SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): January 7, 1998
FIRST WASHINGTON REALTY TRUST, INC.
(Exact name of registrant as specified in its Charter)
State of Maryland 0-25230 52-1879972
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporated) File No.) Identification No.)
4350 East West Highway, Suite 400
Bethesda, Maryland 20814
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (301) 907-7800
No change
(Former name or address, if changed since last report)
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ITEM 5. OTHER EVENTS.
A. First Washington Realty Trust, Inc., a Maryland corporation ("First
Washington"), has completed the acquisition of five shopping centers.
On January 7, 1998, First Washington Realty Limited Partnership, a
Maryland limited partnership (the "Partnership") whose general partner is First
Washington, completed its acquisition of 100% of the partnership interests in
Capitol Place I Investment Limited Partnership, a Maryland limited partnership
which owns Bowie Plaza Shopping Center ("Bowie Plaza") located in Bowie, Prince
George's County, Maryland. The existing partners in Capitol Place I Investment
Limited Partnership contributed 100% of their partnership interests to the
Partnership in exchange for $2,842,369 in cash and 130,626 common units of the
Partnership which were issued to the existing partners, and was part of a
negotiated transaction. The common units are exchangeable thirteen months after
their issuance on a one-for-one basis for common stock of First Washington. The
source of a portion of the consideration consisted of the assumption of an
approximate $4,465,000 mortgage loan from Aid Association for Lutherans with a
remaining term of approximately eleven (11) years and an interest rate of 9.25%
per annum, secured by Bowie Plaza.
On March 9, 1998, the Partnership completed its acquisition of Watkins
Park Plaza Shopping Center ("Watkins Park") located in Mitchellville, Prince
George's County, Maryland from Watkins Park Plaza Limited Partnership, a
Maryland limited partnership. The purchase price for Watkins Park was
$14,295,000, paid in cash, and was part of a negotiated transaction.
On April 30, 1998, the Partnership completed its acquisition of 100% of
the interests in Parkville Shopping Center, L.L.C., a Maryland limited liability
company which owns Parkville Shopping Center ("Parkville") located in Baltimore
City and Baltimore County, Maryland. The existing member of Parkville Shopping
Center, L.L.C. contributed 100% of its interests to the Partnership in exchange
for 185,361 common units of the Partnership which were issued to the existing
member, and was part of a negotiated transaction. The common units are
exchangeable thirteen months after their issuance on a one-for-one basis for
common stock of First Washington. The source of a portion of the consideration
consisted of the assumption of a $3,182,000 mortgage loan from Northern Life
Insurance Company (and subsequent increase to $3,500,000) with a term of ten
(10) years and an interest rate of 7.01% per annum, secured by Parkville.
On May 28, 1998, the Partnership completed its acquisition of 100% of
the partnership interests in L and M Development Company Limited Partnership, a
Maryland partnership which owns Elkridge Corners Shopping Center ("Elkridge")
located in Elkridge, Howard County, Maryland. The existing partners in L and M
Development Company Limited Partnership contributed 100% of their partnership
interests to the Partnership in exchange for 89,109 common units of the
Partnership which were issued to the existing partners, and was part of a
negotiated transaction. The common units are exchangeable thirteen months after
their issuance on a one-for-one basis for common stock of First Washington. The
source of a portion of the consideration consisted of the assumption of an
approximate $5,900,000 mortgage loan from Provident Mutual Life Insurance
Company with a remaining term of approximately twelve (12)
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years and an interest rate of 8.625% per annum, secured by Elkridge Corners.
On June 1, 1998, the Partnership completed its acquisition of The
Village Shopping Center located in the City of Richmond and Henrico County,
Virginia from The Village Shopping Center, A Limited Partnership, a Virginia
limited partnership ("Village Partnership"). Village Partnership contributed The
Village Shopping Center to the Partnership in exchange for 373,162 common units
of the Partnership which were issued to Village Partnership and the assumption
and repayment of certain non-mortgage debt of the Village Partnership in the
aggregate amount of approximately $3,406,363, and was part of a negotiated
transaction. The common units are exchangeable thirteen months after their
issuance on a one-for-one basis for common stock of First Washington.
B. First Washington also completed the disposition of one retail
property and the two apartment properties.
On March 3, 1998, the Partnership completed its sale of 3269 M Street,
N.W., Washington, D.C. to 3269 M Street, L.L.C. The sale price for 3269 M Street
was $750,000, paid in cash, and was part of a negotiated transaction.
On March 20, 1998, the Partnership completed its sale of Branchwood
Apartments located in Goose Creek, South Carolina to CF Park Place Associates
Limited Partnership. The sale price for Branchwood Apartments was $2,350,000,
paid in cash, and was part of a negotiated transaction.
On March 20, 1998, the Partnership completed its sale of Park Place
Apartments located in Hanahan, South Carolina to CF Park Place Associates
Limited Partnership. The sale price for Park Place Apartments was $5,700,000,
paid in cash, and was part of a negotiated transaction.
C. Other Events.
Effective as of February 15, 1998, in connection with the
previous acquisition of City Avenue Shopping Center (formerly known as City Line
Shopping Center) located in Philadelphia, Pennsylvania the Partnership issued to
the previous partners of City Line Shopping Center Associates an additional
67,937 common units of the Partnership pursuant to, and as required under, the
terms of the Contribution Agreement dated October 22, 1996, as amended.
Effective as of March 20, 1998, First Washington entered into a letter
amendment to Revolving Credit Agreement with Union Bank of Switzerland (New York
Branch) increasing the amount available under such secured line of credit
facility to $45,000,000.
ITEM 7. EXHIBITS.
5.1 Contribution Agreement dated November 12, 1997 by and between Gary S.
Frank, Sheldon B. Kamins and C.P. Inc. and First Washington Realty Limited
Partnership.
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5.2 Real Estate Purchase Agreement dated March 9, 1998, by and between
First Washington Realty Limited Partnership and Watkins Park Plaza Limited
Partnership.
5.3 Letter Agreement dated March 16, 1998 by and between First Washington
Realty Limited Partnership and Watkins Park Plaza Limited Partnership.
5.4 Contribution Agreement dated September 9, 1997, by and between
Castlewood Realty Company, Inc. and First Washington Realty Limited Partnership.
5.5 Contribution Agreement dated March 11, 1998, by and between L & M
Montgomery Corporation, Thomas C. Martel, Maury W. Levin and Robert C. Levin and
First Washington Realty Limited Partnership.
5.6 Contribution Agreement dated March 24, 1998, by and between The Village
Shopping Center, A Limited Partnership and First Washington Realty Limited
Partnership.
5.7 Letter Agreement dated April 17, 1998 by and between The Village
Shopping Center, A Limited Partnership and First Washington Realty Limited
Partnership.
5.8 Letter Agreement dated May 6, 1998 by and between The Village Shopping
Center, A Limited Partnership and First Washington Realty Limited Partnership.
5.9 Amendment to Revolving Credit Agreement dated as of March 20, 1998,
among First Washington Realty Limited Partnership, as Borrower, Union Bank of
Switzerland (New York Branch), as Bank, and Union Bank of Switzerland (New York
Branch), as Administrative Agent.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
FIRST WASHINGTON REALTY TRUST, INC.
(Registrant)
By: /S/ Jeffrey S. Distenfeld
Jeffrey S. Distenfeld
Senior Vice President, General Counsel
Date: June 17, 1998
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EXHIBIT 5.1
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is made and entered as of November 12,
1997, by and between GARY S. FRANK, SHELDON B. KAMINS, and C.P. INC., a Maryland
corporation, who are all of the general and limited partners (collectively, the
"Partners" and individually, a "Partner") of Capitol Place I Investment Limited
Partnership, a Maryland limited partnership (the "Partnership") (the Partners
are sometimes hereinafter referred to collectively as "Contributors" and
individually, a "Contributor"), and (ii) FIRST WASHINGTON REALTY LIMITED
PARTNERSHIP, a Maryland limited partnership (hereinafter referred to as
"FWRLP").
W I T N E S S E T H:
WHEREAS, the Partners own all of the partnership interests (the
"Partnership Interests") of the Partnership; and
WHEREAS, the Partnership is the record and beneficial owner of that
certain parcel of real property described on Exhibit A hereto (collectively, the
"Land"), together with the shopping center known as Bowie Plaza Shopping Center
located in Bowie, Prince George's County, Maryland, and all other buildings and
improvements situated thereon (collectively, the "Building"), and all personal
property and fixtures located therein (other than that owned by tenants) (the
"Personalty"), and all appurtenances, rights, easements, rights-of-way,
tenements and hereditaments incident thereto (the "Additional Property") (the
Land, Building, Personalty and Additional Property are hereinafter collectively
referred to as the "Property"); and
WHEREAS, Contributors and FWRLP desire to enter into this Agreement
relating to the contribution by the Contributors to FWRLP of their Partnership
Interests in exchange for certain interests in FWRLP and cash.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Contribution. Subject to the terms and conditions set forth in this
Agreement, Contributors and FWRLP agree to the contribution by Contributors to
FWRLP (the "Contribution") of all of the Partnership Interests.
2. Consideration.
(a) In consideration of the Contribution of the Partnership
Interests to FWRLP, FWRLP shall pay cash (in the form of cash, certified check
or bank wire transfer) and shall issue common partnership units of FWRLP (the
"Units") in an
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aggregate amount (cash and Units) calculated as follows: Ten Million Seven
Hundred Fifty Thousand Dollars ($10,750,000.00) less the outstanding and unpaid
principal balance of the AAL Loan (as defined below) at Closing and adjusted for
any closing adjustments and prorations (the "Consideration Amount"). The number
of Units to be issued shall be determined at Closing by dividing the
Consideration Amount allocated to Units pursuant to Exhibit Q attached hereto by
a price per Unit (the "Unit Price") equal to Twenty-Five Dollars ($25.00),
rounded to the nearest one (1) Unit. The balance of the consideration shall be
paid in cash. FWRLP will pay the cash and issue the Units to the Contributors in
accordance with the schedule set forth as Exhibit Q attached hereto.
(b) At Closing, the Partnership Interests shall be contributed
to FWRLP with the Property then being subject to the indebtedness, lien and
operation of the First Trust (as defined below). Contributors and FWRLP shall
provide to the Lender any and all information reasonably requested by the
Lender.
(c) (i) The Property is presently encumbered by a Deed of
Trust and Security Agreement and First Modification to Deed of Trust ("First
Trust") from the Partnership, as debtor, for the benefit of Aid Association for
Lutherans, as secured party (the "Lender"), which First Trust secures an
original, aggregate principal indebtness of $5,200,000.00 with interest thereon
payable over the term thereof (which ends on December 10, 2009) at a fixed
interest rate of 9.25% per annum, as evidenced by a Note from the Partnership to
Lender, as amended ("Note"). The First Trust and Note and all documents and
instruments executed in connection therewith are collectively referred to as the
"AAL Loan." The AAL Loan requires equal monthly installments of principal and
interest in the amount of the $51,455.00 per month. The outstanding principal
balance under the AAL Loan as of the date hereof is approximately $4,549,000.00.
Copies of the First Trust and Note are attached hereto as Exhibits N and O,
respectively.
(ii) FWRLP's obligations under this Agreement shall be
expressly contingent on the condition that FWRLP receive by Closing a letter
(the "Letter") from Lender (i) consenting to the Contribution of the Partnership
Interests and such modifications to the AAL Loan as FWRLP shall determine are
necessary (to the extent that FWRLP determines that modifications are necessary,
FWRLP shall so notify Contributors on or before November 20, 1997), (ii)
confirming that the AAL Loan is as described above, (iii) certifying that, to
the best knowledge of the Lender, there is no default or event which with notice
or lapse of time, or both, would constitute a default under the AAL Loan. At
Closing, Contributors shall execute an estoppel certificate in favor of FWRLP
certifying that, to the best knowledge of the Contributors, there is no default,
or event of default which with notice or lapse of time, or both, would
constitute a default under the AAL Loan. FWRLP will use commercially reasonable
efforts to obtain such Letter from Lender, and the Contributors shall reasonably
cooperate with FWRLP in its efforts to obtain such Letter from Lender on or
before November 26, 1997 (as
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defined below). FWRLP shall be responsible for all assumption fees and other
costs charged by the Lender in connection with such consents. If such Letter is
not received by FWRLP by Closing, FWRLP shall have the right to terminate this
Agreement, in which event the Deposit (defined below), together with interest
thereon, shall be returned to FWRLP. If Lender does not consent or if Lender's
Letter is other than as set forth above and is not reasonably acceptable to
FWRLP, FWRLP shall have the right, at its sole election, to terminate this
Agreement by giving written notice thereof to Contributors, whereupon the
Deposit, together with interest thereon, shall be returned to Contributors and
neither party shall have any further liability to the other except as
specifically set forth herein.
(d) Anything contained herein to the contrary notwithstanding,
in the event the Lender does not consent to the transfer of the Partnership
Interests to FWRLP as contemplated herein, then in order to cause the
transaction to proceed Contributors may, but shall not be required to, elect to
permit FWRLP to payoff the AAL Loan at Closing; provided that, in such event,
the Consideration Amount shall be reduced by the full amount of any prepayment
premium or penalty and the cash and/or Units to be issued to the Contributors
pursuant hereto shall be recomputed based upon such reduced Consideration
Amount.
3. Deposit.
(a) Within two (2) business days after the date of delivery to
FWRLP of an original of this Agreement executed by Contributors together with
completed Exhibits hereto (the date of such delivery by Contributors being the
"Acceptance Date"), FWRLP shall deliver to the Title Company, as escrow agent, a
deposit (together with interest earned thereon, the "Deposit") of Two Hundred
Fifty Thousand Dollars ($250,000.00 ) by check payable to the Commercial
Settlements, Inc., 1413 K Street, N.W., Washington, DC 20005 (the "Title
Company").
(b) The Title Company will immediately provide Contributors
with written evidence of receipt of such Deposit. The Title Company shall place
the Deposit in an interest-bearing account within two (2) business days after
the date of receipt thereof, and interest on the Deposit shall accrue to the
benefit of the party entitled to the Deposit pursuant to this Agreement. The
Deposit shall be held by the Title Company pursuant to the terms and conditions
of this Agreement.
(c) In the event that, at any time prior to Closing, the
Contributors or FWRLP provides Title Company with a certification (a copy of
which shall be delivered contemporaneously to the other party) that the
Contributors or FWRLP, as the case may be, is entitled to the Deposit pursuant
to the terms of this Agreement, Title Company shall deliver the Deposit to such
party no less than five (5) business days and no more than seven (7) business
days after receipt of said notice, unless the other party disputes such
certification by written notice to Title Company (a copy of which
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shall be delivered contemporaneously to the other party) delivered within five
(5) business days of Title Company's receipt of the initial certification. In
such event, Title Company shall hold the Deposit pending resolution of such
dispute.
(d) The parties acknowledge that (i) Title Company is acting
solely as a stakeholder at their request and for their convenience, (ii) Title
Company shall not be deemed to be the agent of either of the parties, and (iii)
Title Company shall not be liable to either of the parties for any act or
omission on its part unless taken or suffered in bad faith, in willful disregard
to this Agreement or involving gross negligence. The Contributors and FWRLP
shall jointly and severally indemnify and hold Title Company harmless from and
against all costs, claims and expenses, including reasonable attorneys' fees,
incurred in connection with the performance of Title Company's duties hereunder,
except with respect to actions or omissions taken or suffered by Title Company
in bad faith, in willful disregard of this Agreement or involving gross
negligence on the part of Title Company; provided, however, that if any
litigation shall arise between the Contributors and FWRLP in connection
therewith, the non-prevailing party shall pay all such costs, claims and
expenses of the Title Company. In the event any dispute shall arise between the
parties hereto as to the disposition of the Deposit, the Title Company's sole
responsibility may be met, at the Title Company's option, by paying the Deposit
into the court in which relevant litigation is pending between the parties, or
by initiating an interpleader action, and upon payment of the Deposit into
court, neither Contributors nor FWRLP shall have any further right, claim,
demand, or action against the Title Company.
4. Closing. Except as otherwise provided in this Agreement, the
Contribution contemplated herein shall be consummated at the "Closing"
(sometimes hereinafter referred to as the "Closing"), which shall take place on
January 7, 1998 (the "Closing Date") or such other date as may be mutually
agreed upon by Contributors and FWRLP; provided, however, that if the Lender has
not completed all documentation consenting to the contribution of the
Partnership Interests by such date, then the Closing Date shall be extended for
such reasonable time period as is required to complete same, not to exceed
thirty (30) days. The Closing shall take place at the offices of First
Washington Realty Limited Partnership, 4350 East-West Highway, Suite 400,
Bethesda, Maryland 20814, or at such other place as may be mutually agreed upon
by Contributors and FWRLP.
5. Several Representations and Warranties of Contributors. In order to
induce FWRLP to enter into this Agreement and to issue the Units in
consideration for the Partnership Interests, each Contributor for such
Contributor only and for no other Contributor makes the following several
representations and warranties:
(a) Authority. Such Contributor has the right, power and
authority to enter into this Agreement and to contribute its Partnership
Interests in accordance with the terms and conditions of this Agreement. Except
for the consents required under the
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AAL Loan, no consents of any persons other than those executing this Agreement
as a Contributor are required for such execution or to cause such Contributor to
consummate the transactions contemplated by this Agreement. This Agreement is
the valid and binding obligation of such Contributor, enforceable against such
Contributor in accordance with its terms, except that such enforcement may be
subject to bankruptcy, conservatorship, receivership, reorganization,
insolvency, moratorium or similar laws or procedures relating to or affecting
creditors rights generally and to general principles of equity.
(b) [Intentionally Omitted].
(c) Ownership of Interests. Such Contributor owns the
Partnership Interests owned by such Contributor, as set forth in Exhibit P
hereto, free and clear of all liens, charges, encumbrances, restrictive
agreements and assessments other than the provisions of the Partnership
Agreement (as defined in Section 6(a) below) and the AAL Loan. Upon the
contribution of such Contributor's Partnership Interests to FWRLP or its
permitted designee(s), FWRLP will receive good and absolute title thereto, free
from all liens, charges, encumbrances, restrictive agreements and assessments
whatsoever other than the provisions of the Partnership Agreement and the AAL
Loan. Such Contributor hereby waives, with respect to the contribution
contemplated by this Agreement, any "right of refusal" or other restriction on
transfer set forth in the Partnership Agreement. There are no outstanding
options, contracts, calls, commitments or demands of any nature relating to the
Partnership Interest of such Contributor, except as set forth in the Partnership
Agreement and the AAL Loan.
(d) Securities Law Matters.
(i) Each Contributor who shall receive the Units is now and, at the time of
Closing, will be an "accredited investor" as such term is defined under Rule 501
promulgated under the Securities Act of 1933, as amended (the "Securities Act");
(ii) Each Contributor's primary residence or principal place of business is
in the State of Maryland;
(iii) Each Contributor is acquiring the Units for such Contributor's own
account for investment purposes only and not with a view to distribution and
does not intend to distribute or resell the Units;
(iv) Taking into account the information and resources such Contributor can
practically bring to bear on the acquisition of the Units in FWRLP contemplated
hereby, such Contributor is knowledgeable, sophisticated and experienced in
making, and is qualified to make decisions with respect to investments in
securities presenting an investment decision like that involved in the
acquisition of the Units, including investments in securities issued by FWRLP,
and has requested,
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received, reviewed and considered all information such Contributor deems
relevant in making an informed decision to acquire the Units (including the
Confidential Information Statement attached hereto as Exhibit L which contains
the First Amended and Restated Agreement of Limited Partnership of FWRLP and any
Amendments thereto (the "FWRLP Partnership Agreement");
(v) Each Contributor will not, directly or indirectly, voluntarily offer,
sell, pledge, transfer or otherwise dispose of (or solicit any offers to buy,
purchase or otherwise acquire or take a pledge of ) any of the Units except in
compliance with the Securities Act and the rules and regulations promulgated
thereunder and with the terms and conditions of the FWRLP Partnership Agreement;
(vi) Each Contributor acknowledges that the Units to be issued must be held
unless and until they are subsequently registered under the Securities Act and
under applicable state securities or blue sky laws, unless exemptions from such
registrations are available at the time of resale;
(vii) Prior to the issuance of the Units, each Contributor will execute all
such other documents and instruments as may be reasonably necessary to allow
FWRLP to comply with federal and state securities law requirements with respect
to the issuance of the Units and to comply with the terms of the FWRLP
Partnership Agreement; and
(viii) Each Contributor acknowledges and agrees that, notwithstanding
Section 8.6 of the FWRLP Partnership Agreement, the Units to be issued hereunder
shall not be redeemable for cash or exchangeable for Common Stock in the REIT
for a period of thirteen (13) months from and after the date of issuance to such
Contributor.
(e) No Contributor is a person other than a United States
person within the meaning of the Internal Revenue Code of 1986, as amended (the
"Code"). The transaction contemplated herein is not subject to the tax
withholding provisions of Section 3406 of the Code, or Subchapter A of Chapter 3
of the Code or of any other provision of law.
6. General Representations and Warranties of Contributors. In order to
induce FWRLP to enter into this Agreement and to issue the Units in
consideration for the Partnership Interests, the Contributors, jointly and
severally, hereby make the following representations and warranties as of the
date hereof:
(a) Authority. The Partnership is a limited partnership duly
organized and in good standing under the laws of the State of Maryland. The copy
of the Partnership' s Partnership Agreement and all amendments thereto
(collectively, the "Partnership Agreement") including all Certificates of
Limited Partnership and all
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amendments thereto, attached hereto an Exhibit P, is a true, correct and
complete copy thereof.
(b) Title. To the Contributors' knowledge, the Partnership is
the sole owner of fee simple title to the Property, and such title is marketable
and good of record and free and clear of all liens, encumbrances, covenants,
conditions, restrictions and other matters affecting title, except for the
Permitted Exceptions (as defined in Section 8(a)(iii)).
(c) Compliance with Existing Laws. To the knowledge of the
Contributors, the Partnership has not received any notice from a governmental
authority asserting that the Partnership is in violation of any applicable
building, zoning, environmental or other ordinances, statutes or regulations of
any governmental agency, in respect to the ownership, use, maintenance,
condition and operation of the Property or any part thereof.
(d) Leases. True, correct and complete copies of all of the
leases of the Property and any amendments thereto (collectively, the "Leases"),
have been delivered to FWRLP. Attached hereto as Exhibit B is a description of
all of the Leases and a current rent schedule ("Rent Schedule") covering the
Leases. There are no leases or tenancies of any space in the Property other than
those set forth in Exhibit B or, to the Contributors' knowledge, any subleases
or subtenancies unless otherwise noted therein. Except as otherwise set forth in
Exhibit B or elsewhere in this Agreement:
(i) To the knowledge of Contributors, the Leases are in full force and
effect and constitute a legal, valid and binding obligation of the respective
tenants;
(ii) no tenant has an option to purchase the Property or any portion
thereof;
(iii) no renewal or expansion options have been granted to the tenants,
except as provided in the Leases;
(iv) to Contributors' knowledge, the Partnership is not in default under
any of the Leases;
(v) the rents set forth on the Rent Schedule are being collected on a
current basis and there are no arrearages in excess of one month, except as
indicated in Exhibit B hereto, nor has any tenant paid any rent, additional rent
or other charge of any nature for a period of more than thirty (30) days in
advance;
(vi) all work for tenant alterations and other work or materials contracted
for by the Partnership and any tenant has been completed by
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the Partnership, and all work and materials have been fully paid for or will be
paid for by Closing and all contributions to tenant for tenant improvements have
been paid to tenant;
(vii) the Partnership has not sent written notice to any tenant claiming
that such tenant is in default, which default remains uncured, and to
Contributors' knowledge, no tenant is in default under its Lease, except as
indicated in Exhibit B hereto;
(ix) no action or proceeding instituted against the Partnership by any
tenant is presently pending in any court; and
(x) no security deposits are in the possession of Contributors or the
Partnership other than those set forth in Exhibit B.
(e) Service Contracts. Attached hereto as Exhibit C is a
complete and correct list of all contracts or agreements relating to the
management, leasing, operation, maintenance or repair of the Property (the
"Service Contracts"). True and correct copies of all of the Service Contracts
have been delivered to FWRLP. All of the Service Contracts set forth on Exhibit
C shall be assumed by FWRLP as of the Closing Date. Except in the case of a
default by the vendor under a specific Service Contract, no Service Contract
will be terminated, amended, modified or supplemented prior to the Closing Date
without FWRLP's prior written approval.
(f) Tax Bills. Attached hereto on Exhibit D are true and
correct copies of tax bills issued by any applicable federal, state or local
governmental authority to the Partnership with respect to the Property for the
most recent past and current tax years, and any new assessment received with
respect to a current or future tax year.
(g) Insurance. The Property is insured for at least 80% of its
replacement cost (less any deductible) against loss or damage sustained as a
result of fire or other casualty and the Partnership has rent loss insurance in
place for the Property. Attached hereto as Exhibit E is a list of all hazard,
liability and other insurance policies presently affording coverage with respect
to the Property. The Contributors shall maintain in full force and effect all
such policies until the Closing Date. Contributors shall cancel such policies as
of the Closing Date (with Contributors being entitled to any reimbursement of
any advance premiums paid by the Partnership), unless a loss in rental income
has resulted from a casualty or other insured event prior to Closing for which
the Partnership may be entitled to make a claim under such policies, in which
event the policies shall not be canceled.
(h) Condition of Property. Possession of the Property shall be
delivered to FWRLP at Closing in its "as is, where is" condition as of the date
of FWRLP's execution of this Agreement, ordinary wear and tear excepted.
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(i) Tenant Estoppels. The Contributors represent and warrant
that they shall use reasonable efforts to obtain and deliver to FWRLP a tenant
estoppel letter from each tenant in substantially the form attached hereto as
Exhibit F (or in such form or containing such information as may be required
under such tenant's lease).
(j) Condemnation Proceedings. No condemnation or eminent
domain proceedings are pending or, to the best of the Contributors' knowledge,
threatened against the Property or any part thereof, and neither the Partnership
nor the Contributors' has made any commitments to or received any written
notice, of the desire of any public authority or other entity to take or use the
Property or any part thereof whether temporarily or permanently, for easements,
rights-of-way, or other public or quasi-public purposes.
(k) Litigation. Except as set forth on Exhibit G hereto, no
litigation is pending or, to the best of the Contributors' knowledge, threatened
against the Partnership, including administrative actions or orders against the
Partnership relating to governmental regulations, affecting the use, operation
or ownership of the Property or any part thereof as contemplated herein.
(l) No Defaults. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will: (i) subject to
any approval required under the AAL Loan, conflict with, or result in a breach
of, the terms, conditions or provisions of, or constitute a default under, any
agreement or instrument to which the Partnership is a party or by which the
Partnership or the Property is bound, (ii) subject to the approval required
under the AAL Loan, violate any restriction, requirement, covenant or condition
to which the Partnership is subject or by which the Partnership or the Property
is bound, (iii) constitute a violation of any applicable code, resolution, law,
statute, regulation, ordinance, rule, judgment, decree or order or (iv) except
as set forth herein, result in the cancellation of any contract or lease
pertaining to the Property.
(m) [Intentionally Omitted].
(n) Separate Tax Lot and Subdivision. To the best of
Contributors' knowledge, the Land is the subject of a separate subdivision, and
the Land is assessed for tax purposes as a separate and distinct parcel.
(o) Hazardous Waste. Except as disclosed in the environmental
reports delivered by Contributors to FWRLP or obtained by FWRLP, Contributors
have no knowledge of any discharge, spillage, uncontrolled loss, seepage or
filtration (a "Spill") of oil, petroleum or chemical liquids or solids, liquid
or gaseous products or any hazardous waste or hazardous substance (as those
terms are used in the Comprehensive Environmental Response, Compensation and
Liability Act of 1986, as amended, the Resource Conservation and Recovery Act of
1976, as amended, or in any other applicable federal, state or local laws,
ordinances, rules or regulations relating
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to protection of public health, safety or the environment (as such laws may be
amended from time to time) at, upon, under or within the Land or any contiguous
real estate. To the best of the Contributors' knowledge, there is no proceeding
or action pending or threatened by any person or governmental agency regarding
the environmental condition of the Property. To Contributors' knowledge, the
Building is totally free of friable asbestos requiring remediation. Without
intending to limit the foregoing representations and warranties, FWRLP
acknowledges that the Property is and/or has been leased to a dry cleaner,
various restaurants and other tenants that may use regulated products in the
normal course of their business and that Contributors do not control or actively
monitor such use.
(p) Certificates of Occupancy. The Partnership will not amend
any certificates of occupancy for the Property and will maintain them in full
force and effect to the extent that the Partnership is responsible for them. .
(q) Licenses and Permits. The Contributors have received no
notice, nor have any knowledge, that the Partnership is lacking any required
permit or license issued by applicable governmental authorities for operation,
maintenance or ownership of the Property ("Licenses").
(r) Operating Statements. Attached hereto as Exhibit H are
copies of the operating statements of the Property for calendar years 1994,
1995, 1996 and 1997 (through September 30, 1997), which are true and correct to
Contributors' knowledge. Also attached as Exhibit H is a copy of the 1997
operating budget for the Property.
(s) Utilities. To Contributors' knowledge, adequate, usable
public sewers, public water facilities, gas and electrical facilities necessary
to the operation of the Property are installed in and are duly connected to the
Property and can be used without any charge except the normal deposits, if any,
and usual metered utility charges and sewer charges.
(t) Personal Property. Attached hereto as Exhibit I is a true,
correct and complete inventory of all personal property ("Personal Property"),
if any, owned by the Partnership and used in the management, maintenance and
operation of the Property (other than trade fixtures or personal property of
tenants).
(u) Leasing Commissions. To the best of Contributors'
knowledge, there are, and at Closing there shall be, no outstanding or
contingent leasing commissions or fees payable with respect to the Property.
(v) Partnership Liabilities. Except for (i) the obligations
and liabilities of the Partnership which FWRLP is taking the Partnership
Interests subject to under Section 2 (b) above, (ii) the Service Contracts,
Leases and other contractual obligations which FWRLP is acquiring the
Partnership Interests subject to pursuant to this Agreement, and (iii) any
liabilities and obligations of the Partnership which are being
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adjusted at Closing pursuant to Section 12 or other provisions of this
Agreement, the Partnership shall not have any liabilities or obligations, either
accrued, absolute or contingent or otherwise, which will not be paid or
discharged on or before the Closing Date. In addition, the Partnership has not
received notice of any, and to the best of the knowledge of the Contributors,
there is, as of the date of execution of this Agreement, no basis for any claim
against (or liability of ) the Partnership arising from the business done,
transactions entered into or other events occurring prior to the Closing Date
other than the obligations and liabilities described in the preceding sentence.
(w) Partnership for Tax Purposes. The Partnership is, and at
all times has been, properly treated as a partnership for Federal Income Tax
purposes, and not as an "association" or "publicly traded partnership" taxable
as a corporation.
(x) Taxes. The Partnership has timely filed with the
appropriate taxing authorities all returns (including without limitation
information returns and other material information) in respect of Federal, State
and local taxes (collectively "Taxes") required to be filed by it through the
date hereof and will timely file any such returns required to be filed by it on
or prior to the Closing Date. The returns and other information filed (or to be
filed) are complete and accurate in all material respects. All Taxes of the
Partnership in respect of periods beginning before the Closing Date have been
timely paid, or will be timely paid prior to the Closing Date, and the
Partnership has no material liability for Taxes in excess of the amounts so
paid. All Taxes that the Partnership has been required to collect or withhold
have been duly collected or withheld and, to the extent required when due, have
been or will be (prior to Closing Date) duly paid to the proper taxing
authority. No audits of any of the Partnership's federal, state or local returns
for Taxes by the relevant taxing authorities have occurred, and no material
deficiencies for Taxes of the Partnership have been claimed, proposed or
assessed by any taxing or other governmental authority against the Partnership.
There are no pending or, to the best of knowledge of the Contributors,
threatened audits, investigations or claims for or relating to any material
additional liability to the Partnership in respect of Taxes, and there are no
matters under discussion with any governmental authorities with respect to Taxes
that in reasonable judgement of the Contributors or their counsel, is likely to
result in a material additional liability for Taxes. There are no liens for
taxes (other than for current taxes not yet due and payable) on any of the
assets of the Partnership.
7. Obligations Pending Closing. From and after the date of this Agreement
through the Closing Date, Contributors and FWRLP, as applicable, covenant and
agree as follows:
(a) Maintenance and Operation of Premises. The Contributors
will cause the Property to be maintained in its present order and condition,
normal wear and tear excepted and will cause the continuation of the normal
operation thereof, including the purchase and replacement of fixtures and
equipment, and the continuation of the normal practice with respect to
maintenance and repairs so that the Property will,
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except for normal wear and tear, be in substantially the same condition on the
Closing Date as on the date hereof. If the transaction contemplated by this
Agreement closes as provided herein, then FWRLP will reimburse Contributors at
Closing for any costs incurred and paid by the Partnership in excess of $2,000
during each of November and December 1997 for repairs to the roof of the
Building which FWRLP has approved (which approval shall not be unreasonably
withheld or delayed) prior to such repairs being made; provided, however, that
prior approval of FWRLP shall not be required for emergency repairs to the roof,
but Contributors shall promptly notify FWRLP thereof.
(b) Licenses. The Contributors shall use reasonable efforts to
preserve in force all Licenses and to cause those expiring to be renewed.
(c) Changes in Representations. The Contributors shall notify
FWRLP promptly, and FWRLP shall notify the Contributors promptly, if either
becomes aware of any occurrence prior to the Closing Date which would make any
of its representations, warranties or covenants contained herein not true in any
material respect.
(d) Obligations as to Leases. The Contributors shall not,
without FWRLP's prior written consent (which consent shall not be unreasonably
withheld), amend, modify, renew or extend any Lease in any respect unless
required by law, or enter into new leases or approve any assignment of leases or
subletting of leased space, or terminate any Lease. If FWRLP does not respond
within five (5) business days of written request for consent from Contributors,
FWRLP shall be deemed to have consented to such request. Contributors shall not
be responsible for vacancy caused by a breach by tenant under its lease. Prior
to Closing, Contributors shall not apply all or any part of the security deposit
of any tenant unless such tenant has vacated the Property or is in material
default under its lease.
(e) Obligations as to AAL Loan. Contributors shall not,
without FWRLP's prior written consent, (i) prepay, or permit the Partnership to
prepay, the AAL Loan, or (ii) modify or amend, or permit the Partnership to
modify or amend, any of the documents evidencing or securing the AAL Loan or
otherwise entered into in connection with the AAL Loan. Contributors shall make,
or cause the Partnership to make, all payments required to be made under the AAL
Loan when due, shall perform, or cause the Partnership to perform, all
obligations under the AAL Loan and shall keep, and cause the Partnership to
keep, the AAL Loan free from default.
8. Representations, Warranties and Covenants of FWRLP. In order to
induce Contributors to enter into this Agreement and to contribute the
Partnership Interests to FWRLP, FWRLP and, solely as to the representations,
warranties and covenants contained in Sections 8(h), (j), (k) and (l), First
Washington Realty Trust, Inc ("REIT") hereby make the following representations
and warranties as of the date hereof, each of which is material:
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(a) Authority of FWRLP. FWRLP is a limited partnership duly
organized and existing and in good standing under the laws of the State of
Maryland. FWRLP has all necessary power and authority to execute, deliver and
perform this Agreement and consummate all of the transactions contemplated by
this Agreement. This Agreement is the valid and binding obligation of FWRLP,
enforceable against it in accordance with its terms.
(b) No Defaults. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will: (i) conflict
with, or result in a breach of, the terms, conditions or provisions of, or
constitute a default under, the Partnership Agreement or any agreement or
instrument to which FWRLP is a party, (ii) violate any restriction, requirement,
covenant or condition to which the FWRLP is subject, and (iii) constitute a
violation of any applicable code, resolution, law, statute, regulation,
ordinance, rule, judgment, decree or order.
(c) Vacant Space. FWRLP hereby further agrees that if any
rentable space in the Property is vacant or the tenant thereunder is in default
under its lease on the Closing Date, FWRLP shall accept the Property subject to
such vacancy or tenant default (subject to Section 9(a)(v) hereof), provided
that the vacancy or default was not permitted or created by Contributors in
violation of any restrictions contained in this Agreement.
(d) Additional Matters Regarding Authority. The execution,
delivery and performance by FWRLP of this Agreement and each other agreement,
document or instrument contemplated hereby to which FWRLP is a party and which
is required to be delivered to Contributors at Closing (together with this
Agreement, the "FWRLP Documents"), the fulfillment of and the compliance with
the respective terms and provisions hereof and thereof by FWRLP, and the due
consummation of the transactions contemplated hereby or thereby by FWRLP have
been, or by Closing will be, duly and validly authorized and approved by all
requisite partnership actions of FWRLP.
(e) Disclosure Documents. Attached hereto as Exhibit N is a
true and correct copy of the Confidential Information Statement, as supplemented
through the date hereof. The FWRLP Partnership Agreement, as contained in the
Confidential Information Statement, as supplemented through the date hereof, has
not been amended or modified except as set forth in Exhibit N, and, to the
knowledge of FWRLP, is in full force and effect as of the date hereof, and, to
the knowledge of FWRLP, no default or condition which, with the passage of time
or the giving of notice could become a default, exists on the part of any party
thereunder.
(f) Binding Obligation. This Agreement constitutes, and all
other agreements, documents and instruments to be executed by FWRLP pursuant
hereto, when duly executed and delivered by FWRLP, will each constitute, valid
and binding obligations of FWRLP, enforceable in accordance with their
respective terms, except
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that such enforcement may be subject to bankruptcy, conservatorship,
receivership, reorganization, insolvency, moratorium or similar laws or
procedures relating to or affecting creditors' rights generally or the rights of
creditors of limited partnerships and to general principles of equity.
(g) No Capital Calls or Loans. Following Closing, neither
Contributors, as holders of the Units, nor any subsequent transferees of the
Units from Contributors, shall have any obligation to make additional capital
contributions or loans to FWRLP.
(h) Financial Information. The financial statements of FWRLP
and the REIT (including the notes thereto) included in the Confidential
Information Statement, as supplemented through the date hereof, present fairly
the financial position of the respective entity or entities presented therein at
the respective dates indicated and the results of their operations for the
respective periods specified, and except as otherwise stated in any such
registration statement or periodic report, such financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis. Since the date of the most recent financial statements
included in the Confidential Information Statement, as supplemented through the
date hereof, there has been no material adverse change, when considered as a
whole, in the condition, financial or otherwise, or in the earnings, assets,
business affairs or business prospects of FWRLP or the REIT.
(i) Issuance of Units. The FWRLP Partnership Agreement
provides, or prior to Closing will provide, for the issuance of the Units. The
Units to be issued in connection with the transactions herein contemplated have
been, or prior to their issuance on the Closing Date will have been, duly
authorized for issuance by FWRLP to Contributor, and on the date of their
issuance on the Closing Date will be validly issued, fully paid and
non-assessable. The Units conform to the description thereof contained in the
Confidential Information Statement, as supplemented through the date hereof, and
such description conforms to the rights set forth in the FWRLP Partnership
Agreement.
(j) Disclosure. The Confidential Information Statement, as
supplemented through the date hereof, on the date hereof, does not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(k) Status of REIT. First Washington Realty Trust, Inc. is
organized in conformity with the requirements for qualification as a real estate
investment trust under the Internal Revenue Code of 1986, as amended (the
"Code"), and its proposed method of operation will enable it to meet the
requirements for taxation as a real estate investment trust under the Code.
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(l) Anti-Dilution; Holding Period. FWRLP hereby covenants and agrees as
follows:
(i) If at any time prior to Closing there shall be
(a) a reorganization of FWRLP (other than a combination,
reclassification, exchange or subdivision of Units otherwise
provided for herein), (b) a merger or consolidation of FWRLP
with or into another entity in which FWRLP is not the
surviving entity, or a reverse triangular merger in which
FWRLP is the surviving entity but the Units outstanding
immediately prior to the merger are converted by virtue of the
merger into other property, whether in the form of securities,
cash or otherwise, or (c) a sale or transfer of FWRLP's
properties and assets as, or substantially as, an entirety to
any other person, then, as a part of such reorganization,
merger, consolidation, sale or transfer, lawful provision
shall be made so that Contributors shall thereafter be
entitled to receive at Closing the number of shares of stock
or other securities or property of the successor entity
resulting from such reorganization, merger, consolidation,
sale or transfer that Contributors would have been entitled to
receive if the Closing had been held immediately before such
reorganization, merger consolidation, sale or transfer and
Contributors had received at such Closing the Units which it
was entitled to receive under this Agreement, subject to
further adjustments as provided in this Agreement. The
foregoing provisions of this Section shall similarly apply to
successive reorganizations, consolidations, mergers, sales and
transfers occurring prior to Closing and to the stock or
securities of any other entity that are at the time receivable
by holders of the Units as a result thereof.
(ii) If FWRLP, at any time prior to Closing, by
reclassification of securities or otherwise, shall change the
Units into the same or a different number of securities of any
other class or classes, at Closing Contributors shall have the
right to receive such number or kind of securities as would
have been issuable to Contributors as the result of such
change as if Contributors held the Units immediately prior to
such reclassification or other change, all subject to further
adjustment as provided in this Section.
(iii) If FWRLP at any time prior to Closing shall
split, subdivide or combine the Units into a different number
of securities of the same class, the number of Units to be
received by Contributors at Closing shall be proportionately
increased in the case of a split or subdivision or
proportionately decreased in the case of a combination, and
the Unit Price used in this Agreement to calculate certain
adjustments to the number of Units shall be proportionately
decreased in the case of a split or subdivision or
proportionately increased in the case of a combination.
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(iv) If, prior to Closing, all holders of Units
("Unitholders") shall have received, or, on or after the
record date fixed for the determination of eligible
Unitholders, shall have become entitled to receive, without
payment therefor, other or additional Units or other
securities or property (other than cash) of FWRLP by way of
distribution, then and in each case, Contributors shall have
the right to acquire upon Closing, in addition to the number
of Units to which Contributors are entitled hereunder, and
without payment of any additional consideration thereof, the
amount of such other or additional Units or other securities
or property (other than cash) of FWRLP that Contributors would
hold on the Closing Date had they been the holder of record of
the Units on the date hereof through and including the Closing
Date, and had retained such Units and all other additional
Units and other securities or property as aforesaid during
such period, giving effect to all adjustments called for
during such period by the provisions of this Agreement.
(m) Holding Period. Except in connection with a sale of all or
substantially all of FWRLP's assets or a merger or consolidation of FWRLP, in no
event shall FWRLP voluntarily sell or otherwise dispose of the Property or any
part thereof or the Partnership Interests or any part thereof (other than
pursuant to a condemnation or under threat of condemnation) for a period of six
(6) years following the Closing Date, unless (i) it is pursuant to a tax-free
exchange such that no taxable gain would be incurred by Contributors as a result
of such sale or other disposition of the Property or the Partnership Interests
or (ii) FWRLP indemnifies and agrees to hold harmless Contributors from any
Federal and state income tax consequences attributable to such sale or other
disposition. In the event of a condemnation or involuntary conversion of a
material part of the Property, FWRLP shall use reasonable efforts to reinvest
the condemnation proceeds in such property or properties, and within such time
periods, as are required by the Internal Revenue Code to avoid Federal income
tax being payable by Contributors with respect to such condemnation proceeds.
9. Conditions Precedent to Closing.
(a) It shall be a condition precedent of FWRLP's obligation to
make a full settlement hereunder that each and every one of the following
conditions shall exist on the Closing Date:
(i) Representations and Warranties. Contributors'
representations and warranties hereunder shall be true and
correct in all material respects the same manner and with the
same effect as though such representations and warranties had
been made on and as of the Closing, except to the extent
modified by Section 9(a)(v).
(ii) Zoning. No proceedings shall have occurred or be
pending to change, redesignate or redefine the zoning
classification of the Property to a more restrictive
classification than presently exists.
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(iii) Title. Title to the Property shall be
marketable, good of record, and insurable by the Title Company
at standard rates or less, pursuant to a full coverage ALTA
Form-B (Rev. 1970 and 1984) owner's title insurance policy (or
an unconditional commitment therefor) without any exceptions
("Printed form" or otherwise) other than the Permitted
Exceptions, and in addition, without exception for mechanic's
or materialmen's lien arising from goods, labor or materials
provided to the Property prior to the Closing Date. The
"Permitted Exceptions" are:
(A) the lien of current real estate taxes and
special assessments not yet due and payable; and
(B) such other matters which are listed on Exhibit J
attached hereto. Notwithstanding anything to the
contrary contained in this paragraph (B), the
Contributors, at or prior to Closing, shall cause to
be satisfied and released of record all mortgages,
deeds of trust, financing statements, judgments,
liens and matters (other than those set forth on
Exhibit J hereto) that may be satisfied by payment of
a liquidated sum, other than the AAL First Trust;
provided, however, that if the amount thereof exceeds
$250,000 and was not voluntarily created by the
Contributors subsequent to the effective date of the
Title Commitment, Contributors need not satisfy and
release such matters, in which event FWRLP shall have
the right and option either (i) to terminate this
Agreement, or (ii) to close on the contribution of
the Partnership Interests and waive such defects in
title. In the event of termination of this Agreement,
Contributor and FWRLP shall be relieved of all
liabilities under this Agreement, except the
indemnities provided in Sections 14(a) and 16 hereof,
and the Deposit shall be returned to FWRLP.
(iv) [Intentionally Omitted].
(v) Tenant Vacancies. There shall not exist at the
Property at the Closing Date more than 15,000 square feet of
space in the aggregate which is not leased pursuant to a bona
fide lease or which the tenant therein has been in default
under its lease for more than sixty (60) days and for an
amount in excess of two (2) month's base rent at the Closing
Date.
(vi) Leasing Brokerage/Property Management
Agreements. Contributors shall have terminated any and all
leasing brokerage agreements and property management
agreements with respect to the Property effective as of the
Closing. All responsibility for dealings with any such brokers
and agents, including the payment of any claims (if deemed
warranted by the Contributors), shall be the sole
responsibility of the Contributors. The Contributors agree
that they will indemnify and hold
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FWRLP, its successors, assigns, partners, agents and
employees, harmless against any such claims and/or losses
which might be incurred by such indemnitees or by the
Partnership in connection with any outstanding and/or
contingent leasing commissions or fees or management fees.
(vii) Performance by Contributor. Contributors shall
have complied in all material respects with and not be in
breach of any of their covenants or obligations under this
Agreement.
(viii) Tenant Estoppels. FWRLP shall have received
(a) a tenant estoppel letter in substantially the form
attached hereto as Exhibit F (or in such form as required
under such tenant's lease) from, at a minimum, tenants
satisfying the requirements described on Exhibit F-1, which
tenant estoppel letters shall not contradict in any material
respect the information set forth in Exhibit B hereto or the
Contributors' representations and warranties in Section 6(d)
hereof, and (b) any subordination and attornment agreements
required by the Lender. The foregoing notwithstanding,
allegations in tenant estoppels of Landlord defaults or
breaches pertaining to roof leaks in any tenant's space or the
condition of the roof and/or roof systems shall be permitted
and shall not constitute a basis for rejecting any tenant
estoppel or for termination of this Agreement by FWRLP, but
Contributors shall be responsible for any tenant damage claim
as a result thereof accruing prior to Closing.
(b) Failure of Condition. In the event of the failure by the
Closing Date of any condition precedent set forth above, FWRLP shall notify
Contributors in writing, and if Contributors do not correct such failure (if
valid) within five (5) business days after such notice, then FWRLP, at its sole
election, may (a) terminate this Agreement, in which event the Deposit and any
interest thereon shall be returned to FWRLP and, except as otherwise provided in
Section 17 hereof, neither party shall have any further obligations or
liabilities to the other (but the indemnitees provided in Section 14(a) and 16
hereof shall survive in all events); or (b) proceed to Closing and, if such
failure constitutes a default by Contributors hereunder, avail itself of any
legal or equitable remedy FWRLP may have, except as to any default of
Contributors waived in writing by FWRLP or deemed to be waived pursuant to the
provisions of this Agreement on or before the Closing Date; or (c) extend the
Closing Date for such reasonable time period as may be determined by FWRLP (but
in no event for more than three (3) months from the Closing Date then in effect)
in order to permit the satisfaction of any condition precedent not so fulfilled.
(c) Anything to the contrary notwithstanding, the parties to
this Agreement expressly agree that the obligations of Contributors pursuant to
this Agreement are conditioned upon the satisfaction, in the reasonable
discretion of Contributors, of the following conditions:
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(i) All of the covenants, agreements, representations
and warranties made by FWRLP and/or the REIT in this Agreement
(including the attached Exhibits), the Confidential
Information Statement, as supplemented through the date
hereof, or the FWRLP Documents shall be true, accurate and
complete in all material respects, and shall have been
fulfilled in all material respects, as of the date of the
Closing Date; and
(ii) Contributors shall be released by the Lender in
writing from all liabilities they may have on account of or in
any way in connection with the AAL Loan which arise after
Closing.
In the event any of the foregoing conditions are not satisfied as of the Closing
Date, Contributors shall notify FWRLP in writing, and if FWRLP does not correct
such failure (if valid) within five (5) business days after such notice, then
Contributors, in their sole discretion, (A) may avail themselves of the remedies
provided in Paragraph 17(a) hereof if such non-satisfaction constitutes a
default by FWRLP hereunder, or (B) terminate this Agreement, in which event the
Deposit and any interest thereon shall be returned to FWRLP and neither party
shall have nay further obligation or liabilities to the other (but the
indemnities provided in Sections 14(a) and 16 hereof shall survive in all
events).
10. Contributors' Deliveries. At the Closing, the following documents,
each dated on the Closing Date, shall be delivered to FWRLP:
(a) a Contribution and Assumption Agreement ("Assignment") and
an Amendment to the Partnership Agreement ("Amendment") and Limited Partnership
Certificate, in a recordable from, reasonably satisfactory to FWRLP and the
Contributors, setting forth the assignment by each of the Contributors of their
Partnership Interest and its withdrawal from the Partnership and the
substitution of FWRLP and /or its designee(s) as partners of the Partnership,
which Amendment shall be executed and acknowledged by all the Contributors; at
FWRLP's option, such Assignment and Amendment may contain such other amendments
of the Partnership Agreement as shall be determined by FWRLP, provided that the
Contributors shall execute such Assignment and Amendment solely for the purpose
of (a) assigning their respective Partnership Interests to FWRLP or its
designee(s), and (b) withdrawing from the Partnership.
(b) a release from each Contributor releasing the Partnership
and FWRLP (and its designee(s)) as partners of the Partnership from any
obligations and liabilities with respect to the original formation of the
Partnership, and any other matter arising from business done, transactions
entered into or events occurring prior to the Closing Date (including, without
limitation, liability arising from any breach by any of the Contributors), other
than the rights of Contributors pursuant to Paragraph 12 below.
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(c) An opinion of counsel for Contributors, in from and
substance reasonably acceptable to counsel for FWRLP, to the effect that:
(i) The Partnership is a duly organized and validly existing in good
standing under the laws of the State of Maryland:
(ii) The execution and delivery of this Agreement and all other agreements
delivered in connection herewith or at the Closing, the consummation of the
transactions herein contemplated, and compliance with the terms of this
Agreement and all other agreements delivered in connection herewith or at the
Closing will not conflict with, or result in a breach of, any of the terms,
conditions or provisions of, or constitute a default under, any note, indenture,
mortgage, deed of trust, contract or other agreement or instrument to which the
Partnership is a party or by which the Partnership is bound (and of which
counsel has knowledge) (other than the AAL Loan), or any law or order, rule,
regulation, writ, injunction or decree of any government, governmental
instrumentality or court, domestic or foreign;
(iii) Contributors have complete and unrestricted power to contribute,
transfer, assign and deliver to FWRLP and its designee(s) all of the Partnership
Interests to be contributed and assigned hereunder, and the Assignment and the
Amendment delivered pursuant to this Section 10 are in form legally sufficient
to vest in FWRLP and its designee(s) good title to the Partnership Interests
described therein; and
(iv) To the best of counsel's knowledge, there is no litigation or
investigation pending or threatened against the Partnership, or the Property, or
any part thereof, which might result in any material, adverse change pertaining
to the Property or the Partnership, or the operations thereof, or which
questions the validity of any action taken in, under or in connection with any
of the provisions of this Agreement.
(d) a schedule from the Contributors updating the Rent Schedule for the
Property and setting forth all arrearages in rents and all prepayments of rents;
(e) originally executed Leases and Service Contracts and copies of books,
records, operating reports, files and other materials related to the ownership,
use and operation of the Property, to the extent that any exist and are in the
possession of the Contributors, which obligation shall survive Closing;
(f) [Intentionally Omitted]
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(g) an original letter executed by the Contributors advising the tenants of
the Property of the contribution of the Partnership Interests to FWRLP and
directing that rents and other payments thereafter be sent to FWRLP or as FWRLP
may direct;
(h) possession of the Property from the Contributors in the condition
required by this Agreement, and the keys therefore;
(i) from each Contributor, the Certification of Non-foreign Status as
provided in Treas. Reg. 1.1445-2(b)(2)(iii)(B) or in any other form as may be
required by the Internal Revenue Code or the regulations issued thereunder;
(j) such other items and instruments from the Contributors as shall be
required by the Title Company in connection with the issuance of its title
insurance policy to FWRLP pursuant to Section 9(a)(iii) (including customary
owner's affidavit and non-imputation affidavit in form reasonably acceptable to
Contributors);
(k) any and all documents from the Contributors necessary to release the
Deposit from escrow with the Title Company and to have said Deposit returned to
FWRLP;
(l) any other documents required by this Agreement to be delivered by
Contributors; and
(m) An amendment to the FWRLP Partnership Agreement, in a form reasonably
acceptable to FWRLP and Contributors, admitting the Contributors who receive
Units as limited partners of FWRLP and issuing such Units as computed in
accordance with Exhibit Q hereto.
11. FWRLP's Performance. At the Closing, simultaneously with the
deliveries of Contributors pursuant to the provisions of Section 10 above, FWRLP
shall issue to Contributors the Units and cash in the manner specified in
Section 2, and FWRLP and REIT shall execute and deliver those documents and take
such other actions required to be taken by FWRLP and REIT at Closing as required
under this Agreement (including, without limitation, counterparts of the
Assignment, Amendment and amendment to the FWRLP Partnership Agreement),
whereupon the Deposit, and any interest accrued thereon, shall be returned to
FWRLP by the Title Company. In addition to the Units, FWRLP shall deliver to
Contributors at the Closing the following items:
(a) An opinion of Ballard Spahr Andrews & Ingersoll, counsel
to FWRLP, (subject to customary exclusions and qualifications) to the effect
that:
(i) FWRLP is a validly existing limited partnership in good standing under
the laws of the State of Maryland;
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(ii) To such counsel's knowledge, the execution and
delivery of this Agreement and all other agreements delivered
in connection herewith or at the Closing, the consummation of
the transactions herein contemplated, and compliance with the
terms of this Agreement and all other agreements delivered in
connection herewith or at the Closing will not conflict with,
or result in a breach of, any of the terms, conditions or
provisions of, or constitute a default under, any note,
indenture, mortgage, deed of trust, contract or other
agreement or instrument to which FWRLP is a party or by which
FWRLP is bound (and of which counsel has knowledge) (other
than the AAL Loan); and
(iii) FWRLP has complete and unrestricted power to
transfer, assign and deliver to Contributors the Units to be
issued hereunder.
(b) Executed copies of such documents as AAL may reasonably
require in connection with the assumption of the AAL Loan (the "AAL Assumption
Documents"), including, if required by AAL, an indemnity agreement with regard
to hazardous wastes and toxic substances on the Property which arise after
Closing.
12. Settlement Charges; Prorations and Adjustments.
(a) FWRLP shall pay for the title examination, the title
insurance premium, notary fees and other such charges incident to Closing. Any
real estate transfer and recording fees and taxes and documentary stamps in
connection with this transaction, if any, shall be borne by FWRLP; provided,
however, that the number of Units issued to Contributors at the Closing under
Section 2(a) hereof shall be reduced by an amount equal to one-half (1/2) of the
real estate transfer and recording fees and taxes payable by FWRLP divided by
the Unit Price. Although Contributors and FWRLP believe that no real estate
transfer or recording taxes will be due in connection with the transactions
contemplated hereby, if it is finally determined that such taxes are due and
payable in connection herewith, then, as long as the Partnership Interests were
transferred in a manner such that at all times there were at least two (2)
partners of the Partnership, Contributors shall either (at Contributors'
election) (i) reimburse to FWRLP in cash one-half (1/2) of such sum paid by
FWRLP, or (ii) return/relinquish to FWRLP the number of Units equal to one-half
(1/2) of the taxes paid by FWRLP divided by the then-current price per share for
common shares in the REIT. FWRLP and Contributors shall each pay its own legal
fees related to the preparation of this Agreement and all documents required to
settle the transaction contemplated hereby.
(b) In addition to the foregoing, at the Closing, the
following adjustments and prorations shall be computed as of January 1, 1998 (it
being agreed that January 1, 1998 shall be the effective date of the Closing
irrespective of the actual date upon which Closing occurs), as if the
transaction contemplated by this Agreement was a sale of the Property by the
Partnership to FWRLP:
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(i) Taxes. Real estate and personal property taxes
shall be apportioned (based on the fiscal periods for which such taxes
are assessed) as of the Closing Date.
(ii) Assessments. All special assessments and other
similar charges which have become a lien upon the Property or any part
thereof at the Closing Date and are due and payable through the Closing
Date, if any, shall be paid in full by the Contributors at the Closing.
All other special assessments or similar charges shall be adjusted as
of the Closing Date.
(iii) Rent. Rent for the month of, and any month
after, Closing collected by the Partnership prior to Closing shall be
apportioned as of the Closing Date. If any tenant is in arrears in the
payment of rent on the Closing Date, rents received from such tenant
after the Closing shall be applied in the following order of priority:
(a) first to the payment of current rent then due; (b) second, to
delinquent rent for any period after the Closing Date; and (c) third to
delinquent rent for any period prior to the Closing Date. FWRLP shall
use reasonable efforts (other than the institution of suit) to collect
arreages due as of the Closing Date (including, without limitation,
unpaid "Additional Rent" (as defined below) attributable to periods
prior to Closing); provided, however, that at Contributors' election
(i) FWRLP shall assign to Contributors all rights with respect to such
arrearages and Contributors may pursue collection thereof or (ii) FWRLP
will institute suit at the request of Contributors to collect such
arrearages provided all costs (including attorneys' fees) in connection
therewith are paid by Contributors. FWRLP agrees to cooperate with
Contributors in ascertaining any amounts due, permitting Contributors
to avail itself of any audit rights with respect to any tenants and
otherwise assisting Contributors in collection of such arreages. If
rents or any portion thereof received by Contributors or FWRLP after
the Closing Date are payable to the other party by reason of this
allocation, the appropriate sum, less a proportionate share of any
reasonable attorneys' fee, costs and expenses of collection thereof,
shall be promptly paid to the other party, which obligation shall
survive the Closing.
If any tenants are required to pay percentage rents,
escalation charges for real estate taxes, operating expenses,
cost-of-living adjustments or other charges of a similar nature
("Additional Rents") and any Additional Rents are collected by FWRLP
after the Closing which are attributable in whole or in part to any
period prior to the Closing, then FWRLP shall promptly pay to
Contributors the portion thereof attributable to periods prior to and
including the Closing Date, less a proportionate share of any
reasonable attorneys' fees, costs and expenses of collection thereof
(if any), if and when the tenant paying the same has made all
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payments of rents and Additional Rent then due to FWRLP pursuant to the
tenant's Lease, which obligation shall survive the Closing.
(iv) Debt Service on the AAL Loan and Escrows Held by
Lender. The amount of interest payable under the AAL Loan shall be
apportioned as of the Closing Date, and Contributors shall receive a
credit for all escrows maintained by the Lender under the AAL Loan on
the Closing Date.
(v) Miscellaneous. All other charges and fees
customarily prorated and adjusted in similar transactions, including
utilities, insurance premiums and charges for Service Contracts to be
assumed by FWRLP, shall be prorated as of the Closing Date. In the
event that accurate prorations and other adjustments cannot be made at
Closing because current bills are not obtainable or the amount to be
adjusted is not yet ascertainable (as, for example, in the case of
utility bills) the parties shall prorate on the best available
information, subject to further adjustment promptly upon receipt of the
final bill or upon completion of final computations. To the extent that
water consumption or other utility charges may constitute a lien
against the Property, Contributors agree that an appropriate amount in
respect of water consumption or other utility charges may be held in
escrow by the Title Company in connection with its issuance of a title
insurance policy to FWRLP. The Contributors shall use their reasonable
efforts to have all utility meters read on the Closing Date so as to
accurately determine its share of current utility bills.
(c) Security Deposits. All security deposits set forth in the
Leases at the Property shall, at Contributors' election, be paid over to or be
credited to FWRLP at Closing.
(d) Bank Accounts. Immediately prior to the Closing,
Contributors shall have the right to cause the Partnership to withdraw from the
Partnership's bank account(s) and distribute to the Contributors an amount equal
to all cash within such bank account(s) at such time.
(e) Distributions. The quarterly distributions payable to
Contributors on the Common Units for the first record date after any issuance to
Contributors shall be pro rated based upon the effective date of Closing of
January 1, 1998.
13. Risk of Loss. The risk of loss or damage to the Property by fire or
other casualty, until the Closing shall be borne by the Contributors. If prior
to Closing (i) condemnation proceedings are commenced against all or any
material portion of the Property, or (ii) if the Property is damaged by fire or
other casualty to the extent that the cost of repairing such damage shall be
Four Hundred Thousand Dollars
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($400,000.00) (exclusive of roof repair costs) or more or to the extent that
Giant Food, CVS/Pharmacy, Southern States or any other tenant(s) of the Property
occupying in excess of 15,000 square feet in the aggregate shall exercise a
termination right available under its lease because of such damage), or (iii) if
the Property is damaged by an uninsured risk, then FWRLP shall have the right,
upon notice in writing to the Contributors delivered within ten (10) days after
actual notice of such condemnation or fire or other casualty, to terminate this
Agreement, and thereupon the parties shall be released and discharged from any
further obligations to each other (except the indemnities provided in Section
14(a) and 16 hereof shall survive such termination) and the Deposit shall be
refunded to FWRLP. If FWRLP does not elect to terminate this Agreement or in the
event of fire or other casualty not giving rise to a right to terminate this
Agreement by FWRLP, FWRLP shall be entitled to an assignment of all of the
proceeds of fire or other casualty insurance proceeds and the rent insurance
proceeds payable with respect to the period after Closing or of the condemnation
award, as the case may be (i.e., such proceeds shall remain in the Partnership
for the benefit of FWRLP), and Contributors shall have no obligation to repair
or restore the Property; provided, however, that the Unit portion of the
Consideration shall be reduced (based on the Unit Price per Unit) by an amount
equal to the sum of (a) the "deductible" applied by the Partnership's insurance
policy, or (c) if the Partnership is self-insured, the cost of repairing such
damage. FWRLP shall have the right to participate in the negotiation and
settlement of any casualty or condemnation-related claim, provided that FWRLP
shall have previously elected not to terminate this Agreement or has no such
right of termination.
14. Inspection of Property.
(a) FWRLP's Right of Inspection. FWRLP shall have the right,
at its own risk, cost and expense, at any time or times prior to Closing, to
enter, or cause its agents or representatives to enter, upon the Property for
the purpose of making surveys, or any tests, investigations and/or studies
relating to the Property or FWRLP's intended acquisition thereof which FWRLP
deems appropriate, in its sole discretion, during reasonable hours and upon
reasonable notice to the Contributors. FWRLP's entry shall be subject to the
rights of all tenants of the Property, and FWRLP shall use reasonable efforts
not to interfere with the business being conducted by the Tenants. FWRLP shall
further have complete access to all documentation, agreements and other
information in the possession of Contributors related to the ownership, use and
operation of the Property, to the extent it is readily available to
Contributors, and shall have the right to make copies of same. FWRLP agrees to
repair any damage to the Property that may be caused by its inspections and to
indemnify and defend Contributors and hold Contributors harmless against any
injury, loss, damage or lien suffered upon the Property as a result of such
inspections. The foregoing indemnification obligation shall survive Closing
and/or any termination of this Agreement.
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(b) Environmental. (i) As described in that certain Phase I
Environmental Site Assessment and Limited Subsurface Investigation prepared by
Apex Environmental, Inc. and dated October 30, 1997, dry cleaning solvents have
been identified in the soil of the Property in the area behind the existing dry
cleaners. Apex is conducting further subsurface investigations (the "Additional
Investigations") to determine the horizontal and vertical extent of the
contamination in this area (the "Contamination"). If the Costs (as defined
below) to obtain a Closure Letter (as defined below) from the Maryland
Department of the Environment ("MDE") (including the costs of any remediation,
if required) is less than $5,000.00, then the existence of the Contamination
shall not constitute a basis for terminating this Agreement and Contributors
will not be responsible for obtaining the Closure Letter.
(ii) If the Costs to obtain a Closure Letter from MDE (including
the costs of any remediation, if required) is more than $5,000.00, then, except
as set forth in the following paragraph, the existence of the contamination
shall not constitute a basis for termination of this Agreement, and in such
event Contributors shall be responsible, at their sole cost and expense for all
Costs in excess of $5,000.00 (FWRLP being liable for the first $5,000.00 of such
Costs), for obtaining the Closure Letter from MDE, and Contributors shall
diligently pursue same to completion. FWRLP will cause the Partnership to
cooperate with Contributors in obtaining the Closure Letter, and FWRLP and
Contributors agree to share any documents in their possession or which they
obtain in connection with the Contamination and Closure Letter. Contributors
agree to indemnify and hold harmless FWRLP and its representatives, agents,
successors (including, without limitation, successors in title to the Property),
assigns, and nominees, from and against all Costs associated with obtaining a
Closure Letter, which ever is applicable. The "Costs" covered by this Section
14(b) shall be deemed to mean all attorneys' and consultants' fees, costs and
expenses reasonably necessary or appropriate for obtaining the Closure Letter,
including, without limitation, the costs of preparing and filing applications,
reports, letters, certificates, forms, plans, reports and related materials to
MDE or the U.S. Environmental Protection Agency ("EPA"), whichever is
applicable, and the costs, if any, required by MDE or EPA, whichever is
applicable, to further assess and/or remediate the Contamination to the extent
required by MDE and/or EPA. "Closure Letter" shall be deemed to mean a no
further action letter, or its equivalent, stating that no further action
regarding the assessment and remediation of the Contamination is necessary, and
that the case is closed (if a case is opened).
(iii) Notwithstanding the foregoing, if the Costs to obtain a
Closure Letter from MDE (including the costs of any remediation, if required) is
in excess of $100,000.00, then Contributors shall have the right to terminate
this Agreement by giving written notice thereof to FWRLP before the Closing
Date, in which event this Agreement shall terminate, the Deposit shall be
returned to FWRLP and neither party shall have any further liabilities or
obligations to each other; provided, however, that upon such termination, the
Contributors shall reimburse FWRLP for one-half (1/2) of the cost of the
Additional Investigations (not to exceed a reimbursement of $4,000.00).
(iv) Furthermore, Purchaser shall deliver to Contributors
immediately upon its availability a copy of any environmental report it receives
from its environmental consultant, including an estimate of the Costs.
Contributors shall have the right to have its environmental consultant review
said environmental report and estimate the Costs of obtaining a Closure Letter
from MDE (including the costs of any remediation). If the estimate of the Costs
obtained by Contributors from its environmental consultant exceeds One Hundred
Thousand Dollars ($100,000.00), or in the event Purchaser does not deliver a
complete copy of the report prepared by its environmental consultant addressed
to Contributors (or permitting Contributors to rely thereon) on or before
November 26, 1997, Contributors have the right to terminate this Agreement upon
the same terms and conditions set forth above in Section 14(b)(iii). For the
purposes hereof, Contributors environmental consultant shall be a consultant
experienced in environmental matters, such as Apex Environmental.
(v) In the event Closing occurs and Contributors have
responsibility to obtain the Closure Letter (and complete any remediation, if
required) in accordance with this Section 14(b), Contributors shall arrange for
obtaining such Closure Letter (including such remediation, if required) and
advise the Partnership from time to time regarding the scope of activities
planned and completed; so long as such Closure Letter and remediation actions
are being pursued in a diligent manner under the direction of an experienced
environmental consultant, Contributors shall have the exclusive right to
complete such Closure Letter and remediation.
(c) Audit. The Contributors hereby agree to allow books and
records related to the Property to be audited (at FWRLP's sole expense) prior to
Closing upon at least ten (10) days prior notice at Contributors' office by an
independent, certified public accounting firm selected by FWRLP, and the
Contributors will cooperate and cause its employees and other agents to
cooperate in such auditing process, provided Contributors shall not incur third
party out-of-pocket expenses in connection therewith. FWRLP shall provide the
Contributors with at least ten (10) days prior notice of such audit.
15. Indemnifications.
(a) Indemnification by Contributor. Subject to the provisions
of Section 19(m) below, Contributors hereby indemnify and agree to defend and
hold harmless FWRLP and its partners and subsidiaries and any officer, director,
employee, agent of any of them, and their respective successors and assigns from
and against any and all claims, expenses, costs, damages, losses and liabilities
(including reasonable attorneys' fees) which may at any time be asserted against
or suffered by FWRLP, any indemnitee set forth above, or the Property, or any
part thereof, whether before or after the Closing Date, as a result of, on
account of or arising from (i) any breach of any covenant, representation,
warranty or agreement on the part of Contributors, or any of
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them, made herein or in any instrument or document delivered pursuant to this
Agreement, and/or (ii) any obligation, claims, suit, liability, contract,
agreement, debt or encumbrance or other occurrence (other than any of the
foregoing approved, consented or taken subject to by FWRLP in accordance with
the provisions of this Agreement) created, arising or accruing on or prior to
the Closing Date, regardless of when asserted (but subject to Section 19(m)
below), and relating to the Contributors or the Property, or its operations. To
the extent an indemnification obligation under clause (i) above arises out of a
breach by any Contributor of the several representations and warranties set
forth in Section 5 hereof, only the Contributor responsible for such breach
shall be obligated to indemnify FWRLP hereunder.
(b) Indemnification by FWRLP. Subject to the provisions of
Section 19(m) below, FWRLP hereby indemnifies and agrees to defend and hold
harmless Contributors and their respective heirs, executors, administrators,
personal or legal representatives, successors and assigns from and against any
and all claims, expenses, costs, damages, losses and liabilities (including
reasonable attorneys' fees) which may at any time be asserted against or
suffered by Contributors and/or their heirs, executors, administrators, personal
or legal representatives, successors or assigns as a result of, on account of or
arising from (i) any breach of any covenant, representation, warranty or
agreement on the part of FWRLP made herein or in any instrument or document
delivered pursuant to this Agreement, and/or (ii) any obligation, claims, suit,
liability, contract, agreement, debt or encumbrance or other occurrence created,
arising or accruing after the Closing Date and relating to the Partnership, the
Partnership Interests, the Property or its operations or pertaining to tenant
security deposits delivered to FWRLP.
16. Brokerage Commission. Contributors and FWRLP represent and warrant
to each other that no brokerage fee or real estate commission is or shall be due
or owing in connection with this transaction other than that payable to First
Capital Realty, Inc., which shall be payable by FWRLP at the Closing pursuant to
a separate agreement. Contributors and FWRLP hereby indemnify and hold the other
harmless from any and all claims of any other broker or agent so claiming based
on action or alleged action of the other.
17. Default Provisions; Remedies.
(a) FWRLP's Default. If FWRLP fails to consummate the
Contribution contemplated herein when required to do so pursuant to the
provisions hereof, then the Title Company shall deliver the Deposit to
Contributors as full and complete liquidated damages, and as the exclusive and
sole right and remedy of Contributors, at law or in equity, whereupon this
Agreement shall terminate and neither party shall have any further obligations
or liabilities to any other party. In the event this Agreement is terminated,
the indemnities set forth in Sections 14(a) and 16 shall nevertheless remain in
full force and effect.
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(b) Contributors Default. Except for any breaches waived in
writing by FWRLP, if Contributors have breached any of their covenants or
obligations under this Agreement at or prior to Closing or have failed, refused
or are unable to consummate the Contribution contemplated herein by the Closing
Date or if any of the representations and warranties made by Contributors under
this Agreement shall be inaccurate or incorrect in any material respect on the
Closing Date, then FWRLP shall be entitled to (i) waive such breach, default or
failure and proceed to Closing, (ii) extend the Closing for such reasonable time
or times as may be necessary in order to enable Contributors to remedy such
breach, default or failure (not to exceed three (3) months), (iii) terminate
this Agreement and obtain the return of the Deposit, (iv) maintain an action for
specific performance or (v) if and only if the breach, failure or refusal is due
to the wrongful act or omission of Contributors, maintain an action for damages
against Contributors in an amount not to exceed $250,000 (exclusive of court
costs and reasonable attorneys' fees). In the event this Agreement is
terminated, the indemnities set forth in Sections 14(a) and 16 shall
nevertheless remain in full force and effect.
(c) The provisions of Sections 17(a) and (b) above shall not
be applicable to any breach or default by a party occurring or first becoming
actually known to the other party after Closing, and, as to any said breach or
default, the non-defaulting party may exercise any and all remedies available at
law or in equity, subject, however, to the provisions of Section 19(m) and to
the following sentence. The foregoing notwithstanding, as to any such breach or
default (other than a breach of the representations or warranties contained in
Section 5 or Section 6(x) hereof) or any indemnification obligation under
Section 15(a), any execution by FWRLP for damages awarded to FWRLP against
Contributors shall not exceed $6,300,000.00 in the aggregate (and the liability
of each of Messrs. Frank and Kamins for any such damages shall be limited to his
pro rata share (i.e., two-thirds (2/3) with respect to Gary Frank and one-third
(1/3) with respect to Sheldon Kamins) of the lesser of the loss or the
$6,300,000.00 limitation, but not to exceed, as to each of them respectively,
the aggregate value of the respective Units (based on a price of $25.00 per
Unit) and cash received by them at Closing.
(d) In the event that any litigation shall arise between the
parties hereto as to the subject matter hereof, the prevailing party in such
litigation shall be entitled to recover from the non-prevailing party all of its
court costs and reasonable attorneys' fees.
18. Registration Rights. (a) The REIT hereby agrees to use its best
efforts to file a registration statement within thirteen (13) months after
Closing to register the issuance and resale, if required, of REIT Common Stock
which may be issued to Contributors in exchange for its Units, to use its best
efforts to cause such registration statement to become effective and to keep
such registration continuously effective (subject to certain exceptions) for a
period for four (4) years thereafter; provided, however, that the REIT shall be
permitted to postpone such filing or suspend the effectiveness of such shelf
registration statement for such periods as the REIT
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reasonably determines are in the best interest of the REIT or which are
necessary to comply with securities law requirements (including suspending sales
under the shelf registration statement for such periods as the managing
underwriter in an underwritten offering deems necessary).
(b) Piggyback Registration Rights. If the REIT has a shelf
registration statement effective with respect to any of its equity securities,
the REIT will use its best efforts to cause such registration statement to
include the Common Stock issuable upon exchange of the Contributors' Common
Units, unless the REIT reasonably determines that inclusion of such Common Units
would have a material adverse effect on the REIT and its stockholders.
(c) Survival. The obligations of the REIT under this Section
18 shall survive Closing without limitation.
19. Miscellaneous Provisions.
(a) Completeness and Modification. This Agreement (together
with Exhibits A to Q attached hereto) represents the complete understanding
between the parties hereto with respect to the transactions contemplated herein,
and it supersedes all prior discussions, understandings or agreements between
the parties. This Agreement shall not be modified or amended except by an
instrument in writing signed by all of the parties hereto.
(b) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective heirs,
executors, administrators, personal and legal representatives, successors and
assigns.
(c) Assignment. This Agreement shall not be assignable by
FWRLP without the consent of Contributor; provided, however, that,
notwithstanding anything to the contrary contained in this Agreement, without
Contributors' consent, FWRLP shall be entitled (i) to assign this Agreement to
an entity controlled by, controlling or under common control with FWRLP or (ii)
to transfer or, at Closing, cause the Partnership to issue a 1% limited
partnership interest in the Partnership to the REIT or to an entity controlled
by, controlling or under common control with the FWRLP, as long as in either
case (i) the Partnership Interests are transferred in a manner such that at all
times there are at least two (2) partners of the Partnership, and (ii) the Units
are issued to Contributors as required herein. This Agreement shall not be
assignable by Contributors except by operation of law.
(d) Waiver; Modification. Failure by FWRLP or Contributors to insist upon
or enforce any of its rights hereto shall not constitute a waiver or
modification thereof.
(e) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Maryland.
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(f) Headings. The headings are herein used for convenience or
reference only and shall not be deemed to vary the content of this Agreement or
the covenants, agreements, representations and warranties herein set forth, or
the scope of any provision hereof.
(g) Continuing Documentation and Access. From and after
Closing, Contributors shall afford FWRLP reasonable access to any and all
information in their possession concerning the ownership, use and operation of
the Property (including the right to copy same at the expense of FWRLP) for
purposes of any tax examination or audit or other similar purpose, subject to
the agreements of the Contributors, the Partnership or FWRLP concerning
confidentiality set forth herein.
(h) Counterparts. To facilitate execution, this Agreement may
be executed in as many counterparts as may be required; it shall be sufficient
that the signature of, or on behalf of, each party, or that the signatures of
the persons required to bind any party, appear on one or more such counterparts.
All counterparts shall collectively constitute a single agreement.
(i) Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered by hand or
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid or delivered by commercial courier, telecopy or overnight
courier (e.g., Federal Express) against receipt, to the addresses indicated
below:
(i) if to FWRLP:
First Washington Realty Limited Partnership
4350 East-West Highway, Suite 400
Bethesda, MD 20814
Attn: William J. Wolfe
Jeffrey S. Distenfeld, Esq.
Telecopy: (301) 907-4911
(ii) if to Contributors:
Gary S. Frank
Sheldon B. Kamins
Blum, Frank & Kamins
10220 River Road
Potomac, MD 20854
Telecopy: (301) 299-2889
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with a copy to:
Robert Gottlieb, Esquire
Tucker, Flyer & Lewis
1615 L Street, N.W.
Suite 400
Washington, DC 20036
Telecopy: (202) 429-3231
Such notice shall be deemed given on the date of receipt by
the addressee or the date receipt would have been effectuated if delivery were
not refused. Each party may designate a new address by written notice to the
other in accordance with this Section 19(i).
(j) All Warranties Joint and Several. Except as expressly
provided otherwise in this Agreement, each and every warranty, covenant,
undertaking and agreement of Contributors hereunder shall be deemed a joint and
several warranty, covenant, undertaking and agreement of each person and entity
collectively comprising the Contributors.
(k) Further Assurances. Contributors and FWRLP agree to
execute, acknowledge and deliver any further agreements, documents or
instruments that are reasonably necessary or desirable to carry out the
transactions contemplated by this Agreement, provided that such execution,
acknowledgment and delivery does not impose any additional costs on such party
(other than such party's attorneys' fees in the review thereof and de minimis
recording costs).
(l) Business Days. A "business day" shall be Mondays through
Fridays, less and expecting all legal holidays observed by the United States
Government or the Government of the State of Maryland. Any date specified in
this Agreement which does not fall on a business day shall be automatically
extended until the first business day after such date.
(m) Survival. Each of the covenants, indemnities,
representations and warranties of this Agreement shall survive Closing and shall
thereafter remain in effect for a period of time equal to the applicable statute
of limitations in connection with the underlying claim, except as follows:
(i) the covenants, representations and warranties
contained in Section 6(a) through (k) and (m) through (t) and 8(a)
through (l) shall terminate one (1) year after the Closing Date except
as to claims for breach thereof asserted by a party within such one (1)
year period;
(ii) the indemnification for breach of
representations or warranties pursuant to clause (i) of the first
sentence of each of Section
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15(a) and 15(b) herein, shall be subject to the same survival period of
the underlying representation or warranty as contained in this
Agreement, in which case such indemnification obligation shall expire
with respect to any claim not raised by FWRLP, by written notice to
Contributors, within such survival period; and
(iii) any breach of any representation, warranty or
covenant made by any party hereto which is actually known on the
Closing Date to the party benefitted thereby shall be deemed waived
once the Closing has occurred (and in this regard each of Contributor,
FWRLP and the REIT covenant to disclose the existence of any such
breaches to the other party promptly upon learning of the same);
provided, however, that such breach shall not be deemed waived if (x)
the breaching party had actual knowledge that it was in breach on the
date of execution of this Agreement, or (y) the breach consists of an
intentional or wrongful act or omission by the breaching party after
the date of execution of this Agreement.
(n) Definition of Knowledge. For purposes of this Agreement,
whenever a statement is made to a party's "knowledge" or "to the best of the
knowledge" of a party, such statement is made only to the actual knowledge of
the party without any independent inquiry.
(o) Confidentiality. Before Closing, FWRLP agrees that it will
keep confidential, and will make reasonable efforts to have the respective
partners, employees, officers, directors, shareholders, agents, counsel,
accountants and affiliates of FWRLP, keep confidential, the terms of this
Agreement, and all information, records, materials and other data pertaining to
the Property which was acquired or learned from this Agreement or the
negotiations relating thereto or arising out of the transactions contemplated
hereby, except (i) to the extent necessary to effect the transactions
contemplated hereby, (ii) pursuant to compulsion by due process of law, (iii) in
connection with the resolution of any dispute between FWRLP and Contributors, or
(iv) if such information was obtained, or is otherwise available, in the public
domain or from other sources. The provisions of this paragraph shall survive the
Closing and the termination of this Agreement.
20. Tax Matters.
(a) FWRLP covenants that, during the period beginning on the
Closing Date and ending five (5) years thereafter, the principal balance of the
mortgage loan secured by the Property shall not be reduced below an amount equal
to the outstanding principal balance of the AAL Loan as of the Closing Date
(other than for (i) scheduled amortization of the mortgage loan, or (ii)
non-scheduled principal curtailments of the mortgage loan due to application
required by the mortgage lender of insurance or
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condemnation proceeds or by the mortgage lender for other reasons beyond FWRLP's
reasonable control.
(b) If (1) FWRLP intends to make a principal prepayment of the
mortgage loan pursuant to clause (ii) under subsection (a) above, or (2) FWRLP
intends to refinance the mortgage loan secured by the Property after the fifth
(5th) anniversary of the Closing Date, then FWRLP will give each Contributor who
receives Units at least ten (10) days' prior written notice thereof, and each
such Contributor, at his written election but with no obligation to do so, may
affirmatively make a DRO Election or Bottom Guaranty Election (as described
below). Any such election shall be made by notice delivered to FWRLP no later
than the date on which the tax return for FWRLP is filed for the fiscal year in
question. In addition, at Closing each Contributor shall have the right to make
a DRO Election or Bottom Guaranty Election to the extent that the receipt of
Units at Closing would but for such election result in a distribution of money
under Section 752(b) of the Internal Revenue Code of 1986, as amended, that is
taxable for Federal income tax purposes.
(c) A DRO Election shall state that if the Contributor has a
deficit balance in its capital account following the liquidation of the
Contributor's interest in FWRLP or the liquidation of FWRLP, as the case may be,
such Contributor shall contribute to the capital of FWRLP, no later than the end
of the fiscal year during which the Contributor's interest in FWRLP is
liquidated or during which FWRLP is liquidated, as the case may be (or, if
later, 90 days after the date on which the Contributor's interest in FWRLP is
liquidated or on which FWRLP is liquidated, as the case may be) (the
"Liquidation Date") an amount of money equal to a designated portion of the
deficit in the Contributor's capital account. The term "Liquidation" shall have
the meaning given to it in Treas. Regs. Section 1.704.
(d) A Bottom Guaranty Election shall state that if FWRLP shall
be in default with respect to the mortgage loan securing the Property, then the
Contributor agrees to contribute to the capital of FWRLP a designated portion of
the principal balance of such mortgage loan (the "Contribution Limit"); however,
such contribution shall only occur if the mortgage lender shall have exhausted
all of its remedies against the Property in order to collect the amount owing
the mortgage lender, and such Contribution Limit shall be reduced on a
dollar-for-dollar basis for every dollar received by the mortgage lender from
exercising its remedies. Any such contribution shall be made by the Liquidation
Date. For example, if the amount of the mortgage loan were $10,000,000.00 and
the amount of the Contribution Limit were $1,000,000.00, the capital
contribution would only be required if and only if, the Property were sold in
foreclosure and the proceeds (whether cash or other proceeds) of sale were less
than $1,000,000.00.
(e) For the purposes of Section 704(c) of the Internal Revenue
Code of 1986, as amended (the "Code"), the value of the Property will be
allocated between the land and improvements as reasonably determined by the
Contributors and FWRLP.
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The allocation method under Section 704(c) of the Code used by FWRLP with
respect to the Property will be the traditional method set forth in Treasury
Regulation ss.1.704.3.
IN WITNESS WHEREOF, the parties hereto have executed this Contribution
Agreement as of the day and year first written above.
FWRLP:
FIRST WASHINGTON REALTY
LIMITED PARTNERSHIP
By: First Washington Realty Trust, Inc.,
WITNESS: Its general partner
/s/Jeffrey S. Distenfeld By:/s/ William J. Wolfe
William J. Wolfe
President
Date of execution:November 11, 1997
WITNESS: CONTRIBUTORS:
/s/___________________ /s/ Gary S. Frank
GARY S. FRANK
/s/_____________________ /s/ Sheldon B. Kamins
SHELDON B. KAMINS
C.P., INC.
/s/_____________________ By:/s/ Sheldon Kamins
Name:
Title:
Date of execution:November 12, 1997
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First Washington Realty Trust, Inc. joins herein solely for the purpose of
making the representations, warranties and covenants contained in Sections 8(h),
(j), (k) and (l), Section 11 and Section 18 hereof.
FIRST WASHINGTON REALTY
WITNESS: TRUST, INC.
/s/ Jeffrey S. Distenfeld By:/s/ William J. Wolfe
William J. Wolfe
President
Date of execution: November 11 , 1997
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ACKNOWLEDGE BY TITLE COMPANY
The undersigned Title Company executes this Contribution Agreement
solely to acknowledge receipt of the Deposit pursuant to Paragraph 3 hereof and
to evidence its agreement to serve as escrow agent pursuant to the terms of the
foregoing Agreement.
WITNESS: COMMERCIAL SETTLEMENTS, INC.
/s/ Sarah Eckert By: /s/ Stuart Levin
Stuart Levin
Vice President
Date:November 17, 1997
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<PAGE>
LIST OF EXHIBITS
EXHIBIT A. Legal Description of Land Recitals
EXHIBIT B. Leases and Rent Schedule Section 6(d)
EXHIBIT C. Service Contracts Section 6(e)
EXHIBIT D. Violations Section 6(c)
EXHIBIT E. Insurance List Section 6(g)
EXHIBIT F. Form of Tenant Estoppel Section 6(i)
EXHIBIT F-1. Tenant Estoppels Section 8(a)(viii)
EXHIBIT G. Litigation Section 6(k)
EXHIBIT H. Operating Statements and Budget Section 6(r)
EXHIBIT I. Personal Property Section 6(t)
EXHIBIT J. Permitted Exceptions Section 9(a)(iii)(B)
EXHIBIT K. [Intentionally Omitted]
EXHIBIT L. Confidential Information Statement Section 8(c)
EXHIBIT M. [Intentionally Omitted]
EXHIBIT N. First Trust Section 2(c)
EXHIBIT O. Note Section 2(c)
EXHIBIT P. Partnership Agreement Section 6(a)
EXHIBIT Q. Allocation of Units, Consideration Section 2(a)
[Contributors and FWRLP to Attach Foregoing at Acceptance of this Agreement]
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EXHIBIT 5.2
REAL ESTATE PURCHASE AGREEMENT
THIS REAL ESTATE PURCHASE AGREEMENT is made and entered as the 9th day
of March 1998, by and between (i) WATKINS PARK PLAZA LIMITED PARTNERSHIP, a
Maryland limited partnership (hereinafter referred to as "Seller") and (ii)
FIRST WASHINGTON REALTY LIMITED PARTNERSHIP, a Maryland limited partnership,
(hereinafter referred to as "Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is the record and beneficial owner of all of those
certain parcels of real property as more particularly described on Exhibit A
hereto (collectively, the "Land"), together with the shopping center known as
Watkins Park Plaza located in Prince George's County, Maryland, and all other
buildings and improvements not owned by tenants situated thereon (collectively,
the "Building"), and all personal property and fixtures not owned by tenants
located therein (the "Personal Property"), and all appurtenances, rights,
easements, rights-of-way, tenements and hereditaments incident thereto (the
"Additional Property") (the Land, Building, Personal Property and Additional
Property are hereinafter collectively referred to as the "Property"); and
WHEREAS, Purchaser desires to purchase the Property from Seller and
Seller desires to sell and transfer the same to Purchaser.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Purchase and Sale. Purchaser agrees to buy and Seller agrees to sell
and convey the Property for and in consideration of the purchase price and upon
the terms and conditions set forth herein.
2. Purchase Price. The purchase price for the Property (the "Purchase
Price") shall be Fourteen Million Two Hundred Ninety-Five Thousand Dollars
($14,295,000), payable at Closing (as hereinafter defined) in cash, cashier's
check, certified check or bank wire transfer.
3. Deposit.
(a) Within three (3) business days after the date of delivery
to Purchaser of an original of this Agreement executed by Seller together with
completed Exhibits hereto (the date of such delivery to Purchaser being the
"Acceptance Date"), Purchaser shall deliver to Commercial Settlements, Inc.,
1413 K Street, N.W.,
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Washington, D.C. 20005 (the "Title Company"), as escrow agent, a deposit
("Deposit") of One Hundred thousand Dollars ($100,000) by check payable to the
Title Company. If Purchaser shall fail to deliver the Deposit when required to
do so, this Agreement shall become null and void and the parties hereto shall be
relieved of all further liability and obligation to each other.
(b) The Title Company will immediately provide Seller with
written evidence of receipt of such Deposit. The Title Company shall place the
Deposit in an interest-bearing account within three (3) days after the date of
receipt thereof, and interest on the Deposit shall accrue to the benefit of the
party entitled to the Deposit and shall constitute a part of the Deposit for all
purposes hereof. The Deposit shall be held by the Title Company pursuant to the
terms and conditions of this Agreement.
(c) In the event that, at any time prior to Closing, Seller or
Purchaser provides Title Company with a certification (a copy of which shall be
delivered contemporaneously to the other party) that the Seller or Purchaser, as
the case may be, is entitled to the Deposit pursuant to the terms of this
Agreement, Title Company shall deliver the Deposit to such party within seven
(7) business days after receipt of said notice, unless the other party disputes
such certification by written notice to Title Company (a copy of which shall be
delivered contemporaneously to the other party) delivered within five (5)
business days of Title Company's receipt of the initial certification. In such
event, Title Company shall hold the Deposit pending resolution of such dispute.
(d) The parties acknowledge that (i) Title Company is acting
solely as escrow agent at their request and for their convenience, (ii) Title
Company shall not be deemed to be the agent of either of the parties, and (iii)
Title Company shall not be liable to either of the parties for any act or
omission on its part unless taken or suffered in bad faith, in willful disregard
to this Agreement or involving gross negligence. Seller and Purchaser shall
jointly and severally indemnify and hold Title Company harmless from and against
all costs, claims and expenses, including reasonable attorneys' fees, incurred
in connection with the performance of Title Company's duties hereunder, except
with respect to actions or omissions taken or suffered by Title Company in bad
faith, in willful disregard of this Agreement or involving gross negligence on
the part of Title Company; provided, however, that if any litigation shall arise
between the Seller and Purchaser in connection therewith, the non-prevailing
party shall pay all such costs, claims and expenses of the Title Company. In the
event any dispute shall arise between the parties hereto as to the disposition
of the Deposit, the Title Company's sole responsibility may be met, at the Title
Company's option, by paying the Deposit into the court in which relevant
litigation is pending between the parties, or by initiating an interpleader
action, and upon payment of the Deposit into court, neither Seller nor Purchaser
shall have any further right, claim, demand, or action against the Title
Company.
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<PAGE>
4. Closing. Except as otherwise provided in this Agreement, the
purchase and sale contemplated herein shall be consummated at the "Closing",
which shall take place on the date (the "Closing Date") specified by Purchaser
on not less than ten (10) days notice to Seller, provided that the Closing Date
shall not be later than March 18, 1998. The Closing shall take place at the
offices of Seller, or at such other place as may mutually agreed upon by Seller
and Purchaser. The Title Company shall act as closing agent for the Closing.
5. Representations and Warranties of Seller. In order to induce
Purchaser to enter into this Agreement and to purchase the Property, Seller
hereby makes the following representations and warranties, each of which is
material and shall, together with all covenants, agreements and indemnities set
forth in or made pursuant to this Agreement, survive Closing until December 15,
1998, notwithstanding any investigation at any time made by or on behalf of
Purchaser:
(a) Authority of Seller. Seller is a limited partnership duly
organized and in good standing under the laws of the State of Maryland. Seller
has all necessary power and authority and has taken all necessary partnership
action to execute, deliver and perform this Agreement. No consents of any
persons other than those executing this Agreement as Seller are required for
such execution or to enable Seller to consummate the transactions contemplated
hereby. This Agreement is the valid and binding obligation of Seller,
enforceable against it in accordance with its terms, except that such
enforcement may be subject to bankruptcy, conservatorship, receivership,
reorganization, insolvency, moratorium or similar laws or procedures relating to
or affecting creditors' rights generally and to general principles of equity.
(b) Title. Seller is the sole owner of fee simple title to the
Property, and such title is marketable and good of record and, to the best of
Seller's actual knowledge, free and clear of all liens, encumbrances, covenants,
conditions, restrictions and other matters affecting title, except for the
Permitted Exceptions (as defined in Section 8(a)(iii)).
(c) Compliance with Existing Laws. To the best of Seller's
actual knowledge, (i) Seller is not in violation of, and has complied with any
and all applicable building, zoning, environmental or other ordinances, statutes
or regulations of any governmental agency, in respect to the ownership, use,
maintenance, condition and operation of the Property or any part thereof and
(ii) Seller possesses all licenses, certificates, permits and authorizations
necessary for the use and operation of the Property, as Landlord, in the manner
in which it is currently being operated by Seller.
(d) Leases. True, correct and complete copies of all of the
leases of the Property and any amendments thereto (collectively, the "Leases")
have been delivered to Purchaser. Attached hereto as Exhibit B is a description
of all of the Leases and a current rent schedule ("Rent Schedule") covering the
Leases. There are no leases or tenancies of any space in the Property other than
those set forth in Exhibit
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<PAGE>
B or any subleases or subtenancies unless otherwise noted therein. Except as
otherwise set forth in Exhibit B or elsewhere in this Agreement:
(i) to the best of Seller's actual knowledge, the Leases are in full force
and effect and constitute a legal, valid and binding obligation of the
respective tenants and are assignable by Seller to Purchaser;
(ii) no tenant has an option to purchase the Property;
(iii) no renewal or expansion options have been granted to the tenants,
except as provided in the Leases;
(iv) to the best of Seller's actual knowledge, Seller is not in default
under any of the Leases;
(v) the rents set forth on the Rent Schedule are being collected on a
current basis and there are no arrearages in excess of one month, except as
indicated in Exhibit B hereto, nor has any tenant paid any rent, additional rent
or other charge of any nature for a period of more than thirty (30) days in
advance;
(vi) all work for tenant alterations and other work or materials contracted
for by Seller and any tenant has been completed, and all work and materials have
been fully paid for or will be paid for by Closing by Seller and all
contributions to tenants for tenant improvements, if any, have been paid in full
or will be paid for by Closing by Seller;
(vii) Seller has not sent written notice to any tenant claiming that such
tenant is in default, which default remains uncured, and to the best of Seller's
knowledge, no tenant is in default under its Lease, except as indicated in
Exhibit B hereto;
(ix) no action or proceeding instituted against Seller by any tenant is
presently pending in any court; and
(x) there are no security deposits other than those set forth in Exhibit B.
(e) Service Contracts. Attached hereto as Exhibit C is a
complete and correct list of all contracts or agreements relating to the
management, leasing, operation, maintenance or repair of the Property (the
"Service Contracts"). All of the Service Contracts set forth on Exhibit C shall
be assumed by Purchaser as of the Closing Date, unless Purchaser notifies Seller
before the end of the Feasibility Period to terminate any or all of the Service
Contracts. No Service Contract will be terminated, amended, modified or
supplemented prior to the Closing Date without Purchaser's prior
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written approval (except that any management and leasing agreements shall be
terminated as of Closing). If Purchaser approves the termination of any of the
Service Contracts, Purchaser shall be solely responsible for the payment of any
termination fees associated therewith.
(f) Tax Bills. Attached hereto as Exhibit D are true and
correct copies of tax bills issued by any applicable Federal, state or local
governmental authority to Seller with respect to the Property for the most
recent past and current tax years, and any new assessment received with respect
to a current or future tax year.
(g) Insurance. Attached hereto as Exhibit E are copies of all
hazard, liability and other insurance policies presently affording coverage with
respect to the Property. The Property is insured for its replacement value
against loss or damage sustained as a result of fire or other casualty and
Seller has rent loss insurance in place for the Property. Seller shall maintain
in full force and effect all such policies until the Closing Date and shall
cause its insurer to name Purchaser as an additional insured as a contract party
on its rent loss policy with respect to the Property.
(h) Condition of Property. Possession of the Property shall be
delivered to Purchaser at Closing in its "as is, where is" condition as of the
date of Purchaser's execution of this Agreement, subject to ordinary wear and
tear. Seller has no actual knowledge of any material defect in the condition of
the Property, the structural elements thereof or the mechanical systems therein.
(i) Tenant Estoppel. Seller represents and warrants that it
shall use reasonable good faith efforts to obtain and deliver to Purchaser
within thirty (30) days after the Acceptance Date, a tenant estoppel letter in
the form attached hereto as Exhibit F (or such other form as required by
Purchaser's mortgage lender) from each of the tenants of the Property confirming
the information set forth in Exhibit B attached hereto. Seller hereby agrees
that Purchaser may participate in the procurement of said tenant estoppel
letter(s).
(j) Condemnation Proceedings. No condemnation or eminent
domain proceedings are pending against the Property or any part thereof, and
Seller has made no commitments to and has received no notice, oral or written,
of the desire of any public authority or other entity to condemn, take or use
the Property or any part thereof whether temporarily or permanently, for
easements, rights-of-way, or other public or quasi-public purposes.
(k) Litigation. To the best of Seller's actual knowledge, no
litigation is pending, including administrative actions or orders relating to
governmental regulations, affecting the use, operation or ownership of the
Property or any part thereof or Seller's right to sell the Property as
contemplated herein, except as set forth on Exhibit G hereof.
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(l) No Defaults. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will: (i) conflict
with, or result in a breach of, the terms, conditions or provisions of, or
constitute a default under, any agreement or instrument to which Seller is a
party or by which the Seller or the Property is bound, (ii) violate any
restriction, requirement, covenant or condition to which the Seller is subject
or by which Seller or the Property is bound, (iii) constitute a violation of any
applicable code, resolution, law, statute, regulation, ordinance, rule,
judgment, decree or order, or (iv) result in the cancellation of any contract or
lease pertaining to the Property (other than the Service Contracts).
(m) Separate Tax Lot and Subdivision. To the best of Seller's
actual knowledge, each parcel of Land is assessed for tax purposes as one or
more separate and distinct parcels.
(n) Hazardous Waste. Except as disclosed in the Phase I
Environmental Report dated March 5, 1998 prepared by EMG regarding the Property,
Seller has no actual knowledge of any discharge, spillage, uncontrolled loss,
seepage or filtration (a "Spill") of oil, petroleum or chemical liquids or
solids, liquid or gaseous products or any hazardous waste or hazardous substance
(as those terms are used in the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, the Resource Conservation
and Recovery Act of 1976, as amended, or in any other applicable federal, state
or local laws, ordinances, rules or regulations relating to protection of public
health, safety or the environment, as such laws may be amended from time to
time) at, upon, under or within the Land or any contiguous real estate. Seller
has not caused or, to Seller's actual knowledge, permitted to occur, and shall
not cause to occur any condition which may cause a Spill at, upon, under or
within the Land or any contiguous real estate prior to the Closing Date. To the
best of Seller's actual knowledge, there is no proceeding or action pending by
any person or governmental agency regarding the environmental condition of the
Property. To the Seller's knowledge, the Building is totally free of asbestos.
(o) Operating Statements. Attached hereto as Exhibit H are
true and correct operating statements of the Property for fiscal years 1996,
1997 and 1998 (through January 31, 1998). To Seller's knowledge, there has been
no adverse change in the Property or the operation thereof which would
materially adversely affect the economic condition of the Property. Also
attached as Exhibit H is a copy of the 1998 operating budget for the Property.
(p) Utilities. To the best of Seller's actual knowledge,
adequate, usable public sewers, public water facilities, gas and electrical
facilities necessary to the operation of the Property are installed in and are
duly connected to the Property and can be used without any charge except the
normal deposits, if any, and usual metered utility charges and sewer charges.
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(q) Personal Property. Attached hereto as Exhibit I is a true,
correct and complete inventory of all personal property ("Personal Property"),
if any, owned by Seller and used in the management, maintenance and operation of
the Property (other than trade fixtures or personal property of tenants).
(r) Certificates of Occupancy. Prior to the Closing Date,
Seller will not amend any certificates of occupancy for the Property and will
maintain them in full force and effect to the extent the same has been issued to
the Seller.
(s) Licenses and Permits. To the best of Seller's actual
knowledge, all licenses and permits have been issued to Seller by all applicable
governmental authorities which are necessary for the Seller's ownership,
management and operation of the Property (the "Licenses"). Seller has received
no notice, nor has any actual knowledge, that it is lacking any such Licenses.
(t) Leasing Commissions. There are, and at Closing shall be,
no outstanding or contingent leasing commissions or fees payable with respect to
the Property, except as set forth on Exhibit K attached hereto.
(u) Information Provided by Seller. Purchaser acknowledges
that, in making the representations set forth in subparagraphs (c), (d), (e) and
(o) of this Paragraph 5, Seller is, in part, relying upon information provided
from time to time by First Washington Management, Inc. ("FWM"), an affiliate of
Purchaser and Seller's property manager for the Property, and, therefore, such
representations by Seller shall not be breached by Seller unless such
representations are untrue as a result of Seller's actual knowledge of (i)
information inconsistent with or different from information provided to Seller
by FWM and/or (ii) information not provided to Seller by FWM.
6. Obligations of Seller Pending Closing. From and after the date of
this Agreement through the Closing Date, Seller covenants and agrees as follows:
(a) Maintenance and Operation of the Property. Seller will
cause the Property to be maintained in its present order and condition, normal
wear and tear excepted, and will cause the continuation of the normal operation
thereof, including the purchase and replacement of fixtures and equipment, and
the continuation of the normal practice with respect to maintenance and repair
in the ordinary course of business so that the Property will, except for normal
wear and tear, be in substantially the same condition on the Closing Date as on
the Effective Date.
(b) Licenses. Seller shall use its best efforts to preserve in
force all Licenses and to cause those expiring to be renewed.
(c) Changes in Representations. Seller shall notify Purchaser
promptly, and Purchaser shall notify Seller promptly, if either becomes aware of
any
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occurrence prior to the Closing Date which would make any of its
representations, warranties or covenants contained herein not true in any
material respect.
(d) Obligations as to Leases. Seller shall not, without
Purchaser's prior written consent which consent shall not be unreasonably
withheld, amend, modify, renew or extend any Lease in any respect unless
required by law or the terms of any existing lease (and then only in accordance
with the terms of such lease), or enter into new leases or approve any
assignment of leases or subletting of leased space, or terminate any Lease.
Prior to Closing, Seller shall not apply all or any part of the security deposit
of any tenant unless such tenant is in default.
7. Representations, Warranties and Covenants of Purchaser. In order to
induce Seller to enter into this Agreement and to sell the Property to
Purchaser, Purchaser hereby makes the following representations, warranties and
covenants, each of which is material and shall survive Closing, notwithstanding
any investigation at any time made by or on behalf of Seller:
(a) Authority of Purchaser. Purchaser is a limited partnership
duly organized and existing and in good standing under the laws of the State of
Maryland. Subject to Section 8(a) (viii), Purchaser has all necessary power and
authority to execute, deliver and perform this Agreement and consummate all of
the transactions contemplated by this Agreement. Subject to Section 8(a) (viii),
this Agreement is the valid and binding obligation of Purchaser, enforceable
against it in accordance with its terms, except that such enforcement may be
subject to bankruptcy, conservatorship, receivership, reorganization,
insolvency, moratorium or similar laws or procedures relating to or affecting
creditors' rights generally and to general principles of equity.
(b) No Defaults. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will: (i) conflict
with, or result in a breach of, the terms, conditions or provisions of, or
constitute a default under, any agreement or instrument to which Purchaser is a
party, (ii) violate any restriction, requirement, covenant or condition to which
the Purchaser is subject, and (iii) constitute a violation of any applicable
code, resolution, law, statute, regulation, ordinance, rule, judgment, decree or
order.
(c) Vacant Space. Purchaser hereby further agrees that if any
rentable space in the Property is vacant on the Closing Date, Purchaser shall
accept the Property subject to such vacancy, provided that the vacancy was not
permitted or created by Seller in violation of any restrictions contained in
this Agreement.
8. Conditions Precedent to Closing.
(a) It shall be a condition precedent of Purchaser's
obligation to make a full settlement hereunder that each and every one of the
following conditions shall exist on the Closing Date:
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(i) Representations and Warranties. Seller's
representations and warranties hereunder shall be true and
correct in the same manner and with the same effect as though
such representations and warranties had been made on and as of
the Closing.
(ii) Zoning. No proceedings shall have occurred or be
pending to change, redesignate or redefine the zoning
classification of the Property to a more restrictive
classification than presently exists.
(iii) Title. Title to the Property shall be
marketable, good of record, and insurable by the Title Company
at standard rates or less, pursuant to a full coverage ALTA
Form-B (Rev. 1970 and 1984) owner's title insurance policy (or
an unconditional commitment therefor) without any exceptions
("Printed form" or otherwise) other than the Permitted
Exceptions, and in addition, providing affirmative coverage
satisfactory to Purchaser insuring against any mechanic's or
materialmen's lien arising from goods, labor or materials
provided to the Property prior to the Closing Date. The
"Permitted Exceptions" are:
(A) the Leases set forth on Exhibit B attached hereto;
(B) the lien of current real estate taxes and special assessments not
yet due and payable; and
(C) such other matters which are listed on Exhibit J attached hereto.
Purchaser has obtained and provided Seller with a copy of an interim title
binder for the Property from the Title Company. On or before March 16,
1998, Purchaser shall provide Seller with a written notice ("Title
Objections Notice") setting forth the exceptions to title to the Property
which are unacceptable to Purchaser, in its sole discretion. Seller shall
have the option to (i) act diligently, at its sole expense, to correct such
conditions prior to the Closing Date or (ii) terminate this Agreement by
written notice to Purchaser delivered to Purchaser within five (5) days
after the date Purchaser provided Seller with the Title Objection Notice.
If the objections set forth in the Title Objection Notice are not corrected
prior to the Closing Date hereunder, Purchaser, in addition to any other
rights it may have, shall have the right and option (x) to terminate this
Agreement, or (y) to close on the purchase of the Property and waive such
defects in title. In the event of termination of this Agreement by either
Purchaser or Seller pursuant to this subparagraph (B), Seller and Purchaser
shall be relieved of all liabilities under this Agreement (except for any
liabilities accruing prior to the effective date of such termination) and
the Deposit shall be returned to Purchaser.
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(iv) Leasing Brokerage/Property Management
Agreements. Seller shall have terminated any and all leasing
brokerage agreements and property management agreements with
respect to the Property effective as of the Closing. All
responsibility for dealings with any such brokers and agents,
including without limitation the payment of any outstanding or
contingent claims, shall be the sole responsibility of Seller.
Seller agrees that it will indemnify and hold Purchaser, its
successors, assigns, partners, agents and employees, harmless
against any such claims and/or losses which might be incurred
by such indemnitees in connection with any outstanding and/or
contingent leasing commissions or fees or management fees. The
provisions of this subparagraph (iv) shall survive Closing
until December 15, 1998.
(v) Performance by Seller. Seller shall have
complied in all material respects with and not be in material
breach of any of its covenants or obligations under Section 6
of this Agreement.
(vi) Tenant Estoppels. Purchaser shall have received
(A) a tenant estoppel letter substantially in the form
attached hereto as Exhibit F from, at a minimum, those tenants
at the Property satisfying the requirements described on
Exhibit F-1 attached hereto confirming the information set
forth in the Leases and Rent Schedule attached hereto as
Exhibit B for such tenants and containing no material changes
therefrom.
(vii) Existing Mortgages. Seller shall have delivered
to the Title Company such releases or other instruments
necessary to release of record and beneficially any and all
existing mortgages, deeds of trust, financing statements or
other security documents affecting the Property (collectively,
the "Existing Mortgages").
(b) Failure of Condition. In the event of the failure by the
Closing Date of any condition precedent set forth above, Purchaser shall notify
Seller in writing, and if Seller does not correct such failure (if valid) within
five (5) business days after such notice, then Purchaser, at its sole election,
may (a) terminate this Agreement, in which event the Deposit and any interest
thereon shall be returned to Purchaser and, except as otherwise provided in
Section 16 hereof, neither party shall have any further obligations or
liabilities to the other (except for any liabilities accruing prior to the
effective date of such termination); or (b) proceed to Closing and, if a
default, avail itself of any legal or equitable remedy Purchaser may have,
except as to any default of Seller waived in writing by Purchaser or deemed to
be waived pursuant to the provisions of this Agreement on or before the Closing
Date; or (c) extend the Closing Date for such reasonable time period as may be
determined by Purchaser (but in no event for more than fifteen (15) business
days from the Closing Date then in effect) in order to permit the satisfaction
of any condition precedent not so fulfilled.
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9. Seller's Deliveries. Seller shall execute, acknowledge and deliver
to Purchaser (either directly or through the closing agent) at the Closing the
following documents, each dated on the Closing Date:
(a) a special warranty deed, in customary form and substance,
conveying good and marketable fee simple title to the Real Property, free and
clear of all liens, encumbrances, easements and restrictions of every nature and
description, except for the Permitted Exceptions;
(b) a bill of sale which shall convey to Purchaser good title
to all the Personal Property, free and clear of all liens and encumbrances;
(c) an affidavit setting forth, to the extent true, that all
of Seller's representations and warranties are true and correct in all material
respects as of the Closing Date;
(d) an assignment of the Leases, in a form and substance
reasonably acceptable to Seller and Purchaser, together with all originally
executed Leases, and the security deposits shall be paid to Purchaser;
(e) an assignment of Licenses, warranties and Service
Contracts, if any, which are to be assumed by Purchaser, to the extent the same
are held by Seller and are assignable by Seller, together with the originally
executed Service Contracts which are to be assumed;
(f) a schedule updating the Rent Schedule for the Property and
setting forth all arrearages in rents and all prepayments of rents;
(g) copies of books, records, operating reports, files and
other materials related to the ownership, use and operation of the Property
(except for any and all internal economic models, analyses or other internal
economic information and internal partnership documents and tax returns and
similar partnership information prepared by Seller for Seller's exclusive use),
to the extent that any exist and are in the possession of Seller, which
obligation shall survive Closing; provided, however, Seller shall not be
required to deliver any books, records or other information to Purchaser which,
prior to the Closing Date, is in the possession of FWM.
(h) Tenant estoppel letters as required in Section 8(a)(vi).
(i) an original letter executed by Seller advising the tenants
of the Property of the sale of the Property to Purchaser and directing that
rents and other payments thereafter be sent to Purchaser or as Purchaser may
direct;
(j) possession of the Property in the condition required by this
Agreement, and the keys therefore;
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(k) the Certification of Non-foreign Status as provided in Treas. Reg.
1.1445-2(b)(2)(iii)(B) or in any other form as may be required by the
Internal Revenue
Code or the regulations issued thereunder;
(l) such other items and instruments as shall be reasonably
required by the Title Company in connection with the issuance of its title
insurance policy to Purchaser pursuant to Section 8(a)(iii) or as shall be
reasonably requested by counsel to Purchaser and consistent with the terms of
this Agreement;
(m) any and all documents necessary to release the cash
constituting the Deposit from escrow with the Title Company and to have said
Deposit returned to Purchaser;
(n) any other documents required by this Agreement to be delivered by
Seller.
10. Purchaser's Performance. At Closing, simultaneously with the
deliveries of Seller pursuant to the provisions of Section 9 above, Purchaser
shall pay to Seller the Purchase Price in the manner specified in Section 2,
whereupon the Deposit, and any interest accrued thereon, shall be returned to
Purchaser by the Title Company or, at the option of Purchaser, shall be applied
against the payment of Purchase Price.
11. Settlement Charges; Prorations and Adjustments.
(a) Purchaser shall pay for the title examination, the title
insurance premium, notary fees and other such charges incident to Closing. The
reasonable cost of preparation of the deed for the Property shall be borne by
Seller. All real estate transfer and recording fees and taxes and documentary
stamps in connection with this transaction shall be borne equally by Seller and
Purchaser. Purchaser and Seller shall each pay its own legal fees related to the
preparation of this Agreement and all documents required to settle the
transaction contemplated hereby.
(b) In addition to the foregoing, at the Closing, the
following adjustments and prorations shall be computed as of the Closing Date,
as follows:
(i) Taxes. Real estate and personal property taxes
shall be apportioned as of the Closing Date.
(ii) Assessments. All special assessments and other
similar charges which have become a lien upon the Property or
any part thereof at the Closing Date and are due and payable
through the Closing Date, if any, shall be paid in full by
Seller at the Closing. All other special assessments or
similar charges shall be adjusted as of the Closing Date.
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(iii) Rent and Security Deposits. Rent for the month
of, and any month after, Closing collected by Seller prior to
Closing shall be adjusted as of the date of the Closing Date.
If any tenant is in arrears in the payment of rent on the
Closing Date, rents received from such tenant after the
Closing shall be applied in the following order of priority:
(a) first, to the payment of current rent then due; (b)
second, to delinquent rent for any period after the Closing
Date; and (c) third, to delinquent rent for any period prior
to the Closing Date. Purchaser does not guarantee or undertake
any obligation to sue or take other action for collection of
arrearages in rents due from tenants as of the Closing Date.
If rents or any portion thereof received by Seller or
Purchaser after the Closing Date are payable to the other
party by reason of this allocation, the appropriate sum, less
a proportionate share of any reasonable attorneys' fees, costs
and expenses of collection thereof, shall be promptly paid to
the other party, which obligation shall survive the Closing.
If any tenants are required to pay percentage rents,
escalation charges for real estate taxes, operating expenses,
cost-of-living adjustments or other charges of a similar
nature ("Additional Rents") and any Additional Rents are
collected by Purchaser after the Closing which are
attributable in whole or in part to any period prior to the
Closing, then Purchaser shall promptly pay to Seller its
proportionate share thereof, less a proportionate share of any
reasonable attorneys' fees, costs and expenses of collection
thereof (if any), if and when the tenant paying the same has
made all payments of rents and Additional Rent then due to
Purchaser pursuant to the tenant's Lease, which obligation
shall survive the Closing. Purchaser shall use commercially
reasonable efforts to collect any such Additional Rents from
tenants at the Property.
(iv) Miscellaneous. All other charges and fees
customarily prorated and adjusted in similar transactions,
including utilities, insurance premiums and charges for
Service Contracts and other liabilities incurred in the
ordinary course of business to be assumed by Purchaser, shall
be prorated as of the Closing Date. In the event that accurate
prorations and other adjustments cannot be made at Closing
because current bills are not obtainable or the amount to be
adjusted is not yet ascertainable (as, for example, in the
case of utility bills) the parties shall prorate on the best
available information, subject to further adjustment promptly
upon receipt of the final bill or upon completion of final
computations. Seller agrees that an appropriate amount in
respect of water consumption or other utility charges may be
held in escrow by the Title Company in connection with its
issuance of a title insurance policy to Purchaser. Seller
shall use its best efforts to have all utility meters read on
the Closing Date so as to accurately determine its share of
current utility bills.
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12. Risk of Loss. The risk of loss or damage to the Property by fire or
other casualty until delivery of the deed of conveyance shall be borne by
Seller. If prior to Closing (i) condemnation proceedings are commenced against
all or any material portion of the Property, or (ii) if the Property is damaged
by fire or other casualty to the extent that the cost of repairing such damage
shall be One Hundred Thousand Dollars ($100,000.00) or more or if Safeway
supermarket or tenants of the Property (occupying in excess of 4,000 square feet
in the aggregate) shall exercise a termination right available under its lease
because of such damage, or (iii) if the Property is damaged by an uninsured risk
to the extent that the cost of repairing such damage shall be One Hundred
Thousand Dollars ($100,000.00); or (iv) if the Property becomes subject to
litigation which may deprive Purchaser of any material benefit to which it would
become entitled pursuant to this Agreement, then Purchaser shall have the right,
upon notice in writing to the Seller delivered within fifteen (15) days after
actual notice of such condemnation or fire or other casualty or litigation, to
terminate this Agreement, and thereupon the parties shall be released and
discharged from any further obligations to each other (except for any
liabilities accruing prior to the effective date of such termination) and the
Deposit shall be refunded to Purchaser. If Purchaser does not elect to terminate
this Agreement or in the event of fire or other casualty not giving rise to a
right to terminate this Agreement by Purchaser, Purchaser shall be entitled to
an assignment of all of Seller's share of the proceeds of fire or other casualty
insurance and rent insurance proceeds payable with respect to the period after
Closing, if any, or of the condemnation award, as the case may be, and Seller
shall have no obligation to repair or restore the Property; provided, however,
that the Purchase Price shall be reduced by an amount equal to the sum of (a)
the "deductible" applied by the Seller's insurance policy, or (b) if the Seller
is self-insured, the cost of repairing such damage. Purchaser shall have the
right to participate in the negotiation and settlement of any casualty or
condemnation-related claim, provided Purchaser shall have previously elected not
to terminate this Agreement or has no such right of termination.
13. Inspection of Property.
(a) Purchaser's Right of Inspection. Purchaser shall have the
right, at its own risk, cost and expense, at any time or times prior to Closing,
to enter, or cause its agents or representatives to enter, upon the Property for
the purpose of making surveys, or any tests, investigations and/or studies
relating to the Property or Purchaser's intended acquisition thereof which
Purchaser deems appropriate, in its sole discretion, during reasonable hours and
upon reasonable notice to Seller. Purchaser's entry shall be subject to the
rights of all tenants of the Property, and Purchaser shall use reasonable
efforts not to interfere with the business being conducted by the tenants.
Purchaser shall further have complete access to all documentation, agreements
and other information in the possession of Seller related to the ownership, use
and operation of the Property (except for any and all internal economic models,
analyses or other internal economic information and internal partnership
documents and tax returns and similar partnership information prepared by Seller
for Seller's
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exclusive use), to the extent it is readily available to Seller, and shall have
the right, at Purchaser's cost, to make copies of same.
(b) Feasibility Period. Subject to the requirements of Section
13(a) hereof, any other provisions of this Agreement to the contrary
notwithstanding, Purchaser may, prior to the period commencing on the Acceptance
Date and expiring on March 2, 1998 ("Feasibility Period"), cause at Purchaser's
sole cost and expense, such boring, engineering, economic, water, sanitary and
storm sewer, utilities, topographic, structural, environmental and other tests,
investigations, market studies and other studies as Purchaser shall elect. In
the event that any of such tests, investigations and/or studies indicate, in
Purchaser's sole discretion, that Purchaser's plans for the Property would not
be feasible, then Purchaser shall have the right, at its sole election on or
before the expiration of the Feasibility Period, to terminate this Agreement by
giving written notice thereof to Seller, in which event this Agreement shall
terminate, the Deposit shall be returned to Purchaser and neither party shall
have any further liabilities or obligations to each other (except for any
liabilities accruing prior to the effective date of such termination). Purchaser
shall be liable for any damage to real or personal property or injuries to
persons caused by Purchaser's actions in studying the Property during the
Feasibility Period and shall indemnify and hold Seller harmless from any and all
claims or liabilities relating to such damage or injuries and reasonable
attorneys' fees relating thereto. Purchaser shall repair and restore any damage
to the Property caused by Purchaser or its agents in connection with Purchaser's
inspection of the Property.
(c) Notwithstanding the foregoing, the Feasibility Period
shall remain open with respect to Seller's review of survey matters and
engineering and structural matters relating to the Property until March 13, 1998
and, with respect to environmental matters, until March 16, 1998 (collectively,
the "Open Matters"), it being understood and agreed that all of Purchaser's
rights and obligations pursuant to Sections 13(a) and (b), above, shall remain
effective with respect to such Open Matters (as if the Feasibility Period had
not expired) until such aforementioned dates.
(d) Audit. Seller hereby agrees, after the Closing Date, to
allow its books and records related to the Property (except for any and all
internal economic models, analyses or other internal economic information and
internal partnership documents and tax returns and similar partnership
information prepared by Seller for Seller's exclusive use) to be audited (at
Purchaser's sole expense) at the Seller's office or at FWM's office by an
independent, certified public accounting firm selected by Purchaser, and Seller
will cooperate and cause its employees and other agents to cooperate in such
auditing process. Purchaser shall provide Seller with prior notice of such
audit. Seller will cooperate with Purchaser's auditors with respect to such
audit and will execute all reasonable documents requested by Purchaser's
auditors in connection with such audit.
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14. Indemnifications.
(a) Indemnification by Seller. Seller hereby indemnifies and
agrees to defend and hold harmless Purchaser and its partners and subsidiaries
and any officer, director, employee, agent of any of them, and their respective
successors and assigns from and against any and all claims, expenses, costs,
damages, losses and liabilities (including reasonable attorneys' fees) which may
at any time be asserted against or suffered by Purchaser, any indemnitee, or the
Property, or any part thereof, whether before or after the Closing Date, as a
result of, on account of or arising from (i) any breach of any covenant,
representation, warranty or agreement on the part of Seller made herein or in
any instrument or document delivered pursuant to this Agreement, and/or (ii) any
obligation, claims, suit, liability, contract, agreement, debt or encumbrance or
other occurrence created, arising or accruing on or prior to the Closing Date,
regardless of when asserted, and relating to the Seller or the Property or its
operations.
(b) Seller's Environmental Indemnity. Seller hereby
indemnifies and agrees to defend and hold harmless Purchaser and its partners
and subsidiaries, and any officer, director, employee or agent of any of them,
and their respective successors and assigns, from and against any and all
claims, expenses, costs, damages, losses and liabilities (including reasonable
attorneys' fees) which may at any time be asserted against or suffered by any
indemnitee, directly or indirectly, relating to the presence of Hazardous
Materials on the Property at Closing, or the removal of Hazardous Materials from
the Property prior to Closing, including any claim as a result of any
governmental action, action by a third party or actions taken by such
indemnitees based upon advice of a recognized environmental authority to the
effect that action may need to be taken to avoid, reduce or limit any
indemnitees exposure to liability or the risk of injury or damage of persons or
property; provided, however, Seller's indemnification obligations under this
subparagraph (b) shall not be applicable if Seller's representations set forth
in Section 5(n), as modified, if at all, by the affidavit described in Section
9(c) above, are true.
(c) Indemnification by Purchaser. Purchaser hereby indemnifies
and agrees to defend and hold harmless Seller and its Partners and their
respective heirs, executors, administrators, personal or legal representatives,
successors and assigns from and against any and all claims, expenses, costs,
damages, losses and liabilities (including reasonable attorneys' fees) which may
at any time be asserted against or suffered by Seller as a result of, on account
of or arising from (i) any breach of any covenant, representation, warranty or
agreement on the part of Purchaser made herein or in any instrument or document
delivered pursuant to this Agreement, and/or (ii) any obligation, claims, suit,
liability, contract, agreement, debt or encumbrance or other occurrence created,
arising or accruing after the Closing Date and relating to the Property or its
operations.
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<PAGE>
(d) The indemnifications set forth in subparagraphs (a), (b)
and (c) of this Section 14 shall survive Closing or any termination of this
Agreement until December 15, 1998.
15. Brokerage Commission. Seller and Purchaser represent and warrant to
each other that no brokerage fee or real estate commission is or shall be due or
owing in connection with this transaction other than that payable to W&D
Holdings, Inc., which shall be payable by Seller, and First Capital Realty which
the parties understand shall be paid by W&D Holdings, Inc. pursuant to a
separate agreement between the two of them. Seller and Purchaser hereby
indemnify and hold the other harmless from any and all claims of any broker or
agent so claiming based on action or alleged action of the other. The provisions
of this Section 15 shall survive Closing or any termination of this Agreement
until December 15, 1998.
16. Default Provisions; Remedies.
(a) Purchaser's Default. Except for any failure waived in
writing by Seller, if Purchaser fails to consummate the purchase and sale
contemplated herein when required to do so pursuant to the provisions hereof,
then the Title Company shall deliver the Deposit and all interest thereon to
Seller as full and complete liquidated damages, and as the exclusive and sole
right and remedy of Seller, at law or in equity, whereupon this Agreement shall
terminate and neither party shall have any further obligations or liabilities to
any other party (except for any liabilities accruing prior to the effective date
of such termination).
(b) Seller's Default. Except for any breaches waived in
writing by Purchaser, if Seller breaches any of its covenants or obligations
under this Agreement or has failed, refused or is unable to consummate the
purchase and sale contemplated herein by the Closing Date or if any of the
representations and warranties made by Seller under this Agreement shall be
inaccurate or incorrect in any material respect, then Purchaser shall notify
Seller of such breach in writing and, should Seller not cure same within five
(5) business days of receipt of such default notice, then Purchaser shall be
entitled to (i) waive such breach, default or failure, and proceed to Closing,
(ii) terminate this Agreement and obtain the return of the Deposit, and/or (iii)
pursue such remedies as may be available at law or in equity, including without
limitation maintaining an action for damages and/or specific performance
(including without limitation reasonable attorneys' fees and court costs).
(c) In the event that any litigation shall arise between the
parties hereto as to the subject matter hereof, the prevailing party in such
litigation shall be entitled to recover from the non-prevailing party all of its
court costs and reasonable attorneys' fees.
17. 1031 Exchange.
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(a) The Purchaser shall have the right to structure the
transaction specified herein as a like-kind exchange under Code Section 1031 by
providing written notice to Seller and the Escrow Agent at least five (5) days
prior to the Closing. If so structured, the Seller's rights and obligations
hereunder, including Seller's right to be paid the Purchase Price in cash,
cashier's check, certified check or bank wire transfer at Closing, shall be
unaffected thereby.
(b) In the event that Purchaser elects to exercise its rights
to structure this transaction as a like-kind exchange under Code Section 1031,
the Seller agrees to cooperate with Purchaser so long as (i) there is no
additional financial liability or expense imposed upon the Seller, (ii) the
rights of Seller are not affected thereby, and (iii) Seller has no obligation to
acquire land or property used in such like-kind exchange.
(c) Purchaser agrees to hold harmless and indemnify Seller,
with counsel selected by Purchaser and reasonably acceptable to Seller, from and
against any expense, claim or liability of any nature whatsoever which Seller
may suffer or incur as a result of any tax structure elected by Purchaser to
consummate this transaction or as a result of any transaction pursuant to such
structure. Purchaser's liability hereunder shall be unaffected by any
assignment.
18. Miscellaneous Provisions.
(a) Completeness and Modification. This Agreement (together
with Exhibits A to I attached hereto) represents the complete understanding
between the parties hereto with respect to the transactions contemplated herein,
and it supersedes all prior discussions, understandings or agreements between
the parties. This Agreement shall not be modified or amended except by an
instrument in writing signed by all of the parties hereto.
(b) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective heirs,
executors, administrators, personal and legal representatives, successors and
assigns.
(c) Assignment. This Agreement shall not be assignable by
Purchaser without the consent of Seller, provided that this Agreement may be
assigned without Seller's consent to an entity controlled by, controlling or
under common control with Purchaser. This Agreement shall not be assignable by
Seller. Purchaser's liability hereunder shall be unaffected by any assignment.
(d) Waiver; Modification. Failure by Purchaser or Seller to
insist upon or enforce any of its rights hereto shall not constitute a waiver or
modification thereof.
(e) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Maryland.
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(f) Headings. The headings are herein used for convenience or
reference only and shall not be deemed to vary the content of this Agreement or
the covenants, agreements, representations and warranties herein set forth, or
the scope of any provision hereof.
(g) Continuing Documentation and Access. From and after
Closing, Seller shall afford Purchaser reasonable access to any and all
information in its possession concerning the ownership, use and operation of the
Property (including the right to copy same at the expense of Purchaser) for
purposes of any tax examination or audit or other similar purpose, subject to
the agreements of Purchaser concerning confidentiality set forth herein.
(h) All Warranties Joint and Several. Except on set forth in
Section 5(t) hereof, each and every warranty, covenant, undertaking and
agreement of Seller hereunder shall be deemed a joint and several warranty,
covenant, undertaking and agreement of each person and entity collectively
comprising the Seller.
(i) Counterparts. To facilitate execution, this Agreement may
be executed in as many counterparts as may be required; it shall be sufficient
that the signature of, or on behalf of, each party, or that the signatures of
the persons required to bind any party, appear on one or more such counterparts.
All counterparts shall collectively constitute a single agreement.
(j) Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered by hand or
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid or delivered by commercial courier, telecopy or overnight
courier (e.g., Federal Express) against receipt, to the addresses indicated
below:
(i) if to Purchaser:
First Washington Realty Limited Partnership
4350 East-West Highway, Suite 400
Bethesda, MD 20814
Attn: William J. Wolfe, President
Jeffrey S. Distenfeld, Esquire
Telecopy: (301) 907-4911
(ii) if to Seller:
Watkins Park Plaza Limited Partnership
c/o Walker & Dunlop
7500 Old Georgetown Road, Suite 800
Bethesda, MD 20814
Attn: Mitchell Gaynor
Telecopy: (301) 215-5559
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with a copy to:
O'Malley, Miles, Nylen & Gilmore
11785 Beltsville Drive
10th Floor
Beltsville, MD 20705
Attn: Matthew Osnos
Telecopy: (301) 572-6655
Such notice shall be deemed given on the date of receipt by
the addressee or the date receipt would have been effectuated if delivery were
not refused. Each party may designate a new address by written notice to the
other in accordance with this Paragraph 18(j).
(k) Further Assurances. Seller and Purchaser agree to execute,
acknowledge and deliver any further agreements, documents or instruments that
are reasonably necessary or desirable to carry out the transactions contemplated
by this Agreement, provided that such execution, acknowledgment and delivery
does not impose any additional costs on such party (other than such party's
attorneys' fees in the review thereof and de minimis recording costs).
(l) Business Days. A "business day" shall be Mondays through
Fridays, less and expecting all legal holidays observed by the United States
Government or the Government of the State of Maryland. Any date specified in
this Agreement which does not fall on a business day shall be automatically
extended until the first business day after such date.
(m) Zoning. Seller certifies that Seller has no knowledge of
any published preliminary or adopted land use plan (or adopted Zoning Map
Amendment) which may result in condemnation or taking of any part of Seller's
Property. Purchaser acknowledges that Purchaser is aware that information
relative to (i) government plans for land use, roads, highways, parks,
transportation and the like, and (ii) rezoning is available for inspection at
the Prince George's County Administration Building, Upper Marlboro, Maryland.
(n) Option. Purchaser and Seller hereby acknowledge that
certain real estate contracts in form similar to this Agreement have been
construed to be option contracts. Accordingly, simultaneous with the execution
of this Agreement, Purchaser has paid to Seller the sum of Ten Dollars ($10.00)
as consideration to Seller for the granting of any and all options to Purchaser
as contained in this Agreement, the receipt, sufficiency and adequacy of which
are hereby acknowledged. Said option consideration is separate and apart from
the Purchase Price for the Property and in no event will be returned to
Purchaser.
[signatures continue on next page]
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IN WITNESS WHEREOF, the parties hereto have executed this Real Estate
Purchase Agreement as of the day and year first written above.
PURCHASER:
FIRST WASHINGTON REALTY
LIMITED PARTNERSHIP
By: First Washington Realty Trust, Inc.,
WITNESS: Its general partner
/s/ Henry M. Renaud By: /s/ William J. Wolfe
William J. Wolfe
President
Date of execution: March 9, 1998
SELLER:
WITNESS: WATKINS PARK PLAZA
LIMITED PARTNERSHIP
By: W&D Ventures II Corp.,
Its General Partner
/s/ By:/s/ Mitchell M. Gaynor
Mitchell M. Gaynor
Senior Vice President
Date of execution: March 9, 1998
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ACKNOWLEDGEMENT BY TITLE COMPANY
The undersigned Title Company executes this Real Estate Purchase
Agreement solely to acknowledge receipt of the Deposit pursuant to Paragraph 3
hereof and to evidence its agreement to serve as escrow agent pursuant to the
terms of the foregoing Agreement.
COMMERCIAL SETTLEMENTS, INC.
By: /s/
Name:
Title:
Date: , 1998
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LIST OF EXHIBITS
EXHIBIT A. Legal Description of Land Recitals
EXHIBIT B. Leases and Rent Schedule Section 5(d)
EXHIBIT C. Service Contracts Section 5(e)
EXHIBIT D. Tax Bills Section 5(f)
EXHIBIT E. Insurance Policies Section 5(g)
EXHIBIT F. Form of Tenant Estoppel Section 5(i)
EXHIBIT F-1. Tenant Estoppels Section 8(a)(vi)
EXHIBIT G. Litigation Section 5(k)
EXHIBIT H. Operating Statements and Budget Section 5(p)
EXHIBIT I. Personal Property Section 5(r)
EXHIBIT J. Permitted Exceptions Section 8(a)(iii)
EXHIBIT K. Outstanding and Contingent
Leasing Commissions Section 5(t)
[Seller to Attach Foregoing at Acceptance of this Agreement]
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Exhibit 5.3
March 16, 1998
VIA FAX
Matthews Osnos, Esquire
O'Malley, Miles, Nylen & Gilmore
11785 Beltsville Drive, 10th Floor
Beltsville, Maryland 20705
RE: Watkins Park Plaza
Prince George's County, Maryland
Dear Matt:
The purpose of this letter is to amend that certain Real Estate
Purchase Agreement dated March 9, 1998 ("Purchase Agreement") by and between
Watkins Park Plaza Limited Partnership ("Seller") and First Washington Realty
Limited Partnership ("Purchaser") as follows:
1. The date referenced in the definition of the "Closing Date"
appearing in Section 4 of the Purchase Agreement shall be changed from March 18,
1998 to March 20, 1998; and
2. The date referenced in the fourth (4th) line of the definition
of the "Open Matters" appearing in Section 13(c) of the Purchase Agreement shall
be changed from March 16, 1998 to March 20, 1998.
Please arrange for Seller to execute this letter in the space provided
below and return the executed original to Henry M. Renaud via fax today at
301-907-4911 so as to evidence and memorialize Seller's agreement to the
foregoing.
FIRST WASHINGTON REALTY
LIMITED PARTNERSHIP
By: First Washington Realty Trust, Inc.,
Its general partner
By: /s/ Henry M.Renaud
Henry M. Renaud
Assistant Secretary
cc: Mitchell M. Gaynor (via facsimile)
Jeffrey S. Distenfeld, Esquire
[signatures continue on following page]
<PAGE>
Matthews Osnos, Esquire
March 16, 1998
Page 2
SEEN, AGREED AND CONSENTED TO
this 16th day of March, 1998:
WATKINS PARK PLAZA
LIMITED PARTNERSHIP
By: W&D Ventures II Corp.,
Its General Partner
By:/s/Mitchell M. Gaynor
Mitchell M. Gaynor
Senior Vice President
<PAGE>
EXHIBIT 5.4
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is made and entered as the 9th day of
September, 1997, by and between (i) Castlewood Realty Company, Inc., the sole
member of Parkville Shopping Center, L.L.C., a Maryland limited liability
company to be formed (sometimes hereinafter referred to as "Contributor"), and
(ii) FIRST WASHINGTON REALTY LIMITED PARTNERSHIP, a Maryland limited partnership
(hereinafter referred to as "FWRLP").
W I T N E S S E T H:
WHEREAS, the Contributor is the record and beneficial owner of that
certain parcel of real property containing approximately 12.7183 acres of land
as more particularly described on Exhibit A hereto (collectively, the "Land"),
together with the shopping center known as Parkville Shopping Center located in
Baltimore City and Baltimore County, Maryland, and containing approximately
140,834 square feet of leasable area and all other buildings and improvements
situated thereon (collectively, the "Building"), and all personal property and
fixtures located therein (other than that owned by tenants) (the "Personalty"),
and all appurtenances, rights, easements, rights-of-way, tenements and
hereditaments incident thereto (the "Additional Property") (the Land, Building,
Personalty and Additional Property are hereinafter collectively referred to as
the "Property");
WHEREAS, immediately prior to Closing, Contributor will have caused the
Property to be owned by and contributed to a new Maryland limited liability
company known as Parkville Shopping Center, L.L.C. (the "Company") such that
Contributor will be the sole member thereof immediately prior to Closing; and
WHEREAS, Contributor and FWRLP desire to enter into this Agreement
relating to the contribution by Contributor to FWRLP of all of its membership
interests in the Company (the "Membership Interests") in exchange for certain
interests in FWRLP.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Contribution. Subject to the terms and conditions set forth in this
Agreement, Contributor and FWRLP agree to the contribution by Contributor to
FWRLP (the "Contribution") of all of the Membership Interests. Immediately prior
to Closing, Contributor shall have caused the Property to be owned by and
contributed to the Company such that Contributor will be the sole member
thereof.
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<PAGE>
2. Consideration.
(a) In consideration of the Contribution of all of the
Membership Interests, FWRLP shall issue common partnership units of FWRLP (the
"Units") in an aggregate amount calculated as follows: Seven Million Eight
Hundred Thousand Dollars ($7,800,000.00) ("Gross Consideration") less the
outstanding and unpaid principal balance of the Northern Loan (as defined below)
at the Closing ("Net Asset Value"), with the number of Units determined by
dividing the Net Asset Value by a price per Unit (the "Unit Price") equal to
$24.00, rounded to the nearest one (1). FWRLP will issue all of the Units to the
Contributor.
(b) At Closing, the Membership Interests in the Company shall
be contributed to FWRLP with the Property then being subject to the
indebtedness, lien and operation of the Northern Loan, including without
limitation the Mortgage (as defined below).
(c) (i) The Property is presently encumbered by a Deed of
Trust and Security Agreement ("Mortgage") from the Partnership, as debtor, for
the benefit of Northern Life Insurance Company, as secured party (the "Lender"),
which Mortgage secures an original principal indebtness of $3,850,000.00 with
interest thereon payable over the term thereof (which ends on August 1, 1998) at
a fixed interest rate of 7.63% per annum, as evidenced by a Note from the
Partnership to Lender ("Note"). The Mortgage and Note and all documents and
instruments executed in connection therewith are collectively referred to as the
"Northern Loan." The Northern Loan requires equal monthly installments of
principal and interest in the amount of the $29,678.68 per month. The
outstanding principal balance under the Northern Loan as of the date hereof is
approximately $3,300,000.00. Copies of the Mortgage and Note are attached hereto
as Exhibits N and O, respectively.
(ii) FWRLP's obligations under this Agreement shall be expressly
contingent on the condition that FWRLP receive by Closing a letter (the
"Letter") from Lender (i) consenting to the Contribution of the Membership
Interests to FWRLP and the assumption of the Northern Loan by the Company
or FWRLP (or its designee) as borrower, (ii) confirming that the Northern
Loan is as described above, (iii) certifying that, to the best knowledge of
the Lender, there is no default or event which with notice or lapse of
time, or both, would constitute a default under the Northern Loan. At
Closing, the Contributor shall execute an estoppel certificate in favor of
FWRLP certifying that, to the best knowledge of the Contributor, there is
no default, or event of default which with notice or lapse of time, or
both, would constitute a default under the Northern Loan. The Contributor
shall reasonably cooperate with FWRLP in its efforts to obtain such Letter
from Lender before the end of the Feasibility Period (as defined below).
FWRLP shall be responsible for all costs and fees charged by the Lender in
connection with the assumption of the Northern Loan (including but not
limited to
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<PAGE>
assumption fees, Lender's counsel fees and title insurance premiums). If such
Letter is not received by FWRLP by Closing, FWRLP shall have the right to
terminate this Agreement, in which event the Deposit (defined below), together
with interest thereon, shall be returned to FWRLP. If Lender does not consent or
if Lender's Letter is other than as set forth above and is not acceptable to
FWRLP, FWRLP shall have the right, at its sole election, to terminate this
Agreement by giving written notice thereof to Contributor, whereupon the
Deposit, together with interest thereon, shall be returned to Contributor and
neither party shall have any further liability to the other.
(iii) Contributor's obligations under this Agreement
shall be
expressly contingent on the condition that the Lender, on or before the Closing,
shall have released Castlewood Realty Company, Inc. from all obligations and
liabilities under the Northern Loan pursuant to a release document(s) reasonably
acceptable to the Contributor (the "Release"). FWRLP and Contributor shall
cooperate in good faith (at no cost to FWRLP or Contributor) to obtain such
Release from the Lender. If such Release is not obtained by the Closing Date,
Contributor may elect to either (i) terminate this Agreement, in which case the
Deposit shall be returned to FWRLP and neither party shall have any further
liability to the other, or (ii) extend the Closing Date for up to 30 days and if
such Release is not obtained by the end of such 30-day period, then Contributor
may elect to proceed to Closing or terminate this Agreement.
(d) The Contributor and FWRLP will settle any pro rations and
closing adjustments as provided in this Agreement as follows: (i) if Contributor
owes the same, on a net basis, to FWRLP, through a reduction in Units in an
amount equal to the net adjustment divided by the Unit Price, rounded to the
nearest one (1), to be delivered at the Closing, and (ii) if FWRLP owes the
same, on a net basis, to Contributor, through additional Units in an amount
equal to the net adjustment divided by the Unit Price, rounded to the nearest
one (1), to be delivered at the Closing. Contributor acknowledges and agrees
that the Units will not be redeemable for cash or exchangeable for common stock
of the REIT for a period of thirteen (13) months after their issuance, all as
more fully discussed in the Confidential Information Statement (as hereinafter
defined), as supplemented through the date hereof.
(e) Notwithstanding any provision hereof to the contrary, the
Contribution of the Membership Interests to FWRLP by the Contributor as set
forth herein shall constitute a "Capital Contribution" within the meaning of the
FWRLP Partnership Agreement and is intended, to the fullest extent possible, to
be governed by Section 721(a) of the Internal Revenue Code of 1986, as amended
(the "Code"), and all parties to this Agreement will report the transaction
evidenced hereby consistently with this Section 2(e). Since the Contribution of
the Membership Interests to FWRLP will terminate the Company for federal income
tax purposes, FWRLP agrees that the Contributor shall have the right and
obligation to file final tax returns for the Company as of the Closing Date.
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<PAGE>
3. Deposit.
(a) Within two (2) business days after the date of delivery to
FWRLP of an original of this Agreement executed by Contributor together with
completed Exhibits hereto (the date of such delivery by Contributor being the
"Acceptance Date"), FWRLP shall deliver to the Title Company, as escrow agent, a
deposit (together with interest earned thereon, the "Deposit") of Fifty Thousand
Dollars ($50,000.00) by check payable to the Commercial Settlements, Inc., 1413
K Street, N.W., Washington, DC 20005 (the "Title Company").
(b) [Intentionally Omitted].
(c) The Title Company will immediately provide Contributors
with written evidence of receipt of such Deposit. The Title Company shall place
the Deposit in an interest-bearing account within two (2) business days after
the date of receipt thereof, and interest on the Deposit shall accrue to the
benefit of the party entitled to the Deposit pursuant to this Agreement. The
Deposit shall be held by the Title Company pursuant to the terms and conditions
of this Agreement.
(d) In the event that, at any time prior to Closing, either
the Contributor or FWRLP provides Title Company with a certification (a copy of
which shall be delivered contemporaneously to the other party) that the
Contributor or FWRLP, as the case may be, is entitled to the Deposit pursuant to
the terms of this Agreement, Title Company shall deliver the Deposit to such
party within seven (7) business days after receipt of said notice, unless the
other party disputes such certification by written notice to Title Company (a
copy of which shall be delivered contemporaneously to the other party) delivered
within five (5) business days of Title Company's receipt of the initial
certification. In such event, Title Company shall hold the Deposit pending
resolution of such dispute. Any payment of the Deposit to the Contributor shall
be made by certified check payable to Contributor or wire transfer.
(e) The parties acknowledge that Title Company is acting
solely as a stakeholder at their request and for their convenience, that Title
Company shall not be deemed to be the agent of either of the parties, and Title
Company shall not be liable to either of the parties for any act or omission on
its part unless taken or suffered in bad faith, in willful disregard to this
Agreement or involving gross negligence. The Contributor and FWRLP shall jointly
and severally indemnify and hold Title Company harmless from and against all
costs, claims and expenses, including reasonable attorneys' fees, incurred in
connection with the performance of Title Company's duties hereunder, except with
respect to actions or omissions taken or suffered by Title Company in bad faith,
in willful disregard of this Agreement or involving gross negligence on the part
of Title Company.
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<PAGE>
4. Closing. Except as otherwise provided in this Agreement, the
Contribution contemplated herein shall be consummated at the "Closing"
(sometimes hereinafter referred to as the "Closing"), which shall take place on
the date (the "Closing Date") specified by FWRLP on not less than ten (10) days
notice to Contributors, provided that the Closing Date shall not be later than
forty-five (45) days after the end of the Feasibility Period; provided, however,
that if the Lender has not completed all documentation consenting to the
contribution of the Membership Interests by such date, then the Closing Date
shall be extended for such reasonable time period as is required to complete
same, not to exceed 30 days. The Closing shall take place at the offices of
First Washington Realty Limited Partnership, 4350 East-West Highway, Suite 400,
Bethesda, Maryland 20814, or at such other place as may mutually agreed upon by
Contributor and FWRLP.
5. Representations and Warranties of Contributor. In order to induce
FWRLP to enter into this Agreement and to issue the Units in consideration for
the Membership Interests, Contributor makes the following representations and
warranties, each of which is material and shall survive Closing without
limitation, notwithstanding any investigation at any time made by or on behalf
of FWRLP:
(a) Authority. Contributor has the right, power and authority
to enter into this Agreement and to contribute its Membership Interests in
accordance with the terms and conditions of this Agreement. Except for the
consents required under the Northern Loan, no consents of any persons other than
Contributor are required for such execution or to cause such Contributor to
consummate the transactions contemplated by this Agreement. This Agreement is
the valid and binding obligation of Contributor, enforceable against Contributor
in accordance with its terms.
(b) No Defaults. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will: (i) subject to
any approval required under the Northern Loan, conflict with, or result in a
breach of, the terms, conditions, or provisions of or constitute a default under
any agreement or instrument to which such Contributor is a party or by which
such Contributor is bound, or (ii) subject to any approval required under the
Northern Loan, violate any restriction, requirement, covenant or condition to
which such Contributor is subject or by which such Contributor is bound.
(c) Ownership of Interests. Contributor will own all of the
Membership Interests in the Company after the Property is contributed to the
Company immediately prior to Closing, free and clear of all liens, charges,
encumbrances, restrictive agreements and assessments other than the provisions
of the Company's Operating Agreement. Upon the contribution of Contributor's
Membership Interests to FWRLP or its designee(s), FWRLP will receive good and
absolute title thereto, free from all liens, charges, encumbrances, restrictive
agreements and assessments whatsoever other than the provisions of the Operating
Agreement. Such Contributor hereby waives, with
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<PAGE>
respect to the contribution contemplated by this Agreement, any "right of
refusal" or other restriction on transfer set forth in the Operating Agreement.
There are no outstanding options, contracts, calls, commitments or demands of
any nature relating to the Membership Interests of such Contributor, except as
set forth in the Operating Agreement.
(d) Securities Law Matters.
(i) Contributor is now or, at the time of Closing, will be, an
"accredited investor" as such term is defined under Rule 501 promulgated
under the Securities Act of 1933, as amended (the "Securities Act");
(ii) Such Contributor's primary residence or principal place of
business is in the State of Maryland;
(iii) Such Contributor is acquiring the Units for such Contributor's
account for investment purposes only and not with a present view to
distribution;
(iv) Taking into account the information and resources such
Contributor can practically bring to bear on the acquisition of the Units
in FWRLP contemplated hereby, such Contributor is knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions
with respect to investments in securities presenting an investment decision
like that involved in the acquisition of the Units, including investments
in securities issued by FWRLP, and has requested, received, reviewed and
considered all information such Contributor deems relevant in making an
informed decision to acquire the Units (including the Confidential
Information Statement attached hereto which contains the First Amended and
Restated Agreement of Limited Partnership of FWRLP and any Amendments
thereto (the "Partnership Agreement"), except that the Partnership
Agreement has been further amended solely to reflect exchanges of Units for
shares of the REIT's common stock (the "Common Stock") by holders of such
Units in accordance with the terms of the Partnership Agreement);
(v) Such Contributor will not, directly or indirectly, voluntarily
offer, sell, pledge, transfer or otherwise dispose of (or solicit any
offers to buy, purchase or otherwise acquire or take a pledge of ) any of
the Units except in compliance with the Securities Act and the rules and
regulations promulgated thereunder and with the terms and conditions of the
Partnership Agreement;
(vi) Such Contributor acknowledges that the Units to be issued must be
held unless and until they are subsequently registered under the Securities
Act and under applicable state securities or blue sky laws, unless
exemptions from such registrations are available at the time of resale;
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<PAGE>
(vii) Prior to the issuance of the Units, such Contributor will
execute all such other documents and instruments as may be reasonably
necessary to allow FWRLP to comply with federal and state securities law
requirements with respect to the issuance of the Units and to comply with
the terms of the Partnership Agreement; and
(viii) Such Contributor acknowledges and agrees that the Units to be
issued hereunder shall not be exchangeable and shall not be exchanged for
Common Stock for a period of thirteen (13) months from and after the date
of issuance to such Contributor.
(e) No Contributor is a person other than a United States
person within the meaning of the Internal Revenue Code of 1986, as amended (the
"Code"). The transaction contemplated herein is not subject to the tax
withholding provisions of Section 3406 of the Code, or Subchapter A of Chapter 3
of the Code or of any other provision of law.
6. Representations and Warranties of Contributor as to the Property. In
order to induce FWRLP to enter into this Agreement and to issue the Units in
consideration for the Membership Interests, the Contributor, hereby makes the
following representations and warranties as of the date hereof, each of which is
material and shall (except as otherwise set forth in Section 6(s)), survive
Closing for a period of one (1) year (unless expressly provided that it will
survive Closing without such limitation), notwithstanding any investigation at
any time made by or on behalf of FWRLP:
(a) Authority. Contributor is a corporation duly organized and
in good standing under the State of Maryland. The Company will be a limited
liability company duly organized and in good standing under the laws of the
State of Maryland. The Company's Operating Agreement and all Amendments thereto
(collectively, the "Operating Agreement") including all Articles of Organization
and all Amendments thereto shall be in the form attached hereto an Exhibit P.
Notwithstanding anything to the contrary, the representations and warranties
contained in this Section 6(a) shall survive Closing without being subject to
the one year limitation.
(b) Title. Contributor is the sole owner of fee simple title
to the Property, and immediately prior to Closing after contribution of the
Property to the Company, the Company will be the sole owner of fee simple title
to the Property.
(c) Compliance with Existing Laws. To the best of the
Contributor's knowledge and except as set forth on Exhibit D attached hereto,
(i) the Contributor is not in violation of, and has materially complied with,
any and all applicable building, zoning, environmental or other ordinances,
statutes or regulations of any governmental agency, in respect to the ownership,
use, maintenance, condition and operation of the Property or any part thereof,
and (ii) the Contributor possesses (and at Closing will possess) all licenses,
certificates, permits and authorizations necessary for the use and operation of
the Property in the manner in which it is currently being operated by the
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<PAGE>
Contributor, and the requisite certificates of the fire marshalls or board of
fire underwriters have been issued for the Property, if applicable. The Property
is zoned B-2-1 (for portion of Property in Baltimore City) and BL-CCC (for
portion of Property in Baltimore County). To the best of the Contributor's
knowledge, the Building and all related facilities are now in conformance with
all applicable zoning laws, and no variance, exception or other modification of
such laws was necessary in order to authorize the use or occupancy of any
portion thereof, or if necessary it was obtained.
(d) Leases. True, correct and complete copies of all of the
leases of the Property and any amendments thereto (collectively, the "Leases"),
have been delivered to FWRLP. Attached hereto as Exhibit B is a description of
all of the Leases and a current rent schedule ("Rent Schedule") covering the
Leases, which is true and correct in all material respects. There are no leases
or tenancies of any space in the Property other than those set forth in Exhibit
B or, to the Contributor's knowledge, any subleases or subtenancies unless
otherwise noted therein. Except as otherwise set forth in Exhibit B or elsewhere
in this Agreement:
(i) The Leases are in full force and effect and to the best of the
Contributor's knowledge constitute a legal, valid and binding obligation of
the respective tenants;
(ii) no tenant has an option to purchase the Property or any portion
thereof;
(iii) no renewal or expansion options have been granted to the
tenants, except as provided in the Leases;
(iv) to the best of the Contributor's knowledge, the Contributor is
not in default under any of the Leases;
(v) the rents set forth on the Rent Schedule are being collected on a
current basis and there are no arrearages in excess of one month, except as
indicated in Exhibit B hereto, nor has any tenant paid any rent, additional
rent or other charge of any nature for a period of more than thirty (30)
days in advance;
(vi) all work for tenant alterations and other work or materials
contracted for by the Contributor and any tenant has been completed by the
Contributor, and all work and materials have been fully paid for or will be
paid for by Closing except as indicated on Exhibit B;
(vii) the Contributor has not sent written notice to any tenant
claiming that such tenant is in default, which default remains uncured, and
to the best of the Contributor's knowledge, no tenant is in default under
its Lease, except as indicated in Exhibit B hereto;
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<PAGE>
(ix) no action or proceeding instituted against the Contributor by any
tenant is presently pending in any court; and
(x) there are no security deposits other than those set forth in
Exhibit B.
(e) Service Contracts. Attached hereto as Exhibit C is a
complete and correct list of all contracts or agreements relating to the
management, leasing, operation, maintenance or repair of the Property (the
"Service Contracts"). True and correct copies of all of the Service Contracts
have been delivered to FWRLP. Except in the case of a default by the vendor
under a specific Service Contract, no Service Contract will be terminated,
amended, modified or supplemented prior to the Closing Date without FWRLP's
prior written approval, which approval shall not be unreasonably withheld,
conditioned or delayed.
(f) Tax Bills. The Contributor has delivered true and correct
copies of tax bills issued by any applicable federal, state or local
governmental authority with respect to the Property for the most recent past and
current tax years, and any new assessment received with respect to a current or
future tax year.
(g) Insurance. The Property is insured for its replacement
cost against loss or damage sustained as a result of fire or other casualty and
the Partnership has rent loss insurance in place for the Property. Attached
hereto as Exhibit E is a list of all hazard, liability and other insurance
policies presently affording coverage with respect to the Property. The
Contributor shall maintain in full force and effect all such policies until the
Closing Date, and shall cause its insurer to name FWRLP as an additional insured
as a contract party on its rent loss policy with respect to the Property.
(h) Possession of Property. Possession of the Property shall
be delivered to FWRLP at Closing in its "as is, where is" condition as of the
date of FWRLP's execution of this Agreement.
(i) Tenant Estoppels. The Contributor represents and warrants
that it shall use reasonable good faith efforts (without cost to the
Contributor) to obtain and deliver to FWRLP a tenant estoppel letter from each
tenant in substantially the form attached hereto as Exhibit F (or in such form
or containing such information as may be required by the lease of such tenant)
from each of the tenants of the Property confirming the information set forth in
the Rent Schedule attached as Exhibit B hereto.
(j) Condemnation Proceedings. No condemnation or eminent
domain proceedings are pending or, to the best of the Contributor's knowledge,
threatened against the Property or any part thereof, and the Contributor has not
made any commitments to or received any written notice, of the desire of any
public authority or
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<PAGE>
other entity to take or use the Property or any part thereof whether temporarily
or permanently, for easements, rights-of-way, or other public or quasi-public
purposes.
(k) Litigation. Except as set forth on Exhibit G hereto, no
litigation is pending or, to the best of the Contributor's knowledge, threatened
against Contributor or the Company, including administrative actions or orders
against the Contributor or the Company relating to governmental regulations,
affecting the use, operation or ownership of the Property or any part thereof as
contemplated herein, other than those being defended by the Contributor's or the
Company's liability insurers.
(l) No Defaults. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will: (i) subject to
any approval required under the Northern Loan, conflict with, or result in a
breach of, the terms, conditions or provisions of, or constitute a default
under, any agreement or instrument to which the Contributor, or the Company is a
party or by which the Contributor, the Company or the Property is bound, (ii)
subject to the approval required under the Northern Loan, violate any
restriction, requirement, covenant or condition to which the Contributor or the
Company is subject or by which the Contributor, the Company or the Property is
bound, or (iii) result in the cancellation of any contract or lease pertaining
to the Property.
(m) [Intentionally Omitted].
(n) Separate Tax Lot and Subdivision. To the best of the
Contributor's knowledge, the Land is the subject of a separate subdivision, and
the Land is assessed for tax purposes as a separate and distinct parcel(s).
(o) Hazardous Waste. Except as set forth in that certain
Environmental Assessment report of Environmental Management Group, Inc. dated
May 9, 1988, the Contributor has no actual knowledge of any discharge, spillage,
uncontrolled loss, seepage or filtration (a "Spill") of oil, petroleum or
chemical liquids or solids, liquid or gaseous products or any hazardous waste or
hazardous substance (as those terms are used in the Comprehensive Environmental
Response, Compensation and Liability Act of 1986, as amended, the Resource
Conservation and Recovery Act of 1976, as amended, or in any other applicable
federal, state or local laws, ordinances, rules or regulations relating to
protection of public health, safety or the environment, as such laws may be
amended from time to time) at, upon, under or within the Land or any contiguous
real estate. To the best of the Contributor's knowledge, there is no proceeding
or action pending or threatened by any person or governmental agency regarding
the environmental condition of the Property. To the Contributor's knowledge, the
Building is totally free of friable asbestos requiring remediation.
(p) Certificates of Occupancy. The Contributor will not amend
any certificates of occupancy for the Property and will maintain them in full
force and effect to the extent that the Contributor is responsible for them.
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<PAGE>
(q) Licenses and Permits. The Contributor has received no
notice, nor has any knowledge, that Contributor or the Company is lacking any
required permit or license issued by applicable governmental authorities for
operation, maintenance or ownership of the Property ("Licenses").
(r) Operating Statements. Attached hereto as Exhibit H are
true and correct operating statements of the Property for fiscal years ended
September 30, 1994, 1995 and 1996. Also attached as Exhibit H is a year-to-date
operating statement for the Property.
(s) Utilities. To the best of Contributor's knowledge,
adequate, usable public sewers, public water facilities, gas and/or electrical
facilities necessary to the operation of the Property are installed in and are
duly connected to the Property . Notwithstanding anything to the contrary, the
representations and warranties set forth in this Section 6(s) shall not survive
Closing.
(t) Personal Property. Attached hereto as Exhibit I is a true,
correct and complete inventory of all personal property ("Personal Property")
owned by the Contributor or the Company, if any, used in the management,
maintenance and operation of the Property (other than trade fixtures or personal
property of tenants) which is to be transferred to FWRLP. Contributor may remove
all equipment not listed on Exhibit I.
(u) Leasing Commissions. At Closing there shall be, no outstanding or
contingent leasing commissions or fees payable with respect to the Property
(v) Partnership Liabilities. Except for (i) the obligations
and liabilities of the Company which FWRLP is taking the Membership Interests
subject to under Section 2 (c) above, and (ii) any accrued liabilities and
obligations of the Company which are being adjusted at Closing pursuant to
Section 12 of this Agreement, and (iii) matters disclosed or referred to in the
Exhibits attached hereto, the Company shall not have any liabilities or
obligations, either accrued, absolute or contingent or otherwise, which will not
be paid or discharged on or before the Closing Date. In addition, the
Contributor has not received notice of any, and to the best of the knowledge of
the Contributor, there is, as of the date of execution of this Agreement, no
basis for any, claim against (or liability of) the Contributor or the Company
arising from the business done, transactions entered into or other events
occurring prior to the Closing Date other than the obligations and liabilities
described in the preceding sentence.
(w) Partnership for Tax Purposes. The Company is, and at all
times has been, properly treated as a "division" of Contributor for Federal
Income Tax purposes, and the Company itself has not been treated as an
"association" or "publicly traded partnership" taxable as a corporation. The
foregoing representation shall survive Closing without being subject to the one
year limitation.
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(x) Taxes. Contributor and the Company have timely filed with
the appropriate taxing authorities all returns (including without limitation
information returns and other material information) in respect of Federal, State
and local taxes (collectively "Taxes") required to be filed by it through the
date hereof and will timely file any such returns required to be filed by it on
or prior to the Closing Date. The returns and other information filed (or to be
filed) are complete and accurate in all material respects. All Taxes of the
Contributor and Company in respect of periods beginning before the Closing Date
have been timely paid, or will be timely paid prior to the Closing Date, and the
Contributor and the Company has no material liability for Taxes in excess of the
amounts so paid. All Taxes that the Company has been required to collect or
withhold have been duly collected or withheld and, to the extent required when
due, have been or will be (prior to Closing Date) duly paid to the proper taxing
authority. No audits of any of the Company's federal, state or local returns for
Taxes by the relevant taxing authorities have occurred, and no material
deficiencies for Taxes of the Company have been claimed, proposed or assessed by
any taxing or other governmental authority against the Company. There are no
pending or, to the best of knowledge of the Contributor, threatened audits,
investigations or claims for or relating to any material additional liability to
the Company in respect of Taxes, and there are no matters under discussion with
any governmental authorities with respect to Taxes that in reasonable judgement
of the Contributor or its counsel, is likely to result in a material additional
liability for Taxes. There are no liens for taxes (other than for current taxes
not yet due and payable) on any of the assets of the Company. The foregoing
representations and covenants contained in this Section 6(x) shall survive
Closing without being subject to the one year limitation.
7. Obligations of Contributor Pending Closing. From and after the date
of this Agreement through the Closing Date, Contributor covenants and agrees as
follows:
(a) Maintenance and Operation of Premises. The Contributor
will cause the Property to be maintained in its present order and condition,
normal wear and tear, and damage by fire or other casualty (subject to Section
13) excepted, and will cause the continuation of the normal operation thereof,
including the purchase and replacement of fixtures and equipment, and the
continuation of the normal practice with respect to maintenance and repairs so
that the Property will, except for normal wear and tear and damage by fire or
other casualty (subject to Section 13), be in substantially the same physical
condition on the Closing Date as on the date hereof.
(b) Licenses. Contributor shall use its commercially
reasonable efforts to preserve in force all Licenses and to cause those expiring
to be renewed.
(c) Changes in Representations. Contributor shall notify FWRLP
promptly, and FWRLP shall notify Contributor promptly, if either becomes aware
of any occurrence prior to the Closing Date which would make any of its
representations, warranties or covenants contained herein not true in any
material respect.
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(d) Obligations as to Leases. From the Acceptance Date to the
expiration of the Feasibility Period provided for in Section 14, Contributor
shall have the right to enter into new leases for space at the Property ("New
Lease(s)") or to amend, modify, renew, supplement or extend any Lease in any
respect or approve any assignment of leases or subletting of leased space, or
terminate any Lease (with respect to any provision amending, modifying,
renewing, supplementing or extending, etc. above, "Amended Lease(s)"), and as to
any Amended or new Leases entered into by the Contributor during this period,
the Contributor shall give FWRLP notice (including therewith copies of the
Amended and New Leases and all relevant data related to the particular Amended
or New Lease) of such Amended and/or New Leases within three (3) days after the
entry into any Amended or New Lease, but, in any event, not later than seven (7)
days prior to the expiration of the Feasibility Period. After the expiration of
the Feasibility Period, the Contributor shall not, without FWRLP's prior written
consent (which consent shall not be unreasonably withheld), amend, modify, renew
or extend any Lease in any respect unless required by law, or enter into new
leases or approve any assignment of leases or subletting of leased space, or
terminate any Lease. If FWRLP does not respond within five (5) business days of
written request for consent from the Contributor, FWRLP shall be deemed to have
consented to such request. The Contributor hereby further agrees that if any
space is vacant on the Closing Date, FWRLP shall accept the Property subject to
any vacancy as of the Closing Date, provided that the vacancy was not permitted
or created by the Contributor in violation of any restrictions contained in this
Section 7(d). The Contributor shall not be responsible for vacancy caused by a
breach by tenant under its lease. After the end of the Feasibility Period and
prior to Closing, Contributors shall not apply all or any part of the security
deposit of any tenant unless such tenant has vacated the Property.
(e) Obligations as to Northern Loan. The Contributor shall
not, without FWRLP's prior written consent, (i) prepay, or permit the Company to
prepay, the Northern Loan, or (ii) modify or amend, or permit the Company to
modify or amend, any of the documents evidencing or securing the Northern Loan
or otherwise entered into in connection with the Northern Loan. The Contributor
shall make, or cause the Company to make, all payments required to be made under
the Northern Loan when due, shall perform, or cause the Company to perform, all
obligations under the Northern Loan and shall keep, and cause the Partnership to
keep, the Northern Loan free from default.
8. Representations and Warranties of FWRLP. In order to induce
Contributor to enter into this Agreement and to contribute the Membership
Interests to FWRLP, FWRLP, and, as to Sections 8(a), 8(b), 8(e), 8(f) and 8(g),
First Washington Realty Trust, Inc ("REIT") hereby make the following
representations and warranties as of the date hereto, each of which is material
and shall survive Closing, notwithstanding any investigation at any time made by
or on behalf of Contributor or the Company:
(a) Authority of FWRLP and the REIT. FWRLP is a limited partnership
duly organized and existing and in good standing under the laws of the
State of
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Maryland. Subject to the approval of the Board of Directors of the REIT, as set
forth in Section 9(a)(ix), FWRLP and the REIT have all necessary power and
authority to execute, deliver and perform this Agreement and consummate all of
the transactions contemplated by this Agreement, including without limitation
the Registration Rights Agreement referred to in Section 18 and attached hereto
as Exhibit K. Subject to the approval of the Board of Directors of the REIT as
set forth in Section 9(a)(ix), this Agreement is the valid and binding
obligation of FWRLP and the REIT, enforceable against each of them in accordance
with its terms.
(b) No Defaults. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will: (i) conflict
with, or result in a breach of, the terms, conditions or provisions of, or
constitute a default under, any agreement or instrument to which FWRLP or the
REIT is a party, (ii) violate any restriction, requirement, covenant or
condition to which the FWRLP or the REIT is subject, and (iii) constitute a
violation of any applicable code, resolution, law, statute, regulation,
ordinance, rule, judgment, decree or order.
(c) Disclosure Documents. Attached hereto as Exhibit L is a
true and correct copy of the Confidential Information Statement, as supplemented
through the date hereof. The FWRLP Partnership Agreement, as contained in the
Confidential Information Statement, as supplemented through the date hereof, has
not been amended or modified except as set forth in Exhibit L, and, to the
knowledge of FWRLP, no default or condition which, with the passage of time or
the giving of notice could become a default, exists on the part of any party
thereunder.
(d) Disclosure. The Confidential Information Statement, as
supplemented through the date hereof, and including the Appendices thereto, on
the date hereof, does not contain an untrue statement of a 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.
(e) Financial Information. The financial statements of FWRLP
and the REIT (including the notes thereto) included in the Confidential
Information Statement, as supplemented through the date hereof, present fairly
the financial position of the respective entity or entities presented therein at
the respective dates indicated and the results of their operations for the
respective periods specified, and except as otherwise stated in any such
registration statement or periodic report, such financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis.
(f) Issuance of Units. The FWRLP Partnership Agreement
provides, or prior to Closing will provide, for the issuance of the Units. The
Units to be issued in connection with the transactions herein contemplated have
been, or prior to their issuance will have been, duly authorized for issuance by
FWRLP to Contributor, and on the date of their issuance will be validly issued,
fully paid and non-assessable. The
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Units conform to the description thereof contained in the Confidential
Information Statement, as supplemented through the date hereof, and such
description conforms to the rights set forth in the FWRLP Partnership Agreement.
All issued and outstanding Units were issued in compliance with or in
transactions exempt from the registration provisions of applicable federal and
state securities laws. Any and all shares of Common Stock of the REIT
exchangeable for Units issued in connection with the transactions herein
contemplated will be duly authorized, validly issued, fully paid and
non-assessable. All issued and outstanding shares of Common Stock of the REIT
were issued in compliance with or in transactions exempt from the registration
provisions of applicable federal and state securities laws.
(g) Litigation. There is no action or proceeding pending or,
to the knowledge of FWRLP, threatened against FWRLP, the REIT or any subsidiary
before any court or administrative agency which would result in any material
adverse change in the business or financial condition of FWRLP, the REIT and
their subsidiaries, taken as a whole.
(h) Sale of the Property. Except in connection with a sale of
all or substantially all of FWRLP's assets or a merger or consolidation of
FWRLP, in no event shall FWRLP voluntarily sell, or permit the Company or any
affiliate of FWRLP to voluntarily sell, the Property (or the interests in the
Company) for a period of five (5) years following the Closing Date, unless FWRLP
indemnifies and agrees to hold harmless the Contributor from any adverse Federal
and state income tax consequences attributable to such sale. In the event of a
condemnation of a material part of the Property (within such five (5) year
period) FWRLP shall use reasonable efforts to reinvest, or cause the Company or
owner of the Property to reinvest, as the case may be, the condemnation proceeds
in such property or properties, and within such time periods, as are required by
the Internal Revenue Code to avoid Federal income tax being payable by
Contributor with respect to such condemnation proceeds. FWRLP recognizes that
the Contributor may incur adverse tax consequences in the event of a breach by
FWRLP of the covenant not to sell, or permit the sale of, the Property (or the
interests in the Company) as set forth above in this Section 8(h). In the event
of a breach by FWRLP of the covenant not to sell or permit the sale of the
Property (or the interests in the Company) as set forth above in this Section
8(h), FWRLP agrees that it shall pay to the Contributor liquidated damages in
the amount of $4,200,000, it being recognized that the actual amount of damages
sustained by the Contributor is not susceptible of a precise amount, and the
amount of liquidated damages shall compensate the Contributor for the damages
resulting from a breach by FWRLP; provided, however, that if the number of Units
held by Contributor (i.e., those Units received at Closing) at the time of
settlement of any such sale of the Property (or the interests in the Company) is
less than the number of Units issued to such Contributor at Closing, then the
foregoing amount of liquidated damages shall be reduced to an amount equal to
$4,200,000 multiplied by a fraction, the numerator of which is the aggregate
number of Units then held by Contributor and the denominator of which shall be
the aggregate number of Units issued to such Contributor at Closing.
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9. Conditions Precedent to Closing.
(a) It shall be a condition precedent of FWRLP's obligation to
make a full settlement hereunder that each and every one of the following
conditions shall exist on the Closing Date:
(i) Representations and Warranties. Contributor's
representations and warranties hereunder shall be true and
correct in all material respects the same manner and with the
same effect as though such representations and warranties had
been made on and as of the Closing.
(ii) Zoning. No proceedings shall have occurred or be
pending to change, redesignate or redefine the zoning
classification of the Property to a more restrictive
classification than presently exists on the date of FWRLP's
execution of this Agreement.
(iii) Title. Title to the Property shall be
marketable, good of record, and insurable by the Title Company
at standard rates or less, pursuant to a full coverage ALTA
Form-B (Rev. 1970 and 1984) owner's title insurance policy (or
an unconditional commitment therefor) without any exceptions
("Printed form" or otherwise) other than the Permitted
Exceptions, and in addition, without exception for mechanic's
or materialmen's lien arising from goods, labor or materials
provided to the Property prior to the Closing Date. The
"Permitted Exceptions" are:
(A) the lien of current real estate taxes and special assessments not
yet due and payable; and
(B) such other matters which are listed on Exhibit J attached hereto.
Notwithstanding anything to the contrary contained in this paragraph (B),
the Contributor, at or prior to Closing, shall cause to be satisfied and
released of record all mortgages, deeds of trust, financing statements,
judgments or liens, other than the Northern Mortgage, assignments of rents
and leases and financing statements associated with the Northern Loan.
(iv) Existing Mortgages. Contributor shall have
delivered to the Title Company such releases or other
instruments necessary to release of record and beneficially
any and all existing mortgages, deeds of trust, financing
statements or other security documents affecting the Property,
other than the Northern Loan (collectively, the "Existing
Mortgages").
(v) [Intentionally Omitted].
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(vi) Leasing Brokerage/Property Management
Agreements. The Contributor shall have terminated any and all
leasing brokerage agreements and property management
agreements with respect to the Property effective as of the
Closing. All responsibility for dealings with any such brokers
and agents, including the payment of any claims (if deemed
warranted by the Contributor), shall be the sole
responsibility of the Contributor. The Contributor agrees that
it will indemnify and hold FWRLP, its successors, assigns,
partners, agents and employees, harmless against any such
claims and/or losses which might be incurred by such
indemnitees or by the Contributor in connection with any
outstanding and/or contingent leasing commissions or fees or
management fees. Notwithstanding anything to the contrary, the
indemnity set forth in this subsection 9(a)(vi) shall survive
Closing without limitation.
(vii) Performance by Contributor. Contributor and the
Company shall have complied with and not be in material breach
of any of their covenants or obligations under this Agreement.
(viii) Tenant Estoppels. FWRLP shall have received
(a) a tenant estoppel letter in substantially the form
attached hereto as Exhibit F (or in such form as required by
the lease to which a specific tenant is subject) from, at a
minimum, tenants satisfying the requirements described on
Exhibit F-1, confirming the information set forth in the Rent
Schedule attached as Exhibit B hereto for such tenants and
containing no material changes from the Rent Schedule, and (b)
any subordination and attornment agreements required by the
mortgage lender of FWRLP from at least those tenants on
Exhibit F-1.
(ix) FWRT Board Approval. The Board of Directors of
FWRT shall have approved this Agreement and the transactions
contemplated hereby. In the event that the aforesaid condition
is not satisfied by the end of the Feasibility Period, FWRLP
may elect to terminate this Agreement by giving Contributor
written notice thereof within one (1) day after the end of the
Feasibility Period in which event the Deposit and any interest
thereon shall be returned to FWRLP and neither party shall
have any further obligations nor liabilities to the other.
(b) Failure of Condition. In the event of the failure by the
Closing Date of any condition precedent set forth above, then FWRLP, at its sole
election, may (a) terminate this Agreement, in which event the Deposit and any
interest thereon shall be returned to FWRLP and, neither party shall have any
further obligations or liabilities to the other; or (b) proceed to Closing which
shall be deemed a waiver of any such condition precedent; or (c) extend the
Closing Date for such reasonable time period as may be determined by FWRLP and
Contributor (but in no event for more than three (3)
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months from the Closing Date then in effect) in order to permit the satisfaction
of any condition precedent not so fulfilled.
(c) Condition Precedent to Contributor's Obligations. It shall
be a condition precedent of Contributor's obligation to make a full settlement
hereunder that (i) FWRLP's and REIT's representations and warranties hereunder
shall be true and correct in all material respects as of the Closing Date and
FWRLP will deliver a certification thereof to Contributor at Closing, (ii) the
substantive terms of the FWRLP Partnership Agreement, and the amendments thereto
(which shall exclude, among other things, issuance and/or exchange of any units
thereunder), as attached to the Confidential Information Statement set forth in
Exhibit L hereto, have not been modified prior to Closing in a manner materially
adverse to the interests of the Contributor as incoming additional limited
partner of FWRLP, and (iii) the Release described in Section 2(c)(iii) shall
have been issued.
10. Contributors' Deliveries. At the Closing the following documents,
each dated on the Closing Date, shall be delivered to FWRLP:
(a) a Contribution and Assumption Agreement ("Assignment") and
an Amendment to the Operating Agreement ("Amendment") and Articles of
Organization, in a recordable from, reasonably satisfactory to FWRLP and the
Contributor, setting forth the assignment by Contributor of its Membership
Interest or the Property, as the case may be, and its withdrawal from the
Company, if applicable, and the substitution of FWRLP and/or its designee(s) as
members of the Company, if applicable, which Amendment shall be executed and
acknowledged by the Contributor; at FWRLP's option, such Assignment and
Amendment may contain such other amendments of the Operating Agreement as shall
be determined by FWRLP, provided that the Contributor shall execute such
Assignment and Amendment solely for the purpose of (a) assigning its respective
Membership Interest to FWRLP or its designee(s), and (b) withdrawing from the
Company.
(b) a release from the Contributor releasing the Company and
FWRLP (and its designee(s)) as partners of the Company from any obligations and
liabilities with respect to the original formation of the Company, and any other
matter arising from business done, transactions entered into or events occurring
prior to the Closing Date (including, without limitation, liability arising from
any breach by the Contributor).
(c) An opinion of counsel for Contributor, in form and
substance reasonably acceptable to counsel for FWRLP, to the effect that:
(i) The Company is a duly organized limited liability
company and validly existing in good standing under the laws
of the State of Maryland:
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(ii) The execution and delivery of this Agreement and
all other agreements delivered in connection herewith or at
the Closing, the consummation of the transactions herein
contemplated, and compliance with the terms of this Agreement
and all other agreements delivered in connection herewith or
at the Closing will not conflict with, or result in a breach
of, any of the terms, conditions or provisions of, or
constitute a default under, any note, indenture, mortgage,
deed of trust, contract or other agreement or instrument to
which the Contributor or the Company is a party or by which
the Contributor or the Company is bound (and of which counsel
has knowledge) (other than the Northern Loan), or any law or
order, rule, regulation, writ, injunction or decree of any
government, governmental instrumentality or court, domestic or
foreign;
(iii) Contributor has complete and unrestricted power
pursuant to the Company's Operating Agreement to contribute,
transfer, assign and deliver to FWRLP and its designee(s) all
of the Membership Interests to be contributed and assigned
hereunder which are owned and /or controlled by it, and the
Assignment and the Amendment delivered pursuant to this
Section 10 are in form legally sufficient to vest in FWRLP and
its designee(s) good title to the Membership Interests
described therein; and
(iv) To the best of counsel's knowledge, there is no
litigation or investigation pending or threatened against the
Contributor, the Company or the Property, or any part thereof,
which might result in any material, adverse change pertaining
to the Property or the Company, or the operations thereof, or
which questions the validity of any action taken in, under or
in connection with any of the provisions of this Agreement.
(d) a schedule from the Contributor updating the Rent Schedule
for the Property and setting forth all arrearages in rents and all prepayments
of rents;
(e) originally executed Leases and Service Contracts and
copies of books, records, operating reports, files and other materials related
to the ownership, use and operation of the Property, to the extent that any
exist and are in the possession of the Contributor, which obligation shall
survive Closing;
(f) [Intentionally Omitted].
(g) an original letter executed by the Contributor advising
the tenants of the Property of the contribution of the Membership Interests to
FWRLP and directing that rents and other payments thereafter be sent to FWRLP or
as FWRLP may direct;
(h) possession of the Property from the Contributor in the
condition required by this Agreement, and the keys therefore;
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(i) from each Contributor, the Certification of Non-foreign Status as
provided in Treas. Reg. 1.1445-2(b)(2)(iii)(B) or in any other form as may
be required by the Internal Revenue Code or the regulations issued
thereunder;
(j) such other items and instruments from the Contributor as
shall be required by the Title Company in connection with the issuance of its
title insurance policy to FWRLP pursuant to Section 9(a)(iii) (including
customary Contributor's or owner's affidavit), except that Contributor shall not
be obligated to undertake any financial obligation, indemnities, escrows or
guarantee in favor of the Title Company;
(k) any and all documents from the Contributor necessary to
release the Deposit from escrow with the Title Company and to have said Deposit
returned to FWRLP;
(l) any other documents required by this Agreement to be delivered by
Contributor; and
(m) An amendment to the Partnership Agreement of FWRLP, in a
form reasonably acceptable to FWRLP and Contributor, admitting the Contributor
as a limited partner(s) of FWRLP and issuing such Units as computed in
accordance with Section 2(a) hereof.
11. FWRLP's Performance. At the Closing, simultaneously with the
deliveries of Contributor pursuant to the provisions of Section 10 above, FWRLP
shall issue to Contributor the Units in the manner specified in Section 2 and
FWRLP and REIT shall execute and deliver those documents and take such other
actions required to be taken by FWRLP and REIT at Closing as required under this
Agreement, whereupon the Deposit, and any interest accrued thereon, shall be
returned to FWRLP by the Title Company, and Coopers & Lybrand L.L.C. shall issue
a letter acknowledging that FWRLP will utilize the method described in Paragraph
20(f) on its tax returns.
12. Settlement Charges; Prorations and Adjustments. FWRLP shall pay for
the title examination, the title insurance premium, notary fees and other such
charges incident to Closing. Any real estate transfer and recording fees and
taxes and documentary stamps in connection with this transaction, if any, shall
be borne by FWRLP; provided, however, that the number of Units issued to
Contributor at the Closing under Section 2(a) hereof shall be reduced by an
amount equal to one-half (1/2) of the real estate transfer and recording fees
and taxes payable by FWRLP divided by the Unit Price. Although Contributor and
FWRLP believe that no real estate transfer or recording taxes will be due in
connection with the transactions contemplated hereby, if it is finally
determined that such taxes are due and payable in connection herewith or in
connection with the transfer of the Property by Contributor to the Company
through a series of deeds (the "Property Transfer") (but in such case only such
taxes for one transfer), then FWRLP shall pay all such taxes and Contributor
shall either (at FWRLP's election) (i) reimburse to FWRLP one-half (1/2) of such
sum paid by FWRLP, or (ii)
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return/relinquish to FWRLP the number of Units equal to one-half (1/2) of the
taxes paid by FWRLP divided by the Unit Price. The obligations under this
Section 12 shall survive Closing without limitation. FWRLP and Contributor shall
each pay its own legal fees related to the preparation of this Agreement and all
documents required to settle the transaction contemplated hereby. In addition to
the foregoing, at the Closing, the following adjustments and prorations shall be
computed as of the Closing Date, as if the transaction contemplated by this
Agreement was a sale of the Property by the Contributor to FWRLP:
(a) Taxes. Real estate and personal property taxes shall be
apportioned (based on the fiscal periods for which such taxes are assessed) as
of the Closing Date.
(b) Assessments. All special assessments and other similar
charges which have become a lien upon the Property or any part thereof on or
before the Closing Date and are due and payable in full on or prior to the
Closing Date, shall be brought current and paid in full by Contributor on or
prior to the Closing. All other special assessments or similar charges for the
1997 year shall be adjusted as of the Closing Date.
(c) Rent and Security Deposits. Rent for the month of , and
any month after, Closing collected by Contributor prior to Closing shall be
apportioned as of the Closing Date. If any tenant is in arrears in the payment
of rent on the Closing Date, rents received from such tenant after the Closing
shall be applied in the following order of priority: (a) first to the payment of
current rent then due; (b) second, to delinquent rent for any period after the
Closing Date; and (c) third to delinquent rent for any period prior to the
Closing Date. FWRLP shall either use reasonable efforts to collect (at no cost
to FWRLP), or if Contributor so elects shall assign to Contributor the right to
collect, arrearages in rents and Additional Rents due from tenants as of the
Closing Date. If rents or any portion thereof received by Contributor or FWRLP
after the Closing Date are payable to the other party by reason of this
allocation, the appropriate sum, less a proportionate share of any reasonable
attorneys' fee, costs and expenses of collection thereof, shall be promptly paid
to the other party, which obligation shall survive the Closing.
If any tenants are required to pay percentage rents, escalation
charges for real estate taxes, operating expenses, cost-of-living
adjustments or other charges of a similar nature ("Additional Rents") and
any Additional Rents are collected by FWRLP after the Closing which are
attributable in whole or in part to any period prior to the Closing, then
FWRLP shall promptly pay to Contributor its proportionate share thereof,
less a proportionate share of any reasonable attorneys' fees, costs and
expenses of collection thereof, and deliver to Contributor a statement
therefor, if and when the tenant paying the same has made all payments of
rents and Additional Rent then due to FWRLP pursuant to the tenant's Lease,
which obligation shall survive the Closing. Upon written request of
Contributor, FWRLP shall provide Contributor with the
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then current periodic report of the status of collection of such Additional
Rents from such tenants.
FWRLP shall be credited at Closing with all security deposits of
tenants of the Property.
(d) Distributions. The quarterly distributions payable to
Contributor on the Common Units for the first record date after any issuance to
Contributor shall be pro rated based upon the number of days within the quarter
occurring after such issuance to Contributor.
(e) Debt Service on the Northern Loan. The amount of interest
payable under the Northern Loan shall be apportioned as of the Closing Date. Any
escrows held by the Lender on behalf of the Contributor shall be credited to
Contributor at Closing.
(f) Miscellaneous. All other charges and fees customarily
prorated and adjusted in similar transactions, including utilities, insurance
premiums and charges for Service Contracts to be assumed by FWRLP, shall be
prorated as of the Closing Date. In the event that accurate prorations and other
adjustments cannot be made at Closing because current bills are not obtainable
or the amount to be adjusted is not yet ascertainable (as, for example, in the
case of utility bills) the parties shall prorate on the best available
information, subject to further adjustment promptly upon receipt of the final
bill or upon completion of final computations. To the extent that water
consumption or other utility charges may constitute a lien against the Property,
Contributor agrees that an appropriate amount (not to exceed two time the prior
period invoice) in respect of water consumption or other utility charges may be
held in escrow by the Title Company in connection with its issuance of a title
insurance policy to FWRLP, and shall be released promptly after delivery of
evidence to Title Company that such charges have been paid. Contributor shall
use its reasonable efforts to have all utility meters read on the Closing Date
so as to accurately determine its share of current utility bills.
(g) Immediately prior to the Closing, Contributor shall have
the right to cause the Company to withdraw from the Company's bank account(s)
and distribute to the Contributor an amount equal to all cash within such bank
account(s) as of 11:59 p.m. on the day immediately preceding the Closing Date.
The Company shall distribute and assign to Contributor the right to all accounts
receivable of the Company as of Closing.
(h) FWRLP agrees to reimburse Contributor for one-half (1/2)
of the legal fees incurred by Contributor in connection with the transfer of the
Property by Contributor to the Company through a series of deeds, but in no
event shall FWRLP's reimbursement to Contributor exceed $3,000.00.
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13. Risk of Loss. The risk of loss or damage to the Property by fire or
other casualty until the Closing shall be borne by the Contributor. If prior to
Closing (i) condemnation proceedings are commenced against all or any portion of
the Property, or (ii) if the Property is damaged by fire or other casualty to
the extent that the cost of repairing such damage shall be Two Hundred Thousand
Dollars ($200,000.00) or more based on the good faith estimate of an independent
contractor selected by the Contributor and reasonably approved by FWRLP, or
(iii) if the Property is damaged by an uninsured risk, or (iv) if the Property
becomes subject to litigation which may deprive FWRLP of any material benefit to
which it would become entitled pursuant to this Agreement, then FWRLP shall have
the right, upon notice in writing to the Contributor delivered within thirty
(30) days after actual notice of such condemnation or fire or other casualty or
litigation, to terminate this Agreement, and thereupon the parties shall be
released and discharged from any further obligations to each other and the
Deposit shall be refunded to FWRLP. If FWRLP does not elect to terminate this
Agreement or in the event of fire or other casualty not giving rise to a right
to terminate this Agreement by FWRLP, FWRLP shall be entitled to an assignment
of all of the proceeds of fire or other casualty insurance proceeds and the rent
insurance proceeds payable with respect to the period after Closing or of the
condemnation award, as the case may be (i.e., such proceeds shall remain in the
Company for the benefit of FWRLP, if FWRLP acquires the Membership Interests),
and Contributor shall have no obligation to repair or restore the Property;
provided, however, that the Gross Consideration shall be reduced (based on the
Unit Price per Unit) by an amount equal to the sum of (a) the "deductible"
applied by Contributor's insurance policy, or (c) if Contributor is
self-insured, the cost of repairing such damage. FWRLP shall have the right to
participate in the negotiation and settlement of any casualty or
condemnation-related claim if FWRLP does not elect to terminate this Agreement.
14. Inspection of Property.
(a) FWRLP's Right of Inspection. Subject to the rights of
tenants under the Leases, FWRLP shall have the right, at its own risk, cost and
expense, at any time or times prior to Closing, to enter, or cause its agents or
representatives to enter, upon the Property for the purpose of making surveys,
or any tests, investigations and/or studies relating to the Property or FWRLP's
intended acquisition thereof which FWRLP deems appropriate, in its sole
discretion, during reasonable hours and upon reasonable notice to Contributor.
FWRLP shall further have complete access to all documentation, agreements and
other information in the possession of Contributor related to the ownership, use
and operation of the Property, to the extent it is readily available to
Contributor, and shall have the right to make copies of same. FWRLP shall not
have the right during the Feasibility Period to contact tenants without the
prior consent of Contributor. FWRLP agrees to repair any damage to the Property
that may be caused by its inspections and to indemnify and defend Contributor
and hold Contributor harmless against any injury, loss or damage suffered upon
the Property as a result of such inspections.
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(b) Feasibility Period. Any other provisions of this Agreement
to the contrary notwithstanding, FWRLP may cause at FWRLP's sole cost and
expense, such boring, engineering, economic, water, sanitary and storm sewer,
utilities, topographic, structural, environmental and other tests,
investigations, market studies and other studies as FWRLP shall elect, subject
to the rights of tenants under the Leases. FWRLP agrees to use all reasonable
efforts to minimize disruption to business operations within the Property during
the course of any entries thereon. In the event that any of the tests,
investigations, market studies and other studies indicate, in FWRLP's sole
discretion, that FWRLP's plans for the Property would not be feasible for any
reason, then FWRLP shall have the right, at its sole election on or before the
date which is forty-five (45) days after the Acceptance Date (such period herein
referred to as the "Feasibility Period"), to terminate this Agreement by giving
written notice thereof to the Contributor in which event this Agreement shall
terminate, the Deposit shall be returned to FWRLP and neither party shall have
any further liabilities or obligations to each other. If FWRLP does not
terminate this Agreement before the end of the Feasibility Period as aforesaid,
this contingency shall automatically lapse.
(c) Audit. Contributor hereby agrees to allow books and
records related to the Property to be audited (at FWRLP's sole expense) by an
independent, certified public accounting firm selected by FWRLP, and Contributor
will cooperate and cause its employees and other agents to cooperate in such
auditing process. FWRLP shall provide Contributor with prior notice of such
audit.
15. Indemnifications.
(a) Indemnification by Contributor under Section 5.
Contributor for such Contributor only, and for no other Contributor, hereby
indemnifies and agrees to defend and hold harmless FWRLP and its partners and
subsidiaries and any officer, director, employee, agent of any of them, and
their respective successors and assigns from and against any and all claims,
expenses, costs, damages, losses and liabilities (including reasonable
attorneys' fees) which may be asserted against or suffered by any indemnitee,
the Company or the Property, or any part thereof, whether before or after the
Closing Date, as a result of, on account of or arising from any breach of any
representation, warranty, covenant or agreement on the part of such Contributor
set forth in Section 5 herein or in any instrument or document related thereto
delivered pursuant to this Agreement. The indemnification set forth in this
Section 15(a) shall survive Closing without limitation.
(b) Indemnification by the Contributor. Except for the
indemnifications set forth in Section 15(a) above, Contributor hereby
indemnifies and agrees to defend and hold harmless FWRLP and its partners and
subsidiaries and any officer, director, employee, agent of any of them, and
their respective successors and assigns from and against any and all claims,
expenses, costs, damages, losses and liabilities (including reasonable
attorneys' fees) which may at any time be asserted against or suffered by, any
indemnitee, the Company or the Property, or any part thereof, whether before or
after the Closing Date, as a result of, on account of or arising from (i) any
breach of any
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representation, warranty, covenant or agreement on the part of the Contributor
made herein or in any document delivered by the Contributor pursuant to Section
10 of this Agreement, and/or (ii) any obligation, claims, suit, liability,
contract, agreement, debt or encumbrance or other occurrence (other than
obligations under the Northern Loan accruing after the Closing, obligations
accruing after the Closing Date under the Leases and Service Contracts, items
adjusted as of the Closing Date under Section 12 above, other obligations,
claims or agreements expressly assumed by FWRLP in writing, and subject to
Section 12, the transfer and recordation tax in connection with the Property
transfer and any other charges associated therewith) created, arising or
accruing prior to the Closing Date, regardless of when asserted, and relating to
the Company, or the Property, or its operations provided such claim is derived
from an occurrence or breach which took place prior to the Closing Date and to
the extent that such claim is not within the scope of any insurance agreement in
favor of the Company. Claims within the scope of the indemnity set forth in
clause (ii) shall include, without limitation, any and all liabilities for
federal and state income and other taxes due and payable with respect to any
period (or portion thereof) prior to the Closing Date (other than transfer and
recordation taxes which are covered under Section 12). Any indemnification of
FWRLP or the Company or other indemnitee under this Section 15(b) shall survive
Closing for a period of three (3) years (other than indemnification for breach
of representations or warranties pursuant to clause (i) of the first sentence of
this Section 15(b), which are subject to a survival period described in Section
6 of this Agreement, but shall cease and expire with respect to any claim not
raised by FWRLP, by written notice to Contributor, within such limited survival
period).
(c) Indemnification by FWRLP. FWRLP hereby indemnifies and
agrees to defend and hold harmless Contributor and its respective, heirs,
personal representatives, successors and assigns from and against any and all
claims, expenses, costs, damages, losses and liabilities (including reasonable
attorneys' fees) which may at any time be asserted against or suffered by
Contributor as a result of, on account of or arising from (i) any breach of any
representation, warranty, covenant or agreement on the part of FWRLP or the REIT
made herein or in any instrument or document delivered pursuant to this
Agreement, and/or (ii) any obligation, claims, suit, liability, contract,
agreement, debt or encumbrance or other occurrence created, arising or accruing
after the Closing Date and relating to the Property, the Company or its
operations. The foregoing obligations set forth in this Section 15(c) shall
survive Closing without time limitation.
16. Brokerage Commission. Contributor and FWRLP represent and warrant
to each other that no brokerage fee or real estate commission is or shall be due
or owing in connection with this transaction other than that payable to First
Capital Realty, Inc., which shall be payable by FWRLP at the Closing pursuant to
a separate agreement. Contributor and FWRLP hereby indemnify and hold the other
harmless from any and all claims of any other broker or agent so claiming based
on action or alleged action of the other.
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17. Default Provisions; Remedies.
(a) FWRLP's Default. If FWRLP fails to consummate the
Contribution contemplated herein when required to do so pursuant to the
provisions hereof, then the Title Company shall deliver the Deposit to
Contributor as full and complete liquidated damages, and as the exclusive and
sole right and remedy of Contributor, whereupon this Agreement shall terminate
and neither party shall have any further obligations or liabilities to any other
party.
(b) Contributor Default. Except for any breaches waived in
writing by FWRLP, if Contributor has breached any of their covenants or
obligations under this Agreement or have failed, refused or are unable to
consummate the Contribution contemplated herein by the Closing Date or if any of
the representations and warranties made by Contributor under this Agreement
shall be inaccurate or incorrect in any material respect, then FWRLP shall be
entitled, as FWRLP's sole and exclusive right and remedy, to (i) waive such
breach, default or failure and proceed to Closing without abatement of
consideration under Section 2(a), (ii) extend the Closing for such reasonable
time or times as may be necessary in order to enable Contributor to remedy such
breach, default or failure (not to exceed thirty (30) days), (iii) terminate
this Agreement and obtain the return of the Deposit, and/or (iv) pursue an
action for specific performance. In the event that FWRLP elects to pursue
specific performance and FWRLP prevails in such litigation, in addition to any
relief awarded to FWRLP, Contributor shall be obligated to pay all reasonable
legal fees, costs and expenses incurred by FWRLP.
(c) The provisions of Sections 17(a) and (b) above shall not
be applicable to any breach or default by a party occurring or first becoming
actually known to the other party after Closing, and, as to any said breach or
default, the non-defaulting party may exercise any and all remedies available at
law or in equity, subject, however, to any applicable limitations on survival
expressly provided for in this Agreement.
18. Registration Rights. Contributor and the REIT hereby agree to
execute at Closing the Registration Rights Agreement attached hereto as on
Exhibit K.
19. Miscellaneous Provisions.
(a) Completeness and Modification. This Agreement (together
with Exhibits A to R attached hereto), with respect to the transactions
contemplated herein, and it supersedes all prior discussions, understandings or
agreements between the parties. This Agreement shall not be modified or amended
except by an instrument in writing signed by all of the parties hereto.
(b) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective successors and
assigns.
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(c) Assignment. This Agreement shall not be assignable by
FWRLP without the consent of Contributor, provided that, notwithstanding
anything to the contrary contained in this Agreement, FWRLP shall be entitled to
transfer or, at Closing, cause the Company to issue a 1% limited Membership
Interest in the Company to the REIT or to an entity controlled by, controlling
or under common control with the FWRLP, as long as the Units are issued to
Contributor as required herein. This Agreement shall not be assignable by
Contributor.
(d) Waiver; Modification. Failure by FWRLP or Contributor to insist
upon or enforce any of its rights hereto shall not constitute a waiver or
modification thereof.
(e) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Maryland.
(f) Headings. The headings are herein used for convenience or
reference only and shall not be deemed to vary the content of this Agreement or
the covenants, agreements, representations and warranties herein set forth, or
the scope of any provision hereof.
(g) Continuing Documentation and Access. From and after
Closing, Contributor shall afford FWRLP reasonable access to any and all
information in their possession concerning the ownership, use and operation of
the Property (including the right to copy same at the expense of FWRLP) for
purposes of any tax examination or audit or other similar purpose, subject to
the agreements of the Contributor, the Company or FWRLP concerning
confidentiality set forth herein. FWRLP and the REIT agree and acknowledge that
the information provided to them by the Contributor or the Company regarding the
Property or the Company is confidential, and that they will not disclose such
information to any other person, other than to their employees, attorneys,
accountants and other consultants, or use such information for any purpose other
than the transaction described herein without the prior written consent of the
Contributor. If this Agreement is terminated or if the Contribution at the
Closing is not consummated, all information provided to FWRLP and the REIT, and
all copies thereof, shall be returned to the Contributor.
(h) Counterparts. To facilitate execution, this Agreement may
be executed in as many counterparts as may be required; it shall be sufficient
that the signature of, or on behalf of, each party, or that the signatures of
the persons required to bind any party, appear on one or more such counterparts.
All counterparts shall collectively constitute a single agreement.
(i) Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered by hand or
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid or delivered by
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commercial courier, telecopy or overnight courier (e.g., Federal Express)
against receipt, to the addresses indicated below:
(i) if to FWRLP:
First Washington Realty Limited Partnership
4350 East-West Highway, Suite 400
Bethesda, MD 20814
Attn: William J. Wolfe
Jeffrey S. Distenfeld, Esq.
Telecopy: (301) 907-4911
(ii) if to Contributor:
Castlewood Realty Company, Inc.
204 East Joppa Road
Penthouse Five
Towson, MD 21204
Attn: Walter L. McManus, Jr.
Telecopy: (410) 825-1501
with a copy to:
Richard E. Levine, Esq.
Miles & Stockbridge, P.C.
10 Light Street
Baltimore, MD 21202
Telecopy: (410) 385-3700
Such notice shall be deemed given on the date of receipt by
the addressee or the date receipt would have been effectuated if delivery were
not refused. Each party may designate a new address by written notice to the
other in accordance with this Section 19(i).
(j) [Intentionally Omitted].
(k) Further Assurances. Contributor and FWRLP agree to
execute, acknowledge and deliver any further agreements, documents or
instruments that are reasonably necessary or desirable to carry out the
transactions contemplated by this Agreement.
(l) Business Days. A "business day" shall be Mondays through
Fridays, less and expecting all legal holidays observed by the United States
Government or the Government of the State of Maryland. Any date specified in
this
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Agreement which does not fall on a business day shall be automatically extended
until the first business day after such date.
(m) Time of the Essence. Time is of the essence in the
performance of all obligations under this Agreement.
20. Tax Matters.
(a) FWRLP hereby agrees to send to the Contributor the
following information on an annual basis at least 30 days prior to the filing of
the tax return of FWRLP:
(i) the amount of the debt secured by the Property and the amount of
FWRLP's total non-recourse debit as of the end of the most recent fiscal
year;
(ii) the amount of nonrecourse debt allocated to Contributor;
(iii) the adjusted basis of the Property as of the end of the most
recent fiscal year; and
(iv) the projected taxable income or loss of FWRLP for such fiscal
year.
(b) Contributor, at its written election but with no
obligation to do so, may affirmatively make on an annual basis (a) a DRO
Election or (b) a Bottom Guaranty Election with respect to a mortgage loan on a
property acceptable to FWRLP in its sole discretion. Any such election shall be
made by notice delivered to FWRLP no later than the date on which the tax return
for FWRLP is filed for the fiscal year in question.
(c) A DRO Election shall state that if the Contributor has a
deficit balance in its capital account following the Liquidation of the
Contributor's interest in FWRLP or the Liquidation of FWRLP, as the case may be,
Contributor shall contribute to the capital of FWRLP, no later than the end of
the fiscal year during which the Contributor's interest in FWRLP is Liquidated
or during which FWRLP is Liquidated, as the case may be (or, if later, 90 days
after the date on which the Contributor's interest in FWRLP is Liquidated or on
which FWRLP is Liquidated, as the case may be) (the "Liquidation Date") an
amount of money equal to a designated portion of the deficit in the
Contributor's capital account. The term "Liquidation" shall have the meaning
given to it in Treas. Regs. Section 1.704.
(d) A Bottom Guaranty Election shall state that if FWRLP shall
be in default with respect to the mortgage loan securing the property of FWRLP
identified by FWRLP in Section 20(b) above, then the Contributor agrees to
contribute to the capital
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of FWRLP a designated portion of the principal balance of such mortgage loan
(the "Contribution Limit"); however, such contribution shall only occur if the
mortgage lender shall have exhausted all of its remedies against such property
in order to collect the amount owing the mortgage lender, and such Contribution
Limit shall be reduced on a dollar-for-dollar basis for every dollar received by
the mortgage lender from exercising its remedies. Any such contribution shall be
made by the Liquidation Date. For example, if the amount of the mortgage loan
were $10,000,000.00 and the amount of the Contribution Limit were $1,000,000.00,
the capital contribution would only be required if the property were sold in
foreclosure and the proceeds of sale were less than $1,000,000.00.
(e) FWRLP covenants that the principal balance of the mortgage
loan secured by the Property shall not be reduced below $2,400,000 (other than
scheduled amortization of the mortgage loan and principal curtailments of the
mortgage loan beyond FWRLP's reasonable control) and that the mortgage loan to
such extent shall remain "nonrecourse" for Federal income tax purposes, during
the period beginning on the Closing Date and ending five (5) years thereafter.
(f) FWRLP will use the "traditional" method under Section
704(c) of the Internal Revenue Code in connection with the contribution
herewith.
(g) FWRLP will depreciate the book basis and tax basis of the
Property over a 39-year life (as to the building component) and no depreciation
as to the land component.
(h) This Paragraph 20 shall survive the Closing.
21. Master Lease. FWRLP shall master lease to Contributor that certain
space now leased to Heritage Catering, subject to the current lease with
Heritage Catering, (i.e., Contributor will remain the landlord under the
existing Heritage Catering lease). The master lease will contain the terms set
forth on Exhibit R hereto and such other terms as are commonly included in such
a lease in the State of Maryland. Contributor and FWRLP shall negotiate in good
faith all of the terms of the master lease in order to complete the form of such
master lease prior to the end of the Feasibility Period.
22. Contribution of Property. If it is determined by Contributor that
the Property cannot be transferred to the Company immediately prior to Closing
without imposition of a real estate transfer and recordation tax, then the
parties hereby agree that in lieu of the Contributor causing the Property to be
transferred to the Company and the Company contributing the Membership Interests
to FWRLP, the Property will be contributed by deed directly to FWRLP in exchange
for Units and (1) all real estate transfer taxes and documentary stamps in
connection with such deed will be shared equally by Contributor and FWRLP at
Closing and (2) all provisions of this Agreement relating to the Company and to
the contribution of the Property to the Company and the subsequent contribution
of the Membership Interests to FWRLP shall be deleted and
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shall be deemed to refer to the contribution of the Property by deed by the
Contributor to FWRLP, if such items are not already covered by this Agreement,
and (3) there will be a special warranty deed, bill of sale and assignment and
assumption of leases, contracts or other agreements related to the Property
executed at Closing.
IN WITNESS WHEREOF, the parties hereto have executed this Contribution
Agreement as of the day and year first written above.
FWRLP:
FIRST WASHINGTON REALTY
LIMITED PARTNERSHIP
By: First Washington Realty Trust, Inc.,
ATTEST: Its general partner
/s/ Jeffrey S. Distenfeld By: /s/ William J. Wolfe
[Assistant Secretary] William J. Wolfe
President
[Corporate Seal]
Date of execution:September 9, 1997
WITNESS: CONTRIBUTOR:
CASTLEWOOD REALTY COMPANY, INC.
/s/ By: /s/ Walter L. McManus, Jr.
Walter L. McManus, Jr.
President
Date of execution: , 1997
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First Washington Realty Trust, Inc. joins herein solely for the purpose
of making the representations, warranties and covenants contained in Sections
8(a), 8(b), 8(e), 8(f), 8(g), 11, 18 and 19(g) hereof.
FIRST WASHINGTON REALTY
WITNESS: TRUST, INC.
/s/ Jeffrey S. Distenfeld By: /s/ William J. Wolfe
William J. Wolfe
President
Date of execution:September 9, 1997
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ACKNOWLEDGEMENT BY TITLE COMPANY
The undersigned Title Company executes this Contribution Agreement
solely to acknowledge receipt of the Deposit pursuant to Paragraph 3 hereof and
to evidence its agreement to serve as escrow agent pursuant to the terms of the
foregoing Agreement.
WITNESS: COMMERCIAL SETTLEMENTS, INC.
By: /s/ Stuart S. Levin
Stuart S. Levin
Vice President
Date: November 18, 1997
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LIST OF EXHIBITS
EXHIBIT A. Legal Description of Land Recitals
EXHIBIT B. Leases and Rent Schedule Section 6(d)
EXHIBIT C. Service Contracts Section 6(e)
EXHIBIT D. Violations Section 6(c)
EXHIBIT E. Insurance List Section 6(g)
EXHIBIT F. Form of Tenant Estoppel Section 6(i)
EXHIBIT F-1. Tenant Estoppels Section 8(a)(viii)
EXHIBIT G. Litigation Section 6(k)
EXHIBIT H. Operating Statements and Budget Section 6(r)
EXHIBIT I. Personal Property Section 6(t)
EXHIBIT J. Permitted Exceptions Section 9(a)(iii)(B)
EXHIBIT K. Registration Rights Agreement Section 18
EXHIBIT L. Confidential Information Statement Section 8(c)
EXHIBIT M. [Intentionally Omitted]
EXHIBIT N. Mortgage Section 2(c)
EXHIBIT O. Note Section 2(c)
EXHIBIT P. Operating Agreement Section 6(a)
EXHIBIT Q. [Intentionally Omitted]
EXHIBIT R. Master Lease Terms Section 21
[Contributor and FWRLP to Attach Foregoing at Acceptance of this Agreement]
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EXHIBIT 5.5
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is made and entered March 11, 1998, by and
between (i) L&M MONTGOMERY CORPORATION, a Maryland Corporation (the "General
Partner") and THOMAS C. MARTEL, ROBERT C. LEVIN and MAURY LEVIN (the "Limited
Partners") who are all of the general and limited partners (collectively, the
"Partners") of L and M Development Company Limited Partnership, a Maryland
limited partnership (the "Partnership") (the Partners sometimes hereinafter
referred to collectively as "Contributors"), and (ii) FIRST WASHINGTON REALTY
LIMITED PARTNERSHIP, a Maryland limited partnership (hereinafter referred to as
"FWRLP").
W I T N E S S E T H:
WHEREAS, the Partners own all of the partnership interests (the
"Partnership Interests") of the Partnership, and
WHEREAS, the Partnership is the record and beneficial owner of that
certain parcel of real property containing approximately 841 acres of land as
more particularly described on Exhibit A hereto (collectively, the "Land"),
together with the shopping center known as Elkridge Corners Shopping Center
located in Howard County, Maryland, and containing approximately 73,921 square
feet of leasable area and all other buildings and improvements situated thereon
(collectively, the "Building"), and all personal property and fixtures located
therein (other than that owned by tenants) (the "Personalty"), and all
appurtenances, rights, easements, rights-of-way, tenements and hereditaments
incident thereto (the "Additional Property") (the Land, Building, Personalty and
Additional Property are hereinafter collectively referred to as the "Property");
and
WHEREAS, Contributors and FWRLP desire to enter into this Agreement
relating to the contribution by certain Contributors to FWRLP of their
Partnership Interests in exchange for certain interests in FWRLP.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants and agreements herein contained and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
1. Contribution. Subject to the terms and conditions set forth in this
Agreement, Contributors and FWRLP agree to the contribution by Contributors
to FWRLP (the "Contribution") of all of the Partnership Interests.
2. Consideration.
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(a) In consideration of the Contribution of the Partnership
Interests, FWRLP shall issue common limited partnership units of FWRLP (the
"Units") in an aggregate amount calculated as follows: Eight Million One Hundred
Thousand Dollars ($8,100,000.00) less the outstanding and unpaid principal
balance of the Principal Mutual Loan (as defined below) at the Closing, with the
number of Units determined by dividing the consideration payable to the
Contributors receiving Units by a price per Unit (the "Unit Price") equal to the
lesser of (i) $25.50, or (ii) the average closing price of the common stock of
First Washington Realty Trust, Inc. (the "REIT") for the five (5) business days
immediately preceding the Closing Date, rounded to the nearest one (1). FWRLP
will issue the Units to the Contributors in accordance with the schedule set
forth as Exhibit Q attached hereto.
(b) At Closing, the Partnership Interests shall be contributed
to FWRLP with the Property then being subject to the indebtedness, lien and
operation of the Provident Mutual Loan, including without limitation the
Mortgage (as defined below).
(c) (i) The Property is presently encumbered by a Deed of
Trust and Security Agreement ("Mortgage") from the Partnership, as debtor, for
the benefit of Provident Mutual Life Insurance Company, as secured party (the
"Lender"), which Mortgage secures an original principal indebtness of
$6,250,000.00 with interest thereon payable over the term thereof (which ends on
October 17, 2010) at a fixed interest rate of 8.625% per annum, as evidenced by
a Note from the Partnership to Lender ("Note"). The Mortgage and Note and all
documents and instruments executed in connection therewith are collectively
referred to as the " Provident Mutual Loan." The Provident Mutual Loan requires
equal monthly installments of principal and interest in the amount of the
$_________ per month. The outstanding principal balance under the Provident
Mutual Loan as of December 31, 1997 is approximately $5,970,578.00. Copies of
the Mortgage and Note are attached hereto as Exhibits N and O, respectively.
(ii) FWRLP's obligations under this Agreement shall be expressly
contingent on the condition that FWRLP receive by Closing a letter (the
"Letter") from Lender (i) consenting to the Contribution of the Partnership
Interests and such modifications to the Loan as FWRLP shall determine are
necessary, (ii) confirming that the Provident Mutual Loan is as described
above, (iii) certifying that, to the best knowledge of the Lender, there is
no default or event which with notice or lapse of time, or both, would
constitute a default under the Provident Mutual Loan. At Closing, the
Contributors shall execute an estoppel certificate in favor of FWRLP
certifying that, to the best knowledge of the Contributors, there is no
default, or event of default which with notice or lapse of time, or both,
would constitute a default under the Provident Mutual Loan. The
Contributors shall reasonably cooperate with FWRLP in its efforts to obtain
such Letter from Lender before the end of the Feasibility Period (as
defined below). FWRLP shall be responsible for all costs charged by the
Lender in connection with such consents. If such Letter is not received by
FWRLP by Closing or if Lender
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denies its consent or if Lender's Letter is other than as set forth above and is
not acceptable to FWRLP, FWRLP shall have the right, at its sole election, to
terminate this Agreement by giving written notice thereof to Contributors,
whereupon the Deposit (as defined below), together with interest thereon, shall
be returned to Contributors and neither party shall have any further liability
to the other.
(d) The Contributors and FWRLP will settle any pro rations and
closing adjustments as provided in this Agreement as follows: (i) if
Contributors owe the same, on a net basis, to FWRLP, through a reduction in
Units in an amount equal to the net adjustment divided by the Unit Price,
rounded to the nearest one (1), to be delivered at the Closing, and (ii) if
FWRLP owes the same, on a net basis, to Contributors, through additional Units
in an amount equal to the net adjustment divided by the Unit Price, rounded to
the nearest one (1), to be delivered at the Closing. Contributors acknowledge
and agree that the Units will not be redeemable for cash or exchangeable for
common stock of the REIT for a period of thirteen (13) months after their
issuance, all as more fully discussed in the Confidential Information Statement
(as hereinafter defined), as may be supplemented through the Closing Date,
provided that any such supplement will not materially adversely affect the
Contributors.
(e) Notwithstanding any provision hereof to the contrary, the
Contribution of the Partnership Interests to FWRLP by the Contributors who
receive Units as set forth herein shall constitute a "Capital Contribution"
within the meaning of the FWRLP Partnership Agreement and is intended, to the
fullest extent possible, to be governed by Section 721(a) of the Internal
Revenue Code of 1986, as amended (the "Code"), and all parties to this Agreement
will report the transaction evidenced hereby consistently with this Section
2(e). Since the Contribution of the Partnership Interests to FWRLP will
terminate the Partnership for federal income tax purposes, FWRLP agrees that the
Contributors shall have the right and obligation to file final tax returns for
the Partnership as of the Closing Date.
3. Deposit.
(a) Within two (2) business days after the date of delivery to
FWRLP of an original of this Agreement executed by Contributors together with
completed Exhibits hereto (the date of such delivery by Contributors being the
"Acceptance Date"), FWRLP shall deliver to the Title Company, as escrow agent, a
deposit (together with interest earned thereon, the "Deposit") of Fifty Thousand
Dollars ($50,000.00 ) by check payable to the Commercial Settlements, Inc., 1413
K Street, N.W., Washington, DC 20005 (the "Title Company").
(b) Within two (2) business days after the end of the
Feasibility Period (as defined in Section 14(b)), Purchaser shall deliver to the
Title Company, as escrow agent, an additional deposit (the "Additional Deposit")
of Fifty Thousand Dollars ($50,000.00) by check payable to the Title Company.
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(c) The Initial Deposit and Additional Deposit and all accrued
interest thereon are hereinafter referred to collectively as the "Deposit." The
Title Company will immediately provide Contributors with written evidence of
receipt of such Deposit. The Title Company shall place the Deposit in an
interest-bearing account within two (2) business days after the date of receipt
thereof, and interest on the Deposit shall accrue to the benefit of the party
entitled to the Deposit pursuant to this Agreement. The Deposit shall be held by
the Title Company pursuant to the terms and conditions of this Agreement.
(d) In the event that, at any time prior to Closing, either of
the General Partners or FWRLP provides Title Company with a certification (a
copy of which shall be delivered contemporaneously to the other party) that the
Contributors or FWRLP, as the case may be, is entitled to the Deposit pursuant
to the terms of this Agreement, Title Company shall deliver the Deposit to such
party within seven (7) business days after receipt of said notice, unless the
other party disputes such certification by written notice to Title Company (a
copy of which shall be delivered contemporaneously to the other party) delivered
within five (5) business days of Title Company's receipt of the initial
certification. In such event, Title Company shall hold the Deposit pending
resolution of such dispute. Any payment of the Deposit to the Contributors shall
be made by certified check payable to the Partnership or wire transfer.
(e) The parties acknowledge that Title Company is acting
solely as a stakeholder at their request and for their convenience, that Title
Company shall not be deemed to be the agent of either of the parties, and Title
Company shall not be liable to either of the parties for any act or omission on
its part unless taken or suffered in bad faith, in willful disregard to this
Agreement or involving gross negligence. The General Partners and FWRLP shall
jointly and severally indemnify and hold Title Company harmless from and against
all costs, claims and expenses, including reasonable attorneys' fees, incurred
in connection with the performance of Title Company's duties hereunder, except
with respect to actions or omissions taken or suffered by Title Company in bad
faith, in willful disregard of this Agreement or involving gross negligence on
the part of Title Company.
4. Closing. Except as otherwise provided in this Agreement, the
Contribution contemplated herein shall be consummated at the "Closing"
(sometimes hereinafter referred to as the "Closing"), which shall take place on
the date (the "Closing Date") specified by FWRLP on not less than five (5)
business days notice to Contributors, provided that the Closing Date shall not
be later than fifteen (15) business days after the end of the Feasibility
Period; provided, however, that if the Lender has not completed all
documentation consenting to the contribution of the Partnership Interests by
such date, then the Closing Date shall be extended for such reasonable time
period as is required to complete same, provided that such extension does not
exceed forty-five (45) days. The Closing shall take place at the offices of
First Washington Realty Limited Partnership, 4350 East-West Highway, Suite 400,
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Bethesda, Maryland 20814, or at such other place as may mutually agreed upon by
Contributors and FWRLP.
5. Representations and Warranties of Contributors. In order to induce
FWRLP to enter into this Agreement and to issue the Units in consideration for
the Partnership Interests, each Contributor for such Contributor only and for no
other Contributor makes the following representations and warranties, each of
which is material and shall survive Closing without limitation, notwithstanding
any investigation at any time made by or on behalf of FWRLP:
(a) Authority. Such Contributor has the rights, power and
authority to enter into this Agreement and to contribute its Partnership
Interests in accordance with the terms and conditions of this Agreement. Except
for the consents required under the Provident Mutual Loan, no consents of any
persons other than those executing this Agreement as a Contributor are required
for such execution or to cause such Contributor to consummate the transactions
contemplated by this Agreement. This Agreement is the valid and binding
obligation of such Contributor, enforceable against such Contributor in
accordance with its terms.
(b) No Defaults. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will: (i) subject to
any approval required under the Provident Mutual Loan, conflict with, or result
in a breach of, the terms, conditions, or provisions of or constitute a default
under any agreement or instrument to which such Contributor is a party or by
which such Contributor is bound, or (ii) subject to any approval required under
the Provident Mutual Loan, violate any restriction, requirement, covenant or
condition to which such Contributor is subject or by which such Contributor is
bound.
(c) Ownership of Interests. Such Contributor owns the
Partnership Interest owned by such Contributor, as set forth in Exhibit P
hereto, free and clear of all liens, charges, encumbrances, restrictive
agreements and assessments other than the provisions of the Partnership
Agreement. Upon the contribution of such Contributor's Partnership Interest to
FWRLP or its designee(s), FWRLP will receive good and absolute title thereto,
free from all liens, charges, encumbrances, restrictive agreements and
assessments whatsoever other than the provisions of the Partnership Agreement.
Such Contributor hereby waives, with respect to the contribution contemplated by
this Agreement, any "right of refusal" or other restriction on transfer set
forth in the Partnership Agreement. There are no outstanding options, contracts,
calls, commitments or demands of any nature relating to the Partnership Interest
of such Contributor.
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(d) Securities Law Matters.
(i) Such Contributor who shall receive the Units is now or, at the
time of Closing, will be, an "accredited investor" as such term is defined
under Rule 501 promulgated under the Securities Act of 1933, as amended
(the "Securities Act");
(ii) Such Contributor's primary residence or principal place of
business is in the State of Maryland;
(iii) Such Contributor is acquiring the Units for such Contributor's
account for investment purposes only and not with a view to distribution;
(iv) Taking into account the information and resources such
Contributor can practically bring to bear on the acquisition of the Units
in FWRLP contemplated hereby, such Contributor is knowledgeable,
sophisticated and experienced in making, and is qualified to make decisions
with respect to investments in securities presenting an investment decision
like that involved in the acquisition of the Units, including investments
in securities issued by FWRLP, and has requested, received, reviewed and
considered all information such Contributor deems relevant in making an
informed decision to acquire the Units (including the Confidential
Information Statement attached hereto which contains the First Amended and
Restated Agreement of Limited Partnership of FWRLP and any Amendments
thereto (the "Partnership Agreement"), except that the Partnership
Agreement has been further amended solely to reflect exchanges of Units for
shares of the REIT's common stock (the "Common Stock") by holders of such
Units in accordance with the terms of the Partnership Agreement);
(v) Such Contributor will not, directly or indirectly, voluntarily
offer, sell, pledge, transfer or otherwise dispose of (or solicit any
offers to buy, purchase or otherwise acquire or take a pledge of ) any of
the Units except in compliance with the Securities Act and the rules and
regulations promulgated thereunder and with the terms and conditions of the
Partnership Agreement;
(vi) Such Contributor acknowledges that the Units to be issued must be
held unless and until they are subsequently registered under the Securities
Act and under applicable state securities or blue sky laws, unless
exemptions from such registrations are available at the time of resale;
(vii) Prior to the issuance of the Units, such Contributor will
execute all such other documents and instruments as may be reasonably
necessary to allow FWRLP to comply with federal and state securities law
requirements with respect to the issuance of the Units and to comply with
the terms of the Partnership Agreement; and
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(viii) Such Contributor acknowledges and agrees that the Units to be
issued hereunder shall not be redeemable for cash or exchangeable for
Common Stock for a period of thirteen (13) months from and after the date
of issuance to such Contributor.
(e) No Contributor is a person other than a United States
person within the meaning of the Internal Revenue Code of 1986, as amended (the
"Code"). The transaction contemplated herein is not subject to the tax
withholding provisions of Section 3406 of the Code, or Subchapter A of Chapter 3
of the Code or of any other provision of law.
6. Representations and Warranties of the General Partners. In order to
induce FWRLP to enter into this Agreement and to issue the Units in
consideration for the Partnership Interests, the Contributors, jointly and
severally, hereby make the following representations and warranties as of the
date hereof, each of which is material and shall survive Closing for a period of
one (1) year (unless expressly provided that it will survive Closing without
such limitation), notwithstanding any investigation at any time made by or on
behalf of FWRLP:
(a) Authority. The Partnership is a limited partnership duly
organized and in good standing under the laws of the State of Maryland. The copy
of the Partnership' s Partnership Agreement and all Amendments thereto
(collectively, the "Partnership Agreement") including all Certificates of
Limited Partnership and all Amendments thereto and the list of all the Partners
along with their individual Partnership Interests, attached hereto an Exhibit P,
is a true, correct and complete copy thereof. Notwithstanding anything to the
contrary, the representations and warranties contained in this Section 6(a)
shall survive Closing without being subject to the one year limitation.
(b) Title. The Partnership is the sole owner of fee simple
title to the Property.
(c) Compliance with Existing Laws. To the Contributors' actual
knowledge and except as set forth on Exhibit D attached hereto, (i) the
Partnership is not in material violation of, and has materially complied with,
any and all applicable building, zoning, environmental or other ordinances,
statutes or regulations of any governmental agency, in respect to the ownership,
use, maintenance, condition and operation of the Property or any part thereof,
and (ii) the Partnership possesses all material licenses, certificates, permits
and authorizations necessary for the use and operation of the Property in the
manner in which it is currently being operated by the Partnership.
(d) Leases. True, correct and complete copies of all of the leases of
the Property and any amendments thereto (collectively, the "Leases"), have been
delivered to FWRLP. Attached hereto as Exhibit B is a description of all of the
Leases and a current rent schedule ("Rent Schedule") covering the Leases, which
is true and correct
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in all material respects. There are no leases or tenancies of any space in the
Property other than those set forth in Exhibit B or, to the Contributors'
knowledge, any subleases or subtenancies unless otherwise noted therein. Except
as otherwise set forth in Exhibit B or elsewhere in this Agreement:
(i) The Leases are in full force and effect and to the best of the
Contributors' knowledge constitute a legal, valid and binding obligation of
the respective tenants;
(ii) no tenant has an option to purchase the Property or any portion
thereof;
(iii) no renewal or expansion options have been granted to the
tenants, except as provided in the Leases;
(iv) to the best of the Contributors' knowledge, the Partnership is
not in default under any of the Leases;
(v) the rents set forth on the Rent Schedule are
being collected on a current basis and there are no arrearages
in excess of one month, except as indicated in Exhibit B
hereto, nor has any tenant paid any rent, additional rent or
other charge of any nature for a period of more than thirty
(30) days in advance;
(vi) all work for tenant alterations and other work or materials
contracted for by the Partnership and any tenant has been completed by the
Partnership, and all work and materials have been fully paid for or will be
paid for by Closing except as indicated on Exhibit B;
(vii) the Partnership has not sent written notice to any tenant
claiming that such tenant is in default, which default remains uncured, and
to the best of the Contributors' knowledge, no tenant is in default under
its Lease, except as indicated in Exhibit B hereto;
(ix) no action or proceeding instituted against the Partnership by any
tenant is presently pending in any court; and
(x) there are no security deposits other than those set forth in
Exhibit B.
(e) Service Contracts. Attached hereto as Exhibit C is a
complete and correct list of all contracts or agreements relating to the
management, leasing, operation, maintenance or repair of the Property (the
"Service Contracts"). True and correct copies of all of the Service Contracts
have been delivered to FWRLP. Except in the case of a default by the vendor
under a specific Service Contract, no Service Contract will be terminated,
amended, modified or supplemented prior to the Closing
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Date without FWRLP's prior written approval, which approval shall not be
unreasonably withheld, conditioned or delayed (except that any management and
leasing agreements shall be terminated as of Closing).
(f) Tax Bills. The Contributors have delivered true and
correct copies of tax bills issued by any applicable federal, state or local
governmental authority to the Partnership with respect to the Property for the
most recent past and current tax years, and any new assessment received with
respect to a current or future tax year.
(g) Insurance. The Property is insured for its replacement
cost against loss or damage sustained as a result of fire or other casualty and
the Partnership has rent loss insurance in place for the Property. Attached
hereto as Exhibit E is a list of all hazard, liability and other insurance
policies presently affording coverage with respect to the Property. The
Contributors shall maintain in full force and effect all such policies until the
Closing Date, and shall cause the Partnership's insurer to name FWRLP as an
additional insured as a contract party on its rent loss policy with respect to
the Property.
(h) Possession of Property. Possession of the Property shall
be delivered to FWRLP at Closing in its "as is, where is" condition as of the
date of FWRLP's execution of this Agreement, subject to normal wear and tear and
damage by fire or other casualty and the effect of condemnation (subject to
Section 13 herein) excepted.
(i) Tenant Estoppels. The Contributors represent and warrant
that they shall use reasonable good faith efforts to obtain and deliver to FWRLP
a tenant estoppel letter from each tenant in substantially the form attached
hereto as Exhibit F (or in such form as required by FWRLP's mortgage lender)
from each of the tenants of the Property confirming the information set forth in
the Rent Schedule attached as Exhibit B hereto.
(j) Condemnation Proceedings. No condemnation or eminent
domain proceedings are pending or, to the best of the Contributors' knowledge,
threatened against the Property or any part thereof, and neither the Partnership
nor the Contributors has made any commitments to or received any written notice,
of the desire of any public authority or other entity to take or use the
Property or any part thereof whether temporarily or permanently, for easements,
rights-of-way, or other public or quasi-public purposes.
(k) Litigation. Except as set forth on Exhibit G hereto, no
litigation is pending or, to the best of the Contributors' knowledge, threatened
against the Partnership, including administrative actions or orders against the
Partnership relating to governmental regulations, affecting the use, operation
or ownership of the Property or any part thereof as contemplated herein, other
than those being defended by the Partnerships' liability insurers.
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(l) No Defaults. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will: (i) subject to
any approval required under the Provident Mutual Loan, conflict with, or result
in a breach of, the terms, conditions or provisions of, or constitute a default
under, any agreement or instrument to which the Partnership is a party or by
which the Partnership or the Property is bound, (ii) subject to the approval
required under the Provident Mutual Loan, violate any restriction, requirement,
covenant or condition to which the Partnership is subject or by which the
Partnership or the Property is bound, or (iii) result in the cancellation of any
contract or lease pertaining to the Property. The representations and warranties
set forth in this Section 6(l) shall survive Closing without being subject to
the one year limitation.
(m) [Intentionally Omitted].
(n) Separate Tax Lot and Subdivision. To the best of the
Contributors' knowledge, the Land is the subject of a separate subdivision, and
the Land is assessed for tax purposes as a separate and distinct parcel.
(o) Hazardous Waste. Except as set forth in the environmental
reports previously delivered to FWRLP, the Contributors have no knowledge of any
discharge, spillage, uncontrolled loss, seepage or filtration (a "Spill") of
oil, petroleum or chemical liquids or solids, liquid or gaseous products or any
hazardous waste or hazardous substance (as those terms are used in the
Comprehensive Environmental Response, Compensation and Liability Act of 1986, as
amended, the Resource Conservation and Recovery Act of 1976, as amended, or in
any other applicable federal, state or local laws, ordinances, rules or
regulations relating to protection of public health, safety or the environment,
as such laws may be amended from time to time) at, upon, under or within the
Land or any contiguous real estate. To the best of the Contributors' knowledge,
there is no proceeding or action pending or threatened by any person or
governmental agency regarding the environmental condition of the Property. To
the Contributors' knowledge, the Building is totally free of friable asbestos
requiring remediation.
(p) Certificates of Occupancy. The Partnership will not amend
any certificates of occupancy for the Property and will maintain them in full
force and effect to the extent that the Partnership is responsible for them. .
(q) Licenses and Permits. The Contributors have received no
notice, nor have any knowledge, that the Partnership is lacking any required
permit or license issued by applicable governmental authorities for operation,
maintenance or ownership of the Property ("Licenses").
(r) Operating Statements. Attached hereto as Exhibit H are
true and correct operating statements of the Property for 1994, 1995, 1996 and
1997. Also attached as Exhibit H is a copy of the 1998 operating budget for the
Property.
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(s) Utilities. To the best of Contributors' knowledge,
adequate, usable public sewers, public water facilities, gas and/or electrical
facilities necessary to the operation of the Property are installed in and are
duly connected to the Property.
(t) Personal Property. Attached hereto as Exhibit I is a true,
correct and complete inventory of all personal property ("Personal Property")
owned by the Partnership, if any, used in the management, maintenance and
operation of the Property (other than trade fixtures or personal property of
tenants).
(u) Leasing Commissions. At Closing there shall be, no
outstanding or contingent leasing commissions or fees payable with respect to
the Property, except as shown on Exhibit K hereto.
(v) Partnership Liabilities. Except for (i) the obligations
and liabilities of the Partnership which FWRLP is taking the Partnership
Interests subject to under Section 2 (c) above, and (ii) any accrued liabilities
and obligations of the Partnership which are being adjusted at Closing pursuant
to Section 12 of this Agreement pursuant to Service Contracts set forth on
Exhibit C hereto, the Partnership shall not have any liabilities or obligations,
either accrued, absolute or contingent or otherwise, which will not be paid or
discharged on or before the Closing Date. In addition, the Partnership has not
received notice of any, and to the best of the knowledge of the Contributors,
there is, as of the date of execution of this Agreement, no basis for any, claim
against (or liability of) the Partnership arising from the business done,
transactions entered into or other events occurring prior to the Closing Date
other than the obligations and liabilities described in the preceding sentence.
(w) Partnership for Tax Purposes. The Partnership is, and at
all times has been, properly treated as a partnership for Federal Income Tax
purposes, and not as an "association" or "publicly traded partnership" taxable
as a corporation. The foregoing representation shall survive Closing without
being subject to the one year limitation.
(x) Taxes. The Partnership has timely filed with the
appropriate taxing authorities all returns (including without limitation
information returns and other material information) in respect of Federal, State
and local taxes (collectively "Taxes") required to be filed by it through the
date hereof and will timely file any such returns required to be filed by it on
or prior to the Closing Date. The returns and other information filed (or to be
filed) are complete and accurate in all material respects. All Taxes of the
Partnership in respect of periods prior to the Closing Date have been timely
paid, or will be timely paid prior to the Closing Date, and the Partnership has
no material liability for Taxes in excess of the amounts so paid. All Taxes that
the Partnership has been required to collect or withhold have been duly
collected or withheld and, to the extent required when due, have been or will be
(prior to Closing Date) duly paid to the proper taxing authority. No audits of
any of the Partnership's federal, state or local returns for Taxes by the
relevant taxing authorities have occurred,
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and no material deficiencies for Taxes of the Partnership have been claimed,
proposed or assessed by any taxing or other governmental authority against the
Partnership. There are no pending or, to the best of knowledge of the
Contributors, threatened audits, investigations or claims for or relating to any
material additional liability to the Partnership in respect of Taxes, and there
are no matters under discussion with any governmental authorities with respect
to Taxes that in reasonable judgement of the Contributors or their counsel, is
likely to result in a material additional liability for Taxes. There are no
liens for taxes (other than for current taxes not yet due and payable) on any of
the assets of the Partnership. The foregoing representations and covenants
contained in this Section 6(x) shall survive Closing without being subject to
the one year limitation.
7. Obligations of Contributors Pending Closing. From and after the date
of this Agreement through the Closing Date, Contributors covenant and agree as
follows:
(a) Maintenance and Operation of Premises. The General Partner
will cause the Property to be maintained in its present order and condition,
normal wear and tear, and damage by fire or other casualty (subject to Section
12) excepted and will cause the continuation of the normal operation thereof,
including the purchase and replacement of fixtures and equipment, and the
continuation of the normal practice with respect to maintenance and repairs so
that the Property will, except for normal wear and tear and damage by fire or
other casualty (subject to Section 12), be in substantially the same physical
condition on the Closing Date as on the date hereof.
(b) Licenses. The General Partner shall use their commercially
reasonable efforts to preserve in force all Licenses and to cause those expiring
to be renewed.
(c) Changes in Representations. The Contributors shall notify
FWRLP promptly, and FWRLP shall notify the Contributors promptly, if either
becomes aware of any occurrence prior to the Closing Date which would make any
of its representations, warranties or covenants contained herein not true in any
material respect.
(d) Obligations as to Leases. The Contributors and the
Partnership shall not, without FWRLP's prior written consent (which consent
shall not be unreasonably withheld), amend, modify, renew or extend any Lease in
any respect unless required by law, or enter into new leases or approve any
assignment of leases or subletting of leased space, or terminate any Lease. If
FWRLP does not respond within five (5) business days of written request for
consent from the Contributors, FWRLP shall be deemed to have consented to such
request. After the end of the Feasibility Period and prior to Closing,
Contributors shall not apply all or any part of the security deposit of any
tenant unless such tenant has vacated the Property.
(e) Obligations as to Provident Mutual Loan. The Contributors
shall not, without FWRLP's prior written consent, (i) prepay, or permit the
Partnership to
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prepay, the Provident Mutual Loan, or (ii) modify or amend, or permit the
Partnership to modify or amend, any of the documents evidencing or securing the
Provident Mutual Loan or otherwise entered into in connection with the Provident
Mutual Loan. Prior to Closing, the Contributors and the Partnership shall make,
or cause the Partnership to make, all payments required to be made under the
Provident Mutual Loan when due, shall perform, or cause the Partnership to
perform, all obligations under the Provident Mutual Loan and shall keep, and
cause the Partnership to keep, the Provident Mutual Loan free from default.
8. Representations and Warranties of FWRLP. In order to induce
Contributors to enter into this Agreement and to contribute the Partnership
Interests to FWRLP, FWRLP, and, as to Sections 8(a), 8(b), 8(e), 8(f) and 8(g),
First Washington Realty Trust, Inc ("REIT") hereby make the following
representations and warranties as of the date hereto, each of which is material
and shall survive Closing, notwithstanding any investigation at any time made by
or on behalf of Contributors:
(a) Authority of FWRLP and the REIT. FWRLP is a limited
partnership duly organized and existing and in good standing under the laws of
the State of Maryland. Subject to the approval of the Board of Directors of the
REIT as set forth in Section 9(a)(ix), FWRLP and the REIT have all necessary
power and authority to execute, deliver and perform this Agreement and
consummate all of the transactions contemplated by this Agreement. Subject to
the approval of the Board of Directors of the REIT as set forth in Section
9(a)(ix), this Agreement is the valid and binding obligation of FWRLP and the
REIT, enforceable against each of them in accordance with its terms.
(b) No Defaults. Neither the execution of this Agreement nor
the consummation of the transactions contemplated hereby will: (i) conflict
with, or result in a breach of, the terms, conditions or provisions of, or
constitute a default under, any agreement or instrument to which FWRLP or the
REIT is a party, (ii) violate any restriction, requirement, covenant or
condition to which the FWRLP or the REIT is subject, and (iii) constitute a
violation of any applicable code, resolution, law, statute, regulation,
ordinance, rule, judgment, decree or order.
(c) Vacant Space. FWRLP hereby further agrees that if any
rentable space in the Property is vacant on the Closing Date, FWRLP shall accept
the Property subject to such vacancy, provided that the vacancy was not
permitted or created by the Contributors or the Partnership in violation of any
restrictions contained in this Agreement.
(d) Disclosure Documents. Attached hereto as Exhibit L is a
true and correct copy of the Confidential Information Statement, as may be
supplemented through the Closing Date provided that any such supplement will not
materially adversely affect the Contributors. The FWRLP Partnership Agreement
(including the Certificate of Limited Partnership), as contained in the
Confidential Information Statement, has not been amended or modified through the
date hereof except as set
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forth in Exhibit L, and, to the knowledge of FWRLP, no default or condition
which, with the passage of time or the giving of notice could become a default,
exists on the part of any party thereunder.
(e) Issuance of Units. The FWRLP Partnership Agreement
provides, or prior to Closing will provide, for the issuance of the Units. The
Units to be issued in connection with the transactions herein contemplated have
been, or prior to their issuance will have been, duly authorized for issuance by
FWRLP to Contributors, and on the date of their issuance will be validly issued,
fully paid and non-assessable.
(f) Partnership Capitalization. The FWRLP Partnership
Agreement (i) is the only agreement among the partners of FWRLP relating to the
organization, operation, or management of FWRLP, (ii) is in full force and
effect, and (iii) has not been amended or modified through the date hereof
except as set forth in Exhibit L hereto and except for certain exchanges of
common units and issuance of additional common units. Upon the Closing, good,
valid and marketable title to the Units shall be vested in the Contributors free
and clear of any limitation, lien, claim, charge, pledge or encumbrance (except
as provided in the FWRLP Partnership Agreement and in this Agreement).
(g) Tax Matters. To the best of FWRLP's knowledge, all
federal, state, local and foreign tax returns and information statements
required to be filed by or on behalf of FWRLP or for which FWRLP may have any
liability have been duly and timely filed (or requests for extensions have been
timely filed, granted and have not expired). To the best of FWRLP's knowledge as
of the date hereof, there is no audit examination, deficiency or refund
litigation or matter in controversy with respect to any taxes that might result
in a determination materially adverse to FWRLP.
(h) Financial Information. The financial statements of FWRLP
and the REIT (including the notes thereto) included in the Confidential
Information Statement, as supplemented through the date hereof, present fairly
the financial position of the respective entity or entities presented therein at
the respective dates indicated and the results of their operations for the
respective periods specified, and except as otherwise stated in any such
registration statement or periodic report, such financial statements have been
prepared in conformity with generally accepted accounting principles applied on
a consistent basis. Since the date of the most recent financial statements
included in the Confidential Information Statement, as supplemented through the
date hereof, there has been no material adverse change, when considered as a
whole, in the financial condition of FWRLP or the REIT.
9. Conditions Precedent to Closing.
(a) It shall be a condition precedent of FWRLP's obligation to
make a full settlement hereunder that each and every one of the following
conditions shall exist on the Closing Date:
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(i) Representations and Warranties. Subject to the
provisions of Section 7(c), Contributors' representations and
warranties hereunder shall be true and correct in all material
respects in the same manner and with the same effect as though
such representations and warranties had been made on and as of
the Closing.
(ii) Zoning. No proceedings shall have occurred or be
pending to change, redesignate or redefine the zoning
classification of the Property to a more restrictive
classification than presently exists on the date of FWRLP's
execution of this Agreement.
(iii) Title. Title to the Property shall be
marketable, good of record, and insurable by the Title Company
at standard rates or less, pursuant to a full coverage ALTA
Form-B (Rev. 1970 and 1984) owner's title insurance policy (or
an unconditional commitment therefor) without any exceptions
("Printed form" or otherwise) other than the Permitted
Exceptions, and in addition, without exception for mechanic's
or materialmen's lien arising from goods, labor or materials
provided to the Property prior to the Closing Date. The
"Permitted Exceptions" are:
(A) the lien of current real estate taxes and special assessments not
yet due and payable; and
(B) such other matters which are listed on Exhibit J attached hereto.
Notwithstanding anything to the contrary contained in this paragraph (B),
the General Partner, at or prior to Closing, shall cause to be satisfied
and released of record all mortgages, deeds of trust, financing statements,
judgments, liens and other matters that may be satisfied by payment of a
liquidated sum and that first appears of record after the date hereof,
other than the Provident Mutual Mortgage.
(iv) Existing Mortgages. Seller shall have delivered
to the Title Company such releases or other instruments
necessary to release of record and beneficially any and all
existing mortgages, deeds of trust, financing statements or
other security documents affecting the Property, other than
the Provident Mutual Mortgage (collectively, the "Existing
Mortgages").
(v) [Intentionally Omitted].
(vi) Leasing Brokerage/Property Management
Agreements. The General Partner shall have terminated, or
cause the Partnership to terminate, any and all leasing
brokerage agreements and property management agreements with
respect to each Property effective as of the
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Closing. All responsibility for dealings with any such brokers
and agents, including the payment of any claims (if deemed
warranted by the Contributors), shall be the sole
responsibility of the Contributors. The Contributors agree
that they will indemnify and hold FWRLP, its successors,
assigns, partners, agents and employees, harmless against any
such claims and/or losses which might be incurred by such
indemnitees or by the Partnership in connection with any
outstanding and/or contingent leasing commissions or fees or
management fees. Notwithstanding anything to the contrary, the
indemnity set forth in this subsection 9(a)(vi) shall survive
Closing without limitation.
(vii) Performance by Contributors. Contributors shall
have complied with and not be in breach of any of their
covenants or obligations under this Agreement.
(viii) Tenant Estoppels. FWRLP shall have received
(a) a tenant estoppel letter in substantially the form
attached hereto as Exhibit F (or in such form and from such
tenants as required by FWRLP's mortgage lender) from, at a
minimum, tenants satisfying the requirements described on
Exhibit F-1, confirming the information set forth in the
Leases and the Rent Schedule attached hereto as Exhibit B for
such tenants and containing no material changes therefrom, and
(b) any subordination and attornment agreements required by
the Lender.
(ix) FWRT Board Approval. The Board of Directors of
FWRT shall have approved this Agreement and the transactions
contemplated hereby. In the event that the aforesaid condition
is not satisfied by the end of the Feasibility Period, FWRLP
may elect to terminate this Agreement by giving Contributors
written notice thereof within one (1) day after the end of the
Feasibility Period in which event the Deposit and any interest
thereon shall be returned to FWRLP and neither party shall
have any further obligations nor liabilities to the other.
(b) Failure of Condition. In the event of the failure by the
Closing Date of any condition precedent set forth above, FWRLP shall notify
Contributors in writing, and if Contributors do not correct such failure (if
valid) within five (5) business days after such notice, then FWRLP, at its sole
election, may (a) terminate this Agreement, in which event the Deposit and any
interest thereon shall be returned to FWRLP and, except as otherwise provided in
Section 17 hereof, neither party shall have any further obligations or
liabilities to the other; or (b) proceed to Closing and, if a default, avail
itself of any legal or equitable remedy FWRLP may have, except as to any default
of Contributors waived in writing by FWRLP or deemed to be waived pursuant to
the provisions of this Agreement on or before the Closing Date; or (c) extend
the Closing Date for such reasonable time period as may be determined by FWRLP
(but in no event for more than one (1) month from the Closing Date then in
effect) in order to permit the satisfaction of any condition precedent not so
fulfilled.
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(c) In the event FWRLP elects to consummate the Closing under
this Agreement despite the failure (which was actually known to FWRLP) of any
representation or warranty of the Contributors herein contained to be true and
correct in all material respects at the time of Closing, then unless
Contributors expressly agree in writing to the contrary at the time of Closing,
FWRLP shall be deemed to have waived any claims against Contributors arising out
of such failure (provided that such failure was not due to the willful
misconduct or bad faith of Contributors), and, in such event, Contributors shall
have no post-Closing liability to FWRLP with respect thereto.
10. Contributors' Deliveries. At the Closing the following documents,
each dated on the Closing Date, shall be delivered to FWRLP:
(a) a Contribution and Assumption Agreement ("Assignment") and
an Amendment to the Partnership Agreement ("Amendment") and Limited Partnership
Certificate, in a recordable from, reasonably satisfactory to FWRLP and the
Contributors, setting forth the assignment by each of the Contributors of their
Partnership Interest and its withdrawal from the Partnership and the
substitution of FWRLP and /or its designee(s) as partners of the Partnership,
which Amendment shall be executed and acknowledged by all the Contributors; at
FWRLP's option, such Assignment and Amendment may contain such other amendments
of the Partnership Agreement as shall be determined by FWRLP, provided that the
Contributors shall execute such Assignment and Amendment solely for the purpose
of (a) assigning their respective Partnership Interests to FWRLP or its
designee(s), and (b) withdrawing from the Partnership.
(b) a release from each Contributor releasing the Partnership
and FWRLP (and its designee(s)) as partners of the Partnership from any
obligations and liabilities with respect to the original formation of the
Partnership, and any other matter arising from business done, transactions
entered into or events occurring prior to the Closing Date (including, without
limitation, liability arising from any breach by any of the Contributors).
(c) An opinion of counsel for Contributors, in from and
substance reasonably acceptable to counsel for FWRLP, to the effect that:
(i) The Partnership is a duly organized and validly
existing in good standing under the laws of the State of
Maryland:
(ii) The execution and delivery of this Agreement and all other
agreements delivered in connection herewith or at the Closing, the
consummation of the transactions herein contemplated, and compliance with
the terms of this Agreement and all other agreements delivered in
connection herewith or at the Closing will not conflict with, or result in
a breach of, any of the terms, conditions or provisions of, or constitute a
default under, any note, indenture, mortgage, deed of trust, contract or
other agreement or instrument to which the Partnership is a party or by
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which the Partnership is bound (and of which counsel has
knowledge) (other than the Provident Mutual Loan), or any law
or order, rule, regulation, writ, injunction or decree of any
government, governmental instrumentality or court, domestic or
foreign;
(iii) Contributors have complete and unrestricted
power to contribute, transfer, assign and deliver to FWRLP and
its designee(s) all of the Partnership Interests to be
contributed and assigned hereunder which are owned and /or
controlled by them, and the Assignment and the Amendment
delivered pursuant to this Section 10 are in form legally
sufficient to vest in FWRLP and its designee(s) good title to
the Partnership Interests described therein; and
(iv) To the best of counsel's knowledge, there is no
litigation or investigation pending or threatened against the
Partnership, or the Property, or any part thereof, which might
result in any material, adverse change pertaining to the
Property or the Partnership, or the operations thereof, or
which questions the validity of any action taken in, under or
in connection with any of the provisions of this Agreement.
(d) a schedule from the Contributors updating the Rent
Schedule for the Property and setting forth all arrearages in rents and all
prepayments of rents;
(e) originally executed Leases and Service Contracts and
copies of books, records, operating reports, files and other materials related
to the ownership, use and operation of the Property, to the extent that any
exist and are in the possession of the Contributors, which obligation shall
survive Closing;
(f) [Intentionally Omitted].
(g) an original letter executed by the General Partner
advising the tenants of the Property of the contribution of the Partnership
Interests to FWRLP and directing that rents and other payments thereafter be
sent to FWRLP or as FWRLP may direct;
(h) possession of the Property from the General Partner in
the condition required by this Agreement, and the keys therefore;
(i) from each Contributor, the Certification of Non-foreign Status as
provided in Treas. Reg. 1.1445-2(b)(2)(iii)(B) or in any other form as may
be required by the Internal Revenue Code or the regulations issued
thereunder;
(j) such other items and instruments from the Contributors as
shall be required by the Title Company in connection with the issuance of its
title insurance
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policy to FWRLP pursuant to Section 9(a)(iii) (including customary owner's
affidavit and non-imputation affidavit);
(k) any and all documents from the Contributors necessary to
release the Deposit from escrow with the Title Company and to have said Deposit
returned to FWRLP;
(l) any other documents required by this Agreement to be delivered by
Contributors; and
(m) an amendment to the Partnership Agreement of FWRLP, in a
form reasonably acceptable to FWRLP and Contributors, admitting the Contributors
who receive Units as limited partners of FWRLP and issuing such Units as
computed in accordance with Exhibit Q hereto.
11. FWRLP's Performance. At the Closing, simultaneously with the
deliveries of Contributors pursuant to the provisions of Section 10 above, FWRLP
shall issue to Contributors the Units in the manner specified in Section 2 and
FWRLP and REIT shall execute and deliver those documents and take such other
actions required to be taken by FWRLP and REIT at Closing as required under this
Agreement, whereupon the Deposit, and any interest accrued thereon, shall be
returned to FWRLP by the Title Company.
12. Settlement Charges; Prorations and Adjustments. FWRLP shall pay for
the title examination, the title insurance premium, notary fees and other such
charges incident to Closing. Any real estate transfer and recording fees and
taxes and documentary stamps in connection with this transaction, if any, shall
be borne by FWRLP; provided, however, that the number of Units issued to
Contributors at the Closing under Section 2(a) hereof shall be reduced by an
amount equal to one-half (1/2) of the real estate transfer and recording fees
and taxes payable by FWRLP divided by the Unit Price. Although Contributors and
FWRLP believe that no real estate transfer or recording taxes will be due in
connection with the transactions contemplated hereby, if it is finally
determined that such taxes are due and payable in connection herewith, then
Contributors shall either (at FWRLP's election) (i) reimburse to FWRLP one-half
(1/2) of such sum paid by FWRLP, or (ii) return/relinquish to FWRLP the number
of Units equal to one-half (1/2) of the taxes paid by FWRLP divided by the Unit
Price, which obligations shall survive Closing without limitation. FWRLP and
Contributors shall each pay its own legal fees related to the preparation of
this Agreement and all documents required to settle the transaction contemplated
hereby. In addition to the foregoing, at the Closing, the following adjustments
and prorations shall be computed as of the Closing Date, as if the transaction
contemplated by this Agreement was a sale of the Property by the Partnership to
FWRLP:
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(a) Taxes. Real estate and personal property taxes shall be
apportioned (based on the fiscal periods for which such taxes are assessed) as
of the Closing Date.
(b) Assessments. All special assessments and other similar
charges which have become a lien upon the Property or any part thereof on or
before the Closing Date and are due and payable through the Closing Date, shall
be paid in full by the Partnership or the Contributors on or prior to the
Closing. However, to the extent the foregoing can be adjusted as of Closing,
they shall, together with all other special assessments or similar charges, be
adjusted as of the Closing Date.
(c) Rent. Rent for the month of , and any month after, Closing
collected by the Partnership prior to Closing shall be apportioned as of the
Closing Date. If any tenant is in arrears in the payment of rent on the Closing
Date, rents received from such tenant after the Closing shall be applied in the
following order of priority: (a) first to the payment of current rent then due;
(b) second, to delinquent rent for any period after the Closing Date; and (c)
third to delinquent rent for any period prior to the Closing Date. FWRLP shall
and does hereby assign to Contributors the right to collect arrearages in rents
due from tenants as of the Closing Date, and FWRLP shall have no obligation to
collect same. If rents or any portion thereof received by Contributors or FWRLP
after the Closing Date are payable to the other party by reason of this
allocation, the appropriate sum, less a proportionate share of any reasonable
attorneys' fee, costs and expenses of collection thereof, shall be promptly paid
to the other party, which obligation shall survive the Closing.
If any tenants are required to pay percentage rents, escalation
charges for real estate taxes, operating expenses, cost-of-living
adjustments or other charges of a similar nature ("Additional Rents") and
any Additional Rents are collected by FWRLP after the Closing which are
attributable in whole or in part to any period prior to the Closing, then
FWRLP shall promptly pay to Contributors their proportionate share thereof,
less a proportionate share of any reasonable attorneys' fees, costs and
expenses of collection thereof, and deliver to Contributors a statement
therefor, if and when the tenant paying the same has made all payments of
rents and Additional Rent then due to FWRLP pursuant to the tenant's Lease,
which obligation shall survive the Closing without limitation. Upon written
request of Contributors (but only until the time of the first
reconciliation), FWRLP shall provide Contributors with the then current
periodic report of the status of collection of such Additional Rents from
such tenants. All allocations of proportionate shares shall be based on the
number of days involved in any adjustment period.
(d) Distributions. The quarterly distributions payable to
Contributors on the Common Units for the first record date after any issuance to
Contributors shall be pro rated based upon the number of days within the quarter
occurring after such issuance to Contributors .
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<PAGE>
(e) Debt Service on the Provident Mutual Loan. The amount of
interest payable under the Provident Mutual Loan shall be apportioned as of the
Closing Date.
(f) Miscellaneous. All other charges and fees customarily
prorated and adjusted in similar transactions, including utilities, insurance
premiums and charges for Service Contracts to be assumed by FWRLP, shall be
prorated as of the Closing Date. In the event that accurate prorations and other
adjustments cannot be made at Closing because current bills are not obtainable
or the amount to be adjusted is not yet ascertainable (as, for example, in the
case of utility bills) the parties shall prorate on the best available
information, subject to further adjustment promptly upon receipt of the final
bill or upon completion of final computations. To the extent that water
consumption or other utility charges may constitute a lien against the Property,
Contributors agree that an appropriate amount in respect of water consumption or
other utility charges may be held in escrow by the Title Company in connection
with its issuance of a title insurance policy to FWRLP. The Contributors shall
use their reasonable efforts to have all utility meters read on the Closing Date
so as to accurately determine its share of current utility bills.
(g) Immediately prior to the Closing, Contributors shall have
the right to cause the Partnership to withdraw from the Partnership's bank
account(s) and distribute to the Contributors an amount equal to all cash within
such bank account(s) as of 11:59 p.m. on the day immediately preceding the
Closing Date.
13. Risk of Loss. The risk of loss or damage to the Property by fire or
other casualty until the Closing shall be borne by the Contributors. If prior to
Closing (i) condemnation proceedings are commenced against all or any portion of
the Property, or (ii) if the Property is damaged by fire or other casualty to
the extent that the cost of repairing such damage shall be Two Hundred Thousand
Dollars ($200,000.00) or more based on the good faith estimate of an independent
contractor selected by the General Partner and reasonably approved by FWRLP, or
(iii) if the Property is damaged by an uninsured risk, or (iv) if the Property
becomes subject to litigation which may deprive FWRLP of any material benefit to
which it would become entitled pursuant to this Agreement, then FWRLP shall have
the right, upon notice in writing to the Contributors delivered within thirty
(30) days after actual notice of such condemnation or fire or other casualty or
litigation, to terminate this Agreement, and thereupon the parties shall be
released and discharged from any further obligations to each other and the
Deposit shall be refunded to FWRLP. If FWRLP does not elect to terminate this
Agreement or in the event of fire or other casualty not giving rise to a right
to terminate this Agreement by FWRLP, FWRLP shall be entitled to an assignment
of all of the proceeds of fire or other casualty insurance proceeds and the rent
insurance proceeds payable with respect to the period after Closing or of the
condemnation award, as the case may be (i.e., such proceeds shall remain in the
Partnership for the benefit of FWRLP), and Contributors shall have no obligation
to repair or restore the Property; provided, however, that the Unit portion of
the Consideration shall be reduced (based on the Unit
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Price per Unit) by an amount equal to the sum of (a) the "deductible" applied by
the Partnership's insurance policy, or (c) if the Partnership is self-insured,
the cost of repairing such damage. FWRLP shall have the right to participate in
the negotiation and settlement of any casualty or condemnation-related claim if
FWRLP does not elect to terminate this Agreement.
14. Inspection of Property.
(a) FWRLP's Right of Inspection. Subject to the rights of
tenants under the Leases, FWRLP shall have the right, at its own risk, cost and
expense, at any time or times prior to Closing, to enter, or cause its agents or
representatives to enter, upon the Property for the purpose of making surveys,
or any tests, investigations and/or studies relating to the Property or FWRLP's
intended acquisition thereof which FWRLP deems appropriate, in its sole
discretion, during reasonable hours and upon reasonable notice to the General
Partner. FWRLP shall further have complete access to all documentation,
agreements and other information in the possession of Contributors related to
the ownership, use and operation of the Property, to the extent it is readily
available to Contributors, and shall have the right to make copies of same.
FWRLP shall not have the right during the Feasibility Period to contact tenants
without the prior consent of the General Partner. FWRLP agrees to repair any
damage to the Property that may be caused by its inspections and to indemnify
and defend Contributors and hold Contributors harmless against any personal
injury or property damage suffered upon the Property as a result of such
inspections.
(b) Feasibility Period. Any other provisions of this Agreement
to the contrary notwithstanding, FWRLP may cause at FWRLP's sole cost and
expense, such boring, engineering, economic, water, sanitary and storm sewer,
utilities, topographic, structural, environmental and other tests,
investigations, market studies and other studies as FWRLP shall elect, subject
to the rights of tenants under the Leases. FWRLP agrees to use all reasonable
efforts to minimize disruption to business operations within the Property during
the course of any entries thereon. In the event that any of the tests,
investigations, market studies and other studies indicate, in FWRLP's sole and
absolute discretion, that FWRLP's plans for the Property would not be feasible
for any reason or no reason, then FWRLP shall have the right, at its sole
election on or before the date which is thirty (30) business days after the
Acceptance Date (such period herein referred to as the "Feasibility Period"), to
terminate this Agreement by giving written notice thereof to the General Partner
in which event this Agreement shall terminate, the Deposit shall be returned to
FWRLP and neither party shall have any further liabilities or obligations to
each other.
(c) Audit. The Contributors hereby agree to allow books and
records related to each Property to be audited (at FWRLP's sole expense) by an
independent, certified public accounting firm selected by FWRLP, and the
Contributors will cooperate and cause its employees and other agents to
cooperate in such auditing process. FWRLP shall provide the General Partner with
prior notice of such audit.
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15. Indemnifications.
(a) Indemnification by Contributors. Each Contributor for such
Contributor only, and for no other Contributor, hereby indemnifies and agrees to
defend and hold harmless FWRLP and its partners and subsidiaries and any
officer, director, employee, agent of any of them, and their respective
successors and assigns from and against any and all claims, expenses, costs,
damages, losses and liabilities (including reasonable attorneys' fees) which may
be asserted against or suffered by any indemnitee, the Partnership or the
Property, or any part thereof, whether before or after the Closing Date, as a
result of, on account of or arising from any breach of any representation,
warranty, covenant or agreement on the part of such Contributor set forth in
Section 5 herein or in any instrument or document related thereto delivered
pursuant to this Agreement. The obligations set forth in this Section 15(a)
shall survive Closing without limitation.
(b) Indemnification by the Contributors. Except for the
indemnifications set forth in Section 15(a) above, the Contributors, jointly and
severally, hereby indemnify and agree to defend and hold harmless FWRLP and its
partners and subsidiaries and any officer, director, employee, agent of any of
them, and their respective successors and assigns from and against any and all
claims, expenses, costs, damages, losses and liabilities (including reasonable
attorneys' fees) which may at any time be asserted against or suffered by, any
indemnitee the Partnership or the Property, or any part thereof, whether before
or after the Closing Date, as a result of, on account of or arising from (i) any
breach of any representation, warranty, covenant or agreement on the part of the
Contributors made herein or in any instrument or document delivered by the
Contributors pursuant to this Agreement, and/or (ii) any obligation, claims,
suit, liability, contract, agreement, debt or encumbrance or other occurrence
created, arising or accruing prior to the Closing Date, regardless of when
asserted, and relating to the Partnership or the Property, or its operations.
Claims within the scope of the indemnity set forth in clause (ii) shall include,
without limitation, any and all liabilities for federal and state income and
other taxes due and payable with respect to any period (or portion thereof)
prior to the Closing Date. The foregoing obligations set forth in this Section
15(b) shall survive Closing without limitation.
(c) Indemnification by FWRLP. FWRLP hereby indemnifies and
agrees to defend and hold harmless Contributors and their respective, heirs,
personal representatives, successors and assigns from and against any and all
claims, expenses, costs, damages, losses and liabilities (including reasonable
attorneys' fees) which may at any time be asserted against or suffered by
Contributors as a result of, on account of or arising from (i) any breach of any
representation, warranty, covenant or agreement on the part of FWRLP or the REIT
made herein or in any instrument or document delivered pursuant to this
Agreement, and/or (ii) any obligation, claims, suit, liability, contract,
agreement, debt or encumbrance or other occurrence created, arising or accruing
after the Closing Date and relating to the Partnership or the Property or its
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operations. The foregoing obligations set forth in this Section 15(c) shall
survive Closing without time limitation.
16. Brokerage Commission. Contributors and FWRLP represent and warrant
to each other that no brokerage fee or real estate commission is or shall be due
or owing in connection with this transaction. Contributors and FWRLP hereby
indemnify and hold the other harmless from any and all claims of any other
broker or agent so claiming based on action or alleged action of the other.
17. Default Provisions; Remedies.
(a) FWRLP's Default. If FWRLP fails to consummate the
Contribution contemplated herein when required to do so pursuant to the
provisions hereof, then the Title Company shall deliver the Deposit to
Contributors as full and complete liquidated damages, and as the exclusive and
sole right and remedy of Contributors, whereupon this Agreement shall terminate
and neither party shall have any further obligations or liabilities to any other
party.
(b) Contributors' Default. Except for any breaches waived in
writing by FWRLP, if Contributors have breached any of their covenants or
obligations under this Agreement or have failed, refused or are unable to
consummate the Contribution contemplated herein by the Closing Date or if any of
the representations and warranties made by Contributors under this Agreement
shall be inaccurate or incorrect in any material respect, then FWRLP shall be
entitled, as FWRLP's sole and exclusive right and remedy, to (i) waive such
breach, default or failure and proceed to Closing without abatement of
consideration under Section 2(a), (ii) extend the Closing for such reasonable
time or times as may be necessary in order to enable Contributors to remedy such
breach, default or failure (not to exceed thirty (30) days), (iii) terminate
this Agreement and obtain the return of the Deposit, and/or (iv) pursue such
remedies as may be available at law or in equity, including without limitation
an action for damages and/or specific performance. In the event that FWRLP
elects to pursue damages and/or specific performance and FWRLP prevails in such
litigation, in addition to any damages or other relief awarded to FWRLP,
Contributors shall be obligated to pay all reasonable legal fees, costs and
expenses incurred by FWRLP.
(c) Default After Closing. The provisions of Sections 17(a)
and (b) above shall not be applicable to any breach or default by a party
occurring or first becoming actually known to the other party after Closing,
and, as to any said breach or default, the non-defaulting party may exercise any
and all remedies available at law or in equity, subject, however, to any
applicable limitations on survival expressly provided for in this Agreement.
18. Registration Rights. The REIT hereby agrees to use its best efforts
to file a registration statement within thirteen (13) months after Closing to
register the issuance and resale, if required, of REIT Common Stock which may be
issued to
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Contributors in exchange for its Units, to use its best efforts to cause such
registration statement to become effective and to keep such registration
continuously effective (subject to certain exceptions) for a period for four (4)
years thereafter; provided, however, that the REIT shall be permitted to
postpone such filing or suspend the effectiveness of such shelf registration
statement for such periods as the REIT reasonably determines are necessary and
advisable in the best interest of the REIT or which are necessary to comply with
securities law requirements (including suspending sales under the shelf
registration statement for such periods as the managing underwriter in an
underwritten offering deems necessary). The obligations of the REIT under this
Section 18 shall survive Closing.
19. Miscellaneous Provisions.
(a) Completeness and Modification. This Agreement (together
with Exhibits A to Q attached hereto) represents the complete understanding
between the parties hereto with respect to the transactions contemplated herein,
and it supersedes all prior discussions, understandings or agreements between
the parties. This Agreement shall not be modified or amended except by an
instrument in writing signed by all of the parties hereto.
(b) Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto, and their respective successors and
assigns.
(c) Assignment. This Agreement shall not be assignable by
FWRLP without the consent of Contributor, provided that, notwithstanding
anything to the contrary contained in this Agreement, FWRLP shall be entitled to
transfer or, at Closing, cause the Partnership to issue a 1% limited partnership
interest in the Partnership to the REIT or to an entity controlled by,
controlling or under common control with the FWRLP, as long as the Units are
issued to Contributors as required herein. This Agreement shall not be
assignable by Contributors.
(d) Waiver; Modification. Failure by FWRLP or Contributors to insist
upon or enforce any of its rights hereto shall not constitute a waiver or
modification thereof.
(e) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Maryland.
(f) Headings. The headings are herein used for convenience or
reference only and shall not be deemed to vary the content of this Agreement or
the covenants, agreements, representations and warranties herein set forth, or
the scope of any provision hereof.
(g) Continuing Documentation and Access. From and after
Closing, the Contributors shall afford FWRLP reasonable access to any and all
information in their possession concerning the ownership, use and operation of
the Property
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(including the right to copy same at the expense of FWRLP) for purposes of any
tax examination or audit or other similar purpose.
(h) Counterparts. To facilitate execution, this Agreement may
be executed in as many counterparts as may be required; it shall be sufficient
that the signature of, or on behalf of, each party, or that the signatures of
the persons required to bind any party, appear on one or more such counterparts.
All counterparts shall collectively constitute a single agreement.
(i) Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered by hand or
mailed by first-class registered or certified mail, return receipt requested,
postage prepaid or delivered by commercial courier, telecopy or overnight
courier (e.g., Federal Express) against receipt, to the addresses indicated
below:
(i) if to FWRLP:
First Washington Realty Limited Partnership
4350 East-West Highway, Suite 400
Bethesda, Maryland 20814
Attn: William J. Wolfe
Jeffrey S. Distenfeld, Esq.
Telecopy: (301) 907-4911
(ii) if to Contributors or the General Partner:
100 West Road, Suite 505
Towson, Maryland 21204
Attn: Thomas C. Martel
Telecopy: (410) 321-0129
with a copy to:
James D. Wright, Esquire
Venable, Baetjer and Howard, LLP
1800 Mercantile Bank & Trust Building
Two Hopkins Plaza
Baltimore, Maryland 21201
Telecopy: (410) 244-7742
Such notice shall be deemed given on the date of receipt by
the addressee or the date receipt would have been effectuated if delivery were
not refused. Each party may designate a new address by written notice to the
other in accordance with this Section 19(i).
(j) All Warranties Joint and Several. Except as expressly provided
otherwise in this Agreement, each and every warranty, covenant, undertaking
and
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<PAGE>
agreement of the Contributors hereunder shall be deemed a joint and several
warranty, covenant, undertaking and agreement of each person and entity
collectively comprising the Contributors.
(k) Further Assurances. Contributors and FWRLP agree to
execute, acknowledge and deliver any further agreements, documents or
instruments that are reasonably necessary or desirable to carry out the
transactions contemplated by this Agreement.
(l) Business Days. A "business day" shall be Mondays through
Fridays, less and expecting all legal holidays observed by the United States
Government or the Government of the State of Maryland. Any date specified in
this Agreement which does not fall on a business day shall be automatically
extended until the first business day after such date.
20. Post-Closing Agreements of FWRLP.
(a) No Transfer Period. Until the expiration of the period
(the "No Transfer Period") ending on the earlier of (I) such time as all of the
Contributors have redeemed all of the FWRLP Units received by the Contributors
hereunder for cash or for shares of REIT common stock or (II) six (6) years from
the Closing Date, neither FWRLP nor REIT shall allow the sale or transfer of
either the Property or substantially all of the interests in the Partnership,
except for (i) transfers that are fully tax-free to partnerships in which FWRLP
has an interest, (ii) exchanges that are fully tax-free pursuant to Section 1031
of the Code, (iii) involuntary transfers which shall include, without
limitation, a foreclosure, a deed-in-lieu of a foreclosure, a condemnation or a
liquidation of FWRLP or REIT, provided that in the event of a material
condemnation, FWRLP shall use reasonable efforts to reinvest the net
condemnation proceeds in accordance with Section 1033 of the Code and hold the
same until the expiration of the No Transfer Period, and (iv) a sale of all or
substantially all of FWRLP's assets or a merger or consolidation of FWRLP.
(b) Refinance. Until the expiration of the No Transfer Period,
neither FWRLP nor REIT shall allow the Partnership to refinance the Loan for an
amount less than the outstanding principal balance of the Loan as of Closing (as
reduced thereafter by regularly scheduled amortization payments) (the "Minimum
Loan Amount") or to make any payment of principal under the Loan, except as part
of regularly scheduled amortization payments or as otherwise required by the
holder of the Loan or replacement loan under the applicable loan documents, or
to change the terms of the Loan or replacement loan in a manner that would
change the Minimum Loan Amount from nonrecourse to recourse within the meaning
of Section 752 of the Code and the regulations promulgated thereunder.
(c) Section 704(c) Method. FWRLP shall elect the "traditional
method" as described in Treasury Regulation Section 1.704-3(b) with respect to
allocations required by Code Section 704(c) relating to the interests in the
Partnership contributed by the Contributors and the assets of the Partnership.
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<PAGE>
(d) Allocation of Excess Nonrecourse Liabilities. For the
purposes of allocating Contributors' share of the "excess nonrecourse
liabilities" (within the meaning of Treasury Regulations Section 1.753(a)(3)) of
FWRLP to the Contributors, FWRLP will allocate (i) the lesser of (A) one-half of
such excess nonrecourse liabilities or (B) the built-in gain in excess of
Section 704(c) "minimum gain", among its partners based upon each partner's
relative share of FWRLP's built-in gain in excess of Section 704(c) "minimum
gain", and (ii) the remainder of such excess nonrecourse liabilities will be
allocated among the partners based on each partner's relative number of FWRLP
Units (taking into account the Contributors' interest in FWRLP). The foregoing
method shall not be modified by FWRLP until the expiration of the No Transfer
Period, without the consent of materially adversely affected Contributors, if
any, is obtained; provided, however, that in the event of a change in the Code,
the Treasury Regulations, or published Internal Revenue Service ("IRS") rulings,
notices or other administrative guidance, or in any private letter ruling issued
to a taxpayer other than FWRLP (any such change, a "Change in Law") such that,
in the reasonable opinion of tax counsel to FWRLP, based on such Change in Law,
either (i) the foregoing method is no longer legally permissible, (ii) or an
alternative method, not previously permitted, which results in more favorable
tax consequences to the Contributors is currently permitted, FWRLP shall be
entitled, without the consent of the Contributors, to adopt an alternative
method, provided further that, in the case of clause (i), FWRLP shall choose the
alternative method that minimizes, to the extent reasonably possible, the
adverse tax consequences to the Contributors.
(e) The provisions of this Section 20 shall survive the
Closing without limitation.
IN WITNESS WHEREOF, the parties hereto have executed this Contribution
Agreement as of the day and year first written above.
FWRLP:
FIRST WASHINGTON REALTY
LIMITED PARTNERSHIP
By: First Washington Realty Trust, Inc.,
WITNESS: Its general partner
/s/ Henry M. Renaud By: /s/ Jeffrey S. Distenfeld
Jeffrey S. Distenfeld
Senior Vice President
Date of execution: March 11, 1998
WITNESS: CONTRIBUTORS:
L&M MONTGOMERY CORPORATION
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<PAGE>
/s/_____________________ By: /s/ Thomas C. Martel_____
/s/_____________________ By: /s/ Thomas C. Martel_____
THOMAS C. MARTEL
/s/________________________ By: /s/ Robert C. Levin
ROBERT C. LEVIN
/s/________________________ By: /s/ Maury Levin
MAURY LEVIN
Date of execution: , 1998
First Washington Realty Trust, Inc. joins herein solely for the
purpose of making the representations, warranties and covenants contained
in Sections 8(a), 8(b), 8(e), 8(f), 8(g), 11 and 18 hereof.
FIRST WASHINGTON REALTY
WITNESS: TRUST, INC.
/s/ Henry M. Renaud By: /s/ Jeffrey S. Distenfeld
Jeffrey S. Distenfeld
Senior Vice President
Date of execution: March 11, 1998
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<PAGE>
ACKNOWLEDGE BY TITLE COMPANY
The undersigned Title Company executes this Contribution Agreement
solely to acknowledge receipt of the Deposit pursuant to Paragraph 3 hereof and
to evidence its agreement to serve as escrow agent pursuant to the terms of the
foregoing Agreement.
WITNESS: COMMERCIAL SETTLEMENTS, INC.
By: /s/ Stuart S. Levin
Stuart S. Levin
Vice President
Date: March 26, 1998
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<PAGE>
LIST OF EXHIBITS
EXHIBIT A. Legal Description of Land Recitals
EXHIBIT B. Leases and Rent Schedule Section 6(d)
EXHIBIT C. Service Contracts Section 6(e)
EXHIBIT D. Violations Section 6(c)
EXHIBIT E. Insurance List Section 6(g)
EXHIBIT F. Form of Tenant Estoppel Section 6(i)
EXHIBIT F-1. Tenant Estoppels Section 8(a)(viii)
EXHIBIT G. Litigation Section 6(k)
EXHIBIT H. Operating Statements and Budget Section 6(r)
EXHIBIT I. Personal Property Section 6(t)
EXHIBIT J. Permitted Exceptions Section 9(a)(iii)(B)
EXHIBIT K. Contingent Leasing Commissions Section 6(u)
EXHIBIT L. Confidential Information Statement Section 8(c)
EXHIBIT M. [Intentionally Omitted]
EXHIBIT N. Mortgage Section 2(c)
EXHIBIT O. Note Section 2(c)
EXHIBIT P. Partnership Agreement Section 6(a)
EXHIBIT Q. Allocation of Consideration Section 2(a)
[Contributors and FWRLP to Attach Foregoing at Acceptance of this Agreement]
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<PAGE>
Exhibit 5.7
April 17, 1998
VIA HAND DELIVERY
The Village Shopping Center,
A Limited Partnership
4601 N. Park Avenue
Apartment 1608
Bethesda, Maryland 20815
Attention: Lester M. Lewis
Re: The Village Shopping Center, Richmond, Virginia
Dear Mr. Lewis:
The purpose of this letter is to evidence and memorialize an amendment
to that certain Contribution Agreement dated March 24, 1998 ("Contribution
Agreement") by and between The Village Shopping Center, A Limited Partnership
("Contributor") and First Washington Realty Limited Partnership ("FWRLP"). By
executing this letter in the spaces provided below, Contributor and FWRLP each
hereby agree as follows:
1. Section 2(a)(iii) of the Contribution Agreement is deleted in its
entirety and replaced with the following:
"(iii) Issue the Contributor the greater of (A) three hundred sixty
thousand one hundred thirty-two (360,132) common partnership units of FWRLP (the
"Units"), or (B) an aggregate number of Units (rounded to the nearest one (1))
equal to $9,471,464.00 divided by the Unit Price (as defined below)."
2. Except as expressly modified by this letter, the Contribution
Agreement shall continue in full force and effect in accordance with its
original terms.
Please execute both originals of this letter on behalf of Contributor
in the space provided below, retain one (1) fully executed original for your
records and return one (1) fully executed original to Jeffrey S. Distenfeld,
Esquire at the address set forth above via hand delivery today so as to evidence
and memorialize Contributor's agreement to the foregoing.
FWRLP:
FIRST WASHINGTON REALTY
LIMITED PARTNERSHIP
By: First Washington Realty Trust, Inc.,
WITNESS: Its general partner
/s/ Henry M. Renaud By: /s/ William J. Wolfe
William J. Wolfe
President
Date of execution: April 17 , 1998
<PAGE>
The Village Shopping Center,
A Limited Partnership
April 17, 1998
Page 2
CONTRIBUTOR:
WITNESS: THE VILLAGE SHOPPING CENTER, A LIMITED
PARTNERSHIP
/s/ Charlotte K. Lewis By: /s/ Lester M. Lewis
Lester M. Lewis
General Partner
Date of execution: April 17 , 1998
<PAGE>
Exhibit 5.8
May 6, 1998
The Village Shopping Center, A Limited Partnership
4801 N. Park Avenue, #1608
Chevy Chase, Maryland 20815
Attn: Mr. Lester Lewis, General Partner
Re: Contribution Agreement for The Village Shopping Center
dated March 24, 1998 as amended by Letter Amendments
dated April 23, 1998 and April 29, 1998 between First
Washington Realty Limited Partnership and The Village
Shopping Center, A Limited Partnership
Gentlemen:
This letter is intended to serve as an amendment to the Contribution
Agreement described above. Notwithstanding any other terms or conditions of the
Contribution Agreement to the contrary, it is expressly agreed as follows: 1.
Pursuant to its due diligence rights under the Contribution Agreement, First
Washington Realty Limited Partnership ("FWRLP") contracted with EMG for, among
other matters, a "Phase II Environmental Assessment" dated April 24, 1998 (the
"Phase II") of The Village Shopping Center (the "Property"). The Phase II
identified the following items of concern: (a) Five out of service heating oil
underground storage tanks (the "Petroleum USTs"); (b) Two out of service dry
cleaning solvent underground storage tanks (the "Solvent USTs"); (c) A release
of petroleum and additives thereto and constituents thereof in the soil on the
Property from one or more of the Petroleum USTs (the "Petroleum Contamination");
and (d) A release of dry cleaning solvents and constituents and break down
products thereof and additives thereto in the soil from one or more of the
<PAGE>
Mr. Lester Lewis, General Partner
The Village Shopping Center, A Limited Partnership
May 6, 1998
Page 2
Solvent USTs or the dry cleaning operations on the Property (the "Solvent
Contamination"). The Petroleum USTs, Solvent USTs, Petroleum Contamination, the
Solvent Contamination and any petroleum, hazardous substances and constituents
and break down products thereof and additives thereto related to the Petroleum
USTs, the Solvent USTs, the Petroleum Contamination and/or the Solvent
Contamination and discovered in the course of the performance of the
Contributor's obligations hereunder are hereinafter referred to collectively as
the "Environmental Concerns". 2. The Village Shopping Center, A Limited
Partnership (the "Contributor") has agreed to take the following actions with
regard to the Environmental Concerns: (a) Petroleum USTs -- The Contributor
shall, within thirty (30) days hereof, subject to reasonable delay for
regulatory approvals or other force majeure, cause the Petroleum USTs and the
contents thereof to be removed from the Property in compliance with all
applicable laws, regulations and ordinances. In the event that any applicable
governmental authority determines that one or more of the Petroleum USTs should
be closed in place due to concerns for the structural integrity of a building or
unreasonable costs to relocate utility lines or otherwise, then any such
Petroleum USTs may be closed in place in compliance with all applicable laws,
regulations and ordinances using concrete slurry or structural foam as the fill
material. (b) Solvent USTs -- The Contributor shall, within thirty (30) days
hereof, subject to reasonable delay for regulatory approvals or other force
majeure, cause the contents of the Solvent USTs to be removed and disposed of
and the Solvent USTs to be closed in place using concrete slurry or structural
foam as the fill material in compliance with all applicable laws, regulations
and ordinances, including sampling requirements and completion of the proper
closure notification and reporting to the Virginia Department of Environmental
Quality ("DEQ"). (c) Petroleum Contamination -- The Contributor has notified DEQ
of the Petroleum Contamination and DEQ will advise the Contributor that a
"pollution complaint number" will be assigned in connection with the Petroleum
Contamination. The Contributor agrees to perform such actions as required by DEQ
pursuant to assess, and remediate and monitor if necessary, the Petroleum
Contamination and other Environmental
<PAGE>
Mr. Lester Lewis, General Partner
The Village Shopping Center, A Limited Partnership
May 6, 1998
Page 3
Concerns related thereto until the issuance of a typical "no further
action" letter by DEQ. (d) Solvent Contamination -- The Contributor has notified
DEQ of the Solvent Contamination, but it is unknown at this time under which
regulatory program DEQ, or EPA if applicable, will accept the release of the
solvents. Regardless of the regulatory program under which the Solvent
Contamination is assessed, and remediated and monitored if necessary, the
Contributor shall assess, remediate and monitor the Solvent Contamination as
required by the applicable regulatory authority until such regulatory authority
issues a typical "no further action" letter, certificate of satisfactory
completion or the equivalent thereof with regard to the Solvent Contamination
and other Environmental Concerns related thereto. (e) The Contributor shall
diligently pursue the actions required hereunder at all times until the
Contributor's obligations are complete at the Contributor's sole cost and
expense. Copies of all correspondence or other documentation received by the
Contributor from DEQ or EPA regarding the Environmental Concerns shall be sent
to FWRLP promptly upon receipt. In the event that the Contributor is not
diligently pursuing its obligations hereunder after fifteen days' written notice
from FWRLP, then, at its option, and upon written notice to the Contributor,
FWRLP shall have the right to take all steps reasonably necessary to complete
the Contributor's obligations hereunder. FWRLP agrees to promptly advise the
Contributor of the steps taken and the progress being made after exercising its
rights pursuant to this Paragraph 2(e). If FWRLP exercises its rights pursuant
to this Paragraph 2(e), the Contributor shall pay all reasonable invoices
received from FWRLP for Costs (as defined in Paragraph 3 below) within twenty
(20) days of receipt thereof. The election by FWRLP under this Paragraph 2(e)
shall not affect or modify the extent of the Contributor's liability hereunder
for the Costs as described below. (f) Each of the parties hereto acknowledges
that (i) Contributor has entered into a Proposal/Contract for Services dated
May 1, 1998 with Apex Environmental, Inc. for the performance of certain work
related to the Petroleum USTs and Solvent USTs, and (ii) Contributor has
received a supplemental letter dated May 1, 1998 from Apex which briefly
summarizes the "likely course of action." The foregoing are subject in
<PAGE>
Mr. Lester Lewis, General Partner
The Village Shopping Center, A Limited Partnership
May 6, 1998
Page 4
their entirety to the terms and conditions of Paragraphs 1 through 4 of
this Amendment to the Contribution Agreement. 3. The Contributor agrees to
indemnify and hold harmless FWRLP and its representatives, agents, successors
(including, without limitation, successors in title to the Property), assigns,
and nominees, from and against all Costs (as hereinafter defined) associated
with addressing the Environmental Concerns as required by Contributor hereunder.
The "Costs" covered by this Agreement shall be deemed to mean all reasonable
attorneys' and consultants' fees, and other costs and expenses reasonably
necessary or appropriate for completing the Contributor's obligations hereunder
for addressing the Environmental Concerns; provided, however, that such costs
shall also include those fees, costs and expenses incurred by FWRLP, but only
those fees, costs and expenses incurred by FRWLP in the event FWRLP exercises
its rights pursuant to Paragraph 2(e) hereof. If the Contributor fails to pay
any invoices for Costs within twenty (20) days of receipt from FWRLP in
accordance with Paragraph 2(e) hereof, FWRLP and/or FWRT shall have the right to
recover any Costs incurred by FWRLP under Paragraph 2(e), dollar-for-dollar,
from the Partnership Units, any stock exchanged for the Partnership Units, and
any distributions or dividends due thereunder. 4. Paragraphs 1, 2 and 3 of this
amendment to the Contribution Agreement (a) shall survive closing thereunder
without limitation and shall terminate upon completion of the Contributor's
obligations hereunder, with the exception of the rights of FWRLP under Paragraph
3 hereof which shall terminate upon the complete payment of all Costs by the
Contributor, and (b shall be binding upon and inure to the benefit of the
parties hereto, and their respective heirs, executors, administrators, personal
and legal representatives, successor and assigns. 5. This will serve as notice
to Contributor that the Board of Directors of First Washington Realty Trust,
Inc. ("FWRT") has approved the Contribution Agreement and the transactions
contemplated thereby as required in Section 8(a)(viii) of the Contribution
Agreement. 6. The outside Closing Date under Section 4 of the Contribution
Agreement is hereby amended to be May 29, 1998, subject to extension as provided
in Section 4; provided, however, that all settlement adjustments under
Section 11 of the Contribution Agreement shall be made effective June 1, 1998.
7. FWRLP hereby acknowledges that its right to terminate the Contribution
Agreement before the end of the Feasibility Period as provided for in
Section 13(b) of the Contribution Agreement has expired.
<PAGE>
Mr. Lester Lewis, General Partner
The Village Shopping Center, A Limited Partnership
May 6, 1998
Page 5
8. Any capitalized term used herein but not otherwise defined herein shall
have the meaning as set forth in the Contribution Agreement. 9. Except as
expressly amended hereby, the Contribution Agreement remains unmodified and
continues in full force and effect. If the foregoing is satisfactory, please
execute and return the enclosed counterpart original of this letter to me as
soon as possible.
Sincerely,
FIRST WASHINGTON REALTY LIMITED
PARTNERSHIP
a Maryland limited partnership
By: First Washington Realty Trust, Inc.,
Its general partner
By:/s/ William J. Wolfe
William J. Wolfe
President
ACKNOWLEDGED AND AGREED
as of May 7, 1998:
THE VILLAGE SHOPPING CENTER,
A LIMITED PARTNERSHIP
By: /s/ Lester M. Lewis
Lester M. Lewis
General Partner
cc: Gary R. Siegel, Esquire (via facsimile 202-537-5505)
Mr. Les Fleisher (via facsimile 301-495-9452)
Jeffrey S. Distenfeld, Esquire
Ms. Judith Fox
<PAGE>
Exhibit 5.9
UNION BANK OF SWITZERLAND
March 20, 1998
First Washington Realty Limited Partnership
4350 East-West Highway
Suite 400
Bethesda, Maryland 20814
Attention: Mr. James Blumenthal
Re: Our $35,500,000 secured revolving loan (the "Loan")
to you made pursuant to a Revolving Credit Agreement
between you and us dated as of January 22, 1998 (the
"Loan Agreement"; capitalized terms used herein
without definition shall have the meanings ascribed
to them in the Loan Agreement)
Dear Sirs:
This is to confirm the agreement between you and us that the Loan Agreement is
amended, effective as of the date hereof, as follows:
1. In Section 1.01:
(a) In the definition of the term "Bid Borrowing Limit",
the figure "Seventeen Million Dollars ($17,000,000)"
is amended to "Twenty
Two Million Dollars ($22,000,000)".
(b) In the definition of the term "Borrowing Base", "(A)"
is inserted between "to" and "the" in the second line
and "(B) less $6,000,000" is added at the end
thereof.
1
<PAGE>
(c) In the definition of the term "Loan Commitment", the
figure "$35,500,000" is amended to "$45,000,000".
(d) The following definition is added:
"Watkins Park" means the property owned by
Borrower located in Prince George's County, Maryland,
together with the Improvements thereon.
(e) The definition of "Improvements" is amended to
add the following:
(7) in the case of Watkins Park, the existing strip
shopping center containing approximately 113,643
SFGLA and known as "Watkins Park Plaza".
(f) The definition of "Property" and "Properties" is
amended to add Watkins Park.
2. In Section 2.08:
(a) The definition of the term "Ratable Loan
Note" is amended to refer to that certain
replacement note from you to us, dated the
date hereof, in the principal amount of
$45,000,000, as the same may be amended,
modified, extended, severed, assigned,
substituted, renewed, replaced or restated
from time to time (the "Replacement Ratable
Loan Note"), which Replacement Ratable Loan
Note shall be in substitution for the
$35,500,000 ratable loan note dated
January 22, 1998. The Replacement Ratable
Loan Note shall evidence the principal
indebtedness evidenced by said $35,500,000
ratable loan note, together with an
additional principal indebtedness in the
amount of $9,500,000.
(b) The definition of Bid Rate Loan Note is
amended to refer to that certain replacement
note from you to Administrative Agent, dated
the date hereof, in the principal amount of
$22,000,000, as the same may be amended,
modified, extended, severed, assigned,
substituted, renewed, replaced or restated
from time to time (the "Replacement Bid Rate
Loan Note"), which Replacement Bid Rate Loan
Note shall be in substitution for the
$17,000,000 bid rate loan note dated
January 22, 1998. The Replacement Bid Rate
Loan Note shall evidence any Bid Rate Loans.
2
<PAGE>
Our obligation to increase and modify the Loan as set forth above shall be
conditioned on our receipt of (i) the Replacement Note, duly executed by you;
(ii) a replacement Guaranty executed by First Washington Realty Trust, Inc.,
(iii) a Mortgage and Indemnity for Watkins Park; (iv) an amendment, duly
executed by you, to each Mortgage, to increase the principal amount thereof to
$45,000,000 and to change the definition of the term "Note" therein to include a
reference to the Replacement Ratable Loan Note and the Replacement Bid Rate Loan
Note, together with such endorsements as we may require to the title policy
insuring each Mortgage; (v) the items set forth in Section 4.01 of the Loan
Agreement with respect to Watkins Park; and (vi) a resolution of the board of
directors of your general partner authorizing you to execute this letter
agreement and the documents contemplated hereby and to enter into the
transactions contemplated hereby and thereby, and an opinion of your counsel
with respect to the transactions contemplated hereby and thereby (each of the
items required by the foregoing clauses (i) through (vi) to be in form and
substance satisfactory to us).
Except as modified hereby, the Loan Agreement and other Loan documents shall
remain unchanged and in full force and effect.
3
<PAGE>
Kindly acknowledge your agreement with the foregoing, and your representation
and warranty that you have no offsets, counterclaims or defenses against us with
respect to the Loan, by signing and returning the enclosed copies of this
letter.
Very truly yours,
UNION BANK OF SWITZERLAND
(New York Branch),
as Lender and as Administrative Agent
By: /s/ Howard Margolis
Name: Howard Margolis
Title: Vice President
Real Estate Finance
By: /s/ Joseph M. Bassil
Name: Joseph M. Bassil
Title: Director
Agreement acknowledged this
20th day of March, 1998.
FIRST WASHINGTON REALTY
LIMITED PARTNERSHIP,
a Maryland limited partnership
By: First Washington Realty Trust, Inc., a
Maryland corporation, general
partner
Attest:
By: /s/ Henry M. Renaud By: /s/ James G. Blumenthal [SEAL]
Name: Henry M. Renaud Name: James G. Blumenthal
Title: Assistant Secretary Title: Executive Vice President
4
<PAGE>
