall have the
meanings set forth in the Contract. As used in this Amendment, the
following terms have the meanings indicated:
a. "Net Effective Rent" means the average Triple Net Rent,
minus Transaction Costs relating to the applicable New Lease or Renewal
Lease amortized over the primary term of such New or Renewal Lease with
interest at the rate of 10% per annum.
b. "Triple Net Rent" means annual gross rent per square foot
minus $9.01 per square foot for the operating expenses of the
Improvements.
c. "Transaction Costs" as to any New Lease or Renewal Lease
means all costs paid by Buyer in connection therewith including, but not
limited to, costs for tenant improvements, attorneys' fees, external and
internal commissions, space planning and other lease incentives provided
to the applicable tenant in connection with a New Lease or a Renewal
Lease.
2. Amendments.
a. Section 3.1 of the Agreement is hereby amended in its
entirety to read as follows:
"3.1 Purchase Price. The Purchase Price (herein so
called) to be paid by Buyer to Seller is THIRTEEN MILLION SEVEN HUNDRED
THIRTY THOUSAND no/100ths U.S. Dollars ($13,730,000.00), reduced by
obligations assumed and the amounts paid by Buyer pursuant to Section
3.3(i) through (v) below and subject to adjustment as provided below.
Buyer agrees to pay to Seller, as an additional Purchase
Price, the Earn Out Amount, as defined below, in connection with the new
leases of vacant (or to become vacant) leasable areas of the Improvements
entered into on or before December 31, 1997 ("New Leases") and the
renewal or extension of existing leases effectively exercised or entered
into on or before December 31, 1997 (provided, however, that no Earn Out
Amount shall be payable with respect to any renewal or extension of an
existing lease pursuant to a renewal or extension option contained
therein and exercised by such tenant more than one year in advance of the
applicable exercise date in such lease) ("Renewal Leases"). The Earn Out
Amount will be payable on January 15, 1998 as to such amount thereof to
which Seller has qualified on or after the Closing Date through December
31, 1997.
The Earn Out Amount shall be equal to the lesser of (a)
$2,000,000, or (b)(i) the amount of Net Operating Income, as defined
below, as of December 31, 1997, in excess of $1,466,000, multiplied by
(ii) $7.69.
The parties agree that the annual Net Operating Income from
the Leases existing on the date hereof, including the rent payable with
respect to the Renewal Leases with Guaranty Title and IBEW and the rent
payable with respect to the New Leases with DEA and OHA, but not
including the rent payable with respect to the U.S. Bankruptcy Court
Lease, is $1,307,000. Seller acknowledges that no Earn Out Amount will
be payable with respect to the first $159,000 net increase in annual Net
Operating Income over the $1,307,000 annual Net Operating Income as of
the date hereof.
Net Operating Income as of December 31, 1997 shall be the
sum of
(i) $1,307,000;
plus (ii) the average annual Net Effective Rent payable over
the primary term of each New Lease;
plus (iii) with respect to any Renewal Lease, (a) the
average annual Net Effective Rent payable over the renewal or extended
term to the extent in excess of the Triple Net Rent payable by such
tenant over the immediately preceding twelve months;
less (iv) the Triple Net Rent payable over the immediately
preceding twelve months pursuant to the terms of any (i) Lease which has
been terminated or the terms of which have expired as of such date, or
(ii) any Lease in existence on December 31, 1997 which is being replaced
in whole or in part by any New Lease or Renewal Lease, it being the
intent of the parties that the Earn Out Amount be paid on the net
increase in Net Operating Income (after the initial threshold of
$1,466,000 is met) resulting from such New Lease or Renewal Lease, but no
reduction will be made by reason of the expiration of the Lease as to the
U.S. Bankruptcy Court.
For the purpose of determining the Net Effective Rent
payable with respect to any New Lease, any Renewal Lease or any expired
or terminated Lease which is based on an annual gross rent, the annual
gross rent will be converted to Triple Net Rent by subtracting $9.01 per
square foot for the operating expenses of the Improvements.
The calculation of Earn Out Amount will be based on the
Leases in existence on December 31, 1997, without respect to whether the
tenant under any New Lease or any Renewal Lease has taken occupancy of
its premises or commenced payment of rent or whether any other conditions
of the effectiveness of such Lease remains unsatisfied. The foregoing
notwithstanding, if any New Lease or Renewal Lease is signed on or before
December 31, 1997 and if the tenant is not bound with respect to such New
Lease or Renewal Lease unless and until certain conditions and
contingencies in favor of the tenant (and outside of Landlord's control)
are met, any Earn Out Amount that would otherwise be payable with respect
to such Lease or Renewal Lease shall not be payable unless and until such
time as all such contingencies and conditions have been fulfilled or
removed.
As part of the approval by Buyer of each New Lease and each
Renewal Lease and upon the expiration or termination of any Lease, Buyer
and Seller shall agree as to the effect such occurrence shall have on the
calculation of Net Operating Income and the Earn Out Amount.
Notwithstanding anything herein, a New Lease or a Renewal
Lease must have a minimum primary term of three (3) years from and after
the effective date thereof in order for the increase to be included in
the calculation of the Earn Out Amount.
For Example:
A ten (10) year lease for 10,000 square feet at 23.00 p.s.f. average
gross rent with operating expenses of $9.01 p.s.f. and transaction costs
of $10.00 p.s.f. would increase Net Operating Income and generate an Earn
Out Amount (to the extent the $1,466,000 Net Operating Income threshold
has been exceeded) as follows:
Triple Net Rent = $23.00 p.s.f. - $9.01 p.s.f.
Calculation = $13.99 p.s.f.
Net Effective Rent Calculation = $13.99 p.s.f.(average triple net rent
over primary term)
= $1.59 p.s.f.(amortized transaction
costs)
= $12.40 p.s.f.
Earn Out = $12.40 p.s.f. x $7.69 p.s.f.
= $95.36 p.s.f. x 10,000 s.f.
= $953,560
b. Section 3.3, through 3.3(v), of the Contract is hereby
amended to read as follows:
"At Closing the following shall occur:
(i) Buyer will assume and pay to First Bank National
Association ("Lender"), the outstanding principal balance of that
Amendment and Restatement of Promissory Note dated March 29, 1996, in the
original principal amount of $4,950,000, together with all interest and
all other amounts due to Lender in connection therewith, as shown on a
payoff letter from Lender;
(ii) Buyer will purchase the partnership interest in Seller
of Crosstown Asset Corp. I., a Delaware corporation ("Crosstown") for
$5,750,664.35;
(iii) Buyer will acquire, by contribution, the interest of
Apex Asset Management Corporation ("Apex") in that certain Asset
Management Agreement, dated April 13, 1994 (the "Contract") for 85,051 in
Partnership Interests, it being understood and agreed that effective at
Closing, Apex relinquishes all rights to any Earn Out Amount payable
after Closing;
(iv) Buyer will pay adjusted costs (including the closing
costs) shown on the attachment to the Closing Statement in the amount of
$454,234.55;
(v) Buyer shall issue to Seller 257,324 partnership
interests in Buyer (the "Partnership Interests"), with each Partnership
Interest valued at the lesser of (a) the Average Share Price as of the
Closing Date, or (b) $25, and with the number of Partnership Interests
rounded to the nearest whole number."
c. Notwithstanding the second paragraph following Section
3.3(v) of the Purchase Agreement, 330 Associates Inc., Lux and Stender
may elect, by notice to Buyer on or before January 8, 1998, to be paid
their proportionate share of the Earn Out Amount in Partnership Interests
(valued at the lesser of (a) the Average Share Price as of December 31,
1997 or (b) $25, and with the number of Partnership Interests rounded to
the nearest whole number.) No Partnership Interests shall be distributed
to Crosstown in connection with such Earn Out Amount, it being the intent
of the parties that the recipients of such Interests be limited to Robert
Lux, Stewart Stender and 330 Associates, Inc.
d. Section 3.5(f)(iii) of the Contract and the Registration
Rights Agreement previously approved by Buyer and Seller is hereby
amended to increase the permitted weekly trading by Seller from 10% to
20% of the average weekly trading volume for the Shares.
e. Towle Financial has delivered to Buyer an estoppel
certificate indicating certain problems with the HVAC system. Seller
agrees that Buyer may offset any costs Buyer incurs to satisfy such
problem, up to an aggregate sum of $10,000, against any Earn Out Amount
due to Seller on January 15, 1998. Seller shall have no other obligation
to Buyer with respect to this issue.
f. Buyer's environmental report disclosed that there is certain
asbestos containing materials used in insulating pipejoints in the
Building. Prior to Closing, Seller shall remove the asbestos containing
materials disclosed in such report in compliance with all applicable laws
and regulations and deliver an inspection report from Nova Environmental
that such work has been completed in compliance with all applicable laws
and regulations, at Seller's cost. Seller shall have no other obligation
to Buyer with respect to this issue.
g. The Purchase Price reflects a $20,000 adjustment by reason
of issues raised by Buyer relating to the condition of the cooling tower.
Seller shall have no other obligation to Buyer with respect to this
issue.
h.Subject to the terms of this Amendment, Buyer has accepted the
condition of the Property pursuant to Section 4.6 of the Contract.
i. The following provision is hereby added to Section 6.2 of
the Contract. Buyer shall have the right to withhold approval of any
leasing transaction that (i) has Transaction Costs in excess of $3.00 per
rentable square foot per lease year, (ii) involves a tenant whose credit
is unacceptable to Buyer in Buyer's reasonable judgment, (iii) has a use
that is not compatible, in Buyer's reasonable judgment, with the
structure or the other tenants or occupants of the Improvements; or (iv)
would require Buyer to relocate offices at the Improvements. In the
event that Buyer, in its sole discretion, approves a leasing transaction
outside the above-referenced terms and conditions, such transactions
shall be eligible to contribute toward the Earn Out Amount, subject to
the terms and conditions governing the Earn Out Amount contained herein.
3. Leasing Commissions. Seller hereby certifies to Buyer that the OHA
leasing commission in the amount of $43,307.96, the Guaranty Title
leasing commission in the amount of $5,005.50 and the IBEW leasing
commission in the amount of $4,050.00 have been paid in full.
4. Full Force and Effect. Seller and Buyer agree that the Contract is
in full force and effect and has not been amended, modified or
supplemented in any respect, except as provided herein.
5. Governing Law. This Amendment is being executed and delivered and
is intended to be performed in the State of Minnesota, and the laws of
Minnesota shall govern the validity, construction, enforcement and
interpretation of this Amendment, unless otherwise specified herein.
6. Parties Bound. This Amendment is binding on and inures to the
benefit of Seller and Buyer, and their respective heirs, executors,
administrators, successors and assigns.
7. Counterpart Signatures. This Amendment may be executed in any
number of counterparts, which, when assembled and taken together, is to
be regarded as a single agreement.
SIGNATURE PAGE FOR
AMENDMENT
TO
CONTRACT OF SALE
330
EXECUTED by Buyer on the day of March, 1997
BUYER:
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: Liberty Property Trust,
its sole general partner
By:
------------------------------
Its:
------------------------------
By:
------------------------------
Its:
------------------------------
EXECUTED by Seller on __ day of March, 1997.
SELLER:
330 ASSOCIATES LIMITED PARTNERSHIP,
a Minnesota limited partnership
By: 330 Associates, Inc.,
a Minnesota corporation,
its general partner
By:
------------------------------
Its:
------------------------------
Robert C. Lux and Stewart R. Stender agree that, for a period of two
years from the date of Closing that they will not solicit any tenants in
the Improvements on the date hereof to move to any building in which they
have an interest or for which they provide leasing or management
services. In the event they (or their agents) are contacted by a tenant
in the Improvements, they agree to immediately disclose such interest to
Buyer and may proceed to negotiate with such tenant only after receipt of
written consent from Buyer. This Agreement shall survive Closing.
------------------------------
Robert C. Lux
------------------------------
Stewart R. Stender
Dated March ___, 1997
EXHIBIT 10.6
CONTRACT OF SALE
SOBC
This Contract of Sale (the "Contract") dated as of this ___ day of
January, 1997 is made and entered into by and between SOBC ASSOCIATES
LLC, a Minnesota limited liability company ("Seller") and LIBERTY
PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership or its
permitted assigns ("Buyer").
ARTICLE I
DEFINED TERMS
1.1 Definitions. As used in this Contract, the following terms have
the meanings indicated:
"330 Contract" means that Contract of Sale of even date herewith
between Buyer and 330 Associates Limited Partnership.
"Average Share Price" means the average closing price for the
twenty (20) Business Days preceding the Closing Date of a Share as
reported on the New York Stock Exchange.
"Business Day" means a day other than a Saturday, a Sunday or
another day on which commercial banks in Minneapolis, Minnesota are not
required to be open for public business.
"Closing" means the consummation of the purchase of the Property
by Buyer from Seller in accordance with Article VIII.
"Closing Date" means the date on which the Closing is actually
held.
"Earnest Money Deposit" means the portion of the Purchase Price
deposited by Buyer in escrow with the Title Company as provided in
Section 3.2, plus any interest accrued thereon. The amount of the total
Earnest Money Deposit shall be payable as provided in Section 3.2 hereof.
"Effective Date" means the date on which the Title Company
acknowledges receipt of a fully-executed counterpart of this Contract.
"Improvements" means the seven buildings, and all fixtures and
other improvements associated therewith, containing approximately 304,073
square feet of net rentable area, situated on the Land, consisting of the
following buildings:
Building Address Square Footage
-------------------------------- --------------
10301-10313 West 70th Street 23,547
10321 West 70th Street 28,372
10333 West 70th Street 21,640
10349-10357 West 70th Street 53,912
10365-10375 West 70th Street 56,877
10393-10394 West 70th Street 52,684
7078 Shady Oak Road 67,041
"Inspection Period" means the period commencing on the Effective
Date and ending on March 7, 1997.
"Land" means all of those certain lots, tracts or parcels of
land, Eden Prairie, Hennepin County, Minnesota, as more fully described
on Exhibit A, on which the Improvements are located, together with all
and singular the rights appurtenant to that land.
"Leases" means all leases and/or occupancy agreements for space
in the Project.
"NWBC Contract" means that Contract of Sale of even date
herewith between the Buyer and NWBC Associates Limited Partnership.
"Partnership Agreement" means the First Restated and Amended
Agreement of Limited Partnership dated as of June 19, 1995, as amended
on December 22, 1995, as further amended on December 31, 1996, of the
Buyer.
"Permitted Exceptions" means the Title Exceptions set forth in
the Title Commitment (defined in Section 4.1) or reflected in the survey
delivered pursuant to Section 4.2, or any other exceptions or conditions
that affect or may affect Seller's title to or use of the Property to
which Buyer has not objected pursuant to Section 4.3, or that are
approved (or deemed to be approved) by Buyer in accordance with Section
4.4.
"Personal Property" means (a) all tangible personal property
owned by Seller and located on or attached to the Project, (b) Seller's
interest in all licenses or permits relating to the Property, (c)
Seller's interest in all service, maintenance, management, or other
contracts relating to the ownership or operation of the Project, (d)
Seller's interest in all warranties or guaranties relating to the
Project, (e) Seller's interest in all representations and warranties
made to Seller by its predecessor in interest, to the extent assignable,
and (f) Seller's interest in the names of the Project.
"Project" means the Land and the Improvements.
"Property" means, collectively, the Project, the Leases, and the
Personal Property.
"Property Manager" means:
CB Commercial
330 Second Avenue South
Minneapolis MN 55402
Attn: Richard Schadegg
Phone: 612-341-8108
Fax: 612-341-9849
"Purchase Price" means the total consideration to be paid by
Buyer to Seller for the Property.
"Rent Roll" means a rent roll identifying and providing certain
information on the Leases, itemizing all security deposits, prepaid
rents, and other property held by Seller for the account of the Tenants.
"Shares" means the Common Shares of Beneficial Interest, par
value $.001 per share, of the Trust.
"Tenants" means those persons holding rights of a tenant under
the Leases.
"Title Company" means:
Commonwealth Land Title Insurance Company
51 Haddonfield Road
Suite 115
P.O. Box 5382
Cherryhill, NJ 08304
Attn: Joe Patti
Telephone No. 609-662-1500
Telecopier: 609-665-6513
The Title Company shall conduct the title examination, furnish
Seller and Buyer with evidence of title and exceptions thereto and issue
the Title Policy.
"Title Exception" means any lien, mortgage, security interest,
encumbrance, pledge, assignment, claim, charge, lease (surface, space,
mineral, or otherwise), condition, restriction, option, conditional sale
contract, right of first refusal, restrictive covenant, exception,
easement (temporary or permanent), right-of-way, encroachment, overlap,
or other outstanding claim, interest, estate, or equity of any nature.
"Trust" means the Liberty Property Trust, a Maryland real estate
investment trust and the General Partner of Buyer.
1.2 Other Defined Terms. Other defined terms have the meanings
assigned to them elsewhere in this Contract.
ARTICLE II
AGREEMENT OF PURCHASE AND SALE
On the terms and conditions stated in this Contract, Seller hereby
agrees to sell and convey the Property to Buyer, and Buyer hereby agrees
to purchase and acquire the Property from Seller.
ARTICLE III
PURCHASE PRICE
3.1 Purchase Price. The Purchase Price (herein so called) to be
paid by Buyer to Seller is FIFTEEN MILLION TWO HUNDRED EIGHTY-FIVE
THOUSAND AND No/100 U.S. Dollars ($15,285,000).
3.2 Earnest Money Deposit. Within one (1) Business Day after the
Effective Date, Buyer shall have delivered $66,667 to the Title Company,
in cash or cash equivalents representing funds immediately available for
disbursement on the day of receipt by the Title Company, to be held by
the Title Company in escrow to be applied or disposed of by it as is
provided in this Contract. Buyer's failure to timely make the Deposit
(a) makes this Contract voidable at Seller's option and (b) gives Seller
the right to immediately terminate the Contract in which event the
Seller and Buyer shall have no further obligation to one another. The
Earnest Money Deposit shall be invested in an interest-bearing account
with a financial institution and in a manner reasonably acceptable to
Seller and Buyer. All interest earned is part of the Earnest Money
Deposit under this Contract. If the purchase and sale hereunder is
consummated, then the Earnest Money Deposit shall be applied to the
Purchase Price at Closing. In all other events, the Earnest Money
Deposit shall be disposed of by the Title Company as provided in this
Contract.
3.3 Payment of Purchase Price. The Purchase Price shall be payable
to Seller through the Title Company, by:
(i) assuming and agreeing to pay, in form and substance
reasonably acceptable to Jackson National Life Insurance Company
("Lender"), the outstanding principal balance (as shown in a writing
from Lender) of that Promissory Note executed by Seller in favor of
Lender in the original principal amount of $9,120,000, and with an
outstanding principal balance as of the date hereof of approximately
$9,078,858.51 and the other loan documents executed in connection
therewith (collectively, the "Lender Loan Documents"); Buyer shall be
responsible to pay, in addition to the Purchase Price, an assumption fee
of 1% of the outstanding principal balance of such loan at closing
payable to Lender together with Lender's out-of-pocket costs, in
connection with such assumption;
(ii) Buyer purchasing, at or prior to Closing, (a) the Warrant
issued to The Varde Fund III-A, L.P., a Delaware limited partnership
("Varde"), pursuant to that Warrant Agreement dated March 19, 1996
between Seller and Varde, and (b) that Promissory Note dated March 29,
1996 from Seller to Varde in the original principal amount of
$2,430,000, for a cash price (estimated to be in the aggregate amount of
$4,300,000) equal to the amount that would otherwise be distributed to
Varde (if Varde exercised the Warrant, cancelled the Note and became a
member of Seller) pursuant to the organizational documents of Seller by
reason of the sale of the Property to Buyer and the liquidation of
Seller; Seller shall use its best efforts, in consultation with Buyer,
to negotiate and present to Buyer on or before January 31, 1997, in form
acceptable to Buyer (in Buyer's sole discretion), an agreement with
Varde wherein Varde agrees to sell the Warrant and the Note to Buyer for
a cash payment at Closing;
(iv) an amount of cash equal to the sum of all closing costs
incurred by Seller in connection herewith (estimated to be no more than
$350,000); and
(v) the balance of the Purchase Price shall be paid by the
issuance to the Seller of interests in the Buyer (the "Partnership
Interests"), with each Partnership Interest valued at the lesser of (a)
the Average Share Price as of the Closing Date, or (b) $25, and with the
number of Partnership Interests rounded to the nearest whole number. At
least ten (10) Business Days prior to the Closing Date, Seller shall
give Buyer written notice of its best estimate of the allocation of the
Purchase Price as between cash and Partnership Interests.
In the event that the agreement specified in (iii) above is not
executed by January 31, 1997, in form and substance acceptable to Buyer
and Seller, either party may terminate this Agreement. In the event of
such termination of this Contract, the Earnest Money shall be promptly
refunded to Buyer and Seller shall have no further obligations, one to
the other, with respect to the subject matter of this Contract (except
under Section 4.7).
The parties acknowledge that in order to accommodate Seller's
desire to transfer the Property as a contribution for Partnership
Interests under Section 721 of the Code, the Buyer has agreed to acquire
certain interests of Varde, as described above. The parties acknowledge
that the agreement must be negotiated and entered into with Varde as
provided in subsection (ii) above. Such agreement and the closing of
the acquisition contemplated by such agreement are essential to the
closing of the transaction contemplated by this Contract. Because this
Agreement is being executed in advance of the negotiations of the
agreement with Varde, it is not possible to anticipate the ways in which
the negotiation of the agreement with Varde might impact on the
provisions of this Contract. The parties acknowledge that the
provisions of this Contract (other than the Purchase Price) may need to
be modified to address specific issues which arise in connection with
the negotiation of the agreement with Varde, but that any such
modification shall require the written agreement of each of Buyer and
Seller. The parties further agree that, except with respect to Section
4.7, this Contract is terminable by Buyer or Seller if satisfactory
negotiations of the agreement with Varde and related modifications to
this Contract are not entered into as provided above on or before
January 31, 1997. In the event of such termination of this Contract,
the Earnest Money shall be promptly refunded to Buyer and Buyer and
Seller shall have no further obligations, one to the other, with respect
to the subject matter of this Contract (except under Section 4.7).
3.4 Other Contracts. Notwithstanding anything herein to the
contrary, in the event that Buyer, for any reason, exercises its right
to terminate this Contract, as a condition precedent to any such
termination, it shall also, simultaneously, terminate the NWBC Contract
(unless previously terminated pursuant to Section 7.3 of the NWBC
Contract) and the 330 Contract. If the NWBC Contract is terminated
pursuant to Section 7.3 thereof or if the 330 Contract or the NWBC
Contract is terminated pursuant to Section 3.5 thereof, then Buyer may
terminate this Contract. In the event of such termination of this
Contract, the Earnest Money shall be promptly refunded to Buyer and
Seller shall have no further obligations, one to the other, with respect
to the subject matter of this Contract (except under Section 4.7).
3.5 The Partnership Interests.
(a) Each Partnership Interest issued as part of the Purchase
Price shall be exchangeable after the first anniversary of the Closing
Date, on a one-for-one basis, for a Share of the Trust, on the basis set
forth in and subject to the restrictions contained in the Partnership
Agreement (including, without limitation, usual and customary provisions
providing for adjustment in the number of Shares into which Partnership
Interests are convertible upon certain changes in the capitalization of
the Trust.)
(b) Buyer and Seller hereby acknowledge and confirm that they
intend for the transfer of a portion of the Property to Buyer in
exchange for Partnership Interests to qualify as a contribution pursuant
to Section 721 of the Internal Revenue Code of 1986, as amended (the
"Code"). Buyer and Seller agree to take any reasonable steps necessary
to cause such transfer to qualify as a contribution pursuant to such
section.
Buyer acknowledges that, at Closing, Seller shall distribute the
Partnership Interests to Stewart R. Stender and Robert C. Lux.
(c) Seller acknowledges and confirms that:
(i) neither the Partnership Interests nor the Shares into
which the Partnership Interests may be converted have been registered
under the Securities Act of 1933, as amended (the "Securities Act"), or
any state securities laws;
(ii) there is no obligation to register the Partnership
Interests or the Shares except pursuant to the Registration Rights
Agreement (as defined below);
(iii) neither the Partnership Interests nor the Shares
into which the Partnership Interests may be converted may be sold or
otherwise transferred by Seller except (A) pursuant to registration
under the Securities Act and state securities laws or an exemption
therefrom or (B) as a distribution at Closing to Robert C. Lux and
Stewart R. Stender in accordance with their respective interests in
Seller.
(iv) the Partnership Interests shall not be convertible
into Shares until after the first anniversary of the Closing Date; and
(v) the Partnership Interests being acquired hereunder are
being acquired for Seller's own account and not for the account of any
other person or persons, for investment and not with a view to the
disposition thereof in violation of the Securities Act.
(d) Buyer acknowledges and confirms that:
(i) it will not sell the Property (or any portion thereof)
for two years following the Closing Date; and
(ii) Seller as a holder of Partnership Interests in Buyer
will participate in the allocations and distributions of Buyer on the
same basis as the other limited partners of Buyer as determined in
accordance with the terms and provisions of the Partnership Agreement,
provided, however, that the initial distribution to Seller or those
holding the Partnership Interests through Seller will be prorated based
upon the portion of the fiscal quarter of Buyer for which Seller or
those holding the Partnership Interests through Seller held the
Partnership Interests.
(e) Buyer has provided Seller, and Seller acknowledges receipt
of, a copy of the Partnership Agreement.
(f) Buyer and Seller hereby agree to negotiate in good faith
the terms and conditions of the following documents (the "Partnership
Documents") and to use their best efforts to conclude such negotiations
and have a mutually agreeable form of each of the Partnership Documents
on or before January 31, 1997:
(i) a proxy (the "Proxy Agreement") containing usual and
customary terms as to the appointing of the Board of Trustees of the
Trust (so long as the Trust is a general partner of Buyer), as Seller's
proxy with respect to all Partnership Interests owned by Seller, with
authority to consent or withhold consent, in the Trust's sole
discretion, with respect to any matter as to which limited partners of
Buyer may act pursuant to the terms of the Partnership Agreement;
(ii) an investment letter (the "Investment Letter")
containing usual and customary representations and agreements obtained
from purchasers of securities in private placements regarding the
restrictions on transferability of the securities being acquired and the
financial sophistication and qualification of the purchasers;
(iii) a registration rights agreement (the "Registration
Rights Agreement") containing usual and customary representations and
agreements concerning the registration of the Shares, including without
limitation, provisions for (A) Seller to have two demand registration
rights and unlimited "piggyback" registration rights with respect to the
Shares issuable upon exchange of the Partnership Interests, which rights
shall commence on the first anniversary of the Closing Date, (B) Buyer
to cover all expenses of such registration other than the fees of
Seller's counsel and the registration fees for such Shares which shall
be borne by Seller (not to exceed $2,500), (C) Seller to agree that,
notwithstanding the effectiveness of any registration statement covering
the Partnership Interests (other than in connection with an underwritten
offering), it will not sell during any week a number of Shares greater
than 10% of the average weekly trading volume for the Shares on the New
York Stock Exchange for the preceding four calendar weeks.
(iv) an amendment to the Partnership Agreement (the
"Partnership Amendment") for the purpose of evidencing, among other
things, the issuance of the Partnership Interests as a portion of the
Purchase Price.
In the event that the parties have not agreed to the form
of each of the Partnership Documents on or before January 31, 1997,
either party hereto may terminate this Agreement by notice to the other
party and, upon such termination, the Earnest Money shall be promptly
refunded to Buyer and Buyer and Seller shall have no further
obligations, one to the other, with respect to the subject matter of
this Contract (except under Section 4.7).
ARTICLE IV
TITLE AND SURVEY
4.1 Title Commitment; Exception Documents.
(a) Seller has furnished to Buyer and Buyer's counsel a copy of
Seller's Policy of Title Insurance for the Property.
(b) Buyer shall obtain a commitment for an ALTA owner's policy
of title insurance (the "Title Commitment") on the Property issued by
the Title Company and any desired endorsements to the Title Commitment
which are available, if any.
(c) Seller shall also furnish to Buyer copies of instruments
that create or evidence Title Exceptions affecting the Property, as
described in the Title Commitment (together, the "Title Documents").
(d) Seller shall not be obligated to provide Buyer an abstract
of title to the Land, but Seller shall provide any owner's duplicate
certificate of title as to the Land at closing.
4.2 Survey. Seller has provided to Buyer a copy of the most recent
survey of the Project in Seller's possession.
Seller shall deliver to Buyer, as soon as practicable, but in
any case within fifteen (15) days after the Effective Date, an as-built
survey of the Property prepared by Rehder & Associates, Inc. as an Urban
Survey in accordance with the Minimum Standard Detail Requirements and
Classifications for ALTA/ASCM Land Title Surveys as adopted by the
American Land Title Association and American Congress on Surveying and
Mapping in 1992 which shall (a) include items 1, 2, 3, 4, 6, 7, 8, 9,
10, 11 and 13 from Table A of such Requirements and (b) shall be
certified to Buyer and Title Company and any lender of Buyer's of which
Buyer notifies Seller in writing on or prior to the expiration of the
Inspection Period.
The legal description of the Land contained in the Survey and in
the Title Policy shall be used to describe the Land in the special
warranty deed conveying the Project from Seller to Buyer.
4.3 Review of Title Commitment, Survey and Exception Documents.
Buyer has a period of seven (7) Business Days (the "Title Review
Period") after the later of (i) January 31, 1997, or (ii) Buyer's
receipt of the Title Commitment, the Title Documents and the Survey in
which to give written notice to Seller specifying Buyer's objections to
the Title Commitment, the Survey or the Title Documents ("Objections");
provided, however, Buyer may not make any Objection to any of the
Permitted Exceptions listed on Exhibit "I" attached hereto. For
purposes of this Section 4.3, Seller shall have satisfied all of its
obligations with regard to title to the Project if Buyer has not
objected to any of the Title Documents furnished to it or any other
Title Exception referenced in the Title Commitment, within the Title
Review Period.
4.4 Seller's Obligation to Cure; Buyer's Right to Terminate. If
Buyer timely notifies Seller in writing of Objections to any of the
matters furnished to Buyer pursuant to Section 4.3, then Seller shall,
within thirty (30) days after Seller's receipt of Buyer's notice (the
"Cure Period"), make reasonable efforts in good faith to attempt to cure
the Objections. Other than (i) mortgages or other liens securing
indebtedness of Seller, judgments or tax liens against Seller or
mechanics' liens against the Property (collectively, "Liens") which
shall be satisfied, bonded or insured over by Seller at or prior to
Closing, (ii) minor encroachments which do not materially affect Buyer's
or Tenant's use of the Property which Seller shall not be obligated to
correct, and (iii) objections which are insured over by the Title
Company at no cost or liability to Seller, Seller is not obligated to
effect a cure of any Objection unless such Objection is a material
defect in the marketability of title to the Property (a "Material
Objection") and the cost of curing all such Material Objections is less
than $50,000 in the aggregate, but Buyer may, at its option, pay the
excess amounts to Title Company at Closing (which payment shall not
entitle Buyer to a reduction in the Purchase Price) and cause the Title
Company to cure such Objections, but such Objections (which Buyer
intends to pay to cure as aforesaid) shall not delay Closing nor shall
Seller have any further liability or obligation with respect thereto.
If Seller does not satisfy all Objections within the Cure Period, then,
as its sole options or remedies, Buyer may either (a) waive the
unsatisfied Objections, which then become Permitted Exceptions, and
proceed to consummate this transaction without further recourse against
Seller, (b) provide written notice of Buyer's intention to pay the cost
of curing such Objections and pay the cost of curing such Objections at
Closing as provided in the preceding sentence, but such payment shall
not entitle Buyer to a reduction in the Purchase Price except to the
extent that (i) such Objection relates to a Lien, or (ii) Buyer pays the
first $50,000 of such costs to cure Material Objections (which Seller
would otherwise have paid to cure such Material Objections pursuant to
the preceding sentence), in which event Buyer shall be entitled to a
reduction in the Purchase Price only to the extent of that portion of
the first such $50,000 to the extent paid by Buyer to cure such Material
Objections, but Buyer shall have no further recourse against Seller by
reason of such Objections or (c) terminate this Contract and receive
back the Earnest Money Deposit, in which latter event Seller and Buyer
have no further obligations, one to the other, with respect to the
subject matter of this Contract (except under Section 4.7). If
unsatisfied Objections remain but Buyer does not deliver written notice
of its waiver thereof, of Buyer's intention to pay the cost of curing
such Objections or of the termination of this Contract to Seller within
five (5) Business Days after expiration of the Cure Period, then the
unsatisfied Objections shall become additional Permitted Exceptions,
with no reduction in the Purchase Price, and Buyer shall have no further
right to terminate this Contract under this Section 4.4. If Seller
shall effect a cure of the Objections within the Cure Period it shall
deliver written notice thereof to Buyer and Buyer and Seller shall
proceed to Closing as provided herein.
4.5 Title Policy. The Title Policy shall be issued by the Issuing
Title Company, in the amount of the Purchase Price, insuring that Buyer
has fee simple title to the Property, subject only to the Permitted
Exceptions. Seller shall pay for the costs of abstracting, searches
and the preparation of the Title Commitment; the premium for the Title
Policy and any additional premiums for any endorsements requested by
Buyer shall be paid by Buyer. Any closing or escrow fees charged by the
title company shall be paid one-half by Buyer and one-half by Seller.
4.6 Inspection. Buyer may, during the Inspection Period, make such
examinations, studies, inspections, and investigations of the Property
as Buyer deems advisable. Any physical inspections within the buildings
on the Property shall be made only on Business Days and during normal
business hours that will not disturb the quiet enjoyment of the Project
by Tenants, and inspections of space occupied by a Tenant shall be made
only with at least twenty-four (24) hours' advance notice to and consent
of Seller and, at Seller's election, in the presence of a representative
of Seller. Seller shall reasonably cooperate with Buyer in contacting
Tenants to permit Buyer's inspection. Buyer shall use its best efforts
to group inspections together on the same day or days in order to
minimize the number of visits to Tenants' spaces and the impact on the
Tenants. By giving written notice to Seller before the expiration of
the Inspection Period, Buyer may, in Buyer's sole discretion, terminate
this Contract and receive back the Earnest Money Deposit, if Buyer has
found the Property unsuitable for Buyer's purpose, or if Buyer has found
any agreements or information regarding the Property unacceptable, or
for any other reason, in Buyer's sole discretion. If Buyer does not
timely give that notice, then (a) Buyer shall be deemed to have accepted
the condition of the Property, subject to the estoppel certificates to
be delivered by Seller pursuant to Section 5.2(b) hereof, (b) Buyer's
right to terminate this Contract pursuant to this Section 4.6 shall be
deemed waived, and (c) the Earnest Money Deposit shall thereafter not be
refundable and shall be deemed earned by Seller in any event other than
Seller's default or unless Buyer terminates the Contract under the
provisions of Sections 4.4, 9.1, or 11.9 hereof.
4.7 Indemnification. Buyer shall indemnify, defend and hold Seller
harmless from any and all demands, claims, actions or causes of action,
assessments, losses, costs, damages, liabilities, interest, penalties
and reasonable attorney's fees asserted against, resulting to, imposed
on, or incurred by Seller as a result of any act or omission of Buyer,
or any of Buyer's agents, consultants, contractors, or employees, in
connection with an entry on or investigation or examination of the
Property, or any part thereof, before Closing. The indemnification
obligations of Buyer with respect to these matters shall survive the
Closing or the termination of this Contract for any reason and shall
remain in full force and effect thereafter, but any claims of
indemnification hereunder must be made by notice to Buyer within six (6)
months after the date of termination hereof or the Closing Date, as
applicable.
ARTICLE V
REPRESENTATIONS, WARRANTIES, COVENANTS,
AND AGREEMENTS OF SELLER
5.1 Representations and Warranties of Seller. Seller represents and
warrants to Buyer as of the Effective Date, except where specific
reference is made to another date or dates, that:
(a) Attached as Schedule 1 is a complete and accurate Rent Roll
showing all of the Leases which shall be updated by Seller prior to
Closing if necessary.
(b) Attached as Schedule 2 is a complete and accurate list of
all services, maintenance and management contracts relating to the
Property which shall be updated prior to Closing if necessary;
(c) Seller has no current actual knowledge of, and has received
no written notice from, any governmental authority requiring any work,
repairs, construction, alterations or installations on or in connection
with the Property, or asserting any violation of any federal, state,
county or municipal laws, ordinances, codes, orders, regulations or
requirements affecting any portion of the Property, including, without
limitation, the Americans with Disabilities Act and any applicable
environmental laws or regulations. To the current actual knowledge of
Seller, there is no action, suit or proceeding pending or, threatened
against or affecting Seller or the Property or any portion thereof or
relating to or arising out of the ownership of the Property, in any
court or before any federal, state, county or municipal department,
commission, board, bureau or agency or other governmental
instrumentality.
(d) Seller is not a foreign person under Sections 1445 and 7701
of the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder;
(e) To Seller's current actual knowledge, there is no
individual sewage treatment system on or serving the Property as such
term is defined in Minnesota Statutes Section 115.55; there are no wells
or underground storage tanks on the Property;
(f) Seller has full right, power and authority to sell the
Property to Buyer as provided in this Contract and to carry out Seller's
obligations under this Contract, and all requisite action necessary to
authorize Seller to enter into this Contract and to carry out Seller's
obligations hereunder has been taken;
(g) To Seller's current actual knowledge, there is no violation
of Environmental Laws related to the Property or the presence or release
of Hazardous Materials on or from the Property except as disclosed in
the environmental reports listed on Schedule 3 delivered by Seller to
Purchaser or made available for Purchaser's review. The term
"Environmental Laws" includes without limitation the Resource
Conservation and Recovery Act and the Comprehensive Environmental
Response Compensation and Liability Act ("CERCLA") and other federal
laws governing the environment as in effect on the date of this
Agreement together with their implementing regulations and guidelines as
of the date of this Agreement, and all state, regional, county,
municipal and other local laws, regulations and ordinances that are
equivalent or similar to the federal laws recited above or that purport
to regulate Hazardous Materials in effect as of the date of this
Agreement. "Hazardous Materials" means any substance which is (i)
designated, defined, classified or regulated as a hazardous substance,
hazardous material, hazardous waste, pollutant or contaminant under any
Environmental Law, as currently in effect as of the date of this
Agreement (ii) petroleum hydrocarbon, including crude oil or any
fraction thereof and all petroleum products, (iii) PCBs, (iv) lead, (v)
friable asbestos, (vi) flammable explosives, (vii) infectious materials
or (viii) radioactive materials.
(h) Seller has not entered into any other contracts for the
sale of the Property, nor are there any rights of first refusal or
options to purchase the Property or any other rights of others to
acquire the Property that might prevent the consummation of this
Contract.
(i) No brokerage or leasing commissions or other compensation
is or will be due or payable to any person, firm, corporation or other
entity with respect to or on account of any of the Leases or any
extensions or renewals thereof, except for Leases executed after the
Effective Date as provided in Section 5.2(c)(iii) hereof and except as
provided in Section 5.6 hereof.
(j) Seller has no current actual knowledge of any material
misstatement in the statements of income and expenses for the Property,
attached hereto as Exhibit L to the extent such statements relate to the
period of Seller's ownership of the Property.
(k) Tax and Real Estate Investment Trust Matters.
(i) None of the Leases provides for the payment of rents
which is based on the income or profits of any person or entity, except
to the extent of amounts computed by reference to a fixed percentage or
percentages of a tenant's receipts or sales (within the meaning of
Internal Revenue Code Section 856(d)(2)(A) (the Internal Revenue Code is
referred to herein as the "Code").
(ii) The services and activities performed by the landlord
with respect to the Project are services which are customarily performed
by lessors in connection with the rental of real property similar to the
Project in the geographic area in which the Project is located. The
services and activities performed are necessary for the operation of the
Project and are not performed primarily for the convenience of tenants.
(iii) The landlord of the Project does not lease any
substantial personal property to the tenants at the Project other than
personal property which has been installed upon the Project and has
become a part of the real property.
(iv) Except as provided on Exhibit M attached hereto, to
the extent the Project provides parking lots for tenants and their
employees and customers, the parking lots are offered on an unreserved,
complimentary basis, other than with respect to spaces required to be
reserved for handicapped persons under law. The landlord of the Project
does not provide parking attendants, reserved parking or other services
in connection with the parking areas.
(v) The landlord of the Project does not provide any
utility services to tenants at the Project other than usual and
customary utility services, such as electricity, gas, water and sewer
service. In some instances, utility services are separately metered and
paid by the tenants. In other cases, the landlord master meters
electric and water services, in which case the cost of the utility
service is allocated among the tenants on a prorata basis on the basis
of usage and area. The billing mechanism for any master metering
arrangement with respect to Project is usual and customary for the
geographic area in which the Project is located.
(vi) Neither the Land nor any of the Improvements is "held
for sale" within the meaning of the Code.
Seller shall deliver a certificate at Closing as to the
correctness of the representations and warranties set forth above as of
the Closing Date and if any such representation shall not then be
correct, of any exceptions thereto.
Notwithstanding anything contained in this Agreement to the
contrary, all of the representations, warranties and certifications (the
"Representations") which are made by Seller and set forth herein or in
any of the documents or instruments required to be delivered by Seller
hereunder, shall be subject to the following conditions and limitations:
(i) there shall be no liability on the part of Seller for breaches of
Representations of which Buyer had current actual knowledge at Closing
and (ii) in the event that prior to the time of Closing, during the
course of Buyer's inspections, studies, tests and investigations or
through other sources, Buyer gains current actual knowledge of a fact or
circumstance which, by its nature, indicates that a Representation was
or has become untrue or inaccurate, and such fact or circumstance was
not intentionally withheld from Buyer by Seller with the intent to
defraud Buyer, then Buyer shall not have the right to bring any lawsuit
or other legal action against Seller, nor pursue any other remedies
against Seller, as a result of the breach of the Representation caused
thereby, but Buyer's sole right shall be to terminate this Agreement in
which event the Earnest Money Deposit shall be returned to Buyer.
5.2 Covenants and Agreements of Seller. Seller covenants and agrees
with Buyer as follows:
(a) Within ten (10) days after the Effective Date, Seller shall
deliver to Buyer (or, with respect to items (v), (vi) and (x) below,
permit inspection in the offices of the Property Manager), copies (or
where specifically indicated, original counterparts) of the following:
(i) All existing Leases;
(ii) All service, maintenance, management, and other
contracts relating to the ownership and operation of the Property;
(iii) All building permits and certificates of occupancy
or of substantial completion issued with respect to the construction and
ownership of the Project that, to Seller's current actual knowledge, are
in Seller's or the Property Manager's possession;
(iv) All available real estate and personal property tax
statements for real estate and personal property taxes due and payable
in the year of Closing with respect to the Project and, if received by
Seller, the valuation notice issued with respect to the Project for the
year of Closing, that, to Seller's current actual knowledge, are in
Seller's or the Property Manager's possession;
(v) All operating budgets, operating statements and
property reports that, to Sellers' actual knowledge are in Seller's or
the Property Manager's possession;
(vi) The plans and specifications with respect to the
Project that, to Seller's current actual knowledge, are in Seller's or
the Property Manager's possession, to be furnished with no
representation, warranty, or recourse whatsoever;
(vii) The Rent Roll, current through the first day of the
month preceding the month in which the Effective Date falls;
(viii) To the extent in Seller's or the Property Manager's
possession, all environmental reports pertaining to the Property;
(ix) Copies of the Lender Loan Documents; and
(x) All other books and financial records with respect to
the Property that, to Seller's current actual knowledge, are in Seller's
or Property Manager's possession (other than Seller's projections and
other financial information prepared by Seller in connection with its
purchase of the Property, internal financial or performance reviews, the
closing documents relating to such purchase, Seller's partnership
agreement and other partnership financial and tax records).
Seller represents and warrants to Buyer that the information
described in this Section 5.2(a) constitutes all of the books and
financial records in Seller's possession (or in the possession of its
Property Manager) with respect to the Property (other than Seller's
projections and other financial information prepared by Seller in
connection with its purchase of the Property, internal financial or
performance reviews, the closing documents relating to such purchase,
Seller's partnership agreement or other partnership financial and tax
records). In the event that Buyer terminates the Contract for any
reason, Buyer shall immediately return to Seller all of the information
concerning the Property supplied by Seller or Property Manager.
(b) Within thirty (30) days after the Effective Date, Seller
shall use reasonable efforts to obtain and deliver to Buyer estoppel
certificates from the Tenants of the Property, in the form of Exhibit
"J" attached to this Contract. If Seller is unable to obtain an
estoppel certificate for each tenant substantially in the form of
Exhibit "J", Seller shall deliver to Buyer an estoppel certificate
executed by Seller as to such Tenant in the form of Exhibit "K", as
modified to make the statements therein true and correct.
(c) From the date hereof until the Closing Date or the earlier
termination of this Contract, Seller shall:
(i) Operate, insure at current insured amounts, maintain
and lease the Project in the ordinary course of Seller's business and
use reasonable efforts to reasonably preserve for Buyer the relationship
of Seller and Seller's suppliers, Tenants, and others having ongoing
business relations with Seller relating to the Project; and
(ii) Advise Buyer of any litigation, arbitration, or
administrative hearing before any governmental agency concerning of
affecting the Property in any manner that is instituted or threatened in
writing after the Effective Date and of which Seller has current actual
knowledge; and
(iii) Not, without Buyer's prior written consent (which
consent may be withheld in Buyer's sole discretion), enter into any
leases, contracts or other commitments that will survive Closing other
than service contracts that are terminable on thirty (30) days or less
notice. With respect to any lease or any renewal, extension or
amendment of any lease for any portion of the Property which is approved
by Buyer and which is entered into after the Effective Date and with
respect to a proposed amendment to the Lease with Augustine Medical,
Inc. which is described in a letter of intent dated December 6, 1996
between Seller and Augustine Medical, Inc., Buyer shall pay (or
reimburse Seller at Closing) for the cost of all tenant improvements and
leasing commissions required by the terms thereof.
Any consent or approval requested by Seller pursuant to this
Section 5.2(c)(iii) shall be deemed granted if Buyer does not object
within five (5) Business Days after Buyer's receipt of Seller's written
request.
5.3 Survival Beyond Closing. Except to the extent that Buyer has
current actual knowledge of any breach at or prior to Closing (which
Buyer, by closing the purchase contemplated hereby, shall be deemed to
have waived), the representations, warranties, and covenants of Seller
contained in this Contract shall survive the Closing. In the event of
any such breach or misrepresentation discovered by Buyer after Closing,
Buyer may bring an action against Seller for Buyer's actual damages
resulting from such breach, but not for any incidental or consequential
damages, provided, however, that any action with regard to an alleged
breach of any such representation, warranty or covenant of Seller must
be brought within two (2) years after Closing.
5.4 Current Actual Knowledge; Authority. The term "Buyer's current
actual knowledge," as used in the Contract, means matters of which John
Gattuso is presently aware at the relevant time by virtue of Buyer's
inspections and due diligence with respect to the Property, but without
being required to undertake any further investigation or inquiry
whatsoever. The term "Seller's current actual knowledge," as used in
this Contract, means matters of which Seller, Stewart R. Stender or
Robert C. Lux is presently aware at the relevant time, by virtue of
Seller's ownership of the Property, without undertaking any further
investigation or inquiry whatsoever, but does not include matters of
which any other person or entity (including, but not limited to, the
Property Manager or any prior manager of the Property) other than
Seller, Stewart R. Stender or Robert C. Lux is or may be aware but
Seller acknowledges that it has made good faith inquiry of the Property
Manager with regard to the correctness of the representations and
warranties set forth in Section 5.1 and the delivery of the documents
referenced in Section 5.2(a). No brokers, agents or other third parties
(including, but not limited to, the Property Manager or any prior
manager of the Property) are authorized by make any representations and
warranties binding on Seller. In particular, but without limitation,
except as is expressly represented or warranted in Section 5.2(a)
hereof, Seller hereby disclaims, and makes no representation or
warranty, as to the accuracy of the contents or the completeness of any
item delivered by either Seller or the Property Manager of the Project
to Buyer or made available for inspection or review by Buyer.
5.5 "AS-IS" Sale. Seller has advised Buyer that Seller has retained
an independent contractor to manage the Project and that Seller recently
acquired the Project. Accordingly, Seller's current personnel have
limited personal knowledge regarding the construction of the Project,
the operation of the Project, and other matters that an owner of
property similar to the Project might ordinarily have. A material
consideration in negotiating the Purchase Price is Buyer's agreement
that Buyer shall rely solely on its own investigation in consummating
this transaction except as expressly stated to the contrary in this
contract and that SELLER HAS MADE NO EXPRESSED OR IMPLIED
REPRESENTATIONS OR WARRANTIES RESPECTING THE SUBJECT MATTER OF THIS
TRANSACTION, EXCEPT AS EXPRESSLY STATED TO THE CONTRARY IN THIS
CONTRACT. (See Section 11.6)
5.6 Due Diligence Disclosure. Seller has disclosed to Buyer and
Buyer acknowledges and agrees that the Purchase Price is based upon the
following disclosures relating to the Property:
(a) Seller has determined that all of the roofs of the
Improvements will need to be replaced over the next five-year period.
As required by the Lender Loan Documents, Seller has created an escrow
fund to pay all or a portion of the cost of roof replacements for the
Property in the approximate amount of $160,000.00; Seller's interest in
such fund shall be transferred to Buyer at Closing. Seller makes no
warranty to Buyer as to the adequacy of such amount to correct any or
all roof problems in the Improvements during any relevant period.
(b) Seller has given Buyer the notice of the soil settlement
issues related to the Improvements of which Seller has actual knowledge.
Buyer and Seller have adjusted the Purchase Price because of this issue.
Seller shall have no obligation to correct these issues prior to the
Closing or thereafter.
(c) In connection with the building of the age and use of the
Improvements, there may be minor defects discovered by Buyer during the
Inspection Period which shall not permit Buyer to renegotiate the
Purchase Price.
(d) Seller has certain obligations under the Augustine Medical,
Inc. Lease (and the proposed amendment thereto described above) to
provide additional leasable areas to such Tenant and additional tenant
improvements, which obligations will be assumed by Buyer.
ARTICLE VI
REPRESENTATIONS, WARRANTIES, COVENANTS AND
AGREEMENTS OF BUYER
6.1 Representations and Warranties of Buyer.Buyer represents,
warrants, covenants, and agrees with Seller as of the Effective Date and
as of the Closing Date, except where specific reference is made to
another date or dates that:
(a) Buyer has the full right, power, and authority to purchase
the Property from Seller as provided in this Contract and to carry out
Buyer's obligations under this Contract, and all requisite action
necessary to authorize Buyer to enter into this Contract and to carry
out Buyer's obligations hereunder has been taken;
(b) Buyer shall rely solely on its own investigation in
consummating this transaction and, except for express representations
and warranties of Seller contained herein or as expressly stated herein
to the contrary, Buyer has not relied on any representation, warranty or
assurance, expressed or implied;
(c) Buyer shall promptly advise Seller in writing if Buyer's
investigation of the Property reveals the presence of hazardous wastes
or other environmental contamination (including asbestos), or facts that
would cause a reasonable person to investigate further the possibility
of such contamination.
(d) Within seven (7) days after the date hereof, Buyer and the
Trust will deliver to Seller copies of Buyer's and the Trust's Annual
Report on Form 10-K for the year ended December 31, 1995, Quarterly
Reports on Form 10-Q for the fiscal quarters ended March 31, 1996 and
June 30, 1996, as amended, and September 30, 1996, each as filed with
the Securities and Exchange Commission (the "SEC") (collectively, the
"Securities Filings"). As of their respective filing dates with the
SEC, the Securities Filings complied as to form in all material respects
with the applicable requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), and the respective rules and
regulations promulgated thereunder, and did not contain any untrue
statement of material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading. No
event has occurred since the filing of Buyer's and the Trust's Quarterly
Report on Form 10-Q for the fiscal quarter ended September 30, 1996
which is required to be disclosed in a report filed either by Buyer or
the Trust pursuant to Section 13(a) or 15(d) of the Exchange Act which
has not been so disclosed.
(e) The Partnership Interests to be issued to Seller will be,
when issued, duly authorized, validly issued, fully paid and non-
assessable. The Shares to be issued upon exchange of the Partnership
Interests will be, when issued, duly authorized, validly issued, fully
paid and non-assessable, and no liability shall attach to Seller related
thereto.
ARTICLE VII
CONDITIONS PRECEDENT TO BUYER'S AND SELLER'S PERFORMANCE
7.1 Performance of Buyer's Obligations. Seller is not obligated to
perform under this Contract unless:
(a) Buyer has performed all obligations and agreements
performable by Buyer on or before Closing;
(b) Buyer is simultaneously closing on the 330 Contract and the
NWBC Contract unless the NWBC Contract has been terminated in accordance
with Section 7.3 of the NWBC Contract;
(c) all representations and warranties of Buyer are true and
correct in all material respects as of the Closing Date; and
(d) Buyer is simultaneously closing on, and performing at
Closing all of its closing obligations under the agreement referenced in
Section 3.3 whereby Buyer is to buy from Varde the Warrant and the Note.
7.2 Performance of Seller's Obligations. Buyer is not obligated to
perform under this Contract unless:
(a) Seller has performed all obligations and agreements
performable by Seller on or before Closing;
(b) all representations and warranties of Seller are true and
correct in all material respects as of the Closing Date;
(c) as of the Closing, there have been no material adverse
changes in the physical condition of the Project from the condition
thereof as of the end of the Inspection Period;
(d) no material default, vacation, termination, bankruptcy or
other adverse material change in status has occurred with respect to any
Tenant or Tenants representing an aggregate of more than 5% of the total
net operating income with respect to the Property, as shown on the Rent
Roll for the Property; and
(e) Varde is simultaneously closing on, and performing at
Closing all of its closing obligations under, the agreement referenced
in Section 3.3 whereby Varde is to sell to Buyer the Warrant and the
Note.
ARTICLE VIII
CLOSING
8.1 Date and Place of Closing. The Closing shall take place in the
offices of the Title Company in Minneapolis, Minnesota. The Closing Date
shall be March 20, 1997, unless an earlier date is agreed on in writing
by Seller and Buyer.
8.2 Items to be Delivered at the Closing.
(a) Seller. At the Closing, Seller shall deliver or cause to be
delivered to Buyer or the Title Company, the following items:
(i) the Title Policy, in the form specified by Section 4.5,
with the cost thereof to be paid as provided in Section 4.5;
(ii) a Special Warranty Deed, duly executed and
acknowledged by Seller, in substantially the form attached as Exhibit
"B", subject to the Permitted Exceptions;
(iii) the original Leases or, if original Leases are not in
Seller's possession, copies thereof certified by Seller to be true and
correct copies of original Lease;
(iv) duplicate originals of the Assignment and Assumption
of Leases of substantially the form attached as Exhibit "C", duly
executed and acknowledged by Seller;
(v) a Bill of Sale and Assignment and Assumption of
Contracts, Bonds, Warranties and Guaranties in substantially the forms
attached as Exhibits "D" and "F", respectively, fully executed and
acknowledged by Seller;
(vi) a Non-Foreign Certification, in substantially the form
attached as Exhibit "G", in compliance with Section 1445 of the Internal
Revenue Code of 1986, as amended, and regulations promulgated thereunder,
stating under penalty of perjury the Seller's United States
identification number and that Seller is not a "foreign person" as
defined in Section 1445, duly executed and acknowledged by Seller;
provided, however that if Seller fails to deliver this affidavit, Buyer
may withhold from the Purchase Price and pay to the Internal Revenue
Service the amounts required by Section 1445, and regulations promulgated
thereunder;
(vii) keys to all locks located in the Project that are in
Seller's possession;
(viii) the Rent Roll, substantially in the form attached
hereto as Exhibit "E", certified by Seller to its current actual
knowledge through the Closing Date;
(ix) a Tenant Notice Letter in substantially the form
attached as Exhibit "H" (the "Tenant Notice Letters") for each of the
Tenants, duly executed by Seller;
(x) originals (or, if originals are not in Seller's
possession, copies certified by Seller to be true and correct copies
thereof) of all service contracts, plans, warranties, guaranties, and
other contracts and agreements relating to the ownership and operation of
the Project that, to its current actual knowledge, are in Seller's
possession, but Seller shall not be obligated to deliver copies of the
purchase agreement or closing documents relating to the purchase of the
Property by Seller;
(xi) appropriate evidence of authorization, satisfactory to
Buyer and the Title Company, in their reasonable discretion, for (A) the
sale of the Property in accordance with this Contract, (B) the execution
and delivery of this Contract on behalf of Seller, and (C) the
consummation of the transactions contemplated by this Contract on behalf
of Seller;
(xii) a standard form seller's affidavit in form acceptable
to the Title Company;
(xiii) The Proxy Agreement, Investment Letter and
Registration Rights Agreement substantially in the forms agreed upon
pursuant to Section 3.5 and executed by Seller, Robert C. Lux and Stewart
R. Stender;
(xiv) Seller's written agreement to indemnify and hold
Buyer harmless of and from all liabilities, losses, damages, costs,
expenses (including reasonable attorney's fees) that Buyer suffers or
incurs by reason of any act or cause of action occurring or accruing
prior to Closing Date and arising out of any act or failure to act of
Seller's agents, representatives and employees relating to this Contract
or to the Project.
(xv) other items reasonably requested by the Title Company
as administrative requirements for consummating the Closing.
(b) Buyer.At the Closing, Buyer shall deliver to Seller or the
Title Company:
(i) the cash sum required by Section 3.3;
(ii) duplicate originals of the Assignment and Assumption
of Leases, duly executed and acknowledged by Buyer;
(iii) duplicate originals of the Assignment and Assumption
of Contracts, Bond, Warranties and Guaranties, duly executed by Buyer;
(iv) the Tenant Notice Letters, duly executed by Buyer;
(v) appropriate evidence of authorization, satisfactory to
Seller and the Title Company, in their reasonable discretion, for (A) the
purchase of the Property in accordance with this Contract, (B) the
execution and delivery of this Contract on behalf of Buyer, and (C) the
consummation of the transactions contemplated by this Contract on behalf
of Buyer;
(vi) other items reasonably requested by the Title Company
as administrative requirements for consummating the Closing;
(vii) The Registration Rights Agreement substantially in
the form agreed upon pursuant to Section 3.5 and executed by the Trust,
and the Partnership Amendment substantially in the form agreed upon
pursuant to Section 3.5 and executed by or on behalf of the Trust and the
limited partners of Buyer;
(viii) Assumption of the Lender Loan Documents;
(ix) an agreement cancelling the Warrant without any
payment by the Seller to Buyer; and
(x) Buyer's written agreement to indemnify and hold Seller
harmless of and from all liabilities, losses, damages, costs, expenses
(including reasonable attorney's fees) that Seller suffers or incurs by
reason of any act or cause of action occurring or accruing on or after
the Closing Date and arising out of any act or failure to act of Buyer's
agents, representatives and employees relating to this Contract or to the
Project.
8.3 Adjustments at Closing. The following items shall be adjusted or
prorated between Seller and Buyer with respect to the Property:
(a) Ad valorem taxes and installments of special assessments
(collectively, "Taxes") relating to the Property due and payable in the
calendar year of Closing shall be prorated between Seller and Buyer as of
Closing Date, with the Seller being responsible for the number of days in
such calendar year of the Seller's ownership and Buyer being responsible
for the number of days in such calendar year of the Buyer's ownership.
If the actual amount of Taxes due and payable in the calendar
year of Closing is not known or cannot be calculated based on tax rates
and assessed values as of the Closing Date, the proration shall be based
on the amount of Taxes due and payable with respect to the Property in
the calendar year preceding the calendar year of Closing. If the amount
of actual Taxes due and payable in the calendar year in which the Closing
takes place are more or less than the amount used to prorate for Taxes as
of the Closing Date, then an adjustment for actual Taxes due shall be
made after Closing within fifteen days after receipt of the property tax
statements by Buyer. Any amounts now or hereafter received by Buyer (net
of costs and expenses incurred in connection with such protest) or Seller
by reason of tax protests for real estate taxes due and payable with
respect to periods prior to the Closing Date shall be the property of
Seller, subject only to the rights of Tenants therein.
(b) Subject to the specific provisions of subsection (f) below,
rents (including Tenants' contributions for operating costs and taxes)
actually paid to and received by Seller in collected funds before Closing
with respect to the Project for the month in which Closing occurs shall
be prorated as of Closing, with Seller to be charged and Buyer to be
credited with their respective portions. Rents payable with respect to
the Project for the month in which Closing occurs which have not been
paid to and received by Seller in collected funds before Closing shall be
prorated as of Closing, but with no cash credit or debit provided at
Closing. Nothing in this subparagraph shall prohibit, limit, or restrict
Seller from collecting or attempting to collect directly from any Tenant
after Closing in any lawful manner, but excluding Seller's bringing a
unlawful detainer action against a Tenant in connection with Seller's
collection efforts, any rents delinquent at the time of Closing. Rents
received after Closing shall be applied first to current rents and rents
that become delinquent after Closing and then to rents that are
delinquent as of the Closing (with Seller's portion to be promptly paid
by Buyer to Seller).
(c) Seller shall pay over to Buyer and shall deliver to Buyer an
accounting for the following: unforfeited deposits paid by Tenants,
including all rental, security, utility, key, damage, and other deposits;
prepaid rents paid to Seller by the Tenants for periods subsequent to the
Closing Date; and any other money held by Seller for the account of the
Tenants.
(d) All insurance policies and property management and leasing
agreements shall be terminated as of the Closing and there shall be no
prorations as to these items.
(e) Buyer shall receive a credit at Closing (or assignment of
escrowed funds in such amount) in an amount equal to the outstanding
financial obligations of Seller for tenant improvements remaining owed to
Lasermaster, Inc. under that certain lease dated January 31, 1996, as of
the Closing Date.
(f) All other income and ordinary operating expenses of the
Property (other than for public utilities, for which each party shall
deal directly with the service provider), including maintenance,
management, and other service charges, and all other normal operating
charges with respect to the Project shall be prorated effective at
Closing based on reasonable estimates of such operating expenses, and
appropriate cash adjustments shall be made by Buyer and Seller at
Closing.
(g) With respect to amounts paid or payable by Tenants under the
Leases pursuant to provisions relating to escalations or pass-throughs of
operating expenses and real estate taxes ("Additional Rents"), Seller
shall provide to Buyer at closing a certified statement itemizing by
Tenant the amount of Additional Rents collected from such Tenant and a
computation of the actual Additional Rents due from such Tenant for the
period from January 1, 1997 (or, if such Tenant pays Additional Rents on
other than a calendar year basis, from the commencement of the fiscal
year on which such Tenant pays Additional Rents) through the last day of
the month prior to the month in which Closing occurs (the "Additional
Rent Statement"). Promptly after Closing, but in no event more than
thirty (30) days after Closing, Seller shall provide a final certified
Additional Rent Statement updating the statement previously provided
through the date of Closing. At the time each such Additional Rent
Statement is provided, Seller shall also provide to Buyer the supporting
data upon which such Additional Rent Statement is based. As soon as
practical after Closing, Seller shall attempt to reconcile with the
Tenants for the period prior to Closing.
If the final Additional Rent Statement shows that Seller has over
collected the Additional Rents due from the Tenants under the Leases in
force (including month to month and other holdover or extension
arrangements with such Tenants) at the Closing, Seller shall pay to Buyer
the amount of such over collected Additional Rents at the time the final
Additional Rent Statement is provided to Buyer. If the final Additional
Rent Statement shows that Seller has under collected the Additional Rents
due from the Tenants under the Leases in force at the Closing, Buyer
shall make appropriate adjustments to the monthly amounts payable by such
Tenants and shall invoice such under collected amounts to such Tenants as
part of Buyer's year end billing to reconcile estimated Additional Rents
to actual amounts received from each such Tenant. Buyer shall pay to
Seller such uncollected amounts as, if and when received by Buyer. Buyer
shall use reasonable efforts to collect such amounts due and shall be
entitled to recover the cost of collections incurred in connection with
such efforts (apportioned proportionately between the amounts due to
Seller and to Buyer) other than Buyer's administrative and overhead costs
in billing and collection in connection with normal operations at the
Property. The foregoing notwithstanding, Buyer shall have no liability
to Seller for any uncollected amounts and shall not be required to
commence any legal action to collect any such amounts.
Notwithstanding Seller's provision to Buyer of the final
certified Additional Rent Statement and the payment if any, of over
collected amounts at the time of the provision of such statement, Seller
shall remain obligated to refund to any Tenant any additional amounts
finally determined to have been overcollected from such Tenant with
respect to the period prior to Closing by an independent arbitral or
judicial authority.
With respect to Additional Rents due to Seller from Tenants not
in occupancy as of the date of Closing, Seller shall retain all rights
relating thereto and all amounts collected by Seller relating thereto
shall be retained by Seller.
As between Seller and Buyer, Additional Rents shall be allocated
and apportioned over the period with regard to which operating expenses
or real estate taxes are incurred, notwithstanding the date on which such
Additional Rents become payable.
The provisions of this subsection (g) shall survive Closing.
(h) Buyer shall be entitled to a credit against the Purchase
Price as provided in Section 4.4 hereof.
8.4 Possession and Closing. Possession of the Property shall be
delivered to Buyer by Seller at the Closing, subject to the rights of the
Tenants. Buyer shall make its own arrangements for the provision of
public utilities to the Project and Seller shall terminate its contracts
with such utility companies that provide services to the Project.
8.5 Costs of Closing. Each party is responsible for paying the legal
fees of its counsel in negotiating, preparing, and closing the
transaction contemplated by this Contract. Seller shall be responsible
for paying the state deed tax (if any) due upon recording of the Special
Warranty Deed and Buyer shall be responsible for paying the recording
fees for such deed. Any other expense not specifically allocated herein
shall be allocated between the parties in the customary manner for
closings of real property similar to the Property in the geographic area
in which the Property is located.
ARTICLE IX
DEFAULTS AND REMEDIES
9.1 Seller's Defaults; Buyer's Remedies. In addition to Buyer's
remedy for the breaches described in Section 5.3 hereof, if Seller is in
default hereunder after expiration of any applicable cure period provided
herein, Buyer may, at Buyer's sole option, do any of the following, as
Buyer's sole and exclusive remedies:
(a) Terminate this Contract by giving written notice to Seller
on or before the Closing Date, in which event the Earnest Money Deposit
shall be returned to Buyer; or
(b) If the default is Seller's failure to cure Objections, cure
the Objections not cured by Seller at Closing (thereby waiving any
further recourse against Seller by reason thereof) and reduce the
Purchase Price only to the extent of up to the first $50,000 (in the
aggregate) of the cost of curing any Material Objections and the full
amount of the cost of discharging any Lien, to the extent paid by Buyer
and not by Seller pursuant to Section 4.4 hereof, and proceed to
consummate this transaction in accordance with this Contract, or
(c) Enforce specific performance of this Contract.
9.2 Buyer's Default; Seller's Remedies. If Buyer is in default under
this Contract or under the NWBC Contract or the 330 Contract, and such
default continues for ten (10) days after written notice thereof from
Seller to Buyer, Seller may, as Seller's sole and exclusive remedy,
terminate this Contract and receive the Earnest Money Deposit from the
Title Company.
9.3 Payment of Earnest Money Deposit. Upon the termination of this
Contract by reason of a default by Buyer hereunder and expiration of any
applicable cure period provided herein, the Earnest Money Deposit shall
forthwith be tendered by the Title Company to Seller. If the Earnest
Money Deposit may be properly delivered to Seller under this Section 9.3,
then Buyer shall, promptly on written request from Seller, execute and
deliver any documents necessary to cause the Title Company to deliver the
Earnest Money Deposit to Seller.
9.4 Waiver of Claims. As a further material inducement to Seller to
enter into this Contract and the transactions contemplated herein, Buyer
represents and warrants to Seller that Buyer is acquiring the Property
for commercial or business use, has knowledge and experience in financial
and business matters that enable Buyer to evaluate the merits and risks
of the transaction herein contemplated, has bargained for and obtained a
Purchase Price and other terms under this Contract which make the
acceptance of a contract which substantially limits its recourse against
the Seller acceptable and has been and will continue to be represented by
counsel in connection with the transactions contemplated herein.
9.5 Statutory Cancellation. The parties agree that if Seller
commences a statutory cancellation of this Agreement by reason of Buyer's
default, the Buyer's cure period shall be limited to thirty (30) days.
9.6 Varde Default. If Varde defaults under the agreement with Buyer
contemplated under subsection (ii) of Section 3.3 of this Agreement,
including a failure by Varde to perform at Closing, and Buyer notifies
Seller that it has decided not to seek specific performance of Varde's
performance or that such specific performance is not available, then
Buyer or Seller shall have the right to terminate this Contract by giving
written notice to the other party on or before Closing, in which event
the Earnest Money shall be returned to Buyer and Buyer and Seller shall
have no further obligations, one to the other, with respect to the
subject matter of this Contract (except under Section 4.7) except that
Seller shall reimburse Buyer for all reasonable out-of-pocket costs and
expenses incurred by Buyer in connection with this Contract and with the
Property, including, but not limited to, title company charges,
engineering fees, environmental consultant's fees, architect's fees,
legal fees (including the cost of pursuing such specific performance) and
other similar charges.
ARTICLE X
BROKERAGE COMMISSIONS
10.1 Amount. Seller shall pay a real estate brokerage commission to
Tom Holtz of CB Commercial (the "Seller's Broker") in the amount of
$100,000 for Broker's services in connection with this transaction, if,
as and when Closing occurs and Seller conveys the Property to Buyer.
Seller's obligation to pay such commission is totally contingent
upon the consummation of the Closing and the payment to Seller of the
Purchase Price and shall not be payable if Closing and such payment shall
not occur for any reason, including Seller's default. Seller's Broker
may divide its commission with other licensed real estate brokers,
agents, or salespersons, but Seller's only obligation to pay a commission
with respect to the Property, regardless of the nature or extent of
Seller's contact with any other broker or salesman is to Seller's Broker
pursuant to this Contract. Notwithstanding the foregoing, Seller may, at
its option, require the Buyer to pay the Seller's Broker in which event
the Purchase Price shall be reduced by the amount of such payment. Buyer
shall be responsible to pay the commission or fee due to Tim Leary &
David Ryder of CB Commercial ("Buyer's Broker") in connection with this
Contract. Buyer's Broker shall have no right to share in the commission
payable by Seller to Seller's Broker. Buyer's obligation to pay such
commission is totally contingent upon the consummation of the Closing and
the payment to Seller of the Purchase Price and shall not be payable if
Closing and such payment shall not occur for any reason, including
Buyer's default.
10.2 Indemnity. Seller represents and warrants to Buyer that Seller
has not contacted or entered into any agreement with any real estate
broker, agent, finder, or any other party in connection with this
transaction, other than as identified in Section 10.1 and that Seller has
not taken any action that would result in any real estate broker's,
finder's, or other fees or commissions being due to any other party with
respect to this transaction. Seller acknowledges and agrees that Buyer
shall have no obligation to pay any commission by reason of the purchase
and sale contemplated hereby to Seller's Broker and that any commission
payable to any such persons or entities by reason of the purchase and
sale contemplated hereby shall be paid by Seller; such agreement shall
not create any obligation by Seller to such person or entity absent a
written agreement with Seller to such effect. Buyer represents and
warrants to Seller that Buyer has not contacted or entered into any
agreement with any real estate broker, agent, finder, or other party in
connection with this transaction, other than as identified in Section
10.1 and that Buyer has not taken any action that would result in any
real estate broker's, finder's, or other fees or commissions being due to
any other party with respect to this transaction. Buyer acknowledges and
agrees that Seller shall have no obligation to pay any commission by
reason of the purchase and sale anticipated hereby to Buyer's Broker.
Each party hereby indemnifies and agrees to hold the other party harmless
from any loss, liability, damage, cost, or expense (including, but not
limited to, reasonable attorney's fees) resulting to the other party from
a breach of the representation and warranty made by such party herein.
The indemnities set forth in this Section 10.2 shall survive the Closing.
ARTICLE XI
MISCELLANEOUS
11.1 Notices. All notices, demands, requests, and other
communications given with respect to the subject matter of this Contract
shall be in writing, and shall be deemed to be delivered (a) on receipt
if delivered by hand delivery, (b) on receipt if faxed to the number
provided below (provided that a copy of such fax is also sent by U.S.
mail or by a recognized overnight courier service), or (c) when delivered
to a recognized overnight courier service, or whether actually received
or not, if addressed as provided below:
If to Seller: c/o Apex Asset Management Corporation
600 South Highway 169, Suite 1970
Minneapolis MN 55426
Attn: Stewart R. Stender
Fax No: 612-545-1510
Copies to: Fabyanske, Svoboda, Westra & Hart
1100 Kinnard Financial Center
920 Second Avenue South
Minneapolis MN 55402
Attn: Mark W. Westra
Fax No: 612-338-3857
If to Buyer: Liberty Property Limited Partnership
65 Valley Stream Parkway
Great Valley Corporate Center
Malvern, PA 19355
Attention: John Gattuso
Fax No: 610-644-4129
Phone No: 610-648-1754
With a copy to: Liberty Property Limited Partnership
65 Valley Stream Parkway
Great Valley Corporate Center
Malvern, PA 19355
Attention: Anne Sheppard
Fax No: 610-644-4129
Phone No: 610-648-1700
Copies to: Dorsey & Whitney
220 South Sixth Street
Suite 2200
Minneapolis MN 55402
Attention: Jeff Benson
Phone No: 612-340-2757
Fax No: 612-340-7800
11.2 Governing Law. This Contract is being executed and delivered,
and is intended to be performed, in the State of Minnesota, and the laws
of Minnesota shall govern the validity, construction, enforcement, and
interpretation of this Contract, unless otherwise specified herein. This
Contract is performable in, and the exclusive venue for any action
brought with respect hereto shall lie in, Hennepin County, Minnesota.
11.3 Entirety and Amendments. This Contract embodies the entire
agreement between the parties and supersedes all prior agreements and
understandings, if any, relating to the Property, including any letter of
intent executed relating to the Property, and may be amended or
supplemented only by an instrument in writing executed by the party
against whom enforcement is sought.
11.4 Parties Bound. This Contract is binding on and inures to the
benefit of Seller and Buyer, and their respective heirs, executors,
administrators, successors, and assigns.
11.5 Further Acts. In addition to the acts and deeds recited in this
Contract and contemplated to be performed, executed, and/or delivered
under this Contract, Seller and Buyer agree to perform, execute, and/or
deliver or cause to be performed, executed, and/or delivered at the
Closing of after the Closing all further acts, deeds, and assurances
reasonably necessary to consummate the transactions contemplated hereby.
11.6 Condition of the Property. EXCEPT FOR ANY REPRESENTATIONS AND
WARRANTIES OF SELLER PROVIDED HEREIN, BUYER ACKNOWLEDGES AND AGREES THAT
THE PROPERTY SHALL BE CONVEYED AND TRANSFERRED TO BUYER "AS IS, WHERE IS,
AND WITH ALL FAULTS", AND THAT, EXCEPT FOR ANY EXPRESS REPRESENTATIONS
AND WARRANTIES OF SELLER PROVIDED HEREIN, SELLER DOES NOT WARRANT OR MAKE
ANY REPRESENTATION, EXPRESSED OR IMPLIED, AS TO THE MERCHANTABILITY,
QUANTITY, QUALITY, CONDITION, SUITABILITY OR FITNESS FOR ANY PURPOSE
WHATSOEVER OF THE PROPERTY AND HAS NO OBLIGATION WHATSOEVER TO UNDERTAKE
ANY REPAIRS, ALTERATIONS, OR OTHER WORK OF ANY KIND WITH RESPECT TO ANY
PORTION OF THE PROPERTY.
EXCEPT FOR ANY EXPRESS REPRESENTATIONS AND WARRANTIES OF SELLER
PROVIDED HEREIN, BUYER AGREES THAT IN THE EVENT OF ANY CONSTRUCTION
DEFECTS, ERRORS, OMISSIONS OR ON ACCOUNT OF ANY OTHER CONDITIONS
AFFECTING THE PROPERTY, BUYER SHALL LOOK SOLELY TO SELLER'S PREDECESSORS
OR TO SUCH CONTRACTORS AND CONSULTANTS AS MAY HAVE CONTRACTED FOR WORK IN
CONNECTION WITH THE PROPERTY FOR ANY REDRESS OR RELIEF. EXCEPT FOR ANY
REPRESENTATIONS AND WARRANTIES OF SELLER PROVIDED HEREIN, UPON THE
ASSIGNMENT BY SELLER OR ITS CLAIMS, BUYER RELEASES SELLER OF ALL RIGHTS,
EXPRESS OR IMPLIED, BUYER MAY HAVE AGAINST SELLER ARISING OUT OF OR
RESULTING FROM ANY ERRORS, OMISSIONS OR DEFECTS IN THE PROPERTY.
SUBJECT TO THE DELIVERY BY SELLER OF THE INFORMATION DESCRIBED IN
SECTION 5.2(a) HEREOF, TO THE EXTENT IN SELLER'S, SELLER'S PARTNERS OR
THE PROPERTY MANAGER'S POSSESSION, BUYER ALSO ACKNOWLEDGES AND AGREES
THAT THE PROVISIONS IN THIS CONTRACT FOR INSPECTION AND INVESTIGATION OF
THE PROPERTY ARE ADEQUATE TO ENABLE BUYER TO MAKE BUYER'S OWN
DETERMINATION WITH RESPECT TO THE MERCHANTABILITY, QUANTITY, QUALITY,
CONDITION, AND SUITABILITY OR FITNESS FOR ANY PURPOSE OF THE PROPERTY,
INCLUDING, WITHOUT LIMITATION, ITS COMPLIANCE WITH APPLICABLE
ENVIRONMENTAL LAWS.
11.7 Time of the Essence. It is agreed by Seller and Buyer that time
is of the essence with respect to this Contract.
11.8 Exhibits. The Exhibits referred to in, and attached to, this
Contract are incorporated in and made a part of this Contract for all
purposes.
11.9 Risk of Loss. Seller shall promptly notify Buyer of any fire or
other casualty affecting the Project or of any actual or threatened (to
the extent that Seller has current actual knowledge thereof) taking or
condemnation of all or any portion of the Project. If between the
Effective Date of the Contract and the Closing Date, there occurs:
(a) damage to the Project caused by fire or other casualty that
would cost $500,000 or more to repair or would be likely to result, in
Buyer's judgment, in the loss of any Tenant or Tenants representing an
aggregate of more than 5% of the total net operating income with respect
to the Property; or
(b) the taking or condemnation of all or a portion of the
Project that would materially interfere with the present use of the
Project or if any taking or condemnation occurs for which Buyer does not
approve the amount of the condemnation award;
then, Buyer may terminate this Contract by giving written notice
to Seller within ten (10) Business Days after Buyer has received notice
from Seller. If Buyer does not so timely elect to terminate this
Contract, then the Closing shall take place as provided herein and there
shall be assigned to Buyer at the Closing all interest of Seller in and
to any insurance proceeds (and Seller shall pay to Buyer the amount of
any deductible) or condemnation awards payable to Seller on account of
that event, less sums that Seller incurs before the Closing to repair any
of the damage.
If between the Effective Date of the Contract and the Closing
Date, there occurs:
(c) damage to the Project caused by fire or other casualty that
would cost less than $500,000 to repair or would be likely to result, in
Buyer's judgment, in the loss of any Tenant or Tenants representing an
aggregate of less than 5% of the total net operating income with respect
to the Property; or
(d) the taking or condemnation of all or a portion of the
Project that would not materially interfere with the present use of the
Project and Buyer approves of the condemnation award;
then, Buyer may not terminate this Contract and there shall be
assigned to Buyer at the Closing all interest of Seller in and to
insurance proceeds (and Seller shall pay to Buyer the amount of any
deductible) or condemnation awards payable to Seller on account of that
event, less sums that Seller incurs before the Closing to repair any of
the damage.
The provisions of the Section 11.9 shall survive Closing.
11.10 Assignment. This Agreement shall apply to, inure to the benefit
of and be binding upon and enforceable against the parties hereto and
their respective successors and assigns. No such assignment will release
Buyer from any of its obligations hereunder.
11.11 Attorney's Fees. If either party hereto employs an attorney to
enforce or defend its rights hereunder, the prevailing party shall be
entitled to recover its reasonable attorney's fees.
11.12 Non-Disclosure; Non-Recordation. Neither party shall make public
disclosure with respect to this transaction before the Closing except:
(a) as may be required by law, including without limitation
disclosures required under securities laws; and
(b) to such lenders, attorneys, accountants, partners,
directors, officers, employees and representatives of either party or of
such party's advisors who need to know such information for the purpose
of evaluating and consummating the transaction, including the financing
of the transaction; and
(c) to present or prospective sources of financing.
Neither this Contract, nor a memorandum hereof, shall be recorded
in any public records.
11.13 Enforceability. If a provision of this Contract is held to be
illegal, invalid, or unenforceable under present or future laws effective
during this Contract, the legality, validity, and enforceability of the
remaining provisions of this Contract shall not be affected thereby, and
in lieu of each illegal, invalid or unenforceable provision there shall
be added automatically as a part of this Contract a provision as similar
in terms to such illegal, invalid, or unenforceable provision as may be
possible and be legal, valid, and enforceable.
11.14 Business Day. Notwithstanding any other provision herein, if the
Closing Date or the expiration of the Inspection Period, Title Review
Period or Cure Period occurs on a day that is not a Business Day, then
the Closing Date or the expiration date for such period shall be extended
to 4:00 p.m. on the first Business Day following that date.
11.15 Expiration of Offer. If a fully-executed counterpart of this
Contract is not received by Seller and Title Company on or before January
24, 1997 as indicated below, the offer contained in this Contract shall
be null and void.
11.16 Counterpart Signatures. This Contract may be executed in any
number of counterparts, which, when assembled and taken together, is to
be regarded as a single agreement.
SIGNATURE PAGE FOR
CONTRACT OF SALE
SOBC
EXECUTED by Buyer on the day of January, 1997
BUYER:
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: Liberty Property Trust,
its sole general partner
By:
------------------------------
Its:
------------------------------
And
By:
------------------------------
Its:
------------------------------
EXECUTED by Seller on __ day of January, 1997.
SELLER:
SOBC ASSOCIATES LLC,
a Minnesota limited liability company
By:
------------------------------
Its:
------------------------------
JOINDER OF SELLER'S PARTNERS
The undersigned partners in Seller agree that the Partnership Interests
in Buyer acquired pursuant hereto shall be pledged as security for the
performance of the obligations, duties and liabilities of Seller and
Varde that survive Closing, provided however, that if no action is
commenced with regard to an alleged breach in the performance of said
obligations, duties and liabilities of Seller and Varde that survive
Closing within one (1) year after Closing, such Partnership Interest
shall thereafter be free and clear of any such pledge. The undersigned
partners in Seller agree to execute and/or deliver such instruments as
Buyer may reasonably request to perfect such pledge.
Dated: January __, 1997
------------------------------
Stewart R. Stender
------------------------------
Robert C. Lux
JOINDER OF BROKERS
Brokers have executed this Contract solely for the purposes of evidencing
its agreement to the terms of Section 10.1 of this Contract. No consent
by Brokers shall be required to amend any other term of this Contract.
Date executed: January __, 1997
CB COMMERCIAL
By:
------------------------------
Name: Tom Holtz
Title:
------------------------------
By:
------------------------------
Name: Jim Leary
Title:
------------------------------
By:
------------------------------
Name: David Ryder
Title:
------------------------------
JOINDER OF TITLE COMPANY
The undersigned has received a counterpart of this Contract, fully
executed by Seller and Buyer, on the day of January, 1997.
COMMONWEALTH LAND TITLE INSURANCE COMPANY
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
EXHIBIT 10.7
AMENDMENT
TO
CONTRACT OF SALE
SOBC
This Amendment (the "Amendment") dated as of the ____ day of March, 1997,
is made and entered into by and between SOBC ASSOCIATES LLC, a Minnesota
limited liability company ("Seller") and LIBERTY PROPERTY LIMITED
PARTNERSHIP, a Pennsylvania limited partnership or its permitted assigns
("Buyer").
WITNESSETH
WHEREAS, Seller and Buyer entered into that Contract of Sale dated
January 22, 1997, as amended by Amendment No. 1 thereto dated January 31,
1997 and by letter agreements dated March 7, 1997 and March 13, 1997 (the
"Contract") with regard to certain property owned by Seller in Hennepin
County, Minnesota; and
WHEREAS, Seller and Buyer have agreed to amend the Contract in order to
evidence their agreement to certain changes to the Contract, as provided
hereinafter; and
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
I.Defined Terms. Unless the context otherwise indicates or unless
otherwise defined herein, capitalized terms used herein shall have the
meanings set forth in the Contract.
2. Amendments.
a. Section 3.3, through 3.3(v), of the Agreement is hereby
amended in its entirety to read as follows:
"At Closing the following shall occur:
(i) Buyer will assume and agree to pay, in accordance with
an assumption agreement and a loan amendment (the "Amended Loan
Documents") in form and substance reasonably acceptable to Jackson
National Life Insurance Company ("Lender") and Buyer, the outstanding
principal balance (as shown in a writing from Lender) of that Promissory
Note (the "Note") executed by Seller in favor of Lender in the original
principal amount of $9,120,000, and with an outstanding principal balance
as of the date hereof of approximately $9,040,587.30 and the other loan
documents executed in connection therewith (collectively, the "Lender
Loan Documents"). Buyer will pay, in addition to the Purchase Price, an
assumption fee of 1% of the outstanding principal balance of such loan at
closing payable to Lender together with Lender's out-of-pocket costs (all
of which shall be determined as of Closing), in connection with such
assumption, the Capital Improvement Escrow Account and the Tenant
Improvement Escrow Account will be transferred to Buyer without
adjustment to the Purchase Price;
(ii) Buyer will purchase that certain Warrant and Note
issued to The Varde Fund III-A, L.P. for an aggregate price of
$4,684,191.76; and
(iii) Buyer will pay adjusted costs (including the closing
costs) shown on the attachment to the Closing Statement in the amount of
$160,220.94;
(iv) Buyer shall issue to Seller 56,381 partnership
interests in Buyer (the "Partnership Interests"), with each Partnership
Interest valued at the lesser of (a) the Average Share Price as of the
Closing Date, or (b) $25, and with the number of Partnership Interests
rounded to the nearest whole number."
b. Section 3.5(f)(iii) of the Contract and the Registration
Rights Agreement previously approved by Buyer and Seller is hereby
amended to increase the permitted weekly trading by Seller from 10% to
20% of the average weekly trading volume for the Shares.
c. Section 8.2(b)(viii) of the Contract is hereby amended
to read:
"(viii) Assumption of the Note and execution of
the Amended Loan Documents."
d. Section 7.2 of the Contract is hereby amended to add the
following new subsection (f):
"(f)Buyer is satisfied, in its reasonable discretion, with
the form and content of the Amended Loan Documents."
e. Subject to the terms of this Amendment, Buyer has accepted
the condition of the Property pursuant to Section 4.6 of the Contract.
3. Full Force and Effect. Seller and Buyer agree that the Contract
is in full force and effect and has not been amended, modified or
supplemented in any respect, except as provided herein.
4. Governing Law. This Amendment is being executed and delivered
and is intended to be performed in the State of Minnesota, and the laws
of Minnesota shall govern the validity, construction, enforcement and
interpretation of this Amendment, unless otherwise specified herein.
5. Parties Bound. This Amendment is binding on and inures to the
benefit of Seller and Buyer, and their respective heirs, executors,
administrators, successors and assigns.
6. Counterpart Signatures. This Amendment may be executed in any
number of counterparts, which, when assembled and taken together, is to
be regarded as a single agreement.
SIGNATURE PAGE FOR
AMENDMENT NO.
TO
CONTRACT OF SALE
SOBC
EXECUTED by Buyer on the day of March, 1997
BUYER:
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: Liberty Property Trust,
its sole general partner
By:
------------------------------
Its:
------------------------------
By:
------------------------------
Its:
------------------------------
EXECUTED by Seller on __ day of March, 1997.
SELLER:
SOBC ASSOCIATES LLC,
a Minnesota limited liability company
By:
------------------------------
Its:
------------------------------
EXHIBIT 10.8
AGREEMENT REGARDING
PURCHASE OF WARRANT AND NOTE
THIS AGREEMENT is made as of the 21st day of February, 1997, by and
between THE VARDE FUND III-A, L.P., a Delaware limited partnership
("Seller") and LIBERTY PROPERTY LIMITED PARTNERSHIP, a Pennsylvania
limited partnership ("Buyer").
W I T N E S S E T H
WHEREAS, Seller is the holder of warrants to acquire 18,000 Class B
membership units in SOBC Associates LLC, a Minnesota limited liability
company (the "Company"), pursuant to that certain Unit Purchase Warrant
dated June 26, 1996 from Company to Seller (the "Unit Purchase Warrant"),
which was issued pursuant to that Warrant Agreement, dated June 26, 1996
between Company and Seller (the "Warrant Agreement"; collectively, the
Unit Purchase Warrant and the Warrant Agreement are the "Warrant");
WHEREAS, Seller is the holder of a Promissory Note dated June 26, 1996
from Company to Seller in the original principal amount of $2,430,000
(the "Note") and the documents and instruments given as security
therefor;
WHEREAS, Buyer and Company have entered into a Contract of Sale dated
January 22, 1997 (the "Contract of Sale") with regard to the contribution
of the sole asset of Company (the "Property") to Buyer in exchange for
partnership interests in Buyer, subject to the prior purchase by Buyer of
the Warrant and the Note held by Seller pursuant to the terms of this
Agreement; and
WHEREAS, Buyer is purchasing from Seller, the Purchased Interests (as
hereinafter defined) in order to facilitate the Company's transfer of the
Property to the Buyer in a transaction intended to qualify as a
contribution pursuant to Section 721 of the Internal Revenue Code of 1986
and the parties intend to dissolve and liquidate the Company immediately
following the purchase of the Property;
WHEREAS, it is the intention of the Buyer and Seller and the parties to
the Contract of Sale that Buyer purchase the Purchased Interest only in
connection with a Closing on the Contract of Sale, that Buyer have no
liability as a member in the Company before or after the Closing on the
Contract of Sale and that Buyer's rights and obligations against the
Company under the Contract of Sale not be affected or impaired in any
manner by Buyer's acquisition of the Purchased Interest; and
WHEREAS, Seller and Buyer are entering into this Agreement to set forth
the terms and conditions of the sale of the Purchased Interests by Seller
to Buyer.
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms.
Assignment of Warrant and Note: The assignment in the form of
Exhibit A attached hereto.
Closing: The consummation of the contribution of the Property by
the Company to Buyer in accordance with the Contract of Sale.
Closing Date: The date on which the Closing is actually held.
Company Documents: The Articles of Organization, Operating
Agreement, Member Control Agreement and Transfer Restriction Agreement of
the Company.
Contract of Sale: As defined in the recitals hereto.
Liabilities: As defined in Section 10 hereof.
Note: As defined in the recitals hereto.
Property: As defined in the recitals hereto.
Purchase Price: As defined in Section 3 hereof.
Purchased Interest: The Warrant and the Note.
Title Company: Commonwealth Land Title Insurance Company.
Warrant: As defined in the recitals hereto.
Warrant Agreement: As defined in the recitals hereto.
2. Agreement of Purchase and Sale.
(a) On the terms and conditions stated herein, Seller agrees to
sell and convey the Purchased Interest to Buyer and Buyer agrees to
purchase and acquire the Purchased Interest from Seller on the Closing
Date.
(b) The purchase price of the Purchased Interest shall be the
amount which would be distributable to Seller pursuant to the terms of
the Warrant and the Company Documents of the Company by reason of a sale
of the Property to Buyer on the Closing Date for the purchase price set
forth in the Contract of Sale ($15,285,000), subject to the adjustments
and prorations required by the Contract of Sale. The Seller and the
Company agree that the calculation set forth on Exhibit B accurately sets
forth the Purchase Price of the Purchased Interest assuming a Closing on
March 20, 1997, without giving effect to the adjustments noted herein.
The Purchase Price will be adjusted in the event of a change
in the Closing Date only in order to reflect the adjustment in the
portion of the purchase price payable to the Seller in accordance with
the provisions of the Warrant and the Company Documents, which adjustment
will not affect the purchase price payable under the Contract of Sale.
(c) After giving effect to the sale and purchase under this
Section 2 and the completion of the Closing, Buyer shall be the sole
owner of the Warrant and the Note.
3. Terms and Conditions of Purchase and Sale.
a. On the Closing Date (i) Seller shall execute and deliver into
escrow with the Title Company, at its office in Minneapolis, Minnesota,
the Assignment of the Warrant and Note, the Warrant, the Note,
assignments of the other documents and contracts given as security
therefor and the certificate of Seller required by Section 4 hereof,
which documents shall be delivered from escrow to Buyer only upon
satisfaction of the conditions precedent set forth in Section 9 hereof
and the Buyer's payment of the Purchase Price to Seller in immediately
available funds at Closing, and (ii) subject to the satisfaction of the
conditions precedent set forth in Section 9 hereof, Buyer shall pay to
Seller the Purchase Price in immediately available funds and shall
execute and deliver to Seller the acceptance of the Assignment, which
deliveries and actions shall be deemed to have occurred simultaneously
and to constitute the Closing hereunder.
b. Seller and Buyer hereby agree that, notwithstanding anything
to the contrary herein or in the Warrant, if the transaction contemplated
hereby is consummated as provided in this Agreement, Seller shall not be
entitled to any share of Company's taxable income or any distributions of
cash flow for the period prior to or after the Closing Date, but Seller
shall be entitled to receive interest accruing on the Note, as provided
therein, for the period to and including the day prior to the Closing
Date, but if Seller has not received the Purchase Price by 2:00 p.m on
the Closing Date, Seller shall be entitled to interest for the Closing
Date.
c. Subject to the requirements of the second paragraph of Section
3.2 of the Warrant Agreement, Seller shall assign to Buyer at Closing
title to the Purchased Interest free and clear of any lien, claim,
option, call, right of first refusal, charge, security interest,
encumbrance, restriction on transfer (other than any restriction under
the Securities Act of 1933, as amended, or state securities or "blue sky"
laws) or other right of any other party.
4. Representations and Warranties of Seller. Seller hereby represents
and warrants to Buyer that, as of the date hereof:
a. Subject to satisfaction of the requirements of the second
paragraph of Section 3.2 of the Warrant Agreement, Seller has full right,
power and authority to sell the Purchased Interest to Buyer as provided
in this Agreement and to carry out Seller's obligations under this
Agreement, and all requisite action necessary to authorize Seller to
enter into this Agreement and to carry out Seller's obligations hereunder
has been taken;
b. Subject to satisfaction of the requirements of the second
paragraph of Section 3.2 of the Warrant Agreement, Seller is the record
and beneficial owner of the Purchased Interest, free and clear of any
lien, claim, option, call, right of first refusal, charge, security
interest, encumbrance, restriction on transfer (other than any
restriction under the Securities Act of 1933, as amended, or state
securities or "blue sky" laws) or other right of any other party;
c. Seller has not exercised the Warrant in whole or in part.
d. Seller is not a foreign person under Sections 1445 and 7701 of
the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder;
e. The outstanding balance of principal on the Note is $2,430,000
as of the date hereof. Accrued interest on the Note has been paid for
the period ending December 31, 1996.
f. Subject to the requirements of the second paragraph of Section
3.2 of the Warrant Agreement, neither the execution, delivery and
performance of this Agreement by Seller, nor the consummation by Seller
of the transaction contemplated hereby (i) violates (A) any law,
regulation, order, writ, injunction, decree, determination, or award of
any court, any governmental department, board, agency or instrumentality,
domestic or foreign, or any arbitrator applicable to Seller, (B) the
partnership agreement of Seller, or (C) any contract, agreement,
instrument, mortgage, note, lease or other arrangement binding on or
affecting Seller or the Purchased Interest; (ii) requires any consent,
authorization or approval under any contract, agreement, instrument,
mortgage, note, lease or other arrangement to which Seller or the
Purchased Interest is bound; or (iii) results in the creation or
imposition of any encumbrance upon the Purchased Interest.
g. Any registration, declaration or filing with, or consent,
approval, license, permit or other authorization or order by, any
governmental or regulatory authority, domestic or foreign, that is
required in connection with the valid execution, delivery, acceptance and
performance by Seller under this Agreement or the consummation by Seller
of the transaction contemplated hereby has been completed, made or
obtained on or before the date of this Agreement.
h. There is no action, suit or proceeding pending or, to the
current actual knowledge of Seller, threatened against or affecting
Seller or the Purchased Interest, in any court or before or by any
governmental department, board, agency or instrumentality, domestic or
foreign, or any arbitrator which, if adversely determined, would
materially impair Seller's ability to perform its obligations under this
Agreement or would have a material adverse effect on the financial
condition of Seller.
i. Except as provided in the Contract of Sale, no broker, finder,
or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions hereunder based upon
arrangement made by or on behalf of the Seller.
BUYER ACKNOWLEDGES THAT SELLER HAS MADE NO EXPRESSED OR IMPLIED
REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE PROPERTY AND THAT
SELLER SHALL HAVE NO LIABILITY TO BUYER FOR ANY MISREPRESENTATION OR
BREACH BY THE COMPANY IN CONNECTION WITH THE CONTRIBUTION OF THE PROPERTY
TO THE BUYER PURSUANT TO THE CONTRACT OF SALE.
Seller shall execute and deliver a certificate at Closing as to the
correctness of the representations and warranties set forth above as of
the Closing Date (and, if any such representation shall not then be
correct, of any exceptions thereto.)
5. Covenants of Seller.
a. From the date of the execution of this Agreement and until the
Closing Date, Seller will not transfer the Warrant or the Note or any
portion thereof, exercise the Warrant or create, or permit to be created,
any mortgages, security interests, liens, judgments or other encumbrances
on the Warrant or the Note in favor of third parties, except with Buyer's
written consent in each instance.
b. From the date of the execution of this Agreement and until the
Closing Date, Seller shall advise Buyer of any action, suit or
proceeding, litigation, arbitration or administrative hearing before any
governmental agency concerning or affecting the Warrant or the Note in
any manner that is instituted or threatened in writing and of which
Seller has current actual knowledge.
c. Seller does hereby approve, for the benefit of the Company and
the Buyer, the Contract of Sale.
d. Upon the closing of the transaction contemplated by this
Agreement, Seller will transfer title in the Purchased Interest to the
Buyer, free and clear of any encumbrance.
6. Survival Beyond Closing. Except to the extent that Buyer has
current actual knowledge of any breach at or prior to Closing (which
Buyer, by closing the purchase contemplated hereby, shall be deemed to
have waived), the representations, warranties and covenants of Seller
contained in this Agreement (including, without limitation, Seller's
indemnification obligations under Section 10 of this Agreement) shall
survive the Closing, provided, however, that (i) any action for Buyer's
damages with regard to misrepresentation, or breach of warranty, covenant
or agreement of Seller (including, without limitation, any breach of
Seller's indemnification obligations under Section 10 of this Agreement)
must be brought within three (3) years after Closing or shall forever be
barred and (ii) notwithstanding anything herein to the contrary, Seller
shall not be liable to Buyer or any Buyer Indemnitee (as hereinafter
defined) for, nor shall the Liabilities for which Seller may be liable
hereunder include, any costs, liabilities, losses, damages, taxes,
penalties, fines and assessments (whether criminal or civil), actions,
suits, claims, obligations, injuries, judgments, disbursements and
demands of any kind or nature whatsoever related to or arising with
respect to the business, opportunities, investments or operations of the
Buyer (other than the Property and the loss of value thereto resulting
from Seller's misrepresentations or breach of warranties, covenants or
agreements), based on, or arising or resulting from the breach of or
misstatement of any material fact contained in any representation,
warranty, covenant or agreement of Seller.
7. Seller's Knowledge; Authority. The term "Seller's current actual
knowledge" as used in this Agreement, means matters of which Seller or
Gregory S. McMillan is presently aware at the relevant time, by virtue of
Seller's ownership of the Warrant, without undertaking any further
investigation or inquiry whatsoever, but does not include matters of
which any other person or entity (including, but not limited to, any
member of Company) other than Seller or Gregory S. McMillan is or may be
aware.
8. Representations and Warranties of Buyer. Buyer hereby represents
and warrants to Seller that, as of the date hereof and as of the Closing
Date,
a. Buyer has the full right, power and authority to purchase the
Warrant and the Note from Seller as provided in this Agreement and to
carry out Buyer's obligations under this Agreement, and all requisite
action necessary to authorize Buyer to enter into this Agreement and to
carry out Buyer's obligations hereunder has been taken;
b. Buyer has and shall rely solely on its own investigation in
consummating this transaction and, except for express representations and
warranties of Seller contained herein, Buyer has not relied on any
representation, warranty or assurance, expressed or implied of Seller;
and
c. Buyer is an "accredited investor" within the meaning of
Regulation D promulgated under the Securities Act.
9. Conditions Precedent to Seller's and Buyer's Performance.
a. Performance by Seller. Seller is not obligated to perform
under this Agreement unless:
i. Buyer has performed all obligations and agreements
performable by Buyer on or before Closing;
ii. Buyer is simultaneously closing on the Contract of
Sale; and
iii. all representations and warranties of Buyer are true
and correct in all material respects as of the Closing Date.
b. Performance by Buyer. Buyer is not obligated to perform
under this Agreement unless:
i. Seller has performed all obligations and agreements
performable by Seller on or before Closing;
ii. all representations and warranties of Seller are true
and correct in all material respects as of the Closing Date;
iii. Company is simultaneously closing on the Contract of
Sale;
iv. There shall have been no order, nor any preliminary or
permanent injunction, entered in any action or proceeding before any
United States federal or state court, or any foreign court of competent
jurisdiction or governmental authority (which has jurisdiction over the
enforcement of any applicable laws) making illegal or prohibiting the
consummation of the transaction hereunder;
v. The Buyer shall have received an opinion of counsel
to Seller as to the execution, delivery and enforceability of this
Agreement and the documents executed by Seller in connection herewith, in
substantially the form attached hereto as Exhibit C;
vi. Buyer shall have received the following in form and
substance reasonably satisfactory to it:
(1) a Certificate of Limited Partnership of Seller,
certified by the Secretary of State of Delaware;
(2) a Resolution (certified by the general partner
of Seller) and such other documents and evidence with respect to the
Seller as the Buyer or its counsel may reasonably request in order to
establish the authority of Seller to consummate the transactions
contemplated by this Agreement and the other documents to which Seller is
a party, the taking of all necessary action in connection therewith and
the compliance with the conditions herein or therein set forth;
(3) a Certificate of Seller as to the person or
persons authorized to execute and deliver this Agreement and the other
documents to which Seller is a party, and any other documents executed on
behalf of Seller and in connection with the transactions contemplated
hereby and thereby and as to the genuineness of the signature(s) of such
person or persons; and
(4) a Good Standing Certificate for Seller and the
Company dated within five (5) days of the Closing Date.
v. Buyer shall have received from Seller each of the
documents referred to in Section 3.a hereof and a receipt for the
Purchase Price.
10. Indemnification.
a. For purposes of this Section 10, "Liabilities" shall mean
any and all costs, liabilities, losses, damages, taxes, penalties, fines,
and assessments (whether criminal or civil), actions, suits, claims,
obligations, injuries, judgments, disbursements and demands of any kind
or nature whatsoever and except as otherwise expressly provided in this
Section 10, shall include all reasonable out-of-pocket costs,
disbursements and expenses actually incurred (including reasonable
consultant, expert and attorneys' fees and expenses and costs of
investigation, except as otherwise expressly provided herein).
b. For purposes of this Section, a "Buyer Indemnitee" shall
mean the Buyer, its successors and permitted assigns and any of their
shareholders, officers, directors, employees, agents and representatives.
c. Without limiting any other rights which a Buyer Indemnitee
may have hereunder or under applicable law, but subject to the
limitations in Section 6 hereof, Seller hereby agrees to defend,
indemnify and hold harmless each Buyer Indemnitee from and against all
Liabilities that may at any time be incurred by, imposed on or asserted
against such Buyer Indemnitee, directly or indirectly based on, or
arising or resulting from the breach of, or misstatement of any material
fact contained in any representation, warranty or agreement of Seller
contained in this Agreement (the "Indemnified Buyer Liability").
d. Any Buyer Indemnitee shall promptly notify Seller of the
commencement of any action, suit or proceeding with respect to an
Indemnified Buyer Liability or the assertion of any Indemnified Buyer
Liability, in each case as to which indemnification is sought; provided,
that the failure to provide such notice shall not release Seller from any
of its obligations to indemnify hereunder to the extent that such failure
does not materially prejudice the rights of Seller in its ability to
defend such Indemnified Buyer Liability. Seller shall, at its own
expense, assume or cause to be assumed the defense of any such
Indemnified Buyer Liability within thirty (30) days after the affected
Buyer Indemnitee shall have notified Seller thereof. Such Buyer
Indemnitee, upon reasonable notice by Seller or the person assuming the
defense shall consult from time to time with respect to such Indemnified
Buyer and shall provide Seller or the person assuming the defense with
any documents or other items or access to any witness which Seller or the
person assuming the defense deems in its reasonable judgment to be
necessary in connection with the defense of such Indemnified Buyer
Liability, and Seller shall pay or reimburse or cause to be paid or
reimburse, any reasonable out-of-pocket costs therefor. Such Buyer
Indemnitee may participate in the defense of any such Indemnified Buyer
Liability and employ separate counsel, at its own expense, unless such
Buyer Indemnitee shall have reasonably determined that counsel selected
by Seller or such person has a conflict of interest because of the
availability of different or additional defenses to such Buyer
Indemnitee, in which case Seller shall pay or cause to be paid the costs
and expenses of counsel employed by such Buyer Indemnitee. Seller and
its insurers may, in their sole discretion, defend, settle or compromise
any such action, suit or proceeding; provided, that Seller and its
insurers shall be liable in respect of all Indemnified Buyer Liabilities
relating thereto (whether by payment of any judgment, settlement, amount
or indemnity hereunder) and no settlement shall be entered into unless
such Buyer Indemnitee is fully released or discharged from all such
Indemnified Investor Liabilities. Participation by any such Buyer
Indemnitee in any such action, suit or claim shall not constitute a
waiver of the Indemnification provided in this Section 10. Nothing
contained in this Section 10 shall be deemed to require the Buyer
Indemnitee to contest any Indemnified Buyer Liability or to assume
responsibility for or control of any judicial proceeding with respect
thereto.
e. No Buyer Indemnitee shall enter into a settlement or other
compromise with respect to any Indemnified Buyer Liability without the
prior written consent of Seller, which consent shall not be unreasonably
withheld, unless the Buyer Indemnitee waives its rights to be indemnified
with respect to such Indemnified Buyer Liability under this Section 10.
11. Further Assurances. Seller, upon reasonable request of Buyer,
shall execute and deliver such further instruments and do or cause to be
done such further acts as may be necessary to effectuate and confirm the
assignment of the Warrant, the Note and all documents and contracts given
as security therefor.
12. Applicable Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Minnesota.
13. Termination. This Agreement may be terminated at any time prior
to the Closing Date by the mutual written consent of the parties to this
Agreement. This Agreement shall terminate automatically, without the
need for any further writing by or between the parties hereto, if the
Contract of Sale is terminated for any reason. This Agreement shall also
terminate automatically, without the need for any further writing by or
between the parties hereto, if the Closing Date does not occur on or
before April 4, 1997, unless extended by written agreement of the parties
hereto.
14. Specific Performance. The parties hereto agree and acknowledge
that money damages are not an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
15. Amendments. This Agreement may not be amended or terminated
orally, but only by an instrument in writing duly executed by the parties
hereto.
16. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts, and
each such counterpart shall be deemed to be an original but all such
counterparts shall together constitute one and the same Agreement.
17. Liability of Buyer. Seller is not a member of the Company and,
effective on and after the Closing Date, has no right to claim that:
a. It is entitled to contribution or indemnification from Buyer
for any claim made by Buyer against the Company under the Contract of
Sale or under any of the closing documents executed by the Company
thereunder;
b. Buyer's rights and obligations against the Company have been
affected or impaired in any manner by Buyer's acquisition of the
Purchased Interest hereunder; or
c. Buyer is liable for the obligations of the Company under the
Contract of Sale, or that the current members of the Company (Robert C.
Lux and Stewart R. Stender) are not liable for such obligations if and to
the extent such members have liability therefor under applicable law.
SIGNATURE PAGE
TO
AGREEMENT REGARDING
PURCHASE OF WARRANT AND NOTE
SELLER:
THE VARDE FUND III-A, L.P.,
a Delaware limited partnership
By: Varde Partners, L.P. its general partner
By: Varde Partners, Inc., its general partner
By:
------------------------------
Its:
------------------------------
BUYER:
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: Liberty Property Trust,
its sole general partner
By:
------------------------------
Its:
------------------------------
And
By:
------------------------------
Its:
------------------------------
The undersigned, the members of the Company, do hereby consent to the
transfer of the Purchased Interest to Buyer in accordance with this
Agreement, subject to the terms and conditions of this Agreement and
subject to Seller's and Buyer's compliance with the second paragraph of
Section 3.2 of the Warrant Agreement.
------------------------------
Robert C. Lux
------------------------------
Stewart R. Stender
JOINDER
The undersigned agree that the Partnership Interests in Liberty Property
Limited Partnership acquired pursuant to the Contract of Sale, pursuant
to the Contract of Sale dated January 22, 1997 between Buyer and SOBC
Associates LLC, pursuant to the Contract of Sale dated January 22, 1997
between Buyer and NWBC Associates Limited Partnership and pursuant to
that Apex Agreement of even date herewith shall be pledged as security
for the performance of the obligations, duties and liabilities of the
VARDE FUND III-A, L.P. ("Varde") pursuant to the Agreement Regarding
Purchase of Warrant and Note that survive Closing, provided, however,
that if no action is commenced with regard to an alleged breach in the
performance of said obligations, duties and liabilities of Varde that
survive Closing within one (1) year after Closing, such Partnership
Interests shall thereafter be free and clear of any such pledge. The
undersigned parties agree to execute and/or deliver such instruments as
Buyer may reasonably request to perfect such pledge.
Dated: February __, 1997.
------------------------------
Stewart R. Stender
------------------------------
Robert C. Lux
330 ASSOCIATES, INC.
By:
------------------------------
Its:
------------------------------
APEX ASSET MANAGEMENT CORPORATION
By:
------------------------------
Its:
------------------------------
NWBC ASSOCIATES, INC.
By:
------------------------------
Its:
------------------------------
EXHIBIT 10.9
AGREEMENT REGARDING
PURCHASE OF PARTNERSHIP INTERESTS
THIS AGREEMENT is made as of the __ day of February, 1997, by and between
CROSSTOWN ASSET CORP. I, a Delaware corporation ("Seller") and LIBERTY
PROPERTY LIMITED PARTNERSHIP, a Pennsylvania limited partnership
("Buyer").
W I T N E S S E T H:
WHEREAS, Seller is a limited partner in 330 Associates Limited
Partnership, a Minnesota limited partnership (the "Partnership"),
pursuant to that certain Agreement of Limited Partnership Agreement dated
as of April 13, 1994 (the "Partnership Agreement");
WHEREAS, Buyer and the Partnership have entered into a Contract of Sale
dated January 22, 1997 (the "Contract of Sale") with regard to the
contribution of the sole asset of Partnership (the "Property") to the
Buyer in exchange for partnership interests in Buyer, subject to the
prior purchase by Buyer of the Purchased Interest (as hereinafter
defined) of Seller in the Partnership pursuant to the terms of this
Agreement;
WHEREAS, Buyer is purchasing from Seller the Purchased Interest in order
to facilitate the Partnership's transfer of the Property by the
Partnership to Buyer in a transaction intended to qualify as a
contribution pursuant to Section 721 of the Internal Revenue Code of 1986
and the parties intend to dissolve and liquidate the Partnership
immediately following the purchase of the Property pursuant to an Amended
Partnership Agreement (the "Amended Partnership Agreement");
WHEREAS, it is the intention of the Buyer and Seller and the parties to
the Contract of Sale that Buyer purchase the Purchased Interest only in
connection with a Closing on the Contract of Sale, that Buyer have no
liability as a partner in the Partnership before or after the Closing on
the Contract of Sale and that Buyer's rights and obligations against the
Partnership under the Contract of Sale not be affected or impaired in any
manner by Buyer's acquisition of the Purchased Interest; and
WHEREAS, Seller and Buyer are entering into this Agreement to set forth
the terms and conditions of the sale by the Seller to Buyer of the
Purchased Interests of Seller in the Partnership.
NOW, THEREFORE, in consideration of the foregoing recitals and for other
good and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. Defined Terms.
Amended Partnership Agreement: An amendment to the Partnership
Agreement to be executed at Closing by Buyer and the other remaining
partners in the Partnership in order to dissolve and liquidate the
Partnership following Closing and signed by Seller acknowledging the
assignment of the Purchased Interest to Buyer.
Assignment of Partnership Interest: The assignment in the form
of Exhibit A attached hereto.
Closing: The consummation of the contribution of the Property by
the Partnership to Buyer in accordance with the Contract of Sale.
Closing Date: The date on which the Closing is actually held.
Contract of Sale: As defined in the recitals hereto.
Liabilities: As defined in Section 10 hereof.
Partnership Agreement: As defined in the recitals hereto.
Property: As defined in the recitals hereto.
Purchase Price: As defined in Section 2 hereof.
Purchased Interest: As defined in Section 2 hereof.
Title Company: Commonwealth Land Title Insurance Company.
2. Agreement of Purchase and Sale.
a. On the terms and conditions stated herein and in the
Partnership Agreement, Seller agrees to sell and convey the Purchased
Interest to Buyer and Buyer agrees to purchase and acquire the Purchased
Interest from Seller on the Closing Date. The term "Purchased Interest"
shall mean a limited partnership interest in the Partnership in an amount
equal to the Percentage Interest set forth opposite the Seller's name on
Exhibit A to the Partnership Agreement.
b. The purchase price of the Purchased Interest shall be the
amount which would be distributable to Seller pursuant to the terms of
the Partnership Agreement of the Partnership by reason of a sale of the
Property to Buyer on the Closing Date for the purchase price set forth in
the Contract of Sale ($12,478,087), subject to the adjustments and
prorations required by the Contract of Sale and subject to increase by
any Earn Out Amount (as defined in the Contract of Sale) payable to the
Partnership on the Closing Date, but without adjustment for any Earn Out
Amount (as defined in the Contract of Sale) payable subsequent to the
Closing Date. Buyer and Seller agree that the Earn Out Amount payable
subsequent to the Closing Date will be paid to 330 Associates, Inc., as
agent for the current partners of the Partnership (including Seller),
pursuant to the Contract of Sale and not in accordance with this
Agreement and that Seller shall retain an interest in any Earn Out Amount
paid after Closing pursuant to a separate agreement with 330 Associates,
Inc. Buyer shall have no interest in any Earn Out Amount payable after
Closing pursuant to the Contract of Sale. The Seller and the Partnership
agree that the calculation set forth on Exhibit B attached hereto
accurately sets forth the Purchase Price of the Purchased Interest
assuming a Closing on March 20, 1997, without giving effect to the
adjustments and prorations noted herein.
The Purchase Price will be adjusted in the event of a change
in the Closing Date only in order to reflect the adjustment in the
portion of the purchase price payable to the Seller hereunder in
accordance with provisions of the Partnership Agreement, which adjustment
will not affect the purchase price payable under the Contract of Sale.
c. After giving effect to the sale and purchase under this
Section 2 and the completion of the Closing, Buyer shall be a substituted
Limited Partner in the Partnership pursuant to the terms of the Amended
Partnership Agreement, holding the initial Percentage Interest in the
Partnership as set forth opposite Seller's name on Exhibit A to the
Partnership Agreement.
3. Terms and Conditions of Purchase and Sale.
a. On the Closing Date (i) Seller shall execute and deliver into
escrow with the Title Company, at its office in Minneapolis, Minnesota,
the Assignment of the Purchased Interest and the certificate of Seller
required by Section 4 hereof, which documents shall be delivered from
escrow to Buyer only upon satisfaction of the conditions precedent set
forth in Section 9 hereof, and the Buyer's payment of the Purchase Price
to Seller in immediately available funds at Closing, and (ii) subject to
the satisfaction of the conditions precedent set forth in Section 9
hereof, Buyer shall pay to Seller the Purchase Price in immediately
available funds and shall execute and deliver to Seller the acceptance of
the Assignment, which deliveries and actions shall be deemed to have
occurred simultaneously and to constitute the closing hereunder.
b. Seller and Buyer hereby agree that, notwithstanding anything
to the contrary herein or in the Partnership Agreement, the distributive
share of the Partnership's taxable income, tax losses allocable to the
Purchased Interest and distributions shall be allocated to Seller for the
period prior to the Closing Date, based on a closing of the Partnership's
books on the Closing Date.
c. Subject to the requirements of Section 7.3 of the Partnership
Agreement, Seller shall assign to Buyer at Closing title to the Purchased
Interests, free and clear of any lien, claim, option, call, right of
first refusal, charge, security interest, encumbrance, restriction on
transfer (other than any restriction under the Securities Act of 1933, as
amended, or state securities or "blue sky" laws) or other right of any
other party.
4. Representations and Warranties of Seller. Seller hereby
represents and warrants to Buyer that, as of the date hereof:
a. Subject to the requirements of Section 7.3 of the Partnership
Agreement, Seller has full right, power and authority to sell the
Purchased Interest to Buyer as provided in this Agreement and to carry
out Seller's obligations under this Agreement, and all requisite action
necessary to authorize Seller to enter into this Agreement and to carry
out Seller's obligations hereunder has been taken;
b. Seller has a 90% interest, as a limited partner, in the
Partnership, in the Partnership and in all capital relating thereto and
in all profits and losses therein;
c. Subject to the requirements of Section 7.3 of the Partnership
Agreement, Seller is the record and beneficial owner of the Purchased
Interest, free and clear of any lien, claim, option, warrants, contracts,
call, right of first refusal, charge, security interest, encumbrance,
restriction on transfer (other than any restriction under the Securities
Act of 1933, as amended, or state securities or "blue sky" laws) or other
right of any other party;
d. Seller is not a foreign person under Sections 1445 and 7701
of the Internal Revenue Code of 1986, as amended, and regulations
promulgated thereunder;
e. Subject to the requirements of Section 7.3 of the Partnership
Agreement, neither the execution, delivery and performance of this
Agreement by Seller, nor the consummation by Seller of the transaction
contemplated hereby (i) violates (A) any law, regulation, order, writ,
injunction, decree, determination, or award of any court, any
governmental department, board, agency, or instrumentality, domestic or
foreign, or any arbitrator applicable to Seller, (B) the certificate of
incorporation or bylaws of Seller, or (C) any contract, agreement,
instrument, mortgage, note, lease or other arrangement binding on or
affecting Seller or the Purchased Interest; (ii) requires any consent,
authorization or approval under any contract, agreement, instrument,
mortgage, note, lease or other arrangement to which Seller or the
Purchased Interest is bound; or (iii) results in the creation or
imposition of any encumbrance upon the Purchased Interest.
f. Any registration, declaration or filing with, or consent,
approval, license, permit, or other authorization or order by, any
governmental or regulatory authority, domestic or foreign, that is
required in connection with the valid execution, delivery, acceptance and
performance by Seller under this Agreement or the consummation by Seller
of the transaction contemplated hereby has been completed, made or
obtained on or before the date of this Agreement.
g. There is no action, suit, or proceeding pending or, to the
current actual knowledge of Seller, threatened against or affecting
Seller or the Purchased Interest, in any court or before or by any
governmental department, board, agency or instrumentality, domestic or
foreign, or any arbitrator which, if adversely determined, would
materially impair Seller's ability to perform its obligations under this
Agreement or would have a material adverse effect on the financial
condition of Seller.
h. Except as provided in the Contract of Sale, no broker,
finder, or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions hereunder
based upon any arrangement made by or on behalf of the Seller.
BUYER ACKNOWLEDGES THAT SELLER HAS MADE NO EXPRESSED OR IMPLIED
REPRESENTATIONS OR WARRANTIES WITH RESPECT TO THE PROPERTY.
Seller shall execute and deliver a certificate at Closing as to
the correctness of the representations and warranties set forth above as
of the Closing Date and, if any such representation shall not then be
correct, of any exceptions thereto.
5. Covenants of Seller.
a. From the date of the execution of this Agreement and until
the Closing Date, Seller will not transfer the Purchased Interest or any
portion thereof or create, or permit to be created, any mortgages,
security interests, liens, judgments or other encumbrances on the
Purchased Interest in favor of third parties, except with Buyer's written
consent in each instance.
b. From the date of the execution of this Agreement and until
the Closing Date, Seller shall advise Buyer of any action, suit or
proceeding, litigation, arbitration or administrative hearing before any
governmental agency concerning or affecting the Purchased Interest in any
manner that is instituted or threatened in writing and of which Seller
has current actual knowledge.
c. Seller does hereby approve, for the benefit of the
Partnership and Buyer, the Contract of Sale.
d. Upon the closing of the transaction contemplated by this
Agreement, Seller will transfer title in the Purchased Interest to Buyer,
free and clear of any encumbrance, and the Purchased Interest shall
constitute a 90% Percentage Interest in the Partnership.
6. Survival Beyond Closing. Except to the extent that Buyer has
current actual knowledge of any breach at or prior to Closing (which
Buyer, by closing the purchase contemplated hereby, shall be deemed to
have waived), the representations, warranties and covenants of Seller
contained in this Agreement (including, without limitation, Seller's
indemnification obligations under Section 10 of this Agreement) shall
survive the Closing, provided, however, that (i) any action for Buyer's
damages with regard to an alleged breach or misstatement of any such
representation, warranty, covenant or agreement of Seller (including,
without limitation, any breach of Seller's indemnification obligations
under Section 10 of this Agreement) must be brought within three (3)
years after Closing or shall forever be barred and (ii) notwithstanding
anything herein to the contrary, Seller shall not be liable to Buyer or
any Buyer Indemnitee (as hereinafter defined) for, nor shall the
Liabilities for which Seller may be liable hereunder include, any costs,
liabilities, losses, damages, taxes, penalties, fines and assessments
(whether criminal or civil), actions, suits, claims, obligations,
injuries, judgments, disbursements and demands of any kind or nature
whatsoever related to or arising with respect to the business or
operations of the Buyer (other than the Property and the loss of value
thereto resulting from a breach or misstatement of Seller's
representations, warranties, covenants or agreements), based on, or
arising or resulting from the breach of or misstatement of any material
fact contained in any representation, warranty, covenant or agreement of
Seller.
7. Seller's Knowledge; Authority. The term "Seller's current actual
knowledge" as used in this Agreement, means matters of which Seller or
Timothy Clark is presently aware at the relevant time, by virtue of
Seller's ownership of the Partnership Interest, without undertaking any
further investigation or inquiry whatsoever, but does not include matters
of which any other person or entity (including, but not limited to, any
general or limited partner of the Partnership other than Seller) other
than Seller or Timothy Clark is or may be aware.
8. Representations and Warranties of Buyer. Buyer hereby represents
and warrants to Seller that, as of the date hereof and as of the Closing
Date,
a. Buyer has the full right, power and authority to purchase the
Partnership Interest from Seller as provided in this Agreement and to
carry out Buyer's obligations under this Agreement, and all requisite
action necessary to authorize Buyer to enter into this Agreement and to
carry out Buyer's obligations hereunder has been taken;
b. Buyer has and shall rely solely on its own investigation in
consummating this transaction and, except for express representations and
warranties of Seller contained herein, Buyer has not relied on any
representation, warranty or assurance, expressed or implied of Seller;
and
c. Buyer is an "accredited investor" within the meaning of
Regulation D promulgated under the Securities Act.
9. Conditions Precedent to Seller's and Buyer's Performance.
a. Performance by Seller. Seller is not obligated to perform
under this Contract unless:
i. Buyer has performed all obligations and agreements
performable by Buyer on or before Closing;
ii. Buyer is simultaneously closing on the Contract of
Sale; and
iii. all representations and warranties of Buyer are true
and correct in all material respects as of the Closing Date.
b. Performance by Buyer. Buyer is not obligated to perform
under this Contract unless:
i. Seller has performed all obligations and agreements
performable by Seller on or before Closing;
ii. all representations and warranties of Seller are true
and correct in all material respects as of the Closing Date;
iii. the Partnership is simultaneously closing on the
Contract of Sale;
iv. there shall have been no order, or any preliminary or
permanent injunction, entered in any action or proceeding before any
United States federal or state court or any foreign court of competent
jurisdiction or governmental authority (which has jurisdiction over the
enforcement of any applicable laws) making illegal or prohibiting the
consummation of the transaction hereunder;
v. each of the partners of the Partnership shall have duly
executed the Amended Partnership Agreement;
vi. Buyer shall have received a true, correct and complete
copy of the Partnership Agreement and all amendments thereto, if any,
certified as true, current and complete by the general partner of the
Partnership;
vii. Buyer shall have received an opinion of in-house
counsel to Seller as to the execution, delivery and enforceability of
this Agreement and the documents executed by Seller in connection
herewith, in substantially the form attached hereto as Exhibit C;
viii. Buyer shall have received the following in form and
substance reasonably satisfactory to it:
(1) a Certificate of Incorporation of Seller,
certified by the Secretary of State of Delaware;
(2) a Resolution (certified by the Secretary or an
Assistant Secretary of Seller) and such other documents and evidence with
respect to the Seller as the Buyer or its counsel may reasonably request
in order to establish the authority of Seller to consummate the
transactions contemplated by this Agreement and the other documents to
which Seller is a party, the taking of all necessary action in connection
therewith and the compliance with the conditions herein or therein set
forth;
(3) a Certificate of Seller as to the person or
persons authorized to execute and deliver this Agreement and the other
documents to which Seller is a party, and any other documents executed on
behalf of Seller and in connection with the transactions contemplated
hereby and thereby and as to the genuineness of the signature(s) of such
person or persons; and
(4) a Good Standing Certificate for Seller and the
Partnership dated within five (5) days of the Closing Date.
ix. Buyer shall have received from Seller each of the
documents referred to in Section 3.a hereof and a receipt for the
Purchase Price.
10. Indemnification.
a. For purposes of this Section 10, "Liabilities" shall mean any
and all costs, liabilities, losses, damages, taxes, penalties, fines, and
assessments (whether criminal or civil), actions, suits, claims,
obligations, injuries, judgments, disbursements and demands of any kind
or nature whatsoever and except as otherwise expressly provided in this
Section 10, shall include all reasonable out-of-pocket costs,
disbursements and expenses actually incurred (including reasonable
consultant, expert and attorneys' fees and expenses and costs of
investigation, except as otherwise expressly provided herein).
b. For purposes of this Section, a "Buyer Indemnitee" shall mean
the Buyer, its successors and permitted assigns and any of their
shareholders, officers, directors, employees, agents and representatives.
c. Without limiting any other rights which a Buyer Indemnitee
may have hereunder or under applicable law, but subject to the
limitations in Section 6 hereof, Seller hereby agrees to defend,
indemnify and hold harmless each Buyer Indemnitee from and against all
Liabilities that may at any time be incurred by, imposed on or asserted
against such Buyer Indemnitee, directly or indirectly based on, or
arising or resulting from the breach of, or misstatement of any material
fact contained in any representation, warranty or agreement of Seller
contained in this Agreement (the "Indemnified Buyer Liability").
d. Any Buyer Indemnitee shall promptly notify Seller of the
commencement of any action, suit or proceeding with respect to an
Indemnified Buyer Liability or the assertion of any Indemnified Buyer
Liability, in each case as to which indemnification is sought; provided,
that the failure to provide such notice shall not release Seller from any
of its obligations to indemnify hereunder to the extent that such failure
does not materially prejudice the rights of Seller in its ability to
defend such Indemnified Buyer Liability. Seller shall, at its own
expense, assume or cause to be assumed the defense of any such
Indemnified Buyer Liability within thirty (30) days after the affected
Buyer Indemnitee shall have notified Seller thereof. Such Buyer
Indemnitee, upon reasonable notice by Seller or the person assuming the
defense shall consult from time to time with respect to such Indemnified
Buyer and shall provide Seller or the person assuming the defense with
any documents or other items or access to any witness which Seller or the
person assuming the defense deems in its reasonable judgment to be
necessary in connection with the defense of such Indemnified Buyer
Liability, and Seller shall pay or reimburse or cause to be paid or
reimburse, any reasonable out-of-pocket costs therefor. Such Buyer
Indemnitee may participate in the defense of any such Indemnified Buyer
Liability and employ separate counsel, at its own expense, unless such
Buyer Indemnitee shall have reasonably determined that counsel selected
by Seller or such person has a conflict of interest because of the
availability of different or additional defenses to such Buyer
Indemnitee, in which case Seller shall pay or cause to be paid the costs
and expenses of counsel employed by such Buyer Indemnitee. Seller and
its insurers may, in their sole discretion, defend, settle or compromise
any such action, suit or proceeding; provided, that Seller and its
insurers shall be liable in respect of all Indemnified Buyer Liabilities
relating thereto (whether by payment of any judgment, settlement, amount
or indemnity hereunder) and no settlement shall be entered into unless
such Buyer Indemnitee is fully released or discharged from all such
Indemnified Investor Liabilities. Participation by any such Buyer
Indemnitee in any such action, suit or claim shall not constitute a
waiver of the Indemnification provided in this Section 10. Nothing
contained in this Section 10 shall be deemed to require the Buyer
Indemnitee to contest any Indemnified Buyer Liability or to assume
responsibility for or control of any judicial proceeding with respect
thereto.
e. No Buyer Indemnitee shall enter into a settlement or other
compromise with respect to any Indemnified Buyer Liability without the
prior written consent of Seller, which consent shall not be unreasonably
withheld, unless the Buyer Indemnitee waives its rights to be indemnified
with respect to such Indemnified Buyer Liability under this Section 10.
11. Further Assurances. Seller, upon reasonable request of Buyer,
shall execute and deliver such further instruments and do or cause to be
done such further acts as may be necessary to effectuate and confirm the
assignment of the Purchased Interest. In addition, Seller and Buyer
agree to cooperate to take all such actions as shall be necessary to
reflect the substitution of Buyer in place of Seller as a limited partner
in the Partnership.
12. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Minnesota.
13. Termination. This Agreement may be terminated at any time prior
to the Closing Date by the mutual written consent of the parties to this
Agreement. This Agreement shall terminate automatically, without the
need for any further writing by or between the parties hereto, if the
Contract of Sale is terminated for any reason. This Agreement shall also
terminate automatically, without the need for any further writing by or
between the parties hereto, if the Closing Date does not occur on or
before April 4, 1997, unless extended by written agreement of the parties
hereto.
14. Specific Performance. The parties hereto agree and acknowledge
that money damages are not an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole
discretion apply to any court of law or equity of competent jurisdiction
for specific performance and/or injunctive relief in order to enforce or
prevent any violations of the provisions of this Agreement.
15. Amendments. This Agreement may not be amended or terminated
orally, but only by an instrument in writing duly executed by the parties
hereto.
16. Counterparts. This Agreement may be executed in any number of
counterparts and by the different parties on separate counterparts, and
each such counterpart shall be deemed to be an original but all such
counterparts shall together constitute one and the same Agreement.
17. Liability of Buyer. Notwithstanding anything herein to the
contrary and notwithstanding Buyer's purchase of the Purchased Interest,
Seller hereby acknowledges and agrees that:
a. Buyer shall not be subject to any claims of contribution or
indemnification from Seller for any claim made by Buyer against the
Partnership under the Contract of Sale or under any of the closing
documents executed by the Partnership thereunder;
b. Buyer's rights and obligations against the Partnership shall
not be affected or impaired in any manner by Buyer's acquisition of the
Purchased Interest hereunder; and
c. The current partners in the Partnership (330 Associates,
Inc., Robert C. Lux, Stewart R. Stender and Seller), and not Buyer, shall
be liable for the obligations of the Partnership under the Contract of
Sale, if and to the extent such partners have liability therefor under
applicable law, but Crosstown is not, by this Section 17, agreeing to
assume any personal liability for the obligations of the Partnership
under the Contract of Sale.
SIGNATURE PAGE
TO
AGREEMENT REGARDING
PURCHASE OF PARTNERSHIP INTERESTS
SELLER:
CROSSTOWN ASSET CORP. I., a Delaware
corporation
By:
------------------------------
Its:
------------------------------
BUYER:
LIBERTY PROPERTY LIMITED PARTNERSHIP
By: Liberty Property Trust,
its sole general partner
By:
------------------------------
Its:
------------------------------
And
By:
------------------------------
Its:
------------------------------
SIGNATURE PAGE
TO
AGREEMENT REGARDING
PURCHASE OF PARTNERSHIP INTERESTS
The undersigned, the general and limited partners of the Partnership
other than Seller, do hereby consent to the transfer of the Purchased
Interest to Buyer in accordance with this Agreement, subject to the terms
and conditions of this Agreement and subject to Seller's and Buyer's
compliance with Section 7.5 of the Partnership Agreement.
------------------------------
Robert C. Lux
------------------------------
Stewart R. Stender
330 Associates, Inc.
By:
------------------------------
Its:
------------------------------
JOINDER
The undersigned agree that the Partnership Interests in Liberty Property
Limited Partnership acquired pursuant to the Contract of Sale, pursuant
to the Contract of Sale dated January 22, 1997 between Buyer and SOBC
Associates LLC, pursuant to the Contract of Sale dated January 22, 1997
between Buyer and NWBC Associates Limited Partnership and pursuant to
that Apex Agreement of even date herewith shall be pledged as security
for the performance of the obligations, duties and liabilities of
Crosstown Asset Corp. I ("Crosstown") pursuant to the Agreement Regarding
Purchase of Partnership Interest that survive Closing, provided, however,
that if no action is commenced with regard to an alleged breach in the
performance of said obligations, duties and liabilities of Crosstown that
survive Closing within one (1) year after Closing, such Partnership
Interests shall thereafter be free and clear of any such pledge. The
undersigned parties agree to execute and/or deliver such instruments as
Buyer may reasonably request to perfect such pledge.
Dated February __, 1997.
------------------------------
Stewart R. Stender
------------------------------
Robert C. Lux
330 ASSOCIATES, INC.
By:
------------------------------
Its:
------------------------------
APEX ASSET MANAGEMENT CORPORATION
By:
------------------------------
Its:
------------------------------
NWBC ASSOCIATES, INC.
By:
------------------------------
Its:
------------------------------
EXHIBIT 10.10
CONTRIBUTION AND ACQUISITION AGREEMENT
by and among
THE LIBERTY CORPORATION
and the CONTRIBUTORS (defined within)
and
LIBERTY PROPERTY LIMITED PARTNERSHIP
and LIBERTY PROPERTY TRUST
TABLE OF CONTENTS
PAGE
----
ARTICLE I.................................................... 2
DEFINITIONS.................................................. 2
1.01 Definitions........................................... 2
ARTICLE II................................................... 8
CONTRIBUTION OF THE CONTRIBUTED BUSINESS RENTAL PROPERTIES;
SALE OF THE DEFERRED PROPERTIES............................ 8
2.01 Contribution of the Contributed Business Rental
Properties............................................ 8
2.02 Contribution Consideration............................ 8
2.03 Manner of Payment of Contribution Consideration....... 8
2.04 Purchase and Sale of the Deferred Properties.......... 9
2.05 Purchase Price........................................ 9
2.06 Manner of Payment of the Deferred Price............... 9
ARTICLE III - PURCHASE AND SALE OF THE UNDEVELOPED
BUSINESS PROPERTIES........................................ 9
3.01 Agreement to Sell and Purchase........................ 9
3.02 Land Purchase Price; Timing of Land Closings.......... 9
3.03 Absolute Obligation to Pay Land Purchase Price........ 11
ARTICLE IV - CLOSING; THE LAND CLOSING....................... 12
4.01 Closing............................................... 12
4.02 Transactions to Occur at the Initial Closing and the
the Second Closing.................................... 12
4.03 Apportionments........................................ 16
4.04 Transactions to Occur at the Land Closings............ 19
ARTICLE V - TITLE AND RELATED MATTERS........................ 20
5.01 Condition of Title.................................... 20
5.02 Inability to Convey................................... 21
5.03 UCC Searches.......................................... 21
5.04 Survey ............................................... 21
ARTICLE VI - POSSESSION; AGREEMENTS AND LEASES............... 22
6.01 Possession; Leases.................................... 22
6.02 Agreemtns............................................. 22
6.03 Tenant Estoppel Certificates.......................... 23
ARTICLE VII - CONDITIONS TO CLOSING.......................... 24
7.01 Due Diligence Period.................................. 24
7.02 Conditions to Obligations of the Trust and the
Partnership........................................... 25
7.03 Failure of Condition to the Obligations of the
Partnership and the Trust............................. 26
7.04 Conditions to the Obligations of the Contributors..... 28
7.05 Failure of Condition to the Obligations of the
Contributor Parties................................... 28
ARTICLE VIII - REPRESENTATIONS AND WARRANTIES................ 29
8.01 Representations and Warranties of Contributors........ 29
8.02 Representations and Warranties of the Partnership
and the Trust......................................... 37
8.03 No Other Warranties................................... 38
ARTICLE IX - ADDITIONAL AGREEMENTS........................... 38
9.01 Operation of the Properties Pending the Closing....... 38
9.02 Operations Relating to the Undeveloped Business
Properties Pending the Land Closings.................. 40
9.03 Public Announcements.................................. 42
9.04 Woodland Building G................................... 42
9.05 Financial Information SEC Filings..................... 43
9.06 Post-Closing Covenants of the Partnership and the
Trust................................................. 43
ARTICLE X - NOTICES.......................................... 45
10.01 Addresses............................................. 45
10.02 Manner of Sending Notices............................. 46
ARTICLE XI - CASUALTY AND CONDEMNATION....................... 46
11.01 Insurance............................................. 46
11.02 Casualty; Risk of Loss................................ 46
11.03 Condemnation.......................................... 47
ARTICLE XII - MISCELLANEOUS.................................. 48
12.01 Brokers............................................... 48
12.02 Successors and Assigns................................ 49
12.03 Captions or Headings; Cross-References................ 49
12.04 Amendments............................................ 49
12.05 Applicable Law........................................ 49
12.06 Survival of Representations and Warranties............ 49
12.07 Indemnification....................................... 49
12.08 Further Assurances.................................... 51
12.09 Counterparts.......................................... 52
12.10 Limited Liability of Trustees of the Trust............ 52
12.11 Time of the Essence................................... 52
12.12 Entire Agreement...................................... 52
12.13 Execution via Telecopier.............................. 52
12.14 Confidential Information.............................. 5
EXHIBITS
Section
Exhibit Title Reference
- ---------- ------------------------------------------------- ---------
Exhibit A List of Business Rental Properties 1.01
Exhibit B Legal Descriptions of Business Rental Properties 1.01
Exhibit C List of Contributors and States of Formation 1.01
Exhibit D List of Excluded Assets 1.01
Exhibit E List of Building Names and Office Park Names 1.01
Exhibit F Replacement Financing Term Sheet 1.01
Exhibit G List and Acreage of Undeveloped Business
Properties 1.01
Exhibit H Legal Descriptions of Undeveloped Business
Properties 1.01
Exhibit I Allocation of the Contribution Consideration 2.02
Exhibit J Form of Contributor Notes 2.03
Exhibit K Allocation of Deferred Price 2.05
Exhibit L Schedule of Land Prices 3.02
Exhibit M Form of Guaranty Agreement 3.03
Exhibit N Assignment and Assumption Agreement 4.02(a)
Exhibit O Form of Notice to Tenants 4.02(a)
Exhibit P Contributor Rights Agreement 4.02(c)
Exhibit Q Partnership Amendment 4.02(d)
Exhibit R Gap Indemnity 4.02(e)
Exhibit S Tenant Estoppel Letter 6.03
Exhibit T Contriburot Guarantee 1.01
Exhibit U Description of Southchase Property 3.02
SCHEDULES
Schedule 4.03(a)(i)........Prepaid License Fees
Schedule 6.01..............Brokerage Commissions
Schedule 6.02..............Service Agreements
Schedule 8.01(e)...........Litigation
Schedule 8.01(g)...........Notices of Proceedings
Schedule 8.01(h)...........Environmental Exceptions
Schedule 8.01(i)...........Engineering Exceptions
Schedule 8.01(j)...........Real Estate Tax Proceedings
Schedule 8.01(k)(i)........Rent Roll
Schedule 8.01(k)(vi).......Lease Exceptions
Schedule 8.01(m)...........Unpaid Tenant Allowances or Improvements
Schedule 8.01(n)...........Insurance Exceptions
Schedule 8.01(o)...........Service Agreement Exceptions
Schedule 8.01(p)...........Certain Contractual Obligations
CONTRIBUTION AND ACQUISITION AGREEMENT
This Agreement is made as of the ___ day of March, 1997 by and among THE
LIBERTY CORPORATION, a South Carolina corporation ("Contributor Parent"),
and the Contributors (as defined below), LIBERTY PROPERTY LIMITED
PARTNERSHIP, a Pennsylvania limited partnership (the "Partnership"), and
LIBERTY PROPERTY TRUST, a Maryland real estate investment trust (the
"Trust").
INTRODUCTION
A. The Contributors own the Business Rental Properties (as defined
more precisely below) and the Undeveloped Business Properties (as defined
more precisely below).
B. The Contributors desire to contribute the Business Rental
Properties (other than the Deferred Properties) to the capital of the
Partnership, in consideration for the issuance of partnership interests
in the Partnership and other consideration as set forth below, and the
Partnership desires to accept the contribution of the Business Rental
Properties (other than the Deferred Properties) from the Contributors,
upon the terms and conditions set forth below in this Agreement.
C. The Contributor Parties desire to sell to the Partnership the
Deferred Properties and the Undeveloped Business Properties and the
Partnership desires to purchase the Deferred Properties and the
Undeveloped Business Properties from the Contributor Parties, upon the
terms and conditions set forth below in this Agreement.
D. The Contributor Parent holds, directly or indirectly, all of the
equity interests in the Contributors and Land Seller.
E. The Trust is the sole general partner of the Partnership and holds
a controlling majority interest therein. Shares of beneficial interest
in the Trust are publicly-traded on the New York Stock Exchange.
F. The Contributor Parties, on the one hand, and the Partnership and
the Trust, on the other hand, are not affiliated in any way with each
other, notwithstanding the similarities in their names.
NOW, THEREFORE, the parties hereto, in consideration of the mutual
covenants herein contained and intending to be legally bound, hereby
agree as follows:
ARTICLE I
DEFINITIONS
1.01 Definitions. The following terms, as used in this Agreement,
shall have the meanings set forth below in this Section:
"Affiliate" of an entity shall mean any executive officer or director of
such entity or any person or other entity that controls, is controlled
by, or is under common control with, such first entity ("control" for
such purposes being defined as the ownership of twenty percent (20%) or
more of the equity or voting interests of an entity or the actual
ability, pursuant to contractual rights or otherwise, to control the
management and affairs of such entity).
"Allocation Schedule" shall have the meaning set forth in Section 2.02.
"Applicable Laws" shall mean all federal, state, county or municipal
laws, ordinances, codes or regulations.
"Assignment Agreement" shall have the meaning set forth in Section
4.02(a).
"Average Share Price" shall mean the arithmetic average of the daily
closing price per share of the Shares, for the ten business days ending
on and including the second business day prior to the Initial Closing, as
reported by the New York Stock Exchange.
"Business Rental Properties" shall mean, collectively, the Real Property
listed by address on Exhibit A and described by reference to lots on
recorded plat plans or by metes and bounds on Exhibit B, and the Personal
Property and Miscellaneous Rights appurtenant thereto, in each case to
the extent applicable to the respective Properties, but excluding the
Excluded Assets.
"Closing" shall refer to any one or more of the Initial Closing, the
Second Closing, the Extended Closing or a Land Closing, as the context
requires.
"Closing Date" shall refer to the date(s) of the Initial Closing, the
Second Closing, the Extended Closing or a Land Closing, as the context
requires.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Contributed Business Rental Properties" shall mean the Business Rental
Properties other than the Deferred Properties.
"Contribution Consideration" shall have the meaning set forth in Section
2.02.
"Contributor" or "Contributors" shall mean, individually and
collectively, the entities, other than the Contributor Parent and the
Land Seller, that are signatories hereto and are listed, together with
their respective states of formation, on Exhibit C.
"Contributor Guaranties" shall mean the guaranties, each in
substantially the form attached hereto as Exhibit T, by the Contributors
set forth on the Allocation Schedule, of the repayment of the principal
of the Replacement Financing in an amount equal to the Note Portion
allocated to such Contributor.
"Contributor Guarantors" shall mean the Contributors under the
Contributor Guaranties.
"Contributor Lender(s)" shall mean the lender(s) on the Existing
Indebtedness as set forth on the Allocation Schedule.
"Contributor Notes" shall have the meaning set forth in Section 2.03.
"Contributor Parent" shall mean The Liberty Corporation, a South Carolina
corporation.
"Contributor Parties" shall mean, collectively, the Contributor Parent,
Land Seller and the Contributors.
"Contributors Rights Agreement" shall have the meaning set forth in
Section 4.02(c).
"Deferred Price" shall have the meaning set forth in Section 2.05.
"Deferred Properties" shall mean the Business Rental Properties
designated as Park Place and 420 Park Avenue.
"Designee" shall mean the entity or entities designated by the
Partnership in a written notice provided to the Contributor Parent.
"Due Diligence Period" shall have the meaning set forth in Section 7.01.
"Environmental Claim" shall have the meaning set forth in Section
8.01(h).
"Environmental Laws" shall have the meaning set forth in Section 8.01(h).
"Equity Portion" shall have the meaning set forth in Section 2.02.
"Excluded Assets" shall mean all motor vehicles (other than property-
specific maintenance vehicles, if any), the computers and computer
equipment located at 420 Park Avenue, and the assets listed on Exhibit D.
"Existing Indebtedness" shall mean the obligations of certain of the
Contributors set forth on the Allocation Schedule, equal in the aggregate
to the Note Portion, which are to be assumed by the Partnership at the
Initial Closing.
"Extended Closing" shall have the meaning set forth in Section
7.03(b)(ii).
"Failure of a Condition" shall have the meaning set forth in Section
7.03.
"Guaranty Agreement" shall have the meaning set forth in Section 9.06(f).
"Hazardous Materials" shall have the meaning set forth in Section
8.01(h).
"Initial Closing" shall have the meaning set forth in Section 4.01.
"Initial Closing Date" shall have the meaning set forth in Section 4.01.
"Knowledge of the Contributor Parties" shall mean those matters within
the actual conscious awareness of any one or more of H. Ray Eanes,
Porter Rose, Kenneth Jones, Richard H. Sumerel, Charles G. Whitmire,
Jeffrey B. Randolph, Ramon T. Franklin and G. Mac Vinson, it being agreed
that: (a) such individuals shall not have any duty under this Agreement
to conduct any investigation or inquiry of others, but shall not refrain
from conducting any investigation or inquiry normally made by them
without regard to this Agreement or the transactions contemplated hereby,
and (b) in no event shall any of the aforesaid individuals have any
personal liability hereunder.
"Land Closings" shall have the meaning set forth in Section 3.02.
"Land Closing Notice" shall have the meaning set forth in Section 3.02.
"Land Payment" shall have the meaning set forth in Section 3.02.
"Land Price Schedule" shall have the meaning set forth in Section 3.02.
"Land Purchase Price" shall have the meaning set forth in Section 3.02.
"Land Seller" shall mean Liberty Life Insurance Company, except that,
when used with respect to the Woodfield Property, such term shall mean
LPC of S.C., Inc.
"Landlord's Certificate" shall have the meaning set forth in Section
7.02(e).
"Leases" shall mean all those leases and agreements to lease as are set
forth in the 8Rent Roll, as those leases and agreements to lease may be
terminated or modified as permitted under Section 6.01 and as such leases
may be supplemented by additional leases entered between the date hereof
and the Closing Date as permitted under Section 6.01.
"Losses" shall have the meaning set forth in Section 12.07(a).
"Material Adverse Effect" when used with respect to a single Property
shall mean any event, circumstance, condition, change or effect which
results in a diminution of 10% or more in the fair market value of such
Property.
"Material Adverse Effect" when used with respect to the Properties as a
whole shall mean any event, circumstance, condition, change or effect
which results in a diminution of 10% or more in the fair market value, in
the aggregate, of the Properties taken as a whole.
"Material Adverse Effect" when used with respect to an entity shall mean
any event, circumstance, condition, change or effect which has a material
adverse effect on the assets, liabilities, results of operation or
financial condition of such entity.
"Miscellaneous Rights" shall mean, with respect to each of the Premises
and except for the Excluded Assets: (a) all right, title and interest, if
any, of the respective Contributor in and to any award made for
condemnation of its Premises to the extent provided in Section 11.03
hereof (or to be made in lieu thereof) and in and to any unpaid award for
damage to the Premises by reason of change of grade of any street, road,
highway, avenue or alley, or otherwise; (b) to the extent transferrable,
all of the respective Contributor's rights to connect with and to
utilize, for service to its Premises or any part thereof, any private or
public utility facilities as may now or hereafter be within or without
the boundaries of the Premises; (c) the respective Contributor's interest
in the Leases; (d) to the extent transferrable, all licenses, permits,
certificates of occupancy and governmental approvals with respect to the
Premises, and all development agreements, bonds, escrows, and similar
rights relating to governmental permits and/or utility service affecting
the Premises; (e) all of the respective Contributor's right, title and
interest in and to the building names and the office/industrial park
names listed on Exhibit E, but specifically excluding the name "Liberty";
(f) all right, title and interest of the respective Contributor in and to
all plans and specifications for improvements to the Premises or the
buildings located thereon, including approved site plans, but only to the
extent in the respective Contributor's possession and only to the extent
transferrable; (g) all of each Contributor's right, title and interest in
and to all contracts (including, but not limited to, option agreements
and agreements of sale to acquire real property), transferrable
warranties and transferrable guarantees, if any, with regard to the
foregoing or with regard to the related Personal Property and all rights
of the Contributor as declarant under covenants, conditions, easements,
and restrictions governing the office parks in which the Properties are
located; and (h) all of the respective Contributor's right, title and
interest in and to insurance proceeds to the extent provided in Section
11.02 hereof by reason of a loss insured under any insurance policy and
which relate to or inure, directly or indirectly, to the benefit of its
Property, but only if and to the extent the insured Property is
contributed or sold to the Partnership prior to any restoration or repair
of any insured damage, casualty or other loss.
"Note Portion" shall have the meaning set forth in Section 2.02.
"Objection Notice" shall have the meaning set forth in Section 7.01.
"Partnership" shall mean Liberty Property Limited Partnership, a
Pennsylvania limited partnership.
"Partnership Agreement" shall mean the First Restated and Amended
Agreement of Limited Partnership of Liberty Property Limited Partnership
dated as of June 19, 1995, as amended by the Second Amendment to
Agreement of Limited Partnership dated as of December 22, 1995, and by
the Third Amendment to Agreement of Limited Partnership dated as of
December 31, 1996, and as it will be further amended by the Partnership
Amendment.
"Partnership Amendment" shall have the meaning set forth in Section
4.02(d).
"Partnership Interest" shall have the meaning set forth in the
Partnership Agreement.
"Permitted Encumbrances" shall have the meaning set forth in
Section 5.01.
"Personal Property" shall mean, with respect to each of the Properties,
all furnishings, equipment, property-specific maintenance vehicles (if
any), building supplies and other items of personal property owned by any
of the Contributors and (a) located on the relevant Real Property or in
the buildings and improvements thereon and used in connection with the
operation thereof or (b) located off-site but used exclusively in
connection with the operation of such Properties, but in any case
specifically excluding the Excluded Assets.
"Premises" shall have the meaning set forth in the definition of Real
Property.
"Property" or "Properties" shall mean, individually or collectively, the
Business Rental Properties and the Undeveloped Business Properties.
"Real Property"or "Real Properties" shall mean, with respect to each of
the Properties: (a) all those certain lots or pieces of ground relating
to such Property as described on Exhibit B and Exhibit G and the
buildings and improvements located thereon (collectively and individually
referred to as the "Premises"); (b) all easements, rights-of-way or use,
appurtenant parking rights, privileges, appurtenances, interests and
similar rights, if any, of a Contributor appurtenant to or benefitting
its Premises; (c) all right, title and interest, if any, of the
respective Contributor in and to any land lying in the bed of any
streets, roads, or avenues, opened or unopened, existing or proposed,
vacated or hereafter to be vacated, public or private, adjoining its
Premises and also as they extend beyond such Premises for ingress, egress
and regress to or from such Premises or any part thereof and for the
installation, replacement, maintenance and use of utility facilities; and
(d) all and singular the mineral rights, waters, water courses, rights,
liberties, privileges, hereditaments and appurtenances whatsoever
belonging to its Premises or in any way appertaining thereto and the
reversions and remainders, rents, issues and profits thereof.
"Rent Roll" shall have the meaning set forth in Section 8.01(k).
"Replacement Financing" shall mean that certain indebtedness to be
incurred by the Partnership in an amount greater than or equal to the
Note Portion, the terms and conditions of which shall meet the criteria
set forth in the Replacement Financing Term Sheet, the repayment of the
principal (not to exceed in the aggregate an amount equal to the Note
Portion) of which shall be guaranteed severally (but not jointly) by the
Contributors pursuant to the Contributor Guarantees, and the proceeds of
which shall be used to fully repay and satisfy the Contributor Notes on
the date of the Initial Closing.
"Replacement Financing Term Sheet" shall mean the criteria set forth in
Exhibit F.
"Second Closing" shall have the meaning set forth in Section 4.01.
"Securities Act" shall mean the Securities Act of 1933, as amended, and
all regulations promulgated thereunder from time to time.
"Security Deposit" shall have the meaning set forth in Section
8.01(k)(vi)(H).
"Service Agreements" shall have the meaning set forth in Section 8.01(o).
"Shares" shall mean the shares of beneficial interest of the Trust, par
value $.001 per share.
"Tenant" shall have the meaning set forth in Section 8.01(k)(iii).
"Tenant Costs" shall mean all tenant fit-out costs, tenant allowances,
tenant inducements, lease buy-out payments and leasing brokerage
commissions with respect to any lease of space in the Properties.
"Tenant Estoppel Certificate" shall have the meaning set forth in Section
6.03.
"Title Company" shall mean, collectively, Chicago Title Insurance Company
and Commonwealth Land Title Insurance Company, or such other reputable
and responsible title insurance company or companies as may be designated
by the Partnership.
"Trust" shall mean Liberty Property Trust, a Maryland real estate
investment trust.
"Trust Guaranty" shall have the meaning set forth in Section 3.03.
"Undeveloped Business Properties" shall mean, collectively, the Real
Property listed by address and approximate acreage on Exhibit G and
described by reference to lots on recorded plat plans or by metes and
bounds on Exhibit H, and the Miscellaneous Rights, if any, appurtenant
thereto.
ARTICLE II
CONTRIBUTION OF THE CONTRIBUTED BUSINESS
RENTAL PROPERTIES; SALE OF THE DEFERRED PROPERTIES
2.01 Contribution of the Contributed Business Rental Properties. The
Contributors agree to contribute to the Partnership, and the Partnership
agrees to accept from the Contributors, the Contributed Business Rental
Properties, upon the terms and conditions set forth in this Agreement.
As to the Woodfield Spec One Building, which is presently leased to
Ronald Wayne Jones and Carolyn B. Jones, the Partnership may direct that
the contribution of such Building be effectuated by way of a deed to an
Affiliate of the Partnership.
2.02 Contribution Consideration. The consideration payable by the
Partnership to the Contributors for the contribution of the Contributed
Business Rental Properties shall be $60,134,000 (the "Contribution
Consideration"). The Contribution Consideration shall be payable at the
time and in the manner set forth in Section 2.03. The Contribution
Consideration shall be allocated as among the several Contributed
Business Rental Properties, and as among the classes of assets (i.e.,
land, buildings and personal property) comprising the Contributed
Business Rental Properties, in the manner set forth on the schedule
attached hereto as Exhibit I (the "Allocation Schedule"), which also
contains the allocation of the Contribution Consideration among the
respective Contributors who will be contributing the Contributed Business
Rental Properties to the Partnership, indicating in each case the portion
of the Contribution Consideration to be paid to such Contributor by the
issuance of Partnership Interests as set forth in Section 2.03(a)(i) (the
"Equity Portion") and the portion of the Contribution Consideration to be
paid to such Contributor by the assumption of debt as set forth in
Section 2.03(a)(ii) (the "Note Portion").
2.03 Manner of Payment of Contribution Consideration.
(a) At the Initial Closing, the Partnership shall pay the
Contribution Consideration, as adjusted pursuant to the prorations set
forth elsewhere in this Agreement, in the following manner:
(i) The Equity Portion shall be paid by the issuance by the Partnership,
to the respective Contributors entitled thereto under Section 2.02, of
Partnership Interests in the Partnership, with each Partnership Interest
valued at the Average Share Price and with the number of Partnership
Interests rounded to the nearest whole number.
(ii) The Note Portion shall be paid by the assumption by
the Partnership of the Existing Indebtedness, as evidenced by promissory
notes from the Contributors to the Contributor Lenders in the amounts set
forth on the Allocation Schedule and substantially in the form of
Exhibit J (the "Contributor Notes"), which shall be paid in full at the
Initial Closing.
2.04 Purchase and Sale of the Deferred Properties. The Contributors
set forth on Exhibit K, subject to acquiring the interests of certain
unrelated partners in the partnership owning each Deferred Property,
agree to sell or cause to be sold the Deferred Properties to the
Partnership, and the Partnership agrees, subject to such acquisition of
partnership interests, to purchase the Deferred Properties from the
Contributors or the applicable designees, upon the terms and conditions
set forth in this Agreement.
2.05 Purchase Price. The consideration payable by the Partnership for
the purchase of the Deferred Properties shall be $6,981,000 (the
"Deferred Price"). The Deferred Price shall be allocated as between the
Deferred Properties and the respective Contributors conveying them, and
as among the classes of assets (i.e., land, buildings and personal
property) comprising the Deferred Properties, as set forth in Exhibit K.
The Deferred Price shall be payable at the time and in the manner set
forth in Section 2.06.
2.06 Manner of Payment of the Deferred Price. At the Second Closing,
the Partnership shall pay the Deferred Price, as adjusted pursuant to the
prorations set forth elsewhere in this Agreement, by wire transfer of
immediately available funds to the Contributors as set forth on Exhibit
K.
ARTICLE III
PURCHASE AND SALE OF THE UNDEVELOPED BUSINESS PROPERTIES
3.01 Agreement to Sell and Purchase. Land Seller agrees to sell the
Undeveloped Business Properties to the Partnership or its Designee(s),
and the Partnership agrees to purchase, or cause its Designee to
purchase, the Undeveloped Business Properties from Land Seller in one or
more Land Closings on or after the Initial Closing Date, at the price and
on the terms set forth in this Agreement.
3.02 Land Purchase Price; Timing of Land Closings.
(a) The consideration to be paid by the Partnership for the
purchase of the Undeveloped Business Properties shall be the sum of
$17,500,000 (the "Land Purchase Price"), payable in one or more Land
Payments, and a final payment, if necessary on the tenth anniversary of
the Initial Closing Date, all as set forth below, adjusted by the factor
set forth in paragraph (b)(ii) below in this Section 3.02, and subject to
the prorations set forth elsewhere in this Agreement; provided, however,
tht if that certain parcel consisting of approximately 14.62 acres
described on Exhibit U (the "Southchase Property") is sold prior to the
Initial Closing, or if the Southchase Property has not been sold but is
subject to a contract with Stueken, L.L.C. (the "Southchase Purchaser")
or, in the reasonable judgment of the Contributors, to a claim by
Southchase Purchaser, then the Land Purchase Price will be reduced by
$190,060 and the Southchase Property will be deemed not to be a part of
the Undeveloped Business Properties. The portion of the Land Purchase
Price allocable to any portion of the Undeveloped Business Properties
shall be determined pursuant to the schedule of prices as set forth on
Exhibit L (the "Land Price Schedule") and shall be adjusted by the factor
set forth in paragraph (b)(ii)(B) below; provided, however, that the
total price payable for the Undeveloped Business Properties shall in all
events be equal to the Land Purchase Price, as adjusted as set forth in
(b)(ii) below.
(b) The consummation of the purchases and sales of the
Undeveloped Business Properties shall occur at one or more closings (the
"Land Closings"), to occur between the Initial Closing Date and the tenth
anniversary thereof, as determined by the Partnership in accordance with
the following provisions:
(i) The Partnership shall have the right, from time to
time, to schedule a Land Closing by forwarding a written notice thereof
(the "Land Closing Notice") to the Contributor Parent, which notice shall
set forth: (A) the proposed time and date for the Land Closing, which
date shall be a business day not earlier than twenty (20) days after the
date of such notice; (B) the place at which such Land Closing is to
occur, which place shall be within any one of the following cities:
Philadelphia, Pennsylvania; Malvern, Pennsylvania; Greenville, South
Carolina; Columbia, South Carolina; Charleston, South Carolina, Atlanta,
Georgia; or Tampa, Florida; and (C) the parcel or parcels of land which
the Partnership intends to acquire at such Land Closing, which parcel or
parcels may consist of any lot or combination of lots included within the
Undeveloped Business Properties that is lawfully capable of being
conveyed as a separate parcel or parcels.
(ii) The purchase price installment payable at such Land
Closing (the "Land Payment") shall be the amount calculated by (A)
multiplying the usable acreage contained within the parcel or parcels
identified in the Land Closing Notice (as determined by the Partnership
in its reasonable discretion) by the price per usable acre set forth with
respect to such office/industrial park on the Land Price Schedule, and
(B) increasing such product by a factor of 7.5% per annum, compounded
annually, calculated on the basis of the number of days elapsed from (but
excluding) the Initial Closing Date through (and including) the date of
the relevant Land Closing; provided, however, that: (x) in no event shall
the sum of payments made under clause (A) above exceed the Land Purchase
Price, and upon payment of the entire Land Purchase Price (as increased
by the adjustments set forth in clause (B) above), the Partnership shall
be entitled to receive and shall be obligated to accept, for no
additional consideration, a limited warranty deed for all portions of the
Undeveloped Business Properties which then remain unconveyed, and Land
Seller agrees to execute, acknowledge and deliver such deed on demand of
the Partnership; and (y) regardless of the Land Payments theretofore
made, Land Seller's obligation to convey the last unconveyed parcel or
parcels of the Undeveloped Business Properties shall be conditioned upon
the payment by the Partnership of the entire remaining balance of the
Land Purchase Price (as adjusted as aforesaid).
(iii) The Partnership and the Trust agree that, on or
before the date which is eighteen (18) months after the Initial Closing
Date, the Partnership shall have completed closing on Undeveloped
Business Properties having a base purchase price pursuant to the Land
Price Schedule of not less than $2,500,000 (plus the factor set forth in
paragraph (ii)(B) above), provided that the condition to the obligations
of the Partnership and the Trust to consummate such acquisitions has been
and remains satisfied as of such date with respect to Undeveloped
Business Properties having a base purchase price of not less than
$2,500,000.
(iv) The Partnership and the Trust agree that, on or before
the tenth anniversary of the Initial Closing Date, the Partnership shall
have completed closing on the acquisition of all the Undeveloped Business
Properties and shall have paid the entire Land Purchase Price (plus the
factor set forth in paragraph (ii)(B) above, as applicable), provided
that all conditions to the obligations of the Partnership and the Trust
to consummate such acquisitions have been and remain satisfied as of such
date.
(v) The Land Payment payable at each Land Closing shall be
paid by wire transfer of funds to an account designated by the
Contributor Parent. The other transactions to occur at the Land Closings
shall be as set forth in Section 4.04.
3.03 Absolute Obligation To Pay Land Purchase Price; Related
Guaranty, Notwithstanding the flexibility provided in Section 3.02 as to
the timing of the Land Closings, the Partnership shall be absolutely and
unconditionally obligated to pay the Land Purchase Price, plus the factor
set forth in clause (B) of Section 3.02(b)(ii) above, no later than the
tenth anniversary of the Initial Closing Date, with the sole exception of
any such Property (and the allocable price thereof) with respect to which
a Failure of Condition of the type set forth in Section 7.03(c) exists.
Any such amount, to the extent not previously paid at Land Closings
occurring prior to the tenth anniversary of the Initial Closing Date,
shall be paid on such tenth anniversary, by wire transfer of immediately
available funds to an account designated by the Contributor Parent,
whether or not any additional Land Closing occurs on such date. The
Trust hereby absolutely and unconditionally guarantees the payment of the
full Land Purchase Price (with the sole exception as set forth above),
plus the factor set forth in clause (B) of Section 3.01(b)(ii). The
Trust shall execute and deliver at the Initial Closing the Guaranty
attached hereto as Exhibit M (the "Trust Guaranty") further evidencing
its guaranty of payment and performance.
ARTICLE IV
CLOSING; THE LAND CLOSINGS
4.01 Closing.
(a) The consummation of the contribution of the Contributed
Business Rental Properties (the "Initial Closing") shall be held on or
before April 30, 1997, commencing at 10:00 am. at the offices of
Sutherland, Asbill & Brennan, L.L.P., 999 Peachtree Street, N.E.,
Atlanta, Georgia 30309-3996. The date of the Initial Closing is referred
to herein as the "Initial Closing Date."
(b) The consummation of the purchase and sale of the Deferred
Properties (the "Second Closing") shall be held at the same location as
set forth in (a) above, on or before July 30, 1997, commencing at 10:00
a.m. subject to extension by up to 90 days thereafter, upon the
Contributors' obtaining the consent of the Partnership, which shall not
be unreasonably withheld if such extension is requested by the
Contributors in order to acquire the partnership interests as
contemplated by Section 2.04 hereof or to make certain repairs to the
Park Place Building, Greenville, South Carolina.
(c) Any Closing hereunder shall be subject to postponement for
such number of days, if any, as is required to allow the passage of the
grace periods set forth in the preambles to Sections 7.03 and 7.05 below,
plus 10 additional days thereafter to prepare for Closing.
4.02 Transactions to Occur at the Initial Closing and the Second
Closing. At the Initial Closing and the Second Closing, in addition to
any other obligation which the parties may have hereunder in connection
with such Closing, the following events shall occur:
(a) Deliveries by the Contributors. Each Contributor, as to
each Business Rental Property to be conveyed by such Contributor at such
Closing, shall, to the extent not previously delivered by such
Contributor to the Partnership:
(i) Execute, acknowledge and deliver to the Partnership (or
in the case of the Woodfield Spec One Building referred to in Section
2.01, to an Affiliate of the Partnership) a special or limited warranty
deed in customary form for fee simple transfer in the applicable
jurisdiction, in recordable form dated as of the Closing Date,
evidencing the conveyance of fee simple title to the relevant Business
Rental Properties to the Partnership, subject only to the Permitted
Encumbrances and all matters of record on the date of such Closing, but
excluding all other warranties, of any nature or kind, except to the
extent expressly set forth in this Agreement.
(ii) Execute and deliver to the Partnership an Assignment
and Assumption Agreement, substantially in the form of Exhibit N (the
"Assignment Agreement") (A) transferring title to the Personal Property
and Miscellaneous Rights appurtenant to such Business Rental Property to
the Partnership, free and clear of all liens, claims and encumbrances
created by the Contributors or any of their Affiliates, except the
Permitted Encumbrances and all matters of record on the date of such
Closing, (B) assigning to the Partnership (1) all of such Contributor's
rights and interest under the Service Agreements, (2) to the extent
assignable, all of the Contributor's rights in licenses, governmental
approvals, escrows and utility deposits and development rights to the
extent such rights are appurtenant to or benefit such Business Rental
Properties, (3) all of such Contributor's rights under any and all
transferrable warranties and guaranties relating to or inuring, directly
or indirectly, to the benefit of such Business Rental Properties, and (4)
all other assets, if any, to be transferred and assigned by such
Contributor hereunder with respect to such Business Rental Property; (C)
assigning to the Partnership the Contributor's interest in all existing
Leases then in effect with respect to such Business Rental Property, and
(D) containing an express assumption by the Partnership of the
Contributor's obligations arising after the Closing under such assigned
Leases and Service Agreements and under any other contracts or rights
assigned to the Partnership hereunder (except to the extent such
obligations are expressly not to be assumed by the Partnership
hereunder).
(iii) Deliver to the Partnership the originals (or true
copies, if originals are not available) of all Leases and amendments
thereto and guaranties thereof, and of all Service Agreements with
respect to such Business Rental Property.
(iv) Execute and deliver a notice (suitable for
reproduction) to the tenants under the Leases advising of such transfer
of the Business Rental Properties to the Partnership and advising the
tenants to pay all future rentals to the Partnership or its designee,
which form is attached as Exhibit O.
(v) Deliver to the Partnership all tenant deposits,
including security deposits and other deposits (together with interest
thereon if required by law, contract or otherwise) held or required to be
held by the Contributors with respect to such Business Rental Property.
(vi) Deliver to the Partnership copies of all building
plans and specifications, including, but not limited to, approved site
plans, for such Business Rental Property, if in the possession of such
Contributor, and the most recent as-built surveys or plans thereof in the
Contributors' possession.
(vii) Deliver possession of such Business Rental
Properties to the Partnership subject only to the Permitted Encumbrances,
the rights of Tenants under the Leases, and all matters of record on the
applicable Closing Date.
(viii) Deliver to the Partnership with respect to such
Business Rental Property the originals (if in any of the Contributors'
possession and not previously delivered to the Partnership) or copies
(otherwise) of all certificates of occupancy and all other licenses,
permits, authorizations and approvals required by law and issued by all
governmental authorities having jurisdiction over such Business Rental
Properties (or, if certificates of occupancy and/or such licenses, etc.
do not exist or are unavailable to the Contributors, such other
documentation, if any, as is in the possession of the Contributors that
evidences that such Business Rental Property is lawfully occupied and/or
that the use thereof complies with Applicable Laws), and all certificates
issued by any local board of fire underwriters (or other body exercising
similar functions) and each bill received, together with proof of payment
thereof (if any of the same have been paid), for current real estate and
personal property taxes and water and sewer charges and other utilities.
(ix) Execute and deliver to the Partnership a Non-Foreign
Transferor Certificate, certifying that each Contributor is neither a
"foreign person" within the meaning of Section 1445(f) of the Code nor a
"foreign partner" within the meaning of Section 1446 of the Code.
(x) Deliver to the Partnership the legal opinion of
Martha G. Williams, Esquire, with respect to the matters set forth in
Section 8.01(a) and 8.01(b).
(xi) Execute and deliver a certificate certifying that all
representations and warranties made by such Contributors in this
Agreement that by their terms are to survive the Closing are true and
correct in all material respects as of the date of such Closing, and
certifying to the Knowledge of the Contributor Parties as to the matters
referred to in the last sentence of Section 11.02 and in Section
11.03(c); provided, however, that at any Land Closing such certificate
shall be limited to matters described in Section 7.03(c).
(xii) At the Initial Closing, upon repayment of the
Existing Indebtedness by the Partnership, the Contributor Lenders shall
execute and deliver to the Partnership a full release and discharge of
all obligations under the Contributors Notes.
(xiii) Execute and deliver to the Partnership such other
reasonable documents or instruments consistent with the terms hereof as
in the reasonable opinion of counsel for the Partnership may be necessary
to effectuate the transactions occurring at such Closing pursuant to this
Agreement and to transfer title to such Business Rental Properties as
contemplated by this Agreement, provided that such documents or
instruments do not increase the liability of any of the Contributors.
(xiv) Deliver or make available on-site all keys and combinations to
locks of the Properties and all drawings, manuals, technical data and
other documentation in the Contributors' possession relating to the
building systems, equipment and other fixtures and Personal Property
compromising such Business Rental Property.
(b) Memorandum of Agreement of Sale. At the Initial Closing,
Land Seller and the Partnership shall mutually execute, acknowledge and
deliver a Memorandum of Agreement of Sale, in form customary for
recordation under local law or practice in the states and counties in
which the Undeveloped Business Properties are situated, which instrument
shall be recorded in each such county promptly after the Closing Date.
(c) Contributors Rights Agreement. At the Initial Closing, the
Contributor Parent, the Contributors, the Partnership and the Trust shall
mutually execute and deliver the Contributors Rights Agreement
substantially in the form of Exhibit P (the "Contributors Rights
Agreement"), setting forth certain rights and duties of the Contributors
relating to, among other things, the conversion and disposition of the
Partnership Interests to be issued at Closing and of the Shares into
which such Partnership Interests will be convertible and certain
obligations of the Trust.
(d) Deliveries by the Partnership and the Trust. The
Partnership and the Trust shall:
(i) At the Initial Closing execute and deliver to the
Contributors a Fourth Amendment to the First Restated and Amended
Agreement of Limited Partnership of the Partnership, substantially in the
form of Exhibit Q hereto (the "Partnership Amendment"), for the purpose,
among other things, of evidencing the issuance of the Partnership
Interests as a portion of the Contribution Consideration.
(ii) At the Initial Closing the Partnership shall assume
the Contributors Notes.
(iii) The Partnership shall repay the Contributors Notes in
full by wire transfer of immediately available funds;
(iv) Deliver to the Contributors the legal opinions of
James J. Bowes, Esquire, and Weinberg and Green with respect to the
matters set forth in Sections 8.02(a) and 8.02(b).
(v) Execute and deliver a certificate certifying that all
of the representations and warranties made by the Partnership and the
Trust in this Agreement are true and correct as of the date of such
Closing.
(vi) The Partnership shall execute and deliver the
Assignment Agreement with respect to the Business Rental Properties being
conveyed at such Closing.
(vii) At the Initial Closing the Trust shall execute and
deliver the Trust Guaranty.
(viii) Execute and deliver all other documents to be
executed by the Partnership and the Trust pursuant to this Agreement,
including the Contributors Rights Agreement; and
(ix) Execute and deliver to the Contributor Parent and the
Contributors such other reasonable documents or instruments consistent
with the terms hereof as in the reasonable opinion of counsel for the
Contributor Parent may be necessary to effectuate the transactions
occurring at such Closing pursuant to this Agreement.
(e) Replacement Financing; Repayment of Contributors Notes. At
the Initial Closing, the Partnership shall incur the Replacement
Financing and use the proceeds thereof to repay in full the Contributors
Notes. Each Contributor from which the Partnership assumes the Existing
Indebtedness shall severally (but not jointly) guarantee, pursuant to the
Contributor Guaranties, repayment of a portion of the principal of the
Replacement Financing (but not the interest thereon) equal to the
Existing Indebtedness assumed by the Partnership from such Contributor.
(f) Gap Undertaking. The Contributors shall provide, if
required by the Title Company, an undertaking (the "Gap Undertaking") to
the Title Company necessary to effectuate the Closing, substantially in
the form of Exhibit R.
(g) Escrow Agreement. At the Initial Closing the parties shall
execute and deliver the Escrow Agreement if required under Section 9.04.
4.03 Apportionments. At the Initial Closing and the Second Closing,
and (subject to the provisions of Section 9.02(d)) at each of the Land
Closings, the following adjustments and apportionments shall be made:
(a) (i)Taxes, Rents, etc. Real estate taxes (on the basis of
the actual fiscal years for which such taxes are assessed) on the Real
Property, personal property taxes on the Personal Property, minimum water
and sewer rentals, rents, including without limitation expense
pass-throughs, percentage rents and other sums paid by tenants, licensees
and concessionaires and collected by the Contributors prior to such
Closing under the Leases, payments due under the Service Agreements which
are to be assigned to the Partnership and the Trust, prepaid license fees
and other charges for licenses and permits for the Real Property which
will remain in effect for the Partnership's benefit after Closing and
which are listed on Schedule 4.03(a)(i) to this Agreement, and rubbish
removal charges shall be apportioned pro rata between the Contributors
and the Partnership on a per diem basis as of such Closing Date. If the
Partnership discovers at any time after the Closing Date that any Tenants
have prepaid rents or other charges which were not credited to the
Partnership at Closing as required by this Section, the Contributors
shall pay such sums to the Partnership within a reasonable time after
notice from the Partnership. The Partnership shall pay an equitable
portion of all costs incurred in efforts to contest assessments and
otherwise to seek to reduce property tax liabilities to the extent such
costs relate to expected tax savings for 1997 and subsequent years.
Contributors shall be given credit on the closing statement for the
appropriately prorated portions of any amounts that are to be reimbursed
by tenants after the Closing Date, and for any transferable escrows or
similar deposits held by utility companies or municipal authorities, to
the extent the Contributors' rights therein are assigned to the
Partnership at Closing.
(ii) Post-Closing Tenant Rents. All rents and other sums
collected by the Partnership after the Closing Date, up to the respective
amounts currently due the Partnership from time to time, will be retained
by the Partnership and applied on account of the rents and other sums due
to the Partnership. At Closing, the Contributors shall identify all
tenants which are in arrears in the payment of rent as of five (5) days
before the Closing Date. If any tenant shall pay to the Partnership a
sum in excess of all rents and other sums which have accrued to the
Partnership, and which excess sum is on account of arrearages which
became due prior to Closing, the Partnership will promptly remit such
excess net of costs of collection to the Contributors. Without the
Partnership's written consent, which shall not be unreasonably withheld
or delayed, the Contributors shall not bring any suit or other proceeding
against any tenant under the Leases after the Closing Date on account of
rental delinquencies, but this shall not limit any Contributor's right to
bring any suit or proceeding for other damages. The Partnership assumes
no obligation to collect or enforce the payment of any such monies which
may be owing to the Contributors. If the Partnership employs an agent to
collect rent under the Leases after Closing, such agent shall have the
right to deduct and retain from the Contributors' share of any rent or
other payments accruing prior to the Closing Date and received by the
Partnership after the Closing Date compensation at a reasonable rate
payable to such agent by the Partnership, except that such compensation
shall be equitably apportioned between the Contributors and the
Partnership if the sums collected relate to periods both before and after
such Closing.
(iii) Post-Closing Adjustment of Miscellaneous Tenant
Payments. If the apportionment of any percentage rents, "escalation"
payments relating to operating expenses, or other payments received by
the Contributor prior to the Closing Date from a tenant under any of the
Leases on account of periods prior to the Closing Date or on account of
sums which are attributable to expenses incurred by the landlord for
periods of time prior to the Closing Date or on account of any amounts
that are to be reimbursed by any tenant after the Closing Date which
relate to periods prior to the Closing Date, cannot be precisely
determined at the Closing Date, the Contributors and the Partnership
shall reasonably estimate the apportionment of such sums pro rata between
the Partnership and the Contributor on a per diem basis as of the Closing
Date. Each party shall separately reconcile with tenants the amounts paid
or payable on account of operating expenses incurred by such party during
its period of ownership. Post-Closing adjustments shall be made, as
necessary, between the Partnership and the Contributors for each of such
apportioned items as and when such sums can be precisely determined by
the Partnership and the Contributors.
(iv) Combined Tax Assessments. If the Real Property
comprising any Property is not separately assessed for real estate tax
purposes as of the Closing Date, the real estate tax assessment
attributable to such Property shall be deemed to be that portion of the
total assessment on the larger parcel with which such Property is
assessed, which bears the same ratio to such total assessment as the fair
market value of such Property bears to the fair market value of the
larger parcel, as determined to the mutual satisfaction of the
Partnership and the Contributor Parent, each acting reasonably.
(v) Estimated Real Estate Taxes. If bills for real estate
taxes on any Real Property have not been issued as of the applicable
Closing Date, and if the amount of real estate taxes for the then current
tax fiscal year is not then known, the apportionment of real estate taxes
shall be made at Closing on the basis of the prior year's real estate
taxes. Post-Closing adjustments shall be made, as appropriate, between
the Partnership and the Contributors for the real estate taxes as and
when such sums can be precisely determined by the Partnership and the
Contributors.
(vi) "Rollback" Taxes. If all or any portion of the
Undeveloped Business Properties to be conveyed at a Closing is the
subject of any "rollback" taxes or other deferral or abatement whereby
such Property may be subject to the imposition of taxes after the Initial
Closing on account of periods of time prior thereto, the respective
Contributor shall pay, when assessed, all taxes (and interest and
penalties thereon) assessed after the Initial Closing with respect to
periods prior to (A) the date which is eighteen (18) months after the
Initial Closing Date, or (B) the date of the respective Land Closing,
with respect to any Undeveloped Business Property conveyed to the
Partnership or its Designee hereunder prior to the end of the aforesaid
eighteen (18) month period.
(vii) Credits. Any credit due to the Partnership pursuant
to this Section 4.03 shall be paid by the respective Contributor to the
Partnership, and any credit due to the Contributor pursuant to this
Section 4.03 shall be paid by the Partnership to the respective
Contributor at Closing.
(b) Utility Meter Readings. As and when readings of the water,
electric, gas and other utility meters servicing the Real Property (other
than meters which exclusively measure utility consumption which is to be
paid in full by tenants under Leases) become available at or after
Closing, the Contributors shall pay all charges relating to any period
prior to the Closing Date, prorated on a daily basis.
(c) Realty Transfer Taxes. At each Closing, the Contributors
shall pay all realty transfer taxes, mortgage recording taxes,
documentary stamp taxes and sales taxes accruing or payable with respect
to the Contributors' conveyance of the Properties.
(d) Post-Closing Reconciliation. The parties to this Agreement
acknowledge that certain of the information relating to the income and
expense items to be apportioned pursuant to this Section 4.03 may not be
available or completely accurate as of the Closing Date, and the parties
agree that within 90 days after Closing, they shall use all reasonable
diligence to determine the final amount of all adjustments and
reconciliations of the items to be apportioned hereunder and shall make
cash payments as appropriate in order to effectuate a final
reconciliation.
4.04 Transactions to Occur at the Land Closings. At each of the Land
Closings the following transactions shall occur:
(a) The Partnership shall pay the required Land Payment, in the
amount set forth in the Land Closing Notice, by wire transfer of funds to
an account designated by the Contributor Parent;
(b) The Contributor Parent shall execute, acknowledge and
deliver (or shall cause to be executed, acknowledged and delivered) to
the Partnership or its Designee(s) the deed of conveyance to the
Undeveloped Business Property or Properties identified in the respective
Land Closing Notice, in substantially the form of Exhibit M, subject only
to the Permitted Encumbrances, all matters of record as of the Initial
Closing Date, any easements requested or granted by the Partnership or
the Trust and real property taxes for the fiscal year in which the Land
Closing occurs; and
(c) Except to the extent previously delivered, the Contributor
Parent shall execute, deliver and acknowledge (or shall cause to be
executed, delivered and acknowledged) to the Partnership or its Designee
the deliveries of the items referenced in Sections 4.02(a)(ii), (vii),
(ix), and (xi) (limited to representations and warranties with respect to
the Properties being conveyed for the period after the Initial Closing),
as applicable, with respect to the Undeveloped Business Properties
identified in the Land Closing Notice.
ARTICLE V
TITLE AND RELATED MATTERS
5.01 Condition of Title.
(a) Prior to the execution of this Agreement the Partnership has
obtained, at its expense, preliminary title commitments with respect to
each of the Properties. On or before the expiration of the Due Diligence
Period, unless the Partnership has elected to terminate this Agreement
pursuant to Section 7.01(b), the Partnership shall forward to the
Contributor Parent a written notice (the "Title Objection Notice")
setting forth all matters of title relating to the Properties that are
unacceptable to the Partnership (including any endorsements or coverages
reasonably sought by the Partnership that are unavailable). The Title
Objection Notice may be forwarded in conjunction with an Objection Notice
pursuant to Section 7.01(c) or otherwise. Within ten (10) business days
after the Title Objection Notice (or such longer period on which the
Partnership and the Contributor Parent may agree in writing), the parties
hereto shall endeavor in good faith to negotiate with each other and with
the Title Company in order to resolve all matters of title and to arrive
at a mutually acceptable list of covenants, restrictions, easements and
other matters (the "Permitted Encumbrances") subject to which the
Partnership is willing to accept title to the Properties; provided,
however, that under no circumstances shall the Partnership be required to
accept title subject to any monetary liens, judgments or encumbrances
incurred by any of the Contributors or any Affiliate thereof in a fixed
or ascertainable dollar amount, all of which shall be paid and discharged
by the Contributors or provision made so that the Title Company shall not
take an exception therefor at or before Closing. If the parties are
unable in their sole and absolute discretion to so agree within the 10
business day period as aforesaid (or such longer period on which the
Partnership and the Contributor Parent may agree in writing), either the
Partnership or the Contributor Parent shall have the right, at any time
prior to any Closing, to terminate this Agreement by providing written
notice to the other, unless the Partnership waives in writing its
unsatisfied objections. The Partnership and the Trust shall be deemed to
have accepted all matters of record existing as of the later of
December 1, 1996, or the date of the Partnership's title commitment with
respect to each Property, and all such matters shall thereafter be deemed
Permitted Encumbrances, except to the extent such matters are identified
on a Title Objection Notice delivered by the Partnership to the
Contributor Parent by the expiration of the Due Diligence Period and are
not waived thereafter.
(b) At each Closing, title to the Real Properties being conveyed
at such Closing shall be good and marketable and insurable as such by the
Title Company, at standard rates pursuant to the standard stipulations
and conditions of the current ALTA Policy of Owners Title Insurance, free
and clear of all liens, encumbrances and other title defects or
exceptions, except for the Permitted Encumbrances. All search fees and
premiums for the owner's policy of title insurance and all endorsements
thereto shall be paid by the Partnership. The Contributors shall deliver
to the Title Company such commercially reasonable sellers' affidavits as
the Title Insurance Company reasonably requires (with respect to
statutory liens and parties in possession) to insure title as required
hereunder.
(c) The completion of the Initial Closing by the Partnership
shall be deemed to constitute the Partnership's waiver of all matters of
record as of the Initial Closing Date with respect to all of the
Properties, and all such matters shall thereafter constitute Permitted
Encumbrances.
5.02 Inability to Convey. If title to any Real Property is not, at
Closing, good, marketable or insurable as set forth in Section 5.01 and
if the unsatisfied title objection is not in a fixed or ascertainable
amount of a type governed by and resolved pursuant to Section 5.01(a) or
is not otherwise waived or deemed to be waived or accepted, the existence
of such objection shall be deemed to be a Failure of a Condition, and the
rights of the parties hereto shall be as set forth in Section 7.03.
Notwithstanding the foregoing, if the inability or failure of
Contributors to deliver title as aforesaid is the result by any wilful
violation by one or more Contributors of its or their obligations under
this Agreement, the Partnership and the Trust shall have the right, in
addition to or in lieu of the remedies set forth above in this paragraph,
to seek and obtain all other rights and remedies to which they might be
entitled at law or in equity on account of such breach, including
(without limitation) specific performance.
5.03 UCC Searches. The Partnership has obtained or hereafter may
obtain, prior to Closing, searches, of all Uniform Commercial Code
financing statements filed against the Properties or against the
Contributors with respect to such Properties, in each case searched with
the Secretary of State and/or county clerk in the state and county in
which the Contributors have been formed and the Properties are located,
together with tax lien searches in all such jurisdictions. If any such
searches conducted during the Due Diligence Period disclose matters
unacceptable to the Partnership, the Partnership shall disclose such
matters in the Title Objection Notice described in Section 5.01(a) or
they shall be deemed accepted and thereafter shall constitute Permitted
Exceptions. If new searches conducted prior to Closing reveal that,
other than the Permitted Encumbrances and matters of record as of the
date of the Partnership's UCC search conducted prior to the end of the
Due Diligence Period with respect to the affected Property (but in no
event earlier than December 1, 1996), there are any new bankruptcies,
actions, claims or liens affecting or encumbering or which might encumber
the Properties or any interest therein or portion thereof which will
continue after Closing, and the Partnership lists any such matters in a
new Title Objection Notice, the existence of such objection shall be
deemed to be a Failure of a Condition unless satisfied as contemplated in
Section 7.03, and the rights of the parties hereto shall be as set forth
in Section 7.03.
5.04 Survey. The Partnership has commissioned licensed surveyors
qualified in the states in which the respective Properties are located to
prepare as-built survey plans (with respect to the Business Rental
Properties) in accordance with the current editions of "Minimum Standard
Detail Requirements for Land Title Surveys" (as adopted by the American
Land Title Association and the American Congress on Surveying & Mapping).
Each survey plan shall be accompanied by a metes and bounds description
of the Real Property prepared from the survey plans. If any of the survey
plans discloses matters reasonably objectionable to the Partnership, the
Partnership shall disclose such objection in the Title Objection Notice
described in Section 5.01(a). Any matters not so disclosed shall be
deemed to be acceptable to the Partnership and the Trust and shall
constitute Permitted Exceptions.
ARTICLE VI
POSSESSION; AGREEMENTS AND LEASES.
6.01 Possession; Leases. At Closing, the Leases will not be subject
to any rights of brokers to be paid leasing brokerage commissions,
finders or referral fees or similar commissions payable after Closing
except as set forth on Schedule 6.01. The Partnership shall execute and
deliver at Closing the Assignment Agreement, pursuant to which the
Partnership assumes and promises to observe and perform all covenants and
obligations of the landlord under the Leases arising after Closing,
including, but not limited to, the assumption of any obligations of a
Contributor associated with tenant security deposits and interest
thereon, but only to the extent such security deposits are listed on the
Rent Roll and remitted to the Partnership at Closing. From the date of
this Agreement until the Closing, the Contributor shall not enter into
any new leases or agreements to lease with respect to any portion of the
Properties or modify or terminate any Lease without in each case
obtaining the prior written consent of the Partnership, which consent
shall not be unreasonably withheld provided that each proposed tenant is
a creditworthy tenant and provided further that such consent shall be
deemed to have been granted unless the Partnership shall have
affirmatively denied its consent within three (3) business days after
written request.
6.02 Agreements. The Contributors represent and warrant that, except
for the Leases, the agreements set forth on Schedule 6.02, and the
agreements set forth on Schedule 6.01, there are no existing contracts,
agreements or arrangements (whether oral or written) binding upon the
Properties or relating to the operation, management, development,
leasing, maintenance or servicing thereof, other than agreements that are
terminable without cause or penalty upon thirty (30) days' notice or
less, or which do not, in the aggregate, have a Material Adverse Effect
on any of the Properties. The termination of any of the Service
Agreements prior to Closing by reason of the expiration of its term or by
reason of a default thereunder shall not excuse the Partnership from its
obligation to complete Closing and to pay the full Contribution
Consideration, provided that if the service in question is necessary or
appropriate to the proper operation of any Property, the Contributor of
such Property will use commercially reasonable efforts to obtain a
substitute contract on terms reasonably acceptable to the Partnership
prior to Closing; provided further, however, that neither the failure to
use such efforts nor the failure to obtain such a substitute contract
shall excuse the Partnership's performance under this Agreement. All
rights and interests under the Service Agreements (including such
substitute contracts) will be assigned by the Contributors to the
Partnership, and assumed by the Partnership (with respect to obligations
arising after Closing), at Closing by the mutual execution of the
Assignment Agreement.
6.03 Tenant Estoppel Certificates. Prior to the date of this
Agreement, the Contributors have requested each Tenant under a Lease to
deliver to the Partnership a written statement ("Tenant Estoppel
Certificate") substantially in the form of Exhibit S attached hereto.
The Contributors agree to use reasonable efforts to obtain all Tenant
Estoppel Certificates prior to the end of the Due Diligence Period. As
and when the Tenant Estoppel Certificates are from time to time received
by the Partnership, the Partnership shall advise the Contributors of any
deviations therein from the requested form that are reasonably
unsatisfactory to the Partnership. On or before the expiration of the
Due Diligence Period, unless the Partnership has elected to terminate
this Agreement pursuant to Section 7.01(b), the Partnership shall forward
to the Contributor Parent a written notice (the "Tenant Estoppel Notice")
setting forth all Tenant Estoppel Certificates that have not been
received and setting forth any matters contained in the Tenant Estoppel
Certificates that are reasonably unacceptable to the Partnership. The
Tenant Estoppel Notice may be forwarded in conjunction with an Objection
Notice pursuant to Section 7.01(c). Within ten business days after the
Tenant Estoppel Notice (or such longer period on which the Partnership
and the Contributor Parent may agree in writing), the parties hereto
shall endeavor in good faith to negotiate with each other and with the
relevant Tenants in order to resolve all issues relating to the Tenant
Estoppel Certificates. Such resolution may include, by way of example,
an agreement by the parties that the receipt of the missing or defective
Tenant Estoppel Certificate shall be a condition to Closing, or an
agreement by the parties that the defective or missing item may be
included in the Landlord's Certificate referred to in Section 7.02(e), or
may include such other resolution as is mutually acceptable to the
parties. If the parties are unable in their sole and absolute discretion
to so agree within the ten business day period as aforesaid (or such
longer period on which the Partnership and the Contributor Parent may
agree in writing), either the Partnership or the Contributor Parent shall
have the right, at any time prior to Closing, to terminate this Agreement
by providing written notice to the other, unless the Partnership waives
in writing its unsatisfied objections prior to the giving of such notice
of termination. The Partnership and the Trust shall be deemed to have
accepted the status of all Tenant Estoppel Certificates as existing on
the last day of the Due Diligence Period, except to the extent any
deviations are identified in the Tenant Estoppel Notice delivered by the
Partnership to the Contributor Parent by the expiration of the Due
Diligence Period and are not waived thereafter. The Contributors also
agree to request from the Tenants under the Leases such commercially
reasonable subordination and nondisturbance agreements as may be
requested by the lender under the Replacement Financing, upon the written
request of the Partnership.
ARTICLE VII
CONDITIONS TO CLOSING
7.01 Due Diligence Period.
(a) The obligations of the Partnership and the Trust under this
Agreement are subject to the Partnership's and the Trust's being
satisfied, in their sole and absolute discretion, during the period of
time from the date of this Agreement through March 19, 1997 (the "Due
Diligence Period"), with their review of all aspects of the physical,
legal, title, environmental and financial condition of the Properties and
the suitability of the Properties for the Partnership's intended
purposes, and with the determination of the usable acreage relating to
the Undeveloped Business Properties as set forth in Section 3.02.
(b) If for any reason the Partnership determines on or before
the expiration of the Due Diligence Period that the Partnership and the
Trust do not desire to proceed with the transactions contemplated in this
Agreement, they shall have the right to terminate this Agreement by
sending written notice thereof to the Contributor Parent (a "Termination
Notice") on or before 6:00 p.m. EST on the last day of the Due Diligence
Period, accompanied by the payment of $100.00 as a termination fee. The
Contributor Parent and the Contributors acknowledge that the costs and
expenses to be incurred by the Partnership and the Trust in their due
diligence analyses and investigations of the Properties, together with
the payment of the $100.00 termination fee set forth above, represent
fair and adequate consideration for the Contributors' entering into this
Agreement.
(c) Alternatively, the Partnership shall have the right to
forward to the Contributor Parent prior to the expiration of the Due
Diligence Period a notice (the "Objection Notice") setting forth any
specific aspects of the physical, legal, environmental or financial
condition of the Properties or their suitability for the Partnership's
intended purposes that are objectionable to the Partnership, and
containing the Title Objection Notice referred to in Section 5.01 and the
Tenant Estoppel Notice referred to in Section 6.03. Within the period of
ten (10) business days after the Objection Notice (or such longer period
on which the Partnership and the Contributor Parent may agree in
writing), the parties hereto shall negotiate in good faith to determine
whether the Contributor Parties, in their sole and absolute discretion,
are willing to correct to the satisfaction of the Partnership, in its
sole and absolute discretion, whether by amendment to this Agreement or
otherwise, the matters set forth on the Objection Notice. If the parties
are unable to reach agreement within said period of 10 business days (or
such longer period on which the Partnership and the Contributor Parent
shall agree in writing), either the Partnership or the Contributor
Parent shall have the right to terminate this Agreement in its entirety
by giving written notice thereof to the other, unless the Partnership
waives in writing its unsatisfied objections prior to the giving of such
notice of termination.
(d) If the Partnership does not provide a Notice of Termination
or an Objection Notice on or before the end of the Due Diligence Period
as set forth above, this Agreement shall continue in full force and
effect without regard to the provisions of this Section 7.01, and the
Partnership and the Trust shall be deemed for all purposes under this
Agreement to have waived all warranties and representations as to matters
existing at the end of the Due Diligence Period except with respect to
Sections 8.01(a), (b) and (m) and any matter required to be disclosed in
Sections 8.01(g), (k), (n), (o), and (p) of which Contributor Parent
shall not have given notice to the Partnership prior to the end of the
Due Diligence Period.
7.02 Conditions to Obligations of the Trust and the Partnership.
Subject to the terms of Section 7.03 below and of Section 7.01(d) above,
the obligation of the Trust and the Partnership to consummate each
Closing hereunder (other than a Land Closing, which shall be governed
solely by Section 7.03(c)) is conditioned upon the following conditions
precedent, any one or more of which may be waived in writing by the
Partnership, on behalf of itself and the Trust:
(a) All representations and warranties of all Contributor
Parties (limited, in the case of each Closing other than the Initial
Closing, to representations and warranties with respect to the Property
or Properties being conveyed at such Closing) shall be true in all
material respects as of the date hereof and as of the Closing Date,
except as to any matter referred to in Article VIII hereof of which
Contributor Parent shall have given notice to the Partnership prior to
any previous Closing.
(b) Each of the Contributor Parties shall have executed,
acknowledged (where appropriate) and delivered all documents and
instruments required hereunder to be executed, acknowledged and delivered
at such Closing.
(c) Each of the Contributor Parties shall have performed in all
material respects all of its covenants and obligations to be performed at
or prior to such Closing (limited, in the case of each Closing other than
the Initial Closing, to covenants and obligations with respect to the
Property or Properties being conveyed at such Closing), except for any
failure of such performance of which Contributor Parent shall have given
notice to the Partnership prior to any previous Closing.
(d) The Title Company shall be unconditionally committed to
issue promptly following such Closing the policies of title insurance
described in Section 5.01 with respect to the Properties being conveyed
at such Closing;
(e) The respective Contributors with respect to the Business
Rental Properties being conveyed at each Closing shall have executed and
delivered to the Partnership a certification (the "Landlord's
Certificate") certifying that the statements contained in the Tenant
Estoppel Certificates relating to each such Property are true and correct
as of the date of such Closing, and containing such other matters on
which the parties mutually agree in their sole and absolute discretion as
a result of the procedures set forth in Section 6.03.
(f) No preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, shall be
in effect at Closing, and no Applicable Law shall have been enacted or
promulgated between the date of this Agreement and Closing, which in
either case would prevent the consummation of the transactions
contemplated by this Agreement;
(g) All necessary partnership or corporate action shall have
been taken by the Contributors to authorize the execution and delivery of
this Agreement and the consummation of the transactions contemplated
hereby;
(h) Each of the other documents and instruments required by this
Agreement to be delivered to the Partnership or the Trust at such Closing
shall have been delivered; and
(i) No notice shall be outstanding and uncured asserting any
material violation of any Applicable Laws with respect to any of the
Business Rental Properties to be conveyed at such Closing of which
Contributor Parent shall not have given notice to the Partnership prior
to any previous Closing.
7.03 Failure of Condition to the Obligations of the Partnership and
the Trust. If one or more of the conditions to the obligations of the
Partnership and the Trust as set forth in Section 7.02 have not been
satisfied as of the date scheduled for Closing and remain unsatisfied for
twenty (20) days after written notice thereof is provided by the
Partnership to the Contributor Parent and the Partnership reconfirms its
objection to such failure (which circumstance shall be referred to as a
"Failure of Condition"), then:
(a) if (i) one or more of such Failures of Conditions
individually or in the aggregate result in a Material Adverse Effect on
the Properties as a Whole, or (ii) one or more of such Failures of
Conditions individually or in the aggregate have a Material Adverse
Effect on several individual Properties such that the allocable portion
of the Contribution Consideration relating to such affected Properties
(as set forth on the Allocation Schedule) exceeds 15% of the Contribution
Consideration, or (iii) one or more of such Failures of Condition consist
of the non-fulfillment of a condition set forth in paragraphs (b), (f) or
(g) of Section 7.02, then in any such event the Partnership and the Trust
may, at their option, terminate this Agreement and thereby be excused
from their obligation to consummate Closing with respect to all of the
Properties;
(b) if one or more of such Failures of Conditions individually
or in the aggregate have a Material Adverse Effect on one or more of the
Business Rental Properties, the Partnership shall have the right to
terminate this Agreement with respect to the Business Rental Property or
Business Rental Properties so affected, in which case the Contribution
Consideration shall be reduced by the amount allocated to the affected
Business Rental Property or Business Rental Properties set forth on the
Allocation Schedule and the Closing shall proceed as scheduled with
respect to all other Properties not so affected; provided, however, that
the Contributor Parent shall have the following rights to nullify such
partial termination as follows:
(i) if the applicable portion of the Contribution
Consideration relating to the Business Rental Property or Business Rental
Properties with respect to which the Partnership has sought to terminate
this Agreement as aforesaid exceeds 15% of the Contribution
Consideration, the Contributors shall have the right, by notice provided
by the Contributor Parent to the Partnership on or before the earlier to
occur of ten (10) business days after receipt of the notice of
termination from the Partnership as aforesaid or the scheduled date for
Closing, to terminate this Agreement in its entirety in which event this
Agreement shall be null and void and of no further force or effect; or
(ii) the Contributors shall have the right, exercisable by
the Contributor Parent's providing written notice to the Partnership on
or before the day which is the earlier to occur of ten (10) business days
after receipt of the Partnership's notice aforesaid or the scheduled date
for Closing, to correct any failure of condition and to extend the date
for Closing with respect to such Property or Properties by a period of up
to 90 days (the "Extended Closing"), whereupon the payment of the portion
of the Contribution Consideration allocable to such Property or
Properties as designated by the Contributor Parent shall be deferred
until the Extended Closing, and the obligations of the Partnership and
the Trust at such Extended Closing shall be subject to the curing by the
Contributors of the relevant Failure of Condition. If the Failure of
Condition has not been cured by the Contributors on or before the date of
the Extended Closing, the Partnership shall have the right to terminate
this Agreement with respect to the affected Property or Properties, and
the Contribution Consideration shall be permanently reduced by the amount
allocable to such Property or Properties, without any further right on
part of the Contributors to cure such Failure of Condition or to defer
Closing with respect thereto;
(c) if one or more of such Failures of Condition result from the
Contributors' creating any lien, encumbrance or other title defect, or
incurring any obligation that results in such a lien, encumbrance or
other title defect, against any of the Undeveloped Business Properties
after the Initial Closing, except, in each case, as contemplated by this
Agreement, and if such Failure or Failures of Condition, individually or
in the aggregate, have a Material Adverse Effect on one or more of the
Undeveloped Business Properties, the Partnership shall have the right to
terminate this Agreement as to the Undeveloped Business Property or
Properties so affected, in which case the Land Purchase Price shall be
reduced by the amount allocated to such affected Property or Properties
pursuant to Section 3.02, and the Closing shall proceed as scheduled with
respect to all other Properties not so affected, subject, however, to the
right of the Contributor Parent to nullify such partial termination and
to defer conveyance of the affected Property in accordance with paragraph
(b)(ii) above in this Section 7.03;
(d) no Failure of Condition shall excuse the obligations of the
Partnership or the Trust to consummate a Closing except as set forth in
this Section 7.03.
7.04 Conditions to the Obligations of the Contributors. The
obligation of the Contributors to consummate Closing hereunder is
conditioned upon the following conditions, any one or more of which may
be waived in writing by the Contributor Parent, on behalf of all
Contributors:
(a) All representations and warranties of the Partnership and
the Trust shall be true in all material respects as of the date hereof
and as of the Closing Date;
(b) The Partnership and the Trust shall have performed in all
material respects all of their covenants and obligations to be performed
at or prior to Closing;
(c) All necessary partnership and trust actions shall have been
taken to authorize the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby by the Partnership
and the Trust;
(d) No preliminary or permanent injunction or other order,
decree or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory or administrative agency or commission, nor any
statute, rule, regulation or executive order promulgated or enacted by
any governmental authority shall be in effect at Closing which would
prevent the consummation of the transactions contemplated hereby; and
(e) Each of the other documents and instruments required by this
Agreement to be delivered to the Contributors at Closing shall have been
delivered.
7.05 Failure of Condition to the Obligations of the Contributor
Parties. If one or more of the conditions to the obligations of the
Contributor Parties as set forth in Section 7.04 have not been satisfied
as of the date scheduled for Closing and remain unsatisfied for twenty
(20) days after written notice thereof is provided by the Contributor
Parent to the Partnership and the Contributor Parent reconfirms its
objection to such failure, the Contributor Parties may, at their option,
terminate this Agreement and thereby be excused from their obligation to
consummate Closing with respect to all of the Properties; provided,
however, that as to a failure or failures of the condition of the type in
Section 7.04(a), the Contributor Parties may, at their option, terminate
this Agreement and thereby be excused from their obligation to consummate
Closing with respect to all of the Properties only if such failure or
failures individually or in the aggregate result in a Material Adverse
Effect on the Partnership or the Trust or result in a Material Adverse
Effect on the rights of the Contributor Parties under this Agreement.
ARTICLE VIII
REPRESENTATIONS AND WARRANTIES
8.01 Representations and Warranties of Contributors. The Contributor
Parties jointly and severally represent and warrant to the Trust and the
Partnership as follows:
(a) Organization; Authority. Each Contributor Party is a
corporation or partnership duly formed and subsisting under the laws of
its jurisdiction of formation and has the requisite corporate or
partnership power and authority to enter into and perform its obligations
under this Agreement. Each Contributor Party has all power and authority
to own and lease the Properties that it owns and leases and to carry on
its business as it is now being conducted.
(b) Due Authorization; Binding Agreement. The execution,
delivery and performance of this Agreement by each Contributor Party has
been duly and validly authorized by all necessary action of the
Contributor Party. This Agreement has been duly executed and delivered
by each such Contributor Party, or an authorized representative of each
such Contributor, and constitutes a legal, valid and binding obligation
of such Contributor Party.
(c) Consents and Approvals. No consent, waiver, approval or
authorization of, or filing, registration or qualification with, or
notice to, any governmental unit or any other person is required to be
made, obtained or given by any such Contributor Party prior to or as a
condition to the execution, delivery and performance of this Agreement,
except as have been made, obtained or given.
(d) No Violation. None of the execution, delivery or
performance of this Agreement by each Contributor Party does or will,
with or without the giving of notice, lapse of time or both, (i) violate,
conflict with or constitute a default under any term or condition of (A)
the organizational documents of such Contributor Party or any material
provision of any material agreement to which such Contributor Party is a
party or by which it or its assets or properties are bound, or (B) any
terms or provisions of any judgment, decree, order, statute, injunction,
rule or regulation of a governmental unit applicable to such Contributor
Party or (ii) result in the creation of any lien or other encumbrance
upon the assets or properties of such Contributor Party, except as
expressly contemplated by this Agreement.
(e) Litigation. Except (i) the matters, if any, set forth on
Schedule 8.01(e) and (ii) claims covered by insurance with regard to
which liability is not expected to exceed $500,000.00, there are no
judicial, administrative, arbitration or governmental claims, actions,
suits, proceedings or investigations that have been instituted by any of
the Contributor Parties, or notice of which has been served upon any of
the Contributor Parties, or which to the Knowledge of the Contributor
Parties are threatened, against any of the Properties, against any of the
Contributor Parties relating to any of the Properties or relating to the
transactions contemplated by this Agreement, or which would materially
and adversely affect such Contributor Party's ability to perform its
obligations and complete Closing hereunder.
(f) Attachment; Execution; Etc. No attachments, execution
proceedings, assignments for the benefit or creditors, insolvency,
bankruptcy, reorganization or other proceedings are pending or, to the
Knowledge of the Contributor Parties, threatened against any Contributor
or any of its Properties, nor are any of such proceedings contemplated by
any Contributor, which is reasonably likely to materially adversely
affect such Contributor's ability to perform its obligations and complete
Closing hereunder.
(g) Operation of Premises; Compliance with Laws; Violations,
Etc.
(i) To the Knowledge of the Contributor Parties, except as
set forth on Schedule 8.01(g), no Contributor has received any written
notice from any public authority asserting any uncorrected violation of
any Applicable Laws (other than Environmental Laws) with respect to any
of the Properties or any portion thereof, or the condition, use or
operation thereof, including, but not limited to, the Americans with
Disabilities Act of 1990, and each Contributor has obtained all licenses,
certificates, approvals and permits required for the conduct thereof, (A)
except where the failure to do so would not have, individually or in the
aggregate, a Material Adverse Effect on the Contributor or any one or
more Properties, or (B) except to the extent that non-compliance is a
result of a change after the date hereof in the interpretation or
enforcement of existing laws and regulations and such Contributor, before
such change, reasonably believed that it was in compliance. To the
Knowledge of the Contributor Parties, such licenses, certificates,
approvals and permits are in full force and effect, such Contributor has
not taken any action that would (or failed to take any action, the
omission of which would) result in the revocation or invalidity of such
licenses, certificates, approvals or permits and such Contributor has not
received any written notice of violation from any federal, state or
municipal entity or notice of an intention by any such government entity
to modify or revoke any certificate, approval, license or permit issued
by it to such Contributor that in each case has not been cured or
otherwise resolved to the satisfaction of such government entity, except
where such failure or such action would not have a Material Adverse
Effect on such Contributor or any one or more Properties.
(ii) Except as set forth in Schedule 8.01(g), or in the
Leases, the Permitted Encumbrances or any document or instrument of
record, neither the Contributors, nor to the Knowledge of the Contributor
Parties any previous owner of the Premises, has sold, transferred,
conveyed, or entered into any agreement regarding transfer of air rights,
excess floor area ratio, parking rights or other development rights
relating to the Premises. To the Knowledge of the Contributor Parties,
no written notice has been received by any Contributor regarding pending
or threatened eminent domain proceeding affecting the Properties or any
part thereof or affecting the sidewalks or any streets or public ways in
front of or adjoining the Properties.
(iii) Except as set forth in Schedule 8.01(g), each
Contributor has complied in all material respects with all written work
orders, requirements and demands of each and every insurance company
insuring all or any part of the Premises.
(iv) Except as set forth in Schedule 8.01(g), there are no
material unperformed obligations relative to the Properties outstanding
pursuant to any written agreements with any governmental or quasi-
governmental body or authority, and there are no outstanding contracts or
arrangements in the nature of maintenance or development bonds or any
escrows or security deposits relating thereto; provided that the
representation and warranty set forth in this paragraph is limited to
agreements entered into by any of the Contributor Parties or, to the
Knowledge of the Contributor Parties, by any other person .
(h) Environmental Matters. Except as disclosed on Schedule
8.01(h), to the Knowledge of the Contributor Parties: (i) no
Environmental Claim has been asserted against or with respect to any of
the Properties; (ii) no underground storage tanks are now, or have been
in the past, located in or under any of the Properties; (iii) no
Hazardous Materials have been discharged, stored, treated or disposed of
by the Contributors in, on or under any of the Properties in any
quantities, concentrations or manner of use that violate any applicable
Environmental Laws, would require remediation thereunder or (as to the
Undeveloped Business Properties) would prohibit or materially adversely
affect the development or financing of any of such Properties as
office/industrial/flex/warehouse buildings of a type generally similar to
the Business Rental Properties; and (iv) the Contributors have delivered
to the Partnership or its representatives true and complete copies of all
written environmental reports that are, to the knowledge of the
Contributor Parties, in their possession with respect to any of the
Properties.
The term "Hazardous Materials" shall mean any substance,
material, waste, gas or particulate matter which is regulated by any
local governmental authority, the State in which the subject Premises is
located, or the United States Government, including, but not limited to,
any material or substance which is: (i) defined as a "hazardous waste",
"hazardous material", "hazardous substance", "extremely hazardous waste",
or "restricted hazardous waste" or words of similar import under any
provision of any applicable Environmental Law; (ii) petroleum or
petroleum products; (iii) asbestos; (iv) poly chlorinated biphenyl; (v)
radioactive material; (vi) radon gas; (vii) designated as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act, 33 U.S.C.
Section1251 et seq. (33 U.S.C. Section1317); (vii) defined as a
"hazardous waste" pursuant to Section 1004 of the Resource Conservation
and Recovery Act, 42 U.S.C. Section6901 et seq. (42 U.S.C. Section6903);
or (ix) defined as a "hazardous substance" pursuant to Section 101 of the
Comprehensive Environmental Response, Compensation, and Liability Act, 42
U.S.C. Section9601 et seq. (42 U.S.C. Section9601). The term
"Environmental Laws" shall mean all statutes specifically described in
the foregoing sentence and all federal, state and local environmental
health and safety statutes, ordinances, codes, rules, regulations, orders
and decrees regulating, relating to or imposing liability or standards
concerning or in connection with Hazardous Materials. The term
"Environmental Claim" shall mean any written administrative, regulatory
or judicial action, suit, demand, demand letter, claim, lien, notice of
non-compliance or violation, investigation or proceeding relating in any
way to any applicable Environmental Law or any permit issued under any
such applicable Environmental Law including, without limitation, (a) by
governmental or regulatory authorities for enforcement, cleanup, removal,
response, remedial or other actions or damages pursuant to any applicable
Environmental Law, and (b) by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive
relief resulting from Hazardous Materials or arising from alleged injury
or threat of injury to health, safety or the environment as a result of
the presence of Hazardous Materials.
(i) Utilities. To the Knowledge of the Contributor Parties, all
water, sewer, gas, electric, telephone, and other public utilities and
all storm water drainage required by law or necessary for the operation
of the Properties: (A) either enter the Properties through open public
streets adjoining the Properties, or, if they pass through adjoining
private land, do so in accordance with valid public or private easements
or rights of way which will inure to the benefit of the Partnership, (B)
are installed, connected and operating, with all installation and
connection charges paid in full, including, without limitation,
connection and the permanent right to discharge sanitary waste into the
collector system of the appropriate sewer authority, (C) are being
utilized in compliance with all applicable governmental and environmental
protection authorities' laws, rules, regulations and requirements, and
(D) have been adequate and will continue to be adequate to service the
Properties as presently improved and presently used. To the Knowledge of
the Contributor Parties, no moratorium or proceeding exists which
threatens to impair continued furnishing of such services to the
Properties at regular rates and fees. Water and sanitary sewer furnished
to the Properties are public.
(j) Real Estate Taxes and Assessments.
(i) Except as set forth on Schedule 8.01(j) and except for
prospective reassessments, and to the Knowledge of the Contributor
Parties, there are no pending proceedings for the correction or reduction
of the assessed valuation of the Properties for the current or prior tax
years, and to the Contributors have not received written notice that any
such proceedings are threatened.
(ii) Except as set forth on Schedule 8.01(j), and to the
Knowledge of the Contributor Parties, no Contributor has received any
written notice that any material special or general assessments (other
than regular, annual real estate taxes) for public improvements in the
nature of off-site improvements, or otherwise, that have been ordered to
be made or are threatened against or affecting the Properties and would
be binding upon any owner of the respective Properties after the
respective Closing.
(k) Leases.
(i) Except for the Leases, no Contributor has entered into
any contracts for the sale, leasing or occupancy of the Properties or any
portion thereof that will survive for periods after the respective
Closing. There are no outstanding rights of first refusal or options
granted by a Contributor to purchase all or any portion of the
Properties. The copies of the documents evidencing the Leases made
available to the representatives of the Partnership and the Trust, as
listed on Schedule 8.01(k)(i) (the "Rent Roll"), are true, correct and
complete and include all amendments, supplements and side letters
relating thereto. There are no other material contracts or agreements,
oral or written, between any of the Contributors or any of their
Affiliates, on the one hand, and any of the tenants under the Leases, on
the other hand, relating to the Properties or the provision of any
services with respect to the Properties except as disclosed on
Schedule 6.02.
(ii) Except for matters of record and subject to the right
of governmental and law enforcement authorities to enter the Properties
for lawful purposes, as of the Closing, no persons or entities, other
than such Contributor and the tenants under the Leases and the permitted
subtenants, licensees and invitees of the Contributors or such tenants,
shall have any right to the possession, use or occupancy of the
Properties or any portion thereof for any reason whatsoever.
(iii) The Rent Roll is true and correct in all material
respects as of the date noted thereon and discloses all Leases. The
Leases include all leases, agreements to lease, subleases, tenancies,
licenses and other rights of occupancy or use for all or any portion of
the Properties pursuant to which such Contributor is landlord or
licensor, all as amended, renewed and extended to the date of the Rent
Roll, whether oral or written. There has been no material adverse change
in the information set forth in the Rent Roll between the effective date
of the Rent Roll and the date hereof. The Rent Roll accurately and
completely sets forth the following as to each Lease:
(A) a description (by rentable square feet) of the
leased space thereunder;
(B) the name of the current tenant of the space
(the "Tenant") thereunder;
(C) the expiration dates of the current term
thereof; and
(D) the basic and additional rents (which include
all escalators, pass-throughs of taxes, expenses or other items, and all
other sums payable by the Tenant to the lessor, including, without
limitation, utility charges) during the original and any renewal terms
thereof (collectively, "Rents").
(iv) To the Knowledge of the Contributor Parties, each
Security Deposit has been and is held by Contributor or its agent in
compliance with the respective Lease and applicable law. There are no
unfulfilled obligations as to Security Deposits to tenants under Leases
which have expired or been terminated and there is no suit, action or
other claim made, or, to the Knowledge of the Contributor Parties,
pending or threatened with respect to any such Security Deposit.
(v) To the extent the Leases provide parking spaces on a
reserved basis, the respective Business Rental Properties contain
sufficient parking spaces to meet the required number of reserved spaces
and reasonable demand for unreserved spaces.
(vi) The following is true with respect to each Lease:
(A) to the Knowledge of the Contributor Parties,
the Lease is in full force and effect in accordance with its terms. No
lease has been modified, in writing or otherwise, except as shown on the
Rent Roll or as set forth on the Tenant Estoppel Certificate for such
Lease or on Schedule 8.01(k)(vi);
(B) except as set forth on Schedule 8.01(k)(vi),
all obligations of the lessor thereunder which accrue prior to or on the
date of Closing shall have been performed and paid for in all material
respects by such Contributor on or prior to Closing;
(C) except as set forth in Schedule 8.01(k)(vi) and
except for delinquencies in payment of rent of less than thirty (30)
days, to the Knowledge of the Contributor Parties, there has been no
material default or event which, with the giving of notice or the lapse
of time, or both, would constitute a material default on the part of the
tenant thereunder and, except as set forth in Schedule 8.01(k)(vi) the
tenant has not asserted, and to the Knowledge of the Contributor Parties,
has no defense to or offset or claim against its rent or the performance
of its other obligations under the Lease;
(D) except as set forth on Schedule 8.01(k)(vi), no
tenant has prepaid any rent for more than one (l) month if the lease term
has commenced and two (2) months if the lease term has not yet commenced;
(E) to the Knowledge of the Contributor Parties,
except as set forth on Schedule 8.01(k)(vi), neither the Contributors nor
any prior owner of the Properties has released or discharged any
guarantor, voluntarily or involuntarily or by operation of law, from any
obligation with respect to the Lease that such guarantor has guaranteed;
(F) at the time of Closing, no rents will have been
assigned, pledged or encumbered by a Contributor except for liens to be
discharged at Closing;
(G) the amounts being assigned by the Contributor
to the Partnership and representing tenant escrow deposits for taxes,
insurance and utilities and representing portions of rents under gross
leases allocable to taxes, insurance and utilities, constitute all
amounts required to be held by such Contributor under the relevant Leases
for taxes, insurance and utilities; and
(H) Schedule 8.01(k)(vi) accurately lists all
Security Deposits or other deposits held under each of the Leases.
(l) Title to Personal Property. The Personal Property being
transferred at Closing is, or as of Closing will be, free and clear of
any liens or security interests of any kind created by a Contributor or
any Affiliate thereof.
(m) Financial Matters
(i) Each Contributor has paid or will pay in full, at the
time of the Closing or promptly thereafter, all bills and invoices for
labor, goods, materials and services of any kind and taxes and
assessments due and payable relating to the Properties and utility
charges for periods prior to the Initial Closing or the Second Closing
(as appropriate), with respect to the respective Business Rental
Properties conveyed at such Closing. The responsibility for payment of
such items with respect to the Undeveloped Business Properties shall be
governed by Section 9.02(d).
(ii) Except as set forth on Schedule 8.01(m), all
alterations, improvements or other work required to have been completed
by such Contributor prior to the Initial Closing under any reciprocal
easement agreements, Leases and other agreements to which it is a party,
including, without limitation, all alterations, improvements and other
work or allowances therefor required to prepare space for the initial
occupancy of each tenant under a lease, have heretofore been, or will at
the Initial Closing be, completed and paid for in full. All material
unpaid tenant allowances and unfinished tenant improvements to be paid
for or done by the lessor under the Leases are described in Schedule
8.01(m). Those obligations designated on Schedule 8.01(m) as
"Liabilities of the Contributors to be Paid at Closing" shall not be
assumed by the Partnership and shall remain an obligation of the
Contributor.
(iii) All financial information and statements provided by
the Contributors or their representatives to the Partnership or the Trust
relating to the Properties are true, accurate and complete in all
material respects.
(n) Insurance To the Knowledge of the Contributor Parties,
except as set forth on Schedule 8.01(n), no Contributor has received any
written notice from any insurance company of any defect or inaccuracies
in any of the Properties, or any parts thereof, which would adversely
affect the insurability of any of the Properties, or would increase the
cost of insurance beyond that which would ordinarily and customarily be
charged for similar properties in the vicinity of such Properties.
(o) Service Agreements
(i) The Contributors have delivered to the Partnership a
current, complete and correct copy of each of the agreements (the
"Service Agreements") described on Schedule 8.01(o). To the Knowledge of
the Contributor Parties, except as disclosed on Schedule 8.01(o): (i)
there are no agreements with respect to the operation, management,
development, leasing, maintenance or servicing of any of the Properties;
(ii) as of Closing all amounts due under each Service Agreement will have
been paid by the Contributors or pro-rated pursuant to Section 4.03; and
(iii) none of the Contributors has received any written notice from any
party to any Service Agreement claiming the existence of any default or
breach thereunder by a Contributor which would have a Material Adverse
Effect on such Contributor or the relevant Property and no event or
omission has occurred which, with the giving of notice or the lapse of
time or both would constitute such a default.
(p) The Undeveloped Business Properties. In addition to the
foregoing representations and warranties applicable generally to all the
Properties (including, except where expressly otherwise provided, the
Undeveloped Business Properties), the Contributors represent and warrant
as follows with respect to the Undeveloped Business Properties:
(i) Vacant Land. There are no leases, tenancies, licenses
or other rights of occupancy or use created by the Contributors (or, to
the Knowledge of Contributor Parties, created by others) for any portion
of the Undeveloped Business Properties, and no management, service,
equipment, supply, maintenance, employment or concession agreements with
respect to or affecting the Undeveloped Business Properties, except for
any such rights and agreements that are terminable without cause or
penalty upon thirty (30) days' notice or less and except for the Service
Agreements shown on Schedule 6.02 and the matters set forth on
Schedule 6.01.
(ii) No Violations. To the Knowledge of the Contributor
Parties, no written notice has been served on any Contributor by any
governmental authority requiring or calling attention to the need for any
work on or with respect to the Undeveloped Business Properties or any
roads, highways, streets, avenues or alleys abutting the same.
(iii) Certain Private Contractual Obligations. Except as
disclosed on Schedule 8.01(p)(iii), there are no private contractual
obligations to which any Contributor is a party relating to the
installation of or connection to any sanitary sewers, storm sewers or
roads.
8.02 Representations and Warranties of the Partnership and the Trust.
The Partnership and the Trust jointly and severally represent and warrant
to the Contributors as follows:
(a) Organization; Authority. The Partnership is a partnership
duly formed and subsisting under the laws of the Commonwealth of
Pennsylvania. The Trust is a duly formed and validly subsisting real
estate investment trust under the laws of the State of Maryland. Each of
the Trust and the Partnership has full power and authority to carry on
its business as it is now being conducted.
(b) Due Authorization; Binding Agreement. The execution,
delivery and performance of all transactions, obligations and other
agreements contemplated by this Agreement by the Partnership and the
Trust have been duly and validly authorized by all necessary partnership
and trust action, respectively. This Agreement has been duly executed
and delivered by the authorized representatives of the Partnership and
the Trust and constitutes a legal, valid and binding obligation of each.
(c) Consents and Approvals. Except as contemplated under the
Contributors Rights Agreement, no consent, waiver, approval or
authorization of, or filing, registration or qualification with, or
notice to any governmental unit or any other person is required to be
made, obtained or given by the Partnership or the Trust prior to or as a
condition to the execution, delivery and performance of any of the
transactions, obligations and other agreements contemplated by this
Agreement, except as shall have been obtained by Closing.
(d) No Violation. None of the execution, delivery or
performance of any of the transactions, obligations and other agreements
contemplated by this Agreement by the Partnership or the Trust will, with
or without the giving of notice, lapse of time or both, (i) violate,
conflict with or constitute a default under any term or condition of the
organizational documents of the Partnership or the Trust or any material
provision of any contract or indenture or (ii) any terms or provisions of
any judgment, decree, order, statute, injunction, ruling, or regulation
of any governmental unit applicable to the Partnership or the Trust.
(e) Securities Filings. Each of the Trust and the Partnership
has filed all required documents with the SEC since January 1, 1997
including, without limitation, the Annual Report on Form 10-K for the
year ended December 31, 1996 of the Trust and the Partnership
(collectively, the "LPT SEC Documents"). As of their respective dates,
the LPT SEC Documents complied in all material respects with the
requirements of the Securities Act or the Exchange Act, as the case may
be, and, at the respective times they were filed, none of the LPT SEC
Documents contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading. The consolidated financial statements
(including, in each case, any notes thereto) of the Trust and the
Partnership included in the LPT SEC Documents complied as to form in all
material respects with applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, were
prepared in accordance with generally accepted accounting principles
(except, in the case of the unaudited statements, as permitted by Form
10-Q of the SEC) applied on a consistent basis during the periods
involved (except as may be indicated therein or in the notes thereto) and
fairly presented in all material respects the consolidated financial
position of the Trust and the Partnership as at the respective dates
thereof and the consolidated results of their operations and their
consolidated cash flows for the periods then ended (subject, in the case
of unaudited statements, to normal year-end audit adjustments and to any
other adjustments described therein). Except as disclosed in the LPT SEC
Documents or as required by generally accepted accounting principles,
neither the Trust nor the Partnership has, since January 1, 1996, made
any change in the accounting practices or policies applied in the
preparation of financial statements.
(f) Absence of Certain Changes or Events. Except as disclosed
in LPT SEC Documents filed with the SEC prior to the date of this
Agreement, since January 1, 1996, neither the Trust nor the Partnership
has sustained any loss or interference with its business or properties
from fire, flood, windstorm, accident or other calamity (whether or not
covered by the insurance) that has had a Material Adverse Effect on the
Trust or the Partnership, and there has been no event causing a Material
Adverse Effect on the Trust or the Partnership, excluding any changes and
effects resulting from changes in economic, regulatory or political
conditions or changes in conditions generally applicable to the industry
in which the Trust or the Partnership is involved.
(g) No Intent to Refinance or Prepay the Replacement Financing.
As of the date of Initial Closing, neither the Partnership nor the Trust
plans to refinance the Replacement Financing or to repay the same any
faster than required by the terms and conditions thereof.
8.03 No Other Warranties. The Partnership and the Trust hereby
acknowledge that, except as expressly set forth herein, the Contributor
Parties have made no representations with respect to the Properties or
any matter relating thereto in any manner whatsoever, and that the
Partnership is purchasing the Properties on an "as-is" basis without
relying on any representations other than those expressly made herein.
ARTICLE IX
ADDITIONAL AGREEMENTS
9.01 Operation of the Properties Pending the Closing. Between the
date hereof and the Closing Date:
(a) Condition of Business Rental Properties. Each Contributor
shall maintain its Business Rental Properties in substantially the same
condition as exists on the date hereof, ordinary wear and tear excepted.
The Contributors will not in any manner materially alter the condition of
the Business Rental Properties, such as, without limitation, the removal
therefrom of soil or other ground conditions or the making of any changes
or alterations to the buildings and improvements thereon.
(b) Contracts; Leases. No Contributor shall enter into any
contract for services provided to or for the benefit of the Business
Rental Properties which shall not terminate by its terms on or before the
Closing Date or which cannot be terminated at the Closing without cost,
penalty or premium, and shall not enter into any lease for any portion of
the Business Rental Properties without first obtaining the Partnership's
prior written consent, as described in Section 6.01.
(c) Mechanic's Liens. All payments required to be made to
contractors, subcontractors, mechanics, materialmen and all other persons
in connection with work done or services performed prior to Closing with
respect to the Business Rental Properties shall be made by the
Contributors as and when due, but in any event at or prior to the
Closing.
(d) Notices. Each Contributor shall promptly deliver to the
Partnership and the Trust a copy of (i) any tax bill, notice or
assessment, or written notice of change in a tax rate or assessment
affecting its Business Rental Properties, (ii) any written notice or
claim of violation of any Applicable Law, (iii) any written notice of any
taking or condemnation affecting or relating to its Business Rental
Properties, (iv) any written notice instituting or asserting any material
claim, action, investigation or proceeding affecting the Business Rental
Properties, and (v) any other written notice materially affecting or
relating to its Business Rental Properties, but in each case only to the
extent received by such Contributor. The Contributors shall also
promptly deliver to the Partnership and the Trust written notice of any
material casualty affecting the Business Rental Properties.
(e) Responsibility for Assessments. If, at or prior to the
Closing, the Business Rental Properties or any part thereof shall be or
shall have been affected by an assessment or assessments which are or may
become payable in installments, then the installments shall be prorated
and the Contributors shall pay at Closing the portion of the installments
which are attributable to periods prior to Closing, and the Partnership
shall be responsible to pay the portion of the assessment(s) attributable
to periods from and after Closing.
(f) Investigation. Subject to the rights of Tenants, each
Contributor Party shall afford the Partnership and its representatives
full access to its Business Rental Properties, to all files, records and
other information relevant to its Business Rental Properties as they
shall reasonably request, and the Partnership shall have the right to
perform such tests and studies (including without limitation
topographical studies, soils tests and engineering, environmental and
other tests), prepare such plans and surveys and make such applications,
inquiries and searches of governmental records as they shall deem
necessary or appropriate in connection with their evaluation of the
Business Rental Properties, and the Contributor Parties shall cooperate
fully with such investigation of the Business Rental Properties, at no
cost to the Contributor Parties. With respect to material damage to the
Business Rental Properties caused by the Partnership, the Trust or their
representatives during any such investigation, the Partnership and the
Trust shall restore such damaged areas to substantially the same
condition existing prior to such investigation.
(g) Compliance with Obligations. The Contributors shall comply
in all material respects with all of their obligations under the Leases,
the Service Agreements and any other material agreements and contractual
arrangements by which the Business Rental Properties are bound or
affected.
(h) Actions. The Contributor Parties will not wilfully take any
action which would render materially untrue any of the representations or
warranties of the Contributor Parties herein contained, and not omit to
take any action, the omission of which would render materially untrue any
such representation or warranty, but this provision shall automatically
expire at Closing.
9.02 Operations Relating to the Undeveloped Business Properties
Pending the Land Closings. Between the date hereof and the dates of the
respective Land Closings:
(a) Condition of Undeveloped Business Properties. The
Contributors shall not materially alter the condition of the Undeveloped
Business Properties, such as, without limitation, the removal therefrom
of soil or change of grade or other ground conditions. Furthermore, the
Contributors shall have no obligation to make any improvements to any of
the Undeveloped Business Properties.
(b) Contracts; Leases. The Contributors shall not enter into
any contract affecting the Undeveloped Business Properties which shall
not terminate by its terms on or before a respective Land Closing or
which cannot be terminated at such Closing without any cost, penalty or
premium that is not paid by a Contributor, and shall not enter into any
lease for any portion of the Undeveloped Business Properties.
(c) Notices. Each Contributor shall promptly after receipt
thereof deliver to the Partnership and the Trust a copy of (i) any tax
bill, notice or assessment, or written notice of change in a tax rate or
assessment affecting its Undeveloped Business Properties, (ii) any
written notice or claim of violation of any Applicable Law, (iii) any
written notice of any taking or condemnation affecting or relating to its
Undeveloped Business Properties, (iv) any written notice instituting or
asserting any material claim, action, investigation or proceeding
affecting the Undeveloped Business Properties, or (v) any other written
notice materially affecting or relating to its Undeveloped Business
Properties, but in each case only to the extent received by such
Contributor. The Contributors shall also promptly deliver to the
Partnership and the Trust written notice of any material casualty
affecting the Undeveloped Business Properties.
(d) Responsibility for Taxes, Assessments and Maintenance Costs.
Except as set forth below with respect to real estate taxes, the
Partnership shall bear all special and general assessments, maintenance
costs (including lawn mowing and landscaping), insurance premiums,
assessments and contributions under recorded instruments, association
dues and all other ordinary and necessary costs of owning and operating
the Undeveloped Business Properties incurred for periods after the
Initial Closing, and Land Seller shall pay when due all such costs for
periods prior to the Initial Closing. Land Seller shall pay when due
real estate taxes with respect to the Undeveloped Business Properties for
all periods prior to the date (the "Cut-Off Date") which is 18 months
after the Initial Closing Date or, with respect to any Undeveloped
Business Property conveyed to the Partnership or its Designee hereunder
prior to the Cut-Off Date, the date of the respective Land Closing with
respect thereto. The Partnership shall pay when due all other real
estate taxes imposed for periods after the Initial Closing Date with
respect to the Undeveloped Business Properties. In implementation of the
foregoing provisions as applicable to Undeveloped Business Properties
that have not been conveyed to the Partnership prior to the Cut-Off Date:
(i) on or after the Cut-Off Date, the Contributors shall forward from
time to time to the Partnership invoices, supported with copies of tax
bills, for that portion of the real estate tax obligation for such
Undeveloped Business Properties that relates to periods after the Cut-Off
Date, and the Partnership shall pay such invoice promptly after receipt
thereof; and (ii) the Partnership and the respective Contributor shall
direct that all real estate tax bills for tax years after the Cut-Off
Date be addressed directly to the Partnership, and such invoices shall be
paid directly by the Partnership. The Partnership shall provide to the
Contributors, promptly after payment, copies of receipts evidencing the
payment of such tax bills. To the extent that provisions of this
paragraph are inconsistent with the proration provisions of Section 4.03,
the provisions hereof shall govern the prorations of costs at the Land
Closings.
(e) Cooperation. At the request of the Partnership or the
Trust, from the date of this Agreement until the earlier to occur of the
tenth anniversary of the Initial Closing Date or the date on which the
Land Purchase Price has been paid in full, the Contributors shall
cooperate with and assist the Partnership and the Trust, at the sole cost
and expense of the Partnership and the Trust, in obtaining any permits or
other approvals required for their intended subdivision, resale or
development of the Undeveloped Business Properties but in all events in a
manner reasonably consistent with the then existing development of the
business parks in which the relevant Undeveloped Business Properties are
located, and in granting such easements and rights-of-ways as may be
necessary or appropriate in order to provide the Undeveloped Business
Properties with access to utilities, storm and sanitary sewage, roadways
and other services reasonably necessary or appropriate to the development
of the Undeveloped Properties in a manner reasonably consistent with the
development of the Undeveloped Business Properties as
office/industrial/flex/warehouse buildings of a type generally similar to
the Business Rental Properties but in all events in a manner reasonably
consistent with the then existing development of the business parks in
which the relevant Undeveloped Business Properties are located. The
Contributors consent to the Partnership's and the Trust's procurement of
such permits or other approvals with respect to the Undeveloped Business
Properties prior to the Land Closings provided that no such permit shall
be binding upon such Property until the respective Land Closing, and
further consent to the Partnership's and the Trust's granting of such
easements and rights-of-way as aforesaid and agree to execute,
acknowledge and deliver (at no cost to the Contributors) instruments in
customary form creating or confirming the grant of such easements and
rights-of-way.
(f) Investigation. The Contributors shall afford the
Partnership, the Trust and their representatives full access to the
Undeveloped Business Properties, to all files, records and other
information relevant to the Undeveloped Business Properties as they shall
reasonably request, and the Partnership and the Trust shall have the
right to perform such tests and studies (including without limitation
topographical studies, soils tests and engineering, environmental and
other tests), prepare such plans and surveys and make such applications,
inquiries and searches of governmental records as they shall deem
necessary or appropriate in connection with their evaluation of the
Undeveloped Business Properties, and the Contributors shall cooperate
fully with such investigation of the Undeveloped Business Properties, at
no cost to the Contributors. With respect to material damage to the
Undeveloped Business Properties caused by the Partnership, the Trust or
their representatives during any such investigation, the Partnership and
the Trust shall restore such damaged areas to substantially the same
condition existing prior to such investigations.
(g) Signs. Without the prior written consent of the Contributor
Parent (which shall not be unnecessarily withheld), the Partnership shall
not place any signs upon any Undeveloped Business Property prior to the
purchase of such Property by the Partnership or its Designee.
9.03 Public Announcements. The Partnership and the Trust on the one
hand, and the Contributors on the other hand, will consult with each
other before issuing any press release or otherwise making any public
statement with respect to this Agreement or the transactions contemplated
hereby, and no party shall issue any press release or make any such
public announcement prior to such consultation, except as may be required
by law, the Securities and Exchange Commission or by the securities
exchange on which the Shares are then traded.
9.04 Woodland Building G; 3875 Faber Place. If at the time of the
Initial Closing either: (a) the respective Contributor has not reimbursed
Metro Fiber Systems of Florida, Inc. ("Woodland Tenant") for work being
performed by the Woodland Tenant on the Property identified as Woodland
Building G, or (b) the respective Contributor has not paid all Tenant
Costs incurred in connection with the lease executed on or about the date
of this Agreement with a Tenant (the "Faber Tenant") with respect to
space in the Property identified as 3875 Faber Place, then in either or
both of such events the Partnership and the Trust shall nevertheless be
required to complete Closing (assuming all other conditions to Closing
are satisfied). In such event: (a) the Contributors shall remain liable
after Closing to pay all Tenant Costs with respect to the Woodland Tenant
and the Faber Tenant, and (b) one or more of the Contributors shall
deposit with the Title Company at the Initial Closing the sum of
$522,408.50 (with respect to the Woodland Tenant) and/or $200,000 (with
respect to the Faber Tenant), to be held pursuant to a mutually
acceptable Escrow Agreement providing for periodic disbursements, in
order to secure the compliance by the Contributors with their obligations
under this Section. In addition, one or more of the Contributors shall
deposit with the Title Company at the Initial Closing the sum of $50,000
(the "Deposit"), to be held pursuant to a mutually acceptable Escrow
Agreement providing that if a letter of intent with a prospective tenant
for Suite 200, 4055 Faber Place shall be entered into within six months
after the Initial Closing and within seven months after the Initial
Closing the Partnership shall have entered into a lease pursuant thereto,
and if such lease is on market terms for a term of at least one year,
then (a) if said lease provides for an average annual gross rent equal to
not less than $50,000, then the entire Deposit shall be distributed to
such Contributor, and (b) if said lease provides for an average annual
gross rent of less than $50,000, then an amount equal to the difference
between such average annual gross rent and $50,000 shall be distributed
to the Partnership and the balance of the Deposit shall be distributed to
such Contributor. If the aforesaid letter of intent and lease shall not
have been entered into within the time periods specified above, then the
Deposit shall be distributed to the Partnership.
9.05 Financial Information SEC Filings;
(a) Contributor Parent and the Contributors shall promptly, at
the request of the Partnership and at the expense of the Partnership,
make available to the Partnership the historical financial information in
their possession regarding the operation of the Business Rental
Properties to the extent the Partnership needs such information to
prepare stand-alone financial statements for such operations in
accordance with generally accepted accounting principles, as of the end
of fiscal year 1996. Contributor Parent and the Contributors agree to
cooperate with the Partnership and any auditor engaged by the Partnership
to audit such financial statements.
(b) Promptly after filing them with the SEC, the Trust and the
Partnership will provide copies to the Contributor Parent of all of the
LPT SEC Documents filed after the date hereof.
9.06 Post-Closing Covenants of the Partnership and the Trust.
(a) No Sale of Contributed Business Rental Properties. The
Partnership shall not dispose of any of the Contributed Business Rental
Properties (except for the Woodfield Spec One Building referred to in
Section 2.01) in a transaction that is taxable, in whole or in part, for
federal income tax purposes at any time on or before the fifth
anniversary of the date of the Initial Closing.
(b) No Distribution of Contributed Business Rental Properties.
The Partnership shall not distribute any of the Contributed Business
Rental Properties to any partner of the Partnership at any time on or
before the fifth anniversary of the date of the Initial Closing (or, in
the case of any Contributed Business Rental Property contributed to the
Partnership at a later Closing, the fifth anniversary of such Closing).
(c) No In-Kind Distribution to Contributors. The Partnership
shall not distribute any property (other than cash) to any Contributor
that is a partner of the Partnership at any time on or before the fifth
anniversary of the date of the Initial Closing (or, if any Contributed
Business Rental Property is contributed to the Partnership at a later
Closing, the fifth anniversary of such Closing), without the prior
written consent of such Contributor, which consent may be withheld for
any reason or for no reason.
(d) No Prepayment of Replacement Financing. On or before the
second anniversary of the date of the Initial Closing, the Partnership
shall not refinance or repay the Replacement Financing and shall not make
any voluntary prepayment of principal or interest thereon.
(e) Right to Guarantee Other Partnership Debt. The Partnership
grants the Contributors of the Contributed Business Rental Properties the
right, but not the obligation, to guarantee Partnership indebtedness in
an amount not to exceed $36,643,750, which is sufficient to permit the
Contributors to avoid a constructive cash distribution to any of them
under Section 752 of the Code pursuant to a guaranty agreement in form
acceptable to the Contributors. Each such Contributor shall have such
rights during the period of time that such Contributor is a partner in
the Partnership. No Contributor shall have a right of contribution
against any other partner of the Partnership to recoup any portion of a
lender's recovery under such guaranty agreement. The Partnership agrees
to cooperate with any Contributor desiring to guarantee partnership
indebtedness pursuant hereto and shall use its reasonable efforts to
ensure that the lender under any such indebtedness will accept each such
guaranty agreement.
(f) Traditional Allocation Method. With respect to the
Contributed Business Rental Properties, the Partnership shall use the
traditional method of making Section 704(c) allocations, in accordance
with Treasury Regulation Section 1.704-3(b).
ARTICLE X
NOTICES
10.01 Addresses. All notices, demands, requests or other
communications required or permitted under the terms of this Agreement
shall be in writing and, unless and until otherwise specified in a
written notice by any party addressed to and delivered in the manner set
forth in this Section 10.01, shall be sent to the parties at the
following addresses:
if intended for any of the Contributor Parties:
The Liberty Corporation
2000 Wade Hampton Boulevard
Greenville, SC 29615
Attention: Martha G. Williams, Esquire
Fax: 864-609-3176
with a copy delivered in the
manner provided to:
F. Louise Adams, Esquire
Sutherland, Asbill & Brennan, L.L.P.
999 Peachtree Street, N.E.
Atlanta, GA 30309-3996
Fax: 404-853-8806
if intended for the Trust or
the Partnership:
Liberty Property Trust
65 Valley Stream Parkway
Suite 100
Malvern, PA 19355
Attention: Joseph P. Denny, President
Fax: (610) 644-4129
with a copy sent in the
manner provided to:
Herman C. Fala, Esquire
Wolf, Block, Schorr and Solis-Cohen
S.E. Corner 15th and Chestnut Sts.
Philadelphia, PA 19102
Fax: (215) 977-2346
10.02 Manner of Sending Notices. Each such notice, demand, request or
other communication shall be deemed to have been properly served for all
purposes if: (a) hand delivered against a written receipt of delivery;
(b) mailed by registered, certified or express mail of the United States
Postal Service, return receipt requested, postage prepaid; (c) delivered
to a nationally recognized overnight courier service for next business
day delivery, to its addressee at the address set forth above in this
Section; or (d) delivered via telecopier or facsimile transmission to the
facsimile number listed in this Section, provided, however, that if such
communication is given via telecopier or facsimile transmission, an
original counterpart of such communication shall be sent no later than
the next business day in the manner specified in clause (a), (b) or (c)
of this Section 10.02. Each such notice, demand, request or other
communication shall be deemed to have been received by its addressee upon
the earlier of: (i) actual receipt (which, in the case of facsimile
transmission, may be evidenced by voice or electronic confirmation) or
refusal by the addressee or others in the addressee's organization; or
(ii) one (1) business day after delivery to the courier if sent pursuant
to clause (c) above.
ARTICLE XI
CASUALTY AND CONDEMNATION
11.01 Insurance. Each Contributor shall maintain in full force and
effect until the Closing Date the fire and extended coverage insurance
policies now in effect on the Properties of such Contributor.
11.02 Casualty; Risk of Loss. In the event that any building on a
Property shall have been materially damaged by fire or other casualty
prior to the conveyance of such Property hereunder, the Contributors
shall promptly notify the Partnership. If either (a) the terms of the
lease or leases of any tenant or tenants whose base rents represent in
the aggregate more than twenty percent (20%) of the base rent for such
Property would permit such tenant or tenants to terminate their leases,
or (b) the cost of restoration exceeds twenty percent (20%) of the value
of such Property, the Trust and the Partnership shall have the right to
provide written notice (the "Termination Notice") to the Contributor
Parent that the Partnership desires to terminate this Agreement as to
such Property. If the Partnership does not send a Termination Notice,
the Contributor shall, unless it elects to restore pursuant to the next
sentence, prior to Closing, clear the site of debris and pay to the
Partnership at settlement the amount of all insurance proceeds received
by the Contributors (reduced by the costs of clearing the site and
recovering the insurance proceeds) plus the deductible amount under the
relevant insurance policy, and shall assign to the Partnership at Closing
the Contributor's entire interest in and right to receive all insurance
proceeds payable in connection with such casualty, without any reduction
in the Purchase Price by reason of such assignment. If the Partnership
sends a Termination Notice as aforesaid, the Contributor Parent shall
have the right to nullify such termination, by providing written notice
to the Partnership, within ten business days after the Contributor
Parent's receipt of the Termination Notice (but in any event prior to the
scheduled date for Closing), stating that the Contributors desire to
contribute such Property and agree, within a period of 120 days after the
date scheduled for Closing of such Property, to complete the restoration
of the Property substantially to its condition prior to the casualty and
to obtain the written confirmation of all tenants of such Property that
their leases shall remain in full force and effect notwithstanding the
casualty and restoration. Thereupon, the closing of the conveyance of
such Property shall be deferred until the completion of such restoration
and the obtaining of such tenant confirmations, the completion and
receipt of which within the 120-day period as aforesaid shall be a
condition to the Partnership's obligation to consummate the purchase of
Property. In such event, a portion of the Contribution Consideration
allocated to such Property pursuant to Section 2.05 shall be deferred and
shall be paid at the Extended Closing. If the Partnership issues a
Termination Notice and the Contributor Parent does not elect to nullify
such notice, or if the Partnership thereafter terminates this Agreement
for failure of the Contributors to timely complete the restoration work
and obtain the tenant confirmations as aforesaid, this Agreement shall be
null and void as to the Property to affected and as to the portion of the
Contribution Consideration allocable thereto. Each Contributor will
certify to the Trust and the Partnership at the respective Closing that
to its knowledge, no material damage by fire or other casualty has
occurred, or, if such has occurred, will describe in writing the nature
and extent of such damage and whether such damage has been restored.
11.03 Condemnation.
(a) If any of the Business Rental Properties or any material
part thereof shall be taken by the exercise of the power of eminent
domain after the date hereof and prior to the conveyance of such Property
hereunder, this Agreement may be terminated by the Trust and the
Partnership as to such Property by written notice to the applicable
Contributors. In the event of such termination, none of the Trust, the
Partnership or such Contributor shall have any further rights or
obligations under this Agreement and as to such Properties, but as to all
other parties and as to any other Properties this Agreement shall remain
in full force and effect and there shall be an equitable reduction in the
Contribution Consideration. If this Agreement as to such Properties is
not so terminated, then this Agreement as to such Properties shall
continue in full force and effect and there shall be no change in the
Purchase Price, and thereafter the Partnership shall have the sole
authority to negotiate and settle all claims, disputes and awards with
respect thereto. As of Closing, each Contributor shall cause all of such
Contributor's rights and claims to any awards arising therefrom as well
as the amount of any money theretofore received by such Contributor on
account thereof, net of any expenses incurred by such Contributor,
including, without limit thereto, reasonable counsel fees, in collecting
the award and costs of restoration paid or incurred, to be part of the
assets of such Contributor contributed to the Partnership. As of
Closing, each Contributor shall transfer to the Partnership all of such
Contributor's rights and claims (less reasonable repair and restoration
costs theretofore paid or incurred by such Contributor) to any awards
arising therefrom as well as the amount of any money theretofore received
by such Contributor on account thereof, net of any expenses incurred by
such Contributor, including, without limit thereto, reasonable counsel
fees, in collecting the award. With respect to any such taking after the
date of this Agreement, the affected Contributor shall furnish to the
Partnership a copy of the declaration of taking promptly after
Contributor's receipt thereof.
(b) If any of the Undeveloped Business Properties or any portion
thereof shall be taken by the exercise of the power of eminent domain
after the date hereof: (i) such event shall not affect or impair the
rights and obligations of the parties hereunder, except that the
Contributors shall be excused from conveying that portion of the
Properties so taken; (ii) the Partnership or its Designee shall have the
sole authority to negotiate and settle all claims, disputes and awards
with the condemning authority and to retain all awards resulting from
such condemnation; and (iii) there shall be no change in the Land
Purchase Price.
(c) Each Contributor will certify to the Trust and the
Partnership at Closing that no such taking has occurred, or, if such has
occurred will describe in writing the nature and extent of such taking.
ARTICLE XII
MISCELLANEOUS
12.01 Brokers. The Trust and the Partnership jointly and severally
represent and warrant to the Contributors that they have dealt with no
broker or other intermediary in connection with the transactions
contemplated by this Agreement, with the exception of CB Commercial,
whose fees shall be paid by the Partnership. The Contributors jointly
and severally represent and warrant to the Partnership and the Trust that
they have dealt with no broker or other intermediary in connection with
the transactions contemplated by this Agreement, with the exception of CB
Commercial. In the event that any broker or other intermediary claims to
have dealt with any of the Contributors or with the Trust or the
Partnership in connection with the transactions contemplated by this
Agreement, to have introduced the Properties to the Trust or the
Partnership for contribution or sale, or to have been the inducing cause
of the contribution or sale, each of the Contributors and the Trust and
the Partnership shall indemnify, defend and save the others harmless from
and against any claim for commission or compensation by such broker or
other intermediary, as well as all costs and liabilities incurred by the
others by reason thereof, if its representation or warranty above is
false.
12.02 Successors and Assigns. This Agreement shall bind and inure to
the benefit of the parties hereto and their respective heirs, executors,
personal representatives, successors and assigns. Except to the extent
this Agreement permits the Partnership to designate a Designee to receive
title to the Undeveloped Business Properties, this Agreement and the
rights arising hereunder may not be assigned by any party without the
consent of the other parties hereto (provided that the Contributor Parent
shall have the authority to consent or withhold consent on behalf of all
of the Contributors as attorney-in-fact).
12.03 Captions or Headings; Cross-References. The captions or
headings of the Sections 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. References in this Agreement to
Sections and paragraphs are references to Sections and paragraphs of this
Agreement, unless expressly stated to the contrary. References in this
Agreement to Exhibits and Schedules are, unless expressly stated to the
contrary, references to Exhibits and Schedules to this Agreement, each of
which is part of this Agreement.
12.04 Amendments. No change, alteration, amendment, modification or
waiver of any of the terms or provisions of this Agreement shall be
valid, unless in writing and signed by the parties to this Agreement who
are or will be affected thereby.
12.05 Applicable Law. This Agreement shall be governed and construed
according to the laws of the jurisdiction in which the Properties are
located as to the contribution or purchase of such Properties and by the
laws of the Commonwealth of Pennsylvania as to all other matters arising
hereunder.
12.06 Survival of Representations and Warranties. Except where it is
expressly provided that a representation or warranty shall not survive
Closing, all representations and warranties contained in this Agreement
shall survive Closing or a respective Land Closing for a period one (1)
year, and shall expire after such period except with respect to claims
asserted in writing, with reasonable specificity as to the facts giving
rise to such claim, prior to the end of such period. Furthermore, in no
event shall there be any liability for any breach of any representation
or warranty even if a claim therefor has been submitted within such
one-year period, unless either: (a) the basis of such claim has been
resolved to the mutual satisfaction of the relevant parties hereto or (b)
legal action with respect thereto has been commenced, in either case
within two (2) years after the relevant Closing or Land Closing.
12.07 Indemnification.
(a) To the extent and in the manner provided in this Section
12.07, the Contributor Parties hereby jointly and severally agree to
indemnify and hold harmless the Trust, the Partnership, each Affiliate of
the Trust or of the Partnership and their respective heirs, successors,
employees, officers, agents, trustees, directors, personal
representatives and assigns (each, a "Trust Indemnified Party" and
collectively, the "Trust Indemnified Parties") from, against and in
respect of all demands, claims, actions or causes of action, assessments,
taxes, losses, fines, penalties, damages, liabilities, costs and expenses
(including, without limitation, reasonable attorneys' fees and expenses,
costs of litigation and reasonable fees and expenses of accountants) and
charges (collectively, "Losses") sustained or incurred:
(i) as a result of or arising out of any inaccuracy in or
breach of any representation, warranty or covenant of any of the
Contributor Parties in this Agreement, any assignment or other agreement
transferring assets or property (or interests therein), or in any other
agreement or certificate executed in connection with this Agreement or
with respect to the assignment, conveyance, contribution or transfer of
the Properties (or interest therein), assets, agreements, rights or other
instruments conveyed, assigned, contributed or otherwise transferred to
the Trust, the Partnership or any subsidiary of the Trust or the
Partnership; or
(ii) accruing and arising on or prior to the Closing Date
(or arising after the Closing Date but pertaining to the period on or
prior to the Closing Date) under the Leases, Service Agreements, and any
and all contracts as to which any of the Contributors is a party or by
which any of them is bound with respect to the Properties;
(b) To the extent and in the manner provided in this Section
12.07, the Partnership and the Trust jointly and severally agree to and
shall indemnify and hold harmless the Contributor Parties and their
Affiliates and their respective heirs, successors, employees, officers,
agents, trustees, directors, personal representatives and assigns from,
against and in respect of any and all Losses sustained or incurred:
(i) as a result of or arising out of any inaccuracy in or
breach of any representation, warranty or covenant of any of the Trust,
Partnership, subsidiary of the Trust or of the Partnership in this
Agreement, any assignment or other agreement transferring assets or
property (or interests) therein, or in any other agreement or certificate
executed in connection with this Agreement or with respect to the
assignment, conveyance, contribution or transfer of the Properties (or
interest therein), assets, agreements, rights or other instruments
conveyed, assigned, contributed or otherwise transferred to the Trust,
the Partnership or any subsidiary of the Trust or the Partnership; or
(ii) accruing and arising after the Closing Date (other
than those arising after the Closing Date and pertaining to the period
prior to the Closing Date) under the Leases, Service Agreements, and any
and all contracts assumed by the Partnership hereunder.
(c) If a claim arises as to which a party hereto is entitled to
indemnification hereunder (an "Indemnitee"), such Indemnitee shall give
prompt notice of such claim to the party obligated to indemnify the
Indemnitee (an "Indemnitor") specifying the details of such claim of Loss
(as to which notice to the Partnership shall be considered sufficient
notice as to all Indemnitors who are obligated to indemnify the
Indemnitees together with the Partnership, and as to which notice to the
Contributor Parent shall be considered sufficient notice as to all
Indemnitors who are obligated to indemnify the Indemnitee together with
the Contributor Parent, provided, however, that the failure to provide
notice as aforesaid shall not relieve an Indemnitor from its
indemnification obligations hereunder unless, and only to the extent,
that such failure materially prejudices the Indemnitor's defense with
regard to such claim).
(d) If notice of a claim for indemnification under Section
12.07(c) is asserted under this Section 12.07, the Indemnitor shall have
the right, at its own expense, to assume the defense of any claim, action
or proceeding ("Claim") asserted which resulted in the claim for
indemnification, and if such right is exercised, the Indemnitee shall
cooperate in the defense of such Claim, including, without limitation,
assigning any rights the Indemnitee may have against third parties with
regard to such Claim. Indemnification of the parties entitled to
indemnification hereunder pursuant to this Section 12.07 shall be the
exclusive remedy of such parties for any breach of any representation,
obligation, warranty or covenant of any Indemnitor and the liability of
all such parties shall be limited as expressly provided in this Section
12.07.
(e) The joint and several obligations of the Contributor Parties
as Indemnitors and the joint and several obligations of the Trust and the
Partnership as Indemnitors, respectively, are further subject to the
following limitations; provided, however, that the obligations of the
Partnership and the Trust under Section 3.03 of this Agreement or to the
obligations and any liability of the parties under or in connection with
the Contributors Rights Agreement, and no payments required pursuant to
Section 3.03 of this Agreement or pursuant to or in connection with the
Contributors Rights Agreement shall be counted for purposes of the
following limitations:
(i) There shall be no obligation unless and until the
aggregate amount of all Losses suffered by the party or parties to be
indemnified exceeds $1,000,000 and then only for Losses in excess of such
amount.
(ii) In no event shall the Contributor Parties
(collectively) or the Partnership and the Trust (collectively) be liable
for indemnification payments in an aggregate amount exceeding $4,000.000.
12.08 Further Assurances.At or after Closing or a respective Land
Closing, the Contributors shall execute and deliver to the Partnership,
or to any Designee, such other documents or instruments as in the
reasonable opinion of counsel for the Trust and the Partnership may be
necessary to effectuate the transactions described in this Agreement and
to transfer the Properties as contemplated by this Agreement, provided
that such documents or instruments do not increase the liability of any
of the Contributors under this Agreement.
12.09 Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all together shall
constitute one and the same Agreement.
12.10 Limited Liability of Trustees of the Trust. Notwithstanding
anything to the contrary contained herein, the trustees of the Trust
shall have no personal liability or recourse of any nature under this
document. The other party or parties hereto shall look solely to the
assets of the Trust to satisfy any liability or recourse hereunder.
12.11 Time of the Essence. Time is of the essence of this Agreement.
In computing the number of days for purposes of this Agreement, all days
shall be counted, including Saturdays, Sundays and holidays (other than
where business days are expressly specified); provided, however, that if
the final day of any time period provided in this Agreement shall end on
a Saturday, Sunday or legal holiday, then the final day shall extend to
5:00 p.m. of the next full business day. For the purposes of this
Section, the term "holiday" shall mean a day other than a Saturday or
Sunday on which banks in any of the states in which the Real Property is
located are or may elect to be closed.
12.12 Entire Agreement. This Agreement and the Exhibits and Schedules
hereto and the other agreements required to be executed hereby contain
the entire understanding of the parties with respect to the subject
matter hereof, and supersede all prior or other negotiations,
representations, understandings and agreements of, by or among the
parties, express or implied, oral or written, which are fully merged
herein. The express terms of this Agreement control and supersede any
course of performance or customary practice inconsistent with any such
terms. Any agreement hereafter made shall be ineffective to change,
modify, discharge or effect an abandonment of this Agreement unless such
agreement is in writing and signed by the party against whom enforcement
of such change, modification, discharge or abandonment is sought.
12.13 Execution via Telecopier. Executed counterparts of this
Agreement transmitted by telecopier shall be deemed to constitute an
original for all purposes.
12.14 Confidential Information. Except as otherwise provided in this
Agreement, the Partnership agrees that prior to Closing any information
provided to the Partnership by the Contributors in the transactions
contemplated by this Agreement or obtained by the Partnership from its
examinations and inspections will be kept confidential by it and its
affiliates, agents, advisors and employees; provided, however, that
disclosure of such information may be made: (i) to any present or
prospective sources of financing on a need to know basis, subject to
customary confidentiality provisions; (ii) to the extent that the same
shall have or otherwise become publicly available other than as a result
of a disclosure by the Partnership or its Designee(s) or their
Affiliates; (iii) to the extent required to be disclosed by law or during
the course of any litigation, hearing or other legal proceeding; (iv)
with the written consent of a Contributor; or (vi) to the extent the
Partnership or the Trust is required to make such releases or
announcements by reason of the Trust being a public company. If Closing
does not occur, the Partnership and the Trust shall return all
confidential information to the Contributors. The provisions of this
section shall survive the termination of this Agreement in the event that
Closing does not take place.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement as of the day and year first above written.
Contributor Parties:
THE LIBERTY CORPORATION, a
South Carolina corporation
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
LIBCO OF FLORIDA, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
LPC OF S.C., INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
SOUTHCHASE DEVELOPMENT CORPORATION
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
COMMERCE CENTER OF GREENVILLE, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
PARK AVENUE ASSOCIATES, INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
LIBERTY LIFE INSURANCE COMPANY
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
The Partnership:
LIBERTY PROPERTY LIMITED PARTNERSHIP,
a Pennsylvania limited partnership
By: Liberty Property Trust,
a Maryland real estate investment trust
and sole general partner
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
The Trust:
LIBERTY PROPERTY TRUST,
a Maryland real estate investment trust
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
EXHIBIT 10.11
CONTRIBUTORS RIGHTS AGREEMENT
This Contributor Rights Agreement (this "Agreement") is made as of the
day of May, 1997, by and among THE LIBERTY CORPORATION, a South
Carolina corporation (the "Contributor Parent"), the subsidiaries of
Contributor Parent identified on the signature page hereof as
Contributors and LIBERTY PROPERTY TRUST, a Maryland real estate
investment trust (the "Trust").
INTRODUCTION
A. The Contribution and Acquisition Agreement, dated as of March 5,
1997, as amended by Amendment No. 1 to Contribution and Acquisition
Agreement dated as of April 17, 1997, has been entered into by and among
the Contributor Parent and the Contributors (as defined therein),
Liberty Property Limited Partnership, a Pennsylvania limited partnership
(the "Partnership"), and the Trust (the "Contribution Agreement").
B. Under the terms of the Contribution Agreement, in addition to the
other consideration contemplated thereunder, the Contributors will be
issued certain interests of limited partnership ("Partnership
Interests") of the Partnership. In accordance with their terms, such
Partnership Interests will be convertible into Common Shares of
Beneficial Interest, $0.001 par value (the "Shares"), of the Trust.
Such issuances of Partnership Interests have not been registered under
the Securities Act. No current offer or sale of the Shares is being
made at this time, nor has any such offer or sale been registered under
the Securities Act. In certain circumstances provided in this
Agreement, the Contributors may elect to sell some or all of their
Partnership Interests to the Trust instead of converting them into
Shares.
C. In order to induce the Trust and the Partnership to enter into
the Contribution Agreement and to induce the Contributor Parent and the
Contributors to enter into the Contribution Agreement and to consummate
the transactions contemplated thereby, the Contributors and the Trust
hereby agree that this Agreement shall govern the rights and obligations
of the Contributors and the Trust with respect to the Partnership
Interests issued to the Contributors in accordance with the terms of the
Contribution Agreement, any Shares issuable upon the conversion of such
Partnership Interests and certain other matters, as set forth herein.
Certain Definitions. Unless the context otherwise requires, the
following terms shall have the respective meanings indicated:
(a) The term "AMEX" means the American Stock Exchange.
(b) The term "Available Registration" means any time during
which: (i) the Conversion Shelf Registration Statement, the Resale
Shelf Registration Statement or a Demand Resale Registration Statement
is effective, current in its disclosure and available, as the case may
be, for conversion of the Partnership Interests into registered Shares
or for the registered resale of any Shares acquired in a non-registered
conversion and (ii) the Trust has not exercised any of its rights
hereunder to require the Contributors to defer or suspend their reliance
on or other use of any such registration statement or to otherwise defer
or suspend any resales of the Shares.
(c) The term "Business Day" means any day that is not a
Saturday or Sunday or a day on which federal banking institutions in
Philadelphia, Pennsylvania are authorized or required by law or
executive order to close.
(d) The term "Change of Control" means:
(i) the first day on which the Continuing Trustees fail
to constitute at least a majority of the members of the Board of
Trustees of the Trust;
(ii) the time that the Trust first is notified or otherwise
determines that any person, entity or group, within the meaning of
Section 13(d)(3) or 14(d)(2) of the Exchange Act (other than any person
who was at the date hereof an officer or trustee of the Trust or a group
consisting of persons who were at the date hereof officers or trustees
of the Trust) has acquired direct or indirect beneficial ownership
(within the meaning of Rule 13d-3 under the Exchange Act) of 20% or more
of the outstanding Shares of the Trust, unless a majority of the
Continuing Trustees approves the acquisition not later than 10 business
days after the Trust first is so notified or makes such determination;
or
(iii) the first day on which any entity other than the
Trust becomes a general partner of the Partnership; provided, however,
that this will not prevent any entity at least 80% owned by the Trust
from becoming an additional general partner as long as: (A) the Trust
continues as a general partner and continues to own at least 80% of the
beneficial interests in such other entity; (B) the right to convert
Partnership Interests into Shares is not impaired in any way; and (C)
the Trust continues to qualify as an UPREIT.
(d) The term "Closing Date" means the date of the Initial
Closing (as defined in the Contribution Agreement) of the transactions
contemplated under the Contribution Agreement or, in the case of any
Partnership Interests issued at an Extended Closing (as defined in the
Contribution Agreement), means the date of such Extended Closing.
(e) The term "Closing Date Anniversary" means the first
Business Day that is on or after the one-year anniversary of the Closing
Date.
(f) The term "Continuing Trustees" means, as of any date of
determination, any member of the Board of Trustees of the Trust who (i)
was a member of that Board of Trustees on the date hereof, (ii) had been
a member of that Board of Trustees for the two years immediately
preceding such date of determination or (iii) was nominated for election
or elected to that Board of Trustees with the affirmative vote of the
greater of (x) a majority of Continuing Trustees who were members of
that Board at the time of such nomination or election or (y) at least
three Continuing Trustees (except any individual whose election,
nomination or initial assumption of office is in connection with an
actual or threatened election contest relating to the election of the
Trustees of the Trust, as such terms are used in Rule 14a-11 of
Regulation 14A promulgated under the Exchange Act).
(g) The term "Designated Event" means the earlier of: the
occurrence of, or the first public announcement or public filing
regarding a Change of Control or an action to cause the Shares not to be
listed for trading on (or, with respect to Nasdaq, included for
quotation in) at least one of the NYSE, the AMEX or Nasdaq.
(h) The term "Exchange Act" means the Securities Exchange Act
of 1934, as amended.
(i) The term "Fair Market Value" when used with respect to the
Shares or the Partnership Interests means the fair market value of the
number of Shares directly involved or the number of Shares into which
the applicable Partnership Interests are then convertible and shall be
based on, as of any Trading Day, the average of (i) the last reported
sales price regular way or, in case no such reported sale takes place on
such day, the average of the reported closing bid and asked prices
regular way, either case on the NYSE, for the five (5) most recent
consecutive Trading Days, or (ii) if the Shares are not listed or
admitted to trading on the NYSE, the last reported sales price regular
way, or in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, on the
principal national securities exchange on which the Shares are listed or
admitted to trading, or are included for quotation in Nasdaq, if the
Shares are not listed on any national securities exchange for the five
(5) most recent consecutive Trading Days, or (iii) if the Shares are not
listed or admitted to trading on any national securities exchange or
included for quotation in Nasdaq, the average of the closing bid and
asked prices for the five (5) most recent consecutive Trading Days, as
furnished by any NYSE member firm selected from time to time by the
Trust for that purpose.
(j) The term "First Conversion Date" when used with respect to
any Partnership Interests means the first date on which such Partnership
Interests become convertible, by their terms, into the Shares.
(k) The term "Form S-3" means such form under the Securities
Act as in effect on the date hereof or any registration form under the
Securities Act subsequently adopted by the SEC that permits inclusion or
incorporation of substantial information by reference to other documents
filed by the Trust with the SEC.
(l) The term "Initial Put Period" means the period commencing
on the Closing Date and ending at 5:00 p.m., Philadelphia time, on the
Business Day immediately preceding the Closing Date Anniversary.
(m) The term "Monthly Put Amount" means Partnership Interests,
subject to appropriate antidilution adjustments, comparable to those
provided in Section 9(b) with respect to the Shares, if the Partnership
takes any comparable action to effect a subdivision (including through
distribution of an additional number of Partnership Interests to the
holders of Partnership Interests) or combination of the number of its
outstanding Partnership Interests into a different number of Partnership
Interests. [Note: For clarity, the blank will be completed at Closing
with a number equal to 5% of the total number of Partnership Interests
to be acquired by the Contributors for the Contributed Business Rental
Properties.]
(n) The term "Nasdaq" means the Nasdaq National Market operated
by The Nasdaq Stock Market, Inc.
(o) The term "NYSE" means the New York Stock Exchange, Inc.
(p) The terms "register," "registered" and "registration" refer
to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or
ordering by the SEC of the effectiveness of such registration statement.
(q) The term "Registrable Securities" means (i) the Shares
issuable upon conversion of the Partnership Interests issued to the
Contributors in accordance with the terms of the Contribution Agreement
and (ii) any other Shares issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of such Shares, excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which such
person's rights under this Agreement are not assigned.
(r) The term "SEC" means the United States Securities and
Exchange Commission.
(s) The term "Securities Act" means the Securities Act of 1933,
as amended.
(t) The Term "Trading Day" means any Business Day on which the
NYSE, the AMEX or Nasdaq (depending on which of these is then the
principal market for the Shares) is open for trading.
(u) The term "Transfer Restricted Securities" means (i) the
Partnership Interests issued to the Contributors in accordance with the
terms of the Contribution Agreement until such Partnership Interests are
converted into Shares pursuant to the Conversion Shelf Registration
Statement and (ii) if the Shares are issued upon conversion of the
Partnership Interests without such issuance being registered by the
Conversion Shelf Registration Statement, shall also mean such Shares
until they are registered and disposed of in accordance with a Resale
Registration Statement pursuant to Section 4.
PUT OPTIONS.
The Contributor Parent shall have the right under each of the following
circumstances to require the Trust to repurchase from the Contributors
the Transfer Restricted Securities (the "Put Options").
(a) The Put Option may be exercised in part or in full by the
Contributor Parent one time, but not from time to time, by notice to the
Trust given not more than 30 days after the Contributor Parent receives
a copy of or otherwise learns of the first public announcement or the
first public filing regarding a Designated Event, provided that the
Contributor Parent receives such copy or otherwise learns of such
announcement or filing: (i) during the Initial Put Period or (ii) after
the Initial Put Period if there is not at that time an "Available
Registration" or (iii) after the Initial Put Period if there is an
Available Registration, but the volume restrictions in Section 9(a) will
prevent the Contributors from selling all of their Shares within 15
business days after receiving such copy or otherwise learning of such
announcement or filing; provided, however, that under the circumstances
described in the immediately preceding clause (iii), the Put Option may
be exercised only for the amount in excess of the amount that can
otherwise be sold pursuant to Section 9(a) within such 15 business day
period. The Fair Market Value shall be determined using the five most
recent Trading Days ending on and including the second business day
after the first public announcement or first public filing of the
Designated Event.
(b) In addition, in each calendar month during the Initial Put
Period, without regard to whether any Designated Event has occurred, the
Contributor Parent may require the Trust to purchase all, or a portion,
of the Monthly Put Amount at a price equal to the Fair Market Value
calculated as of the date of exercise of such monthly Put Option. The
monthly Put Option may be exercised by the Contributor Parent with
respect to any calendar month during the Initial Put Period by notice to
the Trust given no later than 5:00 p.m., Philadelphia time, on the tenth
day of such month.
(c) Beginning on or after the Closing Date Anniversary, the
Contributor Parent shall have the right to exercise a Put Option on any
day when either of the following conditions exists:
(i) There has been any continuous period, of more than 60
days during which there is not an Available Registration for the
conversion of the Partnership Interests or the resale of the Shares (any
such period, regardless of its length, being referred to as a
"Restricted Period"); or
(ii) There is any subsequent Restricted Period, regardless
of its length, and there has not been a period of at least 60
consecutive days during which an Available Registration was in effect
after the immediately preceding Restricted Period and before
commencement of the then applicable Restricted Period.
Notwithstanding the foregoing provisions of this paragraph (c),
there may be, to the extent so requested by the Contributor Parent
pursuant to Section 3(b), a period of up to 60 additional days (for a
total of 120 days) immediately following the Closing Date Anniversary
during which the Trust may continue to use its best efforts to effect a
Conversion Shelf Registration Statement without triggering a Put Option
under clause (i) of this paragraph (c).
The number of Transfer Restricted Securities that the
Contributor Parent may require the Trust to purchase pursuant to this
paragraph (c) shall be subject to any applicable volume restrictions
prescribed under Section 9. The purchase price for any Put Option
exercised under this paragraph (c) shall be equal to the Fair Market
Value calculated as of the date of exercise of such Put Option.
(d) Any notice regarding the Contributor Parent's exercise of a
Put Option under this Section 2 shall set forth the number of Transfer
Restricted Securities with respect to which the Contributor Parent is
exercising such Put Option. Payment with respect to the Put Option
shall be made by federal wire transfer, payable in same day funds,
pursuant to written instructions furnished by the Contributor Parent to
the Trust in a timely manner, or by any other means as agreed to by the
Contributor Parent and the Trust. Such payment shall occur no later
than the last day of the calendar month with respect to which any
monthly Put Option is exercised under paragraph (b) above, and shall
occur no later than 30 days after the date of exercise of any other Put
Option permitted above.
REGISTERED CONVERSION OFFER AFTER CLOSING DATE ANNIVERSARY.
(a) The Trust shall use its best efforts to cause, a "shelf"
registration statement on Form S-3 (the "Conversion Shelf Registration
Statement"), registering pursuant to Rule 415(a)(x) under the Securities
Act, or any successor provision, the conversion of the Partnership
Interests into Shares in accordance with the terms of the Partnership
Interests to be effective by the First Conversion Date or promptly
thereafter. The Trust acknowledges that to achieve this result, it will
need to file a Conversion Shelf Registration Statement during a period
beginning two weeks before the First Conversion Date and ending two
weeks after the First Conversion Date or will need to obtain assurance
from the SEC Staff as to another procedure acceptable to the SEC Staff
for this purpose.
(b) If, despite the Trust's best efforts, a Conversion Shelf
Registration Statement has not become effective and available for
conversion of the Partnership Interests by the 60th day after the
Closing Date Anniversary but is in the process of being reviewed by the
SEC, the Trust shall consult with the Contributor Parent as to the
status of such review and the Trust's best information as to when a
Conversion Shelf Registration Statement may become effective. If the
Contributor Parent agrees not to count any additional delay for purposes
of Section 2(c), the Trust shall continue for up to 60 more days as
specified by the Contributor Parent, and otherwise the Trust may
continue, to use its best efforts to cause a Conversion Shelf
Registration Statement to become effective and available for conversion
of the Partnership Interests.
(c) The Trust shall use its reasonable best efforts to maintain
the effectiveness of the Conversion Shelf Registration Statement for
three (3) years after the Conversion Shelf Registration Statement first
affords an Available Registration for the Conversion of Partnership
Interests into Shares provided that Rule 415 under the Securities Act,
or any successor rule under the Securities Act, permits an offering on a
continuous or delayed basis.
(d) Notwithstanding the foregoing, if no sooner than 60 days
after a Conversion Shelf Registration Statement first affords an
Available Registration for the conversion of Partnership Interests into
Shares, the Trust shall furnish to the Contributor Parent a certificate
signed by the Chief Executive Officer or the Chief Financial Officer of
the Trust stating that in the good faith judgment of the Board of
Trustees of the Trust, reliance on the Conversion Shelf Registration
Statement to convert the Partnership Interests into Shares would require
the Trust to make public disclosure of information the premature
disclosure of which would have an adverse effect on the Trust, and it is
therefore beneficial to the Trust to defer any conversion of Partnership
Interests pursuant to a then-effective registration statement, the Trust
shall have the right to require the Contributor Parent to refrain from
converting the Partnership Interests until such disclosure can be made
provided that:
(i) Any such period when the Contributors are required to
refrain from converting their Partnership Interests shall be subject to
Section 2(c);
(ii) If, prior to being notified by the Trust to refrain
from converting the Partnership Interests, Contributor Parent has
delivered an Exercise Notice to the Trust indicating a desire for some
or all of the Partnership Interests to be converted but such conversion
has not yet been completed, the Trust shall either:
(A) Permit the conversion contemplated by such
Exercise Notice to be completed on an accelerated basis before the
suspension in the right to convert becomes effective (notwithstanding
anything to the contrary in the Partnership Agreement or otherwise); or
(B) Treat the Contributor Parent's Exercise Notice
as if it had been the exercise of a Put Option permitted under Section
2(c). If the Exercise Notice is treated as the exercise of a Put
Option, the purchase price shall be equal to the Fair Market Value
calculated as of the date the Exercise Notice was given, and shall be
paid no later than the earlier of 30 days after the Exercise Notice was
given or the date the conversion would have otherwise been completed.
RESALE REGISTRATIONS
(a) If, despite its best efforts in accordance with Section 3,
the Trust is unable to cause a Conversion Shelf Registration Statement
to become effective within the time period (including any extension)
during which the Trust is required by Section 3(b) to continue using its
best efforts for such purpose and the Trust thereafter decides to stop
using its best efforts for such purpose, the Trust shall immediately
begin using its best efforts to cause a "Resale Shelf Registration
Statement" on Form S-3 to become effective, registering the resale of
the Shares pursuant to Rule 415(a)(x) of the Securities Act (or any
successor provision). Provided that Rule 415 under the Securities Act
(or any successor rule) still permits an offering on a continuous or
delayed basis, the Trust shall use its reasonable best efforts to
maintain the effectiveness of the Resale Registration Statement for
three years after the Resale Registration Statement first affords an
Available Registration for the resale of the Shares.
(b) If the Trust has failed to cause a Conversion Shelf
Registration Statement or a Resale Shelf Registration to become
effective within 180 days after the First Conversion Date, or if any
such registration statement has become effective but thereafter has been
suspended as an Available Registration for a continuous period of more
than 150 days or has been withdrawn or terminated, the Contributor
Parent shall have a right to demand up to three "Demand Resale
Registration Statements," by making not more than one demand in each of
the three successive twelve month periods following the circumstance
triggering the Contributor Parent's rights to demand such registration
statements. Following written request to the Trust by notice from the
Contributor Parent (the "Demand") that the Trust file a Demand Resale
Registration Statement under the Securities Act covering the
registration of at least 25% of the Registrable Securities initially
issuable or, if less, a majority of the Registrable Securities then
outstanding, the Trust shall, subject to the limitations set forth in
Sections 4(c) and (d), effect at the earliest practicable time after the
receipt of such request, the registration for resale by the Contributors
of all Registrable Securities that the Contributor Parent requested to
be registered in the Demand. The Trust shall use its reasonable best
efforts to cause each such Demand Resale Registration Statement to
remain as an Available Registration for at least 60 days.
(c) If the Contributor Parent intends to distribute the
Registrable Securities covered by the Resale Shelf Registration
Statement or the Demand Resale Registration Statement by means of an
underwriting, the Contributor Parent shall so advise the Trust. The
underwriter will be selected by the Contributor Parent and shall be
reasonably acceptable to the Trust. Each applicable Contributor shall
(together with the Trust as provided in Section 5(c)(iii)) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting.
(d) Any distribution of securities pursuant to this Section
shall be subject to the volume limitations set forth in Section 9,
except that any underwritten offering at a price to the public that is
no less than 90% of the Fair Market Value of the Shares as of the date
such underwritten offering is priced shall not be subject to the volume
restrictions in Section 9.
(e) Notwithstanding the foregoing, if the Trust shall furnish
to the Contributor Parent a certificate signed by the Chief Executive
Officer or the Chief Financial Officer of the Trust stating that in the
good faith judgment of the Board of Trustees of the Trust, it would be
detrimental for such registration statement to be filed or would require
the Trust to make public disclosure of information the premature
disclosure of which would have an adverse effect on the Trust, and it is
therefore beneficial to the Trust to defer the filing of such
registration statement (or the intended sale of Shares pursuant to a
then-effective registration statement), the Trust shall have the right
to defer taking action with respect to such filing, or to require the
Contributor Parent to refrain from selling Shares, as the case may be,
until the condition requiring such deferral or restraint can be
resolved, but any such deferral or restraint period shall be subject to
Section 2(c).
OBLIGATIONS OF THE TRUST.
(a) Whenever required under Section 4 of this Agreement to
effect the registration of any Registrable Securities, the Trust shall,
as expeditiously as reasonably possible, prepare and file with the SEC a
registration statement with respect to such Registrable Securities and
use its reasonable best efforts to cause such registration statement to
become effective. The Trust shall use its reasonable best efforts to
keep any registration statement required by Section 3 or 4 effective for
a period of up to three (3) years in the case of a Conversion Shelf
Registration Statement or a Resale Shelf Registration Statement or up to
60 days in the case of any Demand Resale Registration Statement, or, in
each case, until the date upon which all of the Contributors'
Registrable Securities may be sold in one three-month period pursuant to
Rule 144 under the Securities Act; provided, however, that such three-
year (or 60 day) period shall be extended, with respect to any of the
Contributors, as appropriate, for a period of time equal to the period
during which any of the respective Contributors refrain from acquiring
Shares in a registered conversion of Partnership Interests or reselling
Shares pursuant to such registration at the request of the Trust or any
underwriter of securities of the Trust or any of its subsidiaries;
provided further that, in the case of a Conversion Shelf Registration
Statement or a Resale Shelf Registration Statement, Rule 415 under the
Securities Act, or any successor rule under the Securities Act, permits
an offering on a continuous or delayed basis, and that applicable rules
under the Securities Act governing the obligation to file a post-
effective amendment permit, in lieu of filing a post-effective amendment
that (A) includes any prospectus required by Section 10(a)(3) of the
Securities Act or (B) reflects facts or events representing a material
or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be
included in (A) and (B) above to be contained in periodic reports filed
pursuant to Section 13 or 15(d) of the Exchange Act in the registration
statement. The immediately preceding proviso shall not apply to or
restrict the Trust's obligation with respect to any Demand Resale
Registration Statement. In addition, nothing herein shall require any
Contributor to convert any Partnership Interests into Shares any sooner
than otherwise desired even though such conversion may be necessary to
commence a holding period for the Shares that must be satisfied before
the Shares can be sold pursuant to Rule 144.
(b) Whenever required under Section 3 or 4 to effect the
registration of any Transfer Restricted Securities, in addition to its
other obligations under this Agreement, the Trust shall, as
expeditiously as reasonably possible:
(i) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement.
(ii) Cause all such Registrable Securities registered
pursuant thereto to be listed on each securities exchange on which
similar securities issued by the Trust are then listed.
(iii) Notify the Contributor Parent at any time when the
prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus relating thereto includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein
or necessary to make the statements therein not misleading in the light
of the circumstances then existing, and prepare and furnish to the
Contributors a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus shall
not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statement therein not misleading in the light of the circumstances then
existing, provided that no such supplement or amendment need be so
furnished after distribution of the Contributors' Registrable Securities
has been completed.
(c) Whenever required under Section 4 of this Agreement to
effect the registration of any Registrable Securities, in addition to
its other obligations under this Agreement, the Trust shall, as
expeditiously as reasonably possible:
(i) Furnish to each Contributor such number of copies of a
prospectus, including any preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as it may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by it.
(ii) Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Contributor Parent; provided, that the Trust shall not
be required in connection therewith or as a condition thereto to qualify
to do business or to file a general consent to service of process in any
such states or jurisdictions.
(iii) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement,
in usual and customary form, with the managing underwriter of such
offering. Each applicable Contributor shall also enter into and perform
its obligations under such an agreement.
INFORMATIONAL OBLIGATIONS OF CONTRIBUTOR PARENT. It shall be a
condition precedent to the obligations of the Trust to take any action
pursuant to Section 4 of this Agreement with respect to the Registrable
Securities of the Contributors that the Contributor Parent shall furnish
to the Trust such information regarding each of the Contributors, the
Registrable Securities held by each of them, the intended method of
disposition of such securities as shall be required to effect the
registration of the Contributors' Registrable Securities and any other
information required by under the applicable rules and regulations of
the SEC and any exchange on which the Trust's securities are listed or
the rules or policies of the National Association of Securities Dealers,
Inc.
EXPENSES OF REGISTRATION. The Trust shall bear all expenses incurred
directly in connection with the registration, filing or qualification of
the Transfer Restricted Securities required under Section 3 and 4,
including all registration, filing and qualification fees, printers' and
accounting fees and fees and disbursements of counsel for the Trust.
All expenses related to the disposition of Registrable Securities,
including all underwriting discounts, brokerage commissions and transfer
taxes, and fees and disbursements of any counsel for the Contributor
Parent shall be borne by the Contributor Parent. Notwithstanding the
foregoing, the Trust shall not be required to pay for any expenses of
any registration proceeding begun pursuant to Section 4(b) if the
registration request is subsequently withdrawn at the request of the
Contributor Parent (in which case the Contributor Parent shall bear such
expenses), unless the Contributor Parent agrees to forfeit its right to
one of its additional demand registrations pursuant to Section 4(b).
TERMINATION OF REGISTRATION OBLIGATIONS.
Any provision of this Agreement to the contrary notwithstanding, the
Trust shall not be obligated to effect, or to take any action to effect,
any registration pursuant to Section 4 of this Agreement, during the
period beginning on a date fifteen (15) days prior to the Trust's good
faith estimate of the date of filing of, and ending on a date forty-five
(45) days after the effective date of, a registration of equity
securities of the Trust under the Securities Act in connection with a
public offering for cash by and on behalf of the Trust of such equity
securities (specifically excluding a registration relating solely to the
sale of securities for consideration other than cash, or in connection
with a merger, acquisition or other business combination, or in
connection with a dividend or interest reinvestment plan or to
participants in a stock option or other employee benefits plan of the
Trust or any of its subsidiaries (including, without limitation, the
Partnership)), provided that the Trust is actively employing in good
faith reasonable efforts to cause such registration statement to become
effective. Any such delay in filing a registration statement required
pursuant to Section 4 shall be subject to Section 2(c).
LIMITATIONS ON VOLUME.
(a) Except as otherwise provided in Sections 2(a) and 2(b),
sales by the Contributors of their Partnership Interests and their
Shares shall be subject to the following "Initial Volume Restrictions,"
which shall be measured based on the number of Shares that have been or
are being sold directly and the number of Shares into which the
Partnership Interests that have been or are being sold could have been
converted (assuming the Partnership Units were then convertible).
Except as otherwise provided herein or as permitted by the prior written
consent of the Trust, the amount of Partnership Interests and Shares
sold by the Contributors during any calendar week after the Closing Date
Anniversary shall not, in the aggregate, exceed the product of (x) fifty
thousand (50,000) subject to the adjustments below, multiplied by (y)
the number of calendar weeks since the Closing Date Anniversary up to
and including the calendar week with respect to which such calculation
is made, less (z) the amount of Partnership Interests and Shares sold by
the Contributors, in the aggregate, after the Closing Date Anniversary
and prior to the week with respect to which such calculation is made.
For example, assuming no prior sales by the Contributors, the
Contributors may sell, during the twenty-first week after the Closing
Date Anniversary with respect to such Registrable Securities, one
million fifty thousand (1,050,000) Registrable Securities. Anything in
this Agreement to the contrary notwithstanding, the Trust shall have the
right, in its sole discretion, to waive the volume limitation included
in this Section.
(b) If the Trust (i) declares or pays a dividend on its
outstanding Shares in Shares or makes a distribution to all holders of
its outstanding Shares in Shares or effects a stock split, (ii)
subdivides its outstanding Shares, or (iii) combines its outstanding
Shares into a smaller number of Shares, the 50,000 share per week
Initial Volume Restriction in Section 9(a) shall be adjusted by
multiplying the weekly volume limitation by a fraction, the numerator of
which shall be the number of Shares issued and outstanding on the record
date for such dividend, distribution, subdivision or combination
(assuming for such purposes that such dividend, distribution,
subdivision or combination has occurred as of such time), and the
denominator of which shall be the actual number of Shares (determined
without the above assumption) issued and outstanding on the record date
for such dividend, distribution, subdivision or combination. A similar
adjustment shall be made, as appropriate, to any other minimums or
maximums contained herein that are stated in terms of a percentage of
initially issuable Shares or similar measure. Any adjustments under
this Section 9(b) shall become effective immediately after the effective
date of such event retroactive to the record date, if any, for such
event.
1. Representations, Warranties and Agreements of the Contributor
Parent.
The Contributor Parent hereby:
(a) Represents and warrants that each Contributor is acquiring
the Partnership Interests under the terms of the Contribution Agreement
for the Contributor's own account as principal for investment and not
with a view to resale or distribution and that the Contributor will not
sell or otherwise transfer the Registrable Securities except for any
resales, distributions, sales or other transfers in accordance with
applicable securities laws and the provisions hereof.
(b) Understands that such Partnership Interests have not been
registered under the Securities Act, or the securities laws of any state
and, as the result thereof, are subject to substantial restrictions on
transfer, including, without limitation, those included in the
instruments governing the rights of the holders of Partnership
Interests.
(c) Acknowledges that the Partnership Interests, by their
terms, are not convertible into Registrable Securities prior to the
Closing Date Anniversary.
(d) Agrees that the none of the Contributors will sell or
otherwise transfer any Partnership Interests or any interest therein
unless in accordance with the terms of this Agreement, and the
Contributor Parent, if requested by the Trust, assumes all costs and
expenses associated with an opinion of counsel which is reasonably
satisfactory to the Trust that the Partnership Interests may be
transferred in reliance on an applicable exemption from the registration
requirements of the Securities Act and any other applicable securities
laws and the transfer will not cause the Trust or any of its affiliates
to be in violation of any other provision of federal or state law.
(e) Understands that, except as set forth in this Agreement,
(i) the Trust has no obligation or intention to register the Partnership
Interests for resale under any federal or state securities laws or to
take any action (including the filing of reports or the publication of
information required by Rule 144 under the Securities Act), which would
make available any exemption from the registration requirements of such
laws, and (ii) the Contributors therefore may be precluded from selling
or otherwise transferring or disposing of the Registrable Securities or
any portion thereof and (iii) except as otherwise provided in this
Agreement, the Contributors may have to bear the economic risk of
investment in the Registrable Securities for an indefinite period.
(f) Understands that no federal or state agency has approved or
disapproved the Partnership Interests, passed upon or endorsed the
merits of the offering thereof, or made any finding or determination as
to the fairness of the Partnership Interests for investment.
(g) Acknowledges that the Contributor Parent has read and
carefully reviewed the Trust's annual report to shareholders for the
year ended December 31, 1996, the definitive proxy statement filed in
connection with the Trust's 1996 Annual Meeting of Shareholders, the
Annual Report on Form 10-K of the Trust and the Partnership for the year
ended December 31, 1996, and the information contained in all other
reports or documents filed by the Trust and/or the Partnership under
Sections 13(a), 14(a), 14(c) and 15(d) of the Exchange Act since the
date of such Annual Report on Form 10-K (all of which are listed on
Schedule 10(g) attached hereto) and a description of the Partnership
Interests; acknowledges that the Trust and the Partnership have made
available the opportunity to ask questions of, and receive answers from,
the Trust and the Partnership concerning the terms and conditions of the
transactions contemplated hereby and to obtain any additional
information, to the extent that the Trust or the Partnership possesses
such information, or can acquire it without unreasonable effort or
expense, necessary to verify the accuracy of the information given to
the Contributor Parent or otherwise to make an informed investment
decision; and acknowledges that all material documents, records and
books pertaining to this investment or the business of the Trust and the
Partnership have, on request, been made available to the Contributor
Parent or to any advisor designated by the Contributor Parent to receive
such information.
(h) Understands that the Partnership Interests are being
offered and sold in reliance on specific exemptions from the
registration requirements of federal and state securities laws and that
the Trust, the Partnership and the controlling persons thereof are
relying upon the truth and accuracy of the representations, warranties,
agreements, acknowledgments and understandings set forth herein in order
to determine the applicability of such exemptions and the suitability of
the Contributors to acquire the Partnership Interests.
2. Indemnification. In the event any Registrable Securities are
included in a registration statement under the provisions of this
Agreement:
(a) The Trust will indemnify and hold harmless the Contributor
Parent, each Contributor, any underwriter (as defined in the Securities
Act) for the Contributor Parent or any Contributor and each person, if
any, who controls the Contributor Parent or underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, or the omission or alleged omission
to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading (a "Violation");
and the Trust will pay to the Contributor Parent, each Contributor, each
underwriter and each controlling person any legal or other expenses
reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability, or action if such settlement is effected without the consent
of the Trust (which consent shall not be unreasonably withheld or
delayed), nor shall the Trust be liable in any such case for any such
loss, claim, damage, liability, or action to the extent that it arises
out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in
connection with such registration by the Contributor Parent, underwriter
or controlling person.
(b) To the extent permitted by law, the Contributor Parent will
indemnify and hold harmless the Trust, each of its directors, each of
its officers who has signed the registration statement, each person, if
any, who controls the Trust within the meaning of the Act, any
underwriter and any controlling person of any such underwriter, against
any losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the Securities
Act, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation
occurs in reliance upon and in conformity with written information
furnished by the Contributor Parent expressly for use in connection with
such registration; and the Contributor Parent will pay any legal or
other expenses reasonably incurred by any person intended to be
indemnified pursuant to this subsection, in connection with
investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in
this subsection shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Contributor Parent, which consent
shall not be unreasonably withheld; provided, that, in no event shall
any indemnity under this subsection exceed the gross proceeds from the
offering received by the Contributor Parent.
(c) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section,
deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate
in, and, to the extent the indemnifying party so desires and
acknowledges its responsibility for indemnification as to the matter
involved, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party (together with all
other indemnified parties which may be represented without conflict by
one counsel) shall have the right to retain one separate counsel, with
the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under
this Section.
(d) If the indemnification provided for in this Section is held
by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss, liability,
claim, damage, or expense as well as any other relevant equitable
considerations; provided, however, that in no event shall the
Contributor Parent's liability to contribute under this subsection
exceed the gross proceeds from the offering received by the Contributor
Parent. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten
public offering are in conflict with the foregoing provisions of this
Section 10, the provisions in the underwriting agreement shall control.
(f) The obligations of the Trust and the Contributor Parent
under this Section shall survive the completion of any offering of
Registrable Securities pursuant to a registration statement under this
Agreement, and otherwise.
3. Reports Under Exchange Act. With a view to making available to
the Contributors the benefits of Rule 144 under the Securities Act
(subject to compliance with the applicable holding period in such Rule),
the Trust agrees to:
(a) make and keep public information available, as those terms
are understood and defined in such Rule 144; and
(b) file with the SEC in a timely manner all reports and other
documents required of the Trust under the Exchange Act.
4. Assignment of Registration Rights.The right to cause the Trust to
register Registrable Securities pursuant to this Agreement may be
transferred or assigned (but only with all related obligations) by the
Contributor Parent or a Contributor to a transferee or assignee of such
securities, provided that:
(a) the Trust, prior to such transfer or assignment, assents
thereto in writing; provided, however, that the Trust's prior assent
shall not be required if the transferee or assignee is Contributor
Parent or any entity at least 80% owned by Contributor Parent.
(b) the Trust is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee
or assignee and the securities with respect to which such registration
rights are being assigned;
(c) such transferee or assignee agrees in writing to be bound
by and subject to the terms and conditions of this Agreement; and
(d) such assignment is completed in accordance with the
requirements of the Securities Act, including the restrictions on
further transfer thereunder.
5. Amendment and Waiver. Any provision of this Agreement may be
amended and the observance thereof may be waived only with the written
consent of the Trust and the Contributor Parent. Failure of any party
to exercise any right or remedy under this Agreement or otherwise, or
delayed by a party in exercising such right or remedy, will not operate
as a waiver thereof.
6. Notices. Notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be sufficiently given when
personally delivered against receipt (including by overnight courier)
or sent by certified or registered mail, return receipt requested,
addressed:
if to the Trust:
Liberty Property Trust
65 Valley Stream Parkway
Suite 100
Malvern, Pennsylvania 19355
Attention: General Counsel
with a copy sent in the
manner provided to:
Wolf, Block, Schorr and Solis-Cohen
S.E. Corner 15th & Chestnut Streets
Philadelphia, Pennsylvania 19102
Attention: Herman C. Fala, Esquire
and
(ii)if to the Contributor Parent or any Contributor:
The Liberty Corporation
2000 Wade Hampton Boulevard
Greenville, SC 29615
Attention: Martha G. Williams, Esquire
with a copy sent in the
manner provided to:
Sutherland, Asbill & Brennan, L.L.P.
999 Peachtree Street, N.E.
Atlanta, Georgia 30309
Attention: F. Louise Adams, Esquire
or at such other address as each party furnishes by notice given in
accordance with this section.
7. Governing Law. This Agreement shall be enforced, governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania, notwithstanding any conflicts of laws provisions to the
contrary.
8. Merger. This Agreement constitutes the entire Agreement among
the parties hereto with respect to the subject matter hereof, and there
are no representations, promises, warranties or other undertakings other
than those set forth or referred to herein. This Agreement supersedes
all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have executed this Agreement as of the day and year first above written.
THE LIBERTY CORPORATION
By:
------------------------------
Name:
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Title:
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LIBCO OF FLORIDA, INC.
By:
------------------------------
Name:
------------------------------
Title:
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LPC OF S.C., INC.
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
SOUTHCHASE DEVELOPMENT CORPORATION
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
LIBERTY PROPERTY TRUST
By:
------------------------------
Name:
------------------------------
Title:
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Schedule 10(g)
List of Reports or Documents filed by the Trust
and/or the Partnership since the date of the Annual
Report on Form 10-K for the Year Ended December 31, 1996
1. Current Report on Form 8-K of Liberty Property Trust (the "Trust")
and Liberty Property Limited Partnership (the "Partnership"), filed with
the Securities and Exchange Commission (the "Commission") on February
13, 1997.
2. Registration Statement on Form S-3 of the Trust and the Partnership
(File No. 333-22211), filed with the Commission on February 21, 1997.
3. Annual Report on Form 10-K of the Trust and the Partnership, filed
with the Commission on March 3, 1997.
4. Registration Statement on Form S-3 of the Trust and the Partnership
(File No. 333-22831), filed with the Commission on March 5, 1997.
5. Current Report on Form 8-K of the Trust and the Partnership, filed
with the Commission on March 6, 1997.
6. Pre-Effective Amendment No. 1 to Registration Statement on Form S-3
(File No. 333-22211) of the Trust and the Partnership, filed with the
Commission on March 6, 1997.
7. Prospectus filed pursuant to Rule 424(b)(3) of the Trust and the
Partnership filed with the Commission on March 7, 1997.
8. Prospectus filed pursuant to Rule 424(b)(5) of the Trust and the
Partnership, filed with the Commission on March 20, 1997.
9. Preliminary Proxy Statement of the Trust filed with the Commission
on March 20, 1997.
10. Current Report on Form 8-K of the Trust and the Partnership, filed
with the Commission on March 21, 1997.
11. Revised Preliminary Proxy Materials of the Trust, filed with the
Commission on April 9, 1997.
12. Definitive Proxy Materials of the Trust, filed with the Commission
on April 14, 1997.
EXHIBIT 10.12
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT dated as of March 20, 1997 (the
"Agreement") is made by and among Liberty Property Trust, a Maryland real
estate investment trust (the "Trust"), and each of the persons identified
as a Selling Shareholder on the signature page hereof (the "Selling
Shareholders").
WHEREAS the Trust is the sole general partner of Liberty Property Limited
Partnership, a Pennsylvania limited partnership (the "Partnership"); and
WHEREAS the Partnership has entered into three Contracts for Sale dated
as of January 22, 1997, and one Contract for Sale dated as of February
21, 1997 (collectively, the "Contracts") for the contribution to the
Partnership of certain assets in connection with which the Selling
Shareholders will receive certain partnership interests (the "Partnership
Interests") in the Partnership; and
WHEREAS the Partnership Interests will be exchangeable from time to time,
after the first anniversary of the closing of the transactions
contemplated by the Contracts (the "Closing Date"), for certain common
shares of beneficial interest, par value $.001 per share, of the Trust in
accordance with the partnership agreement of the Partnership; and
WHEREAS the Trust has agreed to grant to the Selling Shareholders certain
rights relating to the registration of the Shares under the Securities
Act of 1933, as amended and the rules and regulations thereunder, or any
similar successor statute (collectively, the "Securities Act"), on the
terms and conditions contained herein.
NOW, THEREFORE, in consideration of the premises and mutual covenants
contained herein, and for other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto
agree as follows:
1. Registration Rights.
(a) Piggyback Rights. Commencing one year from the Closing
Date, the Trust shall give each Selling Shareholder thirty (30) days'
prior written notice of its intention to file with the Securities and
Exchange Commission (the "Commission") a registration statement covering
the Trust's common shares of beneficial interest, par value $.001 per
share (the "Shares"), under the Securities Act (other than a registration
relating solely to the sale of securities for consideration other than
cash, in connection with a merger, acquisition or other business
combination, in connection with a dividend or interest reinvestment plan
or to participants in a stock option or other employee benefits plan of
the Trust or any of its subsidiaries (including, without limitation, the
Partnership)), and shall offer to include in such registration statement
any Registrable Shares (as hereinafter defined) held by the Selling
Shareholder. At the written request of each Selling Shareholder received
by the Trust within fifteen (15) days from the end of such thirty (30)
day period, the Trust shall include the Selling Shareholders' Registrable
Shares in the registration (the "Piggyback Registration"); provided,
however, that if the registration statement relates to a proposed
offering which is an underwritten public offering and if, in the
reasonable judgment of the underwriter, the inclusion of any such
Registrable Shares would materially adversely effect the public offering
of the Shares of the Trust for its own account, the number of Registrable
Shares of the Selling Shareholders to be included in the Piggyback
Registration shall be reduced pro rata among all of the Selling
Shareholders participating in the Piggyback Registration so that the
public offering shall not be materially adversely effected. If, on the
first anniversary of the Closing Date, the Trust has an effective
registration statement filed with the Commission to which the Registrable
Shares may be added to register either the resale or issuance of such
Shares, then the Trust shall be obligated to give the Selling
Shareholders notice of that registration statement and offer to include
the Registrable Shares of the Selling Shareholders in that registration
statement pursuant to this paragraph 1(a).
(b) Demand Right. Commencing one year from the Closing Date
until there are no Registrable Shares, if the Trust receives a written
request therefor from either Robert C. Lux or Stewart R. Stender, the
Trust shall prepare and file a registration statement (a "Demand
Registration") under Rule 415 of the Securities Act covering the
Registrable Shares which are the subject of such request and shall use
its best efforts to cause such registration statement to become effective
as promptly as practicable. In addition, upon the receipt of such
request, the Trust shall promptly give written notice to the Selling
Shareholders not participating in such request that such registration is
to be effected. The Trust shall include in such registration statement
such Registrable Shares for which it has received written requests to
register from such other Selling Shareholders within fifteen (15) days
after the delivery of the Trust's written notice concerning such
registration. The Trust shall be obligated to prepare, file and cause to
become effective only one registration statement pursuant to this
paragraph 1(b) at the request of Robert C. Lux, and one at the request of
Stewart R. Stender, for a total of two Demand Registrations. In the
event that the Selling Shareholder who initially requested a Demand
Registration pursuant to this paragraph 1(b) determines for any reason
not to proceed with the Demand Registration at any time before the Demand
Registration has been declared effective by the Commission, and the
Selling Shareholder agrees to bear its own expenses incurred in
connection therewith and to reimburse the Trust for the expenses incurred
by it attributable to such registration, then such Selling Shareholder
shall not be deemed to have exercised his Demand Registration right
hereunder. As used in this Agreement, the term "Registrable Shares"
means Shares issued or to be issued by the Trust to the Selling
Shareholders in exchange for the Partnership Interests, excluding (i)
Shares for which a registration statement relating to the issuance or
sale thereof shall have become effective under the Securities Act and
which have been issued or sold, as applicable, under such registration
statement, (ii) Shares sold pursuant to Rule 144 under the Securities Act
or (iii) Shares which, together with all other Registrable Shares held by
such Selling Shareholder and any other Selling Shareholder whose sales of
Registrable Shares must be aggregated with sales of such Selling
Shareholder pursuant to Rule 144(e), are eligible for sale pursuant to
Rule 144 under the Securities Act. The Trust agrees to use reasonable
efforts to keep each Demand Registration continuously effective until the
earliest of (A) the date on which the Selling Shareholders no longer hold
any Registrable Shares registered under the Demand Registration, (B) the
date on which the Registrable Shares registered under the Demand
Registration held by each Selling Shareholder may, together with all
other Registrable Shares held by such Selling Shareholder and any other
Selling Shareholder whose sales of Registrable Shares must be aggregated
with sales of such Selling Shareholder pursuant to Rule 144(e), be sold
by such Selling Shareholder pursuant to Rule 144 under the Securities Act
or (C) the date which is nine (9) months (plus any period during which
the Trust invokes its right to postpone or suspend the use of a Demand
Registration pursuant to the last sentence of this Section 1(b)) from the
effective date of such Demand Registration. Notwithstanding the
foregoing provisions of this paragraph 1(b), the Trust shall have the
right to require the Selling Shareholders to postpone the preparation and
filing of, or to suspend their use of, a Demand Registration for a
reasonable period of time, not to exceed 90 days, if the Trust is in
possession of material, nonpublic information that, if disclosed as
required in such registration statement, could materially adversely
affect the assets, business or prospects of the Trust, or any pending
transaction involving the Trust; provided, however, that (i) the Trust
shall not rely on this right to postpone or suspend a Demand Registration
more than twice in any twelve month period, and (ii) the Trust may not
invoke this right within thirty (30) days after the end of a previous
postponement or suspension of a Demand Registration pursuant to this
sentence.
2. Expenses. The Trust shall bear all of the costs and expenses of
any registration hereunder, except that the participating Selling
Shareholders shall pay the fees and expenses of Selling Shareholders'
counsel, any transfer taxes or underwriting discounts and commission
applicable to the Registrable Shares of the Selling Shareholders to be
included in the registration, and, in the case of Demand Registrations
hereunder, the first $2,500 of the aggregate registration fees payable to
the Commission with respect to the Registrable Shares of the Selling
Shareholders to be included in Demand Registrations hereunder.
3. Obligations of the Trust. Whenever the Trust shall be required to
register any Registrable Shares pursuant to the provisions of this
Agreement, the Trust shall also be obligated, with the cost of performing
such obligation to be incurred by the Trust, to do the following:
(a) Prepare for filing with the Commission such amendments and
supplements to the registration statement and the prospectus used in
connection therewith (the "Prospectus") as may be necessary to keep said
registration statement current, effective and in compliance with the
provisions of the Securities Act with respect to the sale of the
Registrable Shares covered by such registration statement for the period
reasonably necessary to complete the proposed offering of such
Registrable Shares.
(b) Furnish to the participating Selling Shareholders such
copies of preliminary and final Prospectuses, the applicable registration
statement and all amendments thereto, all documents incorporated by
reference therein and such other documents as the participating Selling
Shareholders may reasonably request to facilitate the offering of the
participating Selling Shareholders' Registrable Shares.
(c) The Trust shall promptly notify each Selling Shareholder of,
and confirm in writing, any request by the Commission for amendments or
supplements to the applicable registration statement or the Prospectus
related thereto or for additional information. In addition, the Trust
shall promptly respond to such request and shall promptly notify each
Selling Shareholder of, and confirm in writing, the filing of the
applicable registration statement, any prospectus supplement related
thereto or any post-effective amendment to the applicable registration
statement and the effectiveness of any post-effective amendment.
(d) Use reasonable efforts to register or qualify the
Registrable Shares covered by the registration statement under the
securities or blue sky laws of such jurisdictions as the participating
Selling Shareholders may reasonably request; provided, however, that the
Trust will not be required to: (i) qualify generally to do business in
any jurisdiction where it would not be required but for this clause (d);
(ii) subject itself to taxation in such jurisdiction; (iii) consent to
general service of process in such jurisdiction; (iv) register in any
state requiring as a condition to such registration, escrow or surrender
of any securities of the Trust or any security holder; or (v) incur
expenses in excess of $5,000 in the aggregate with respect to any such
state securities or blue sky registrations or qualifications solely as a
result of the inclusion of the Registrable Shares in the registration or
qualification.
(e) Furnish to the participating Selling Shareholders a copy of
the opinion of counsel for the Trust which is included as an exhibit to
the registration statement pursuant to the requirements of the Securities
Act and a letter or letters of the independent certified public
accountants of the Trust in form and substance customary for similar
offerings.
(f) Furnish the participating Selling Shareholders with a copy
of all documents filed and all correspondence to or from the Commission
in connection with the offering.
(g) Notify each participating Selling Shareholder for whom
Shares are registered or are to be registered on such registration
statement, at any time when the Prospectus relating thereto is required
to be delivered under the Securities Act, of the happening of any event
as a result of which the Prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of
the circumstances then existing, and at the request of any such
participating Selling Shareholder, prepare and furnish to such
participating Selling Shareholder a reasonable number of copies of a
supplement to or an amendment of such Prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such securities, such
Prospectus shall not include an untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary
to make the statement therein not misleading in the light of the
circumstances then existing, provided that no such supplement or
amendment need be filed after distribution of the participating Selling
Shareholder's Registrable Shares has been completed.
(h) The Trust shall file any necessary listing applications or
amendments to the existing applications to cause the Shares to be listed
or quoted on the primary exchange or quotation system on which the Shares
are then listed or quoted. The Trust agrees to deliver copies of the
Prospectus as contained in the applicable registration statement promptly
following effectiveness thereof to the New York Stock Exchange (or any
other applicable national securities exchange) as contemplated by Rule
153 under the Securities Act.
4. Obligations of the Selling Shareholders.
(a) It shall be a condition precedent to the obligation of the
Trust to register the Registrable Shares that each participating Selling
Shareholder furnish the Trust with appropriate information as may be
necessary to be included in the registration statement covering the
participating Selling Shareholders' Registrable Shares. Additionally,
each participating Selling Shareholder agrees to enter into and perform
its obligations under an underwriting agreement, in usual and customary
form, including, without limitation, customary indemnification and
contribution obligations, with the underwriters, if any, of such
offering.
(b) Notwithstanding the effectiveness of any registration
statement filed with respect to the Registrable Shares, the Selling
Shareholders hereby jointly agree that the aggregate number of
Registrable Shares sold by the Selling Shareholders during any week will
not exceed 20% of the average weekly trading volume for the Shares on the
New York Stock Exchange for the preceding four calendar weeks; provided,
however, that this limitation shall not apply to any Registrable Shares
sold in an underwritten public offering at a price equal to the then
current market price for the Shares less the usual and customary discount
applicable in such offerings.
5. Suspension of Registration Obligations.
(a) Any provision of this Agreement to the contrary
notwithstanding, the Trust shall not be obligated to effect, or to take
any action to effect, any registration pursuant to paragraph 1(b) of this
Agreement during the period beginning on a date thirty (30) days prior to
the Trust's good faith estimate of the date of filing of, and ending on a
date ninety (90) days after the effective date of, a registration of
securities of the Trust or any of its subsidiaries (including, without
limitation, the Partnership) under the Securities Act in connection with
a public offering of such securities (other than a registration relating
solely to the sale of securities for consideration other than cash, in
connection with a merger, acquisition or other business combination, in
connection with a dividend or interest reinvestment plan or to
participants in a stock option or other employee benefits plan of the
Trust or any of its subsidiaries (including, without limitation, the
Partnership)), provided that the Trust is actively employing in good
faith reasonable efforts to cause such registration statement to become
effective.
(b) Any provision of this Agreement to the contrary
notwithstanding, the Trust shall not be obligated to effect, or to take
any action to effect, any registration pursuant to paragraph 1 of this
Agreement after the first date on which, and only for so long as, the
Registrable Shares issuable upon conversion of the Partnership Interests
are able to be so issued or to be resold pursuant to an effective
registration statement on Form S-3 (including, without limitation, a
"shelf" registration statement pursuant to Rule 415(a)(x) under the
Securities Act) of the Trust, provided that (i) the Trust shall use its
reasonable best efforts to maintain the effectiveness of such
registration statement and the availability of such registration
statement for such conversion or resale, as the case may be, until all
the Registrable Shares are sold, (ii) such Rule 415, or any successor
rule under the Securities Act, permits an offering on a continuous or
delayed basis, and (iii) applicable rules under the Securities Act
governing the obligation to file a post-effective amendment permit, in
lieu of filing a post-effective amendment which (A) includes any
prospectus required by Section 10(a)(3) of the Securities Act or (B)
reflects facts or events representing a material or fundamental change in
the information set forth in the registration statement, the
incorporation by reference of information required to be included in (A)
and (B) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934 in the
registration statement.
6. Indemnification.
(a) The Trust shall indemnify the Selling Shareholders who
participate in a registration from, against and in respect of all losses,
claims, damages, liabilities, actions and costs and expenses in respect
thereof (including reasonable attorney's fees) caused by any untrue
statement or alleged untrue statement of a material fact relating to the
Trust contained in the registration statement in which the Selling
Shareholders' Registrable Shares are registered under the Securities Act,
any preliminary or final Prospectus contained therein, or any amendment
or supplement thereto, or caused by any omission or alleged omission
required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading; provided, however, that if such losses, claims, damages,
liabilities or actions are caused by any untrue statement or omission
contained in information furnished to the Trust by a Selling Shareholder
for use therein, the indemnification provided above shall be afforded the
Trust by such Selling Shareholder. The obligations under this paragraph
6(a) shall survive the termination of this Agreement and the completion
of any offering of Registrable Shares under this Agreement.
(b) Promptly after receipt by an indemnified party under this
paragraph 6 of a notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this
Agreement, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly situated, to assume
control of the defense thereof with counsel mutually satisfactory to the
parties; provided, however, that an indemnified party shall have the
right to retain its own counsel if, in the reasonable opinion of counsel
for the indemnified party, representation of such indemnified party by
the counsel retained by the indemnifying party would be inappropriate due
to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such proceedings;
provided further however, that the indemnifying party shall be
responsible for the fees and expenses of only one counsel for all
indemnified parties. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any
such action shall relieve such indemnifying party of any liability to the
indemnified party under this Agreement only to the extent prejudicial to
the indemnifying party's ability to defend such action, and the omission
so to deliver written notice to the indemnifying party will not relieve
it of any liability that it may have to any indemnified party otherwise
than under this Agreement.
(c) If the indemnification provided for in paragraph 6(a) is
unavailable to an indemnified party with respect to any losses, claims,
damages, actions, liabilities, costs or expenses referred to therein or
is insufficient to hold the indemnified party harmless as contemplated
therein, then the indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, actions,
liabilities, costs or expenses in such proportion as is appropriate to
reflect the relative fault of the Trust, on the one hand, and the Selling
Shareholder, on the other hand, in connection with the statements of
omissions which resulted in such losses, claims, damages, actions,
liabilities, costs or expenses as well as any other relevant equitable
considerations. The relative fault of the Trust, on the one hand, and of
the Selling Shareholder, on the other hand, shall be determined by
reference to, among other factors, whether the untrue or alleged untrue
statement of a material fact or omission to state a material fact relates
to information supplied by the Trust or by the Selling Shareholder and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; provided,
however, that in no event shall the obligation of any indemnifying party
to contribute under this paragraph 6(c) exceed the amount that such
indemnifying party would have been obligated to pay by way of
indemnification if the indemnification provided for under paragraph 6(a)
hereof had been available under the circumstances. The Trust and the
Selling Shareholders agree that it would not be just and equitable if
contribution pursuant to this paragraph 6(c) were determined by pro rata
allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately
preceding paragraph. Notwithstanding the provisions of this paragraph
6(c), the Selling Shareholder shall not be required to contribute any
amount in excess of the amount by which the gross proceeds from the sale
of Shares of such Selling Shareholder exceeds the amount of any damages
that such Selling Shareholder has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission. No
indemnified party guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any indemnifying party who was not guilty of such
fraudulent misrepresentation.
7. Assignment. The rights to have the Trust register Registrable
Shares pursuant to this Agreement may be assigned by a Selling
Shareholder to a transferee or assignee of all of such Selling
Shareholder's Registrable Shares; provided, however, that the Trust,
within a reasonable time after such transfer, is furnished with written
notice of the name and address of such transferee or assignee and the
Registrable Shares with respect to which such registration rights are
being assigned, together with a written agreement executed by the
transferee or assignee to be bound by the provisions of this Agreement;
and provided further, that such assignment shall be effective only if
immediately following such transfer, the further disposition of such
Registrable Shares by the transferee or assignee is restricted under the
Securities Act.
8. Amendment and Waiver. Any provision of this Agreement may be
amended and the observance thereof may be waived only with the written
consent of the Trust and the holders of a majority of the Selling
Shareholders' Registrable Shares. Failure of any party to exercise any
right or remedy under this Agreement or otherwise, or delayed by a party
in exercising such right or remedy, will not operate as a waiver thereof.
9. Notices. Notices required or permitted to be given hereunder
shall be in writing and shall be deemed to be sufficiently given when
personally delivered against receipt (including by overnight courier) or
sent by registered mail, return receipt requested, addressed:
(a) if to the Trust:
Liberty Property Trust
Great Valley Corporate Center
65 Valley Stream Parkway
Malvern, Pennsylvania 19355
Attention: William G. Rouse III, Chairman
with a copy to:
Liberty Property Trust
Great Valley Corporate Center
65 Valley Stream Parkway
Malvern, Pennsylvania 19355
Attention: James J. Bowes, General Counsel
and
(b) if to a Selling Shareholder:
Robert C. Lux
APEX Asset Management Corporation
600 South Highway 169, Suite 1970
Minneapolis, MN 55426
and
Stewart R. Stender
APEX Asset Management Corporation
600 South Highway 169, Suite 1970
Minneapolis, MN 55426
or at such other address as each party furnishes by notice given in
accordance with this section.
10. Governing Law. This Agreement shall be enforced, governed by and
construed in accordance with the laws of the Commonwealth of
Pennsylvania, notwithstanding any conflicts of laws provisions to the
contrary.
11. Merger. This Agreement constitutes the entire Agreement among
the parties hereto with respect to the subject matter hereof, and there
are no representations, promises, warranties or other undertakings other
than those set forth or referred to herein. This Agreement supersedes
all prior agreements and understandings among the parties hereto with
respect to the subject matter hereof.
12. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
IN WITNESS WHEREOF, the Trust and the Selling Shareholders have caused
this Agreement to be executed as of the date first shown above.
LIBERTY PROPERTY TRUST
By:
------------------------------
Its:
------------------------------
THE SELLING SHAREHOLDERS
------------------------------
Robert C. Lux
------------------------------
Stewart R. Stender
330 Associates Inc.
By:
------------------------------
Its:
------------------------------
NWBC Associates, Inc.
By:
------------------------------
Its:
------------------------------
APEX Asset Management Corporation
By:
------------------------------
Its:
------------------------------
101
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Balance Sheet at March 31, 1997 (unaudited) and the Consolidated
Statement of Operations for the Three Months Ended March 31, 1997 (unaudited)
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000921112
<NAME> LIBERTY PROPERTY TRUST
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 20,146
<SECURITIES> 0
<RECEIVABLES> 9,728
<ALLOWANCES> 1,760
<INVENTORY> 0
<CURRENT-ASSETS> 29,874
<PP&E> 1,325,318
<DEPRECIATION> 128,794
<TOTAL-ASSETS> 1,291,712
<CURRENT-LIABILITIES> 12,369
<BONDS> 616,660
0
0
<COMMON> 40
<OTHER-SE> 559,227
<TOTAL-LIABILITY-AND-EQUITY> 1,291,712
<SALES> 0
<TOTAL-REVENUES> 46,482
<CGS> 0
<TOTAL-COSTS> 11,919
<OTHER-EXPENSES> 10,457
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 12,582
<INCOME-PRETAX> 11,524
<INCOME-TAX> 0
<INCOME-CONTINUING> 11,524
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,549
<EPS-PRIMARY> .32
<EPS-DILUTED> .34
</TABLE>
