EXHIBIT 10.53
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is made and entered as the 22nd day of
October, 1996, by and between (i) KINGS PARK ASSOCIATES, a Virginia general
partnership (the "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, Contributor 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
Kings Park Shopping Center located in Springfield, Fairfax County, Virginia, 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, Contributor and FWRLP desire to enter into this Agreement
relating to the contribution by Contributor to FWRLP of the Property in exchange
for cash and 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 Property.
2. Consideration.
(a) In consideration of the Contribution of the Property 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
aggregate amount (cash and Units) calculated as follows: Five Million Seven
Hundred Thousand and 00/100 Dollars ($5,700,00.00) less the outstanding and
unpaid principal balance of the Lutheran 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 sixty percent (60%) of the Consideration Amount by a price per Unit
(the "Unit Price") equal to the average closing price of First
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Washington Realty Trust, Inc. ("REIT") common stock for the fifteen (15)
business days immediately preceding the Closing Date (as defined below), rounded
to the nearest one (1) Unit. The balance of the consideration shall be paid in
cash.
(b) At Closing, the Property shall be contributed to FWRLP
with the Property then being subject to the indebtedness, lien and operation of
the First Trust (as defined below). Contributor 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 dated October 21, 1994 (the "First Trust") from the
Contributor, as debtor, for the benefit of Aid Association for Lutherans, as
secured party (the "Lender"), which First Trust secures an original principal
indebtness of $4,500,000.00 with interest thereon payable over the term thereof
(which ends on November 1, 2014) at a fixed interest rate of 9% per annum, as
evidenced by a Deed of Trust Note from Contributor to Lender ("Note"). The First
Trust and Note and all documents and instruments executed in connection
therewith are collectively referred to as the "Lutheran Loan." The Lutheran Loan
is non-recourse (except for environmental and other standard carve outs) to
Contributor and requires equal monthly installments of principal and interest in
the amount of the $40,488.00 per month. The outstanding principal balance under
the Lutheran Loan as of the date hereof is approximately $4,340,000.00. True and
correct copies of the First Trust and Note are attached hereto as Exhibits L and
M, 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 Property
subject to the Lutheran Loan, and such modifications to the Lutheran Loan as
FWRLP shall determine, in its sole discretion, are necessary (to the extent that
FWRLP determines that modifications are necessary, FWRLP shall so notify
Contributor prior to the end of the Feasibility Period), (ii) confirming that
the Lutheran 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 Lutheran Loan. FWRLP and
Contributor shall cooperate in obtaining the Letter from Lender. FWRLP shall be
responsible for all fees charged by Lender in connection with the assumption of
the Lutheran Loan. At Closing, Contributor shall execute an estoppel certificate
in favor of FWRLP certifying that, to the best knowledge of Contributor, there
is no default, or event of default which with notice or lapse of time, or both,
would constitute a default under the Lutheran Loan. Contributor shall use
commercially reasonable efforts to deliver to FWRLP such Letter from Lender
before the end of the Feasibility Period (as defined below). 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
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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.
3. Deposit.
(a) Within one (1) business day 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 to FWRLP being the
"Acceptance Date") in order to evidence and provide comfort to Contributor with
respect to FWRLP's intention to close hereunder, FWRLP shall deliver to the
Title Company, as escrow agent, a deposit of Fifty Thousand Dollars ($50,000.00
) by check payable to the Commercial Settlements, Inc., 0000 X Xxxxxx, X.X.,
Xxxxxxxxxx, XX 00000 (the "Title Company").
(b) Within two (2) business days after the end of the
Feasibility Period (as defined in Section 13(b)), FWRLP 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.
(c) In the event that FWRLP elects to extend the Closing Date
pursuant to Section 4(b) hereof, then, on the date of such election, FWRLP shall
deliver to the Title Company, as escrow agent, an additional deposit (the
"Extension Deposit") of Twenty-five Thousand Dollars ($25,000.00) by check
payable to the Title Company.
(d) The Initial Deposit, Additional Deposit and the Extension
Deposit and all accrued interest thereon are hereinafter referred to
collectively as the "Deposit." The Title Company will immediately provide
Contributor 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.
(e) In the event that, at any time prior to Closing,
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 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 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.
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(f) 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. 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; provided, however, that if any litigation shall arise
between the Contributor 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 Contributor nor
FWRLP shall have any further right, claim, demand, or action against the Title
Company.
4. Closing.
(a) Closing. Except as otherwise provided in this Agreement,
the Contribution contemplated herein shall be consummated at the "Closing",
which shall take place on the date (the "Closing Date") specified by FWRLP on
not less than ten (10) days notice to Contributor, provided that the Closing
Date shall not be later than forty-five (45) days after the end of the
Feasibility Period. The Closing shall take place at the offices of First
Washington Realty Limited Partnership, 0000 Xxxx-Xxxx Xxxxxxx, Xxxxx 000,
Xxxxxxxx, Xxxxxxxx 00000, or at such other place as may mutually agreed upon by
Contributor and FWRLP.
(b) Extension of Closing. Notwithstanding the provisions
contained in Section 4(a), FWRLP may extend the Closing Date to a date not later
than February 15, 1997 by (i) delivery prior to the date specified as the
Closing Date in Section 4(a) above of the Extension Deposit to the Title Company
as set forth in Section 3(c) above, and (ii) notifying Contributor in writing,
no later than five (5) days before the original Closing Date, of FWRLP's
intention to exercise said right.
5. Representations and Warranties of Contributor. In order to induce
FWRLP to enter into this Agreement and to issue the Common Units in
consideration for the Property, Contributor 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 for to the extent provided in Section 18(m):
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(a) Authority of Contributor. Contributor is a general
partnership duly organized and in good standing under the laws of the
Commonwealth of Virginia. Contributor 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 Contributor are required for such execution or to enable Contributor to
consummate the transactions contemplated hereby. This Agreement is the valid and
binding obligation of Contributor, 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. To the Contributor's knowledge, Contributor 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
Contributor, Contributor has not received notice from any governmental authority
asserting that the Contributor 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. To the knowledge of the
Contributor, the Contributor possesses 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 Contributor, and the requisite
certificates of the fire marshalls or board of fire underwriters have been
issued for the Property. To the best of Contributor's knowledge, the Building
and all related facilities do not rely on any other property in order to comply
with applicable zoning laws.
(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 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) to the knowledge of Contributor, 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;
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(iii) no renewal or expansion options have been
granted to the tenants, except as provided in the Leases;
(iv) to the Contributor's knowledge, 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 Contributor and any tenant has
been completed, and all work and materials have been fully
paid for or will be paid for by Closing and all contributions
to tenants for tenant improvements have been paid in full;
(vii) Contributor has not sent written notice to any
tenant claiming that such tenant is in default, which default
remains uncured, and to Contributor's knowledge, no tenant is
in default under its Lease, except as indicated in Exhibit B
hereto;
(ix) no action or proceeding instituted against
Contributor by any tenant is presently pending in any court;
and
(x) no security deposits are in the possession of
Contributor 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 FWRLP as of the Closing Date. 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 as Exhibit D are true and
correct copies of tax bills issued by any applicable Federal, state or local
governmental authority to Contributor 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
value against loss or damage sustained as a result of fire or other casualty and
Contributor has rent loss insurance in place for the Property. Contributor shall
maintain in full force and effect all such policies until the Closing Date and
shall cause its insurer to name
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FWRLP as an additional insured as a contract party on its rent loss policy with
respect to the Property. Contributor shall cancel such policies as of the
Closing Date (with Contributor being entitled to any reimbursement of any
advance premiums paid by Contributor), unless a loss in rental income has
resulted from a casualty prior to Closing for which the Contributor 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. Contributor hereby represents, warrants
and covenants to FWRLP that, ordinary wear and tear excepted, to its knowledge
there is no material defect in the condition of the Property, the structural
elements thereof or the mechanical systems therein. FWRLP acknowledges that the
acreage and square footage descriptions of the Property set forth in the
Recitals hereto are approximate, and that the consideration to be delivered to
Contributor pursuant to this Agreement is not subject to offset in the event
such descriptions are inaccurate.
(i) Tenant Estoppel. Contributor represents and warrants that
it shall use reasonable efforts to obtain tenant estoppel letters in the form of
Exhibit F from all tenants of the Property.
(j) Condemnation Proceedings. No condemnation or eminent
domain proceedings are pending or, to the best of Contributor's knowledge,
threatened against the Property or any part thereof, and Contributor has made no
commitments to and has received no notice, oral or written, 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. No litigation is pending or, to the best of
Contributor's knowledge, currently threatened, including administrative actions
or orders relating to governmental regulations, affecting the use, operation or
ownership of the Property or any part thereof or Contributor's right to
contribute the Property as contemplated herein, except as set forth on Exhibit G
hereof.
(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 Contributor is
a party or by which the Contributor or the Property is bound, (ii) violate any
restriction, requirement, covenant or condition to which the Contributor is
subject or by which Contributor 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.
(m) Entrances. To the best of Contributor's knowledge, access
to any
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portion of the Land is not obtained from adjoining public roads by means of
easements, rights-of-way or licenses across lands or premises not included
within the Property.
(n) Separate Tax Lot and Subdivision. To the best of
Contributor's knowledge, each parcel of Land is the subject of a separate
subdivision, and each parcel of Land is assessed for tax purposes as one or more
separate and distinct parcels.
(o) Hazardous Waste. Contributor has 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 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. To the best of 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 asbestos. Without
intending to limit the foregoing representations and warranties, FWRLP
acknowledges that the Property has been leased to a dry cleaner, a service
station, various restaurants and other tenants that may use regulated products
in the normal course of their business and that Contributor does not control or
actively monitor such use.
(p) Operating Statements. Attached hereto as Exhibit J are
true and correct operating statements of the Property for fiscal years 1993,
1994, 1995 and 1996 (through September 30, 1996). To Contributor'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.
(q) Utilities. To the best of Contributor's 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.
(r) Personal Property. Attached hereto as Exhibit K is a true,
correct and complete inventory of all personal property ("Personal Property"),
if any, owned by Contributor and used in the management, maintenance and
operation of the Property (other than trade fixtures or personal property of
tenants).
(s) Leasing Commissions. To the best of Contributor's
knowledge, there are, and at Closing shall be, no outstanding or contingent
leasing commissions or fees payable with respect to the Property.
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(t) Securities Law Matters.
(i) Contributor and each of its partners who receive
Units is an "accredited investor" as such term is defined
under Rule 501 promulgated under the Securities Act of 1933,
as amended (the "Securities Act");
(ii) The general partners (the "Partners") of
Contributor are Xxxxxx X. Xxxx, Xxxxxxxx Xxxxxxxx and the
Estate of Xxxxxxx X. Xxxxxxxx;
(iii) Xxxxxx X. Xxx has his primary residence in the
State of Maryland and Xxxxxxxx Xxxxxxxx has his primary
residence in the District of Columbia;
(iv) Contributor will hold the Units for its own
account for investment purposes only and not with a view to
distribution and does intend to distribute or resell the
Units, except as expressly set forth at the end of this
Section 5(t) below;
(v) Taking into account the personnel and resources
Contributor can practically bring to bear on the acquisition
of the Units in FWRLP contemplated hereby, 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 it deems
relevant in making an informed decision to acquire the Units
(including the Confidential Information Statement, as
supplemented through the date hereof, attached hereto as
Exhibit N which contains the First Amended and Restated
Agreement of Limited Partnership of FWRLP and any Amendments
thereto (the "Partnership Agreement");
(vi) 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;
(vii) Contributor acknowledges that the Units to be
issued must be held 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;
(viii) Prior to the issuance of the Units,
Contributor will execute all
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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;
(ix) Contributor acknowledges and agrees that,
notwithstanding Section 8.6 of the 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 the date of issuance to Contributor;
and
FWRLP hereby agrees that, at Closing, Contributor may transfer the
Units to Xxxxxx X. Xxx and Xxxxxxxx Xxxxxxxx, or may request FWRLP to issue the
Units directly to Xxxxxx X. Xxx and Xxxxxxxx Xxxxxxxx, provided that the
Partners receiving such Units shall acknowledge and agree to be bound (on a
several basis with respect to matters pertaining to such partners) by all of the
provisions of this Section 5(t) and any other provision of this Agreement
relating to the Units (in lieu of Contributor), and by accepting such Units
hereby agree to be so bound. The Estate of Xxxxxxx Xxxxxxxx shall not have any
direct or indirect liability for any of the representations set forth in Section
5(t).
6. 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 the Property. Contributor
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 date hereof.
(b) Licenses. Contributor shall use its best 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.
(d) Obligations as to Leases. Contributor shall not, without
FWRLP's prior written consent, 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, Contributor shall
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not apply all or any part of the security deposit of any tenant unless such
tenant has vacated the Property or is material default under its lease.
(e) Obligations as to Lutheran Loan. The Contributor shall
not, without FWRLP's prior written consent, (i) prepay the Lutheran Loan, or
(ii) modify or amend any of the documents evidencing or securing the Lutheran
Loan or otherwise entered into in connection with the Lutheran Loan. Contributor
shall make all payments required to be made under the Lutheran Loan when due,
shall perform all obligations under the Lutheran Loan and shall keep the
Lutheran Loan free from default.
7. Representations, Warranties and Covenants of FWRLP. In order to
induce Contributor to enter into this Agreement and to contribute the Property
to FWRLP, FWRLP and (solely as to the representations and warranties contained
in Sections 7(h), (j), (k) and (n) First Washington Realty Trust, Inc. (the
"REIT") hereby make the following representations, warranties and covenants,
each of which is material and shall together with all covenants, agreements and
indemnities set forth or made pursuant to this Agreement survive Closing to the
extent provided in Section 18(m).
(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. Subject to the approval of the Board of Directors of REIT as set forth
in Section 8(a) (viii), FWRLP 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 the approval of the Board of
Directors of REIT as set forth in Section 8(a) (viii), 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 on the Closing Date, FWRLP shall accept
the Property subject to such vacancy, provided that the vacancy was not
permitted or created by Contributor 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 Contributor at Closing (together with this
Agreement, the "FWRLP
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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 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
Contributor, as holder of the Units, nor any subsequent transferees of the Units
from Contributor, 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
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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.
(l) Anti-Dilution: 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 Contributor 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 Contributor would have been entitled to receive if the
Closing had been held immediately before such reorganization,
merger consolidation, sale or transfer and Contributor 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
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securities or otherwise, shall change the Units into the same
or a different number of securities of any other class or
classes, at Closing Contributor shall have the right to
receive such number or kind of securities as would have been
issuable to Contributor as the result of such change as if
Contributor 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 Contributor 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.
(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, Contributor shall have
the right to acquire upon Closing, in addition to the number
of Units to which Contributor is entitled hereunder, and
without payment of any additional consideration therefor, the
amount of such other or additional Units or other securities
or property (other than cash) of FWRLP that Contributor would
hold on the Closing Date had Contributor 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 or involuntarily sell or otherwise dispose of the
Property (other than (i) pursuant to a condemnation or (ii) in connection with a
like-kind exchange for a property with debt having a principal amount not less
than that encumbering the Property at such time) for a period of five (5) years
following the Closing Date, unless FWRLP indemnifies and agrees to hold harmless
Contributor from any adverse 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 Contributor with
respect to such condemnation proceeds.
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8. 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 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 FWRLP 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 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),
Contributor, at or prior to Closing, shall cause to
be satisfied and released of record all mortgages,
deeds of trust, financing statements, judgements,
liens and matters that may be satisfied by payment of
a liquidated sum and that first appears of record
after the date hereof, other than the First Trust;
provided, however, that if the amount thereof exceeds
$200,000 and was not voluntarily created by the
Contributor subsequent to the effective date of the
Title Commitment, Contributor needs 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 13(a) and 15 hereof,
and the Deposit shall be returned to FWRLP.
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(iv) Leasing Brokerage/Property Management
Agreements. Contributor shall have terminated any and all
leasing brokerage agreements (excluding leasing brokerage
agreements relating solely to contingent brokerage commissions
for leases previously entered into which do not constitute
violations of Contributor's representation and warranty under
subsection 5(s)) 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
Contributor), shall be the sole responsibility of Contributor.
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 in connection with any management or other
fees due under any such property management agreements or
under those leasing agreements which Contributor is obligated
to terminate as provided above outstanding and/or contingent
leasing commissions or fees or management fees.
(v) Performance by Contributor. Contributor shall
have complied in all material respects with and not be in
material breach of any of its covenants or obligations under
this Agreement.
(vi) 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,
Purchaser may elect to terminate this Agreement by giving
Seller written notice thereof on or before the end of the
Feasibility Period in which event the Deposit and any interest
thereon shall be returned to Purchaser and neither party shall
have any further obligations or 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
Contributor in writing, and if Contributor does 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 16 hereof, neither party shall have any further obligations or
liabilities to the other (but the indemnities provided in Section 13(a) and 15
hereof shall survive in all events); 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 Contributor 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.
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(c) Anything to the contrary notwithstanding, the parties to
this Agreement expressly agree that the obligations of Contributor pursuant to
this Agreement are conditioned upon the satisfaction, in the reasonable
discretion of Contributor, of the following conditions:
(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) Contributor and its Partners shall be released
by the First Trustholder in writing from all liabilities they
may have on account of or in any way in connection with the
Lutheran Loan.
In the event any of the foregoing conditions are not satisfied as of the Closing
Date, Contributor shall notify FWRLP in writing, and if FWRLP does not correct
such failure (if valid) within five (5) business days after such notice, then
Contributor, in its sole discretion, (A) may avail itself of the remedies
provided in Paragraph 16(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 any further obligation or liabilities to the other (but the
indemnities provided in Sections 13(a) and 15 hereof shall survive in all
events).
9. Contributor's Deliveries. Contributor shall execute, acknowledge and
deliver to FWRLP at the Closing the following documents, each dated on the
Closing Date:
(a) a special warranty deed, in form and substance
satisfactory to FWRLP, and Title Company, conveying good and marketable fee
simple title to the Property, free and clear of all liens, encumbrances,
easements and restrictions of every nature and description, except for the
Permitted Exceptions;
(b) a xxxx of sale which shall convey to FWRLP good title to
all the Property, free and clear of all liens and encumbrances;
(c) an affidavit setting forth that all of Contributor's
representations and warranties are true and correct in all material respects on
the Closing Date;
(d) an assignment of the Leases, together with all originally
executed Leases, and the security deposits shall be paid to FWRLP;
(e) an assignment of Licenses and Service Contracts, if any,
which are
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to be assumed by FWRLP at FWRLP's request, 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, to
the extent that any exist and are in the possession of Contributor, which
obligation shall survive Closing;
(h) Tenant estoppel letters in the form attached hereto as
Exhibit F from Giant Food, CVS/Pharmacy, King Park Hardware and First Union Bank
and tenants leasing in the aggregate at least 70% of the remaining leased space
in the Property dated within thirty (30) days of Closing, which tenant estoppel
letters shall not contradict the information set forth in Exhibit B hereto or
the Contributor's representations and warranties in Section 5(d) hereof.
(i) an original letter executed by Contributor advising the
tenants of the Property of the contribution of the Property to FWRLP and
directing that rents and other payments thereafter be sent to FWRLP or as FWRLP
may direct;
(j) possession of the Property in the condition required by
this Agreement, and the keys therefore;
(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 required by
the Title Company in connection with the issuance of its title insurance policy
to FWRLP pursuant to Section 8(a)(iii) or as shall be reasonably requested by
counsel to FWRLP 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 FWRLP;
(n) an amendment to the Partnership Agreement of FWRLP, in a
form reasonably acceptable to FWRLP and Contributor, admitting the Contributor
(or the Partners receiving Units, if applicable) as a limited partner(s) of
FWRLP and issuing the Units to Contributor (or the Partners who are to receive
Units, if applicable) computed in accordance with Section 2 herein; and
(o) any other documents required by this Agreement to be
delivered by
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Contributor.
10. FWRLP's Performance. At Closing, simultaneously with the deliveries
of Contributor pursuant to the provisions of Section 9 above, FWRLP shall pay
the cash and issue the Units to Contributor in the manner specified in Section
2, 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 item:
(a) Executed copies of such documents as Lutheran may
reasonably require in connection with the assumption of the Lutheran Loan (the
"Lutheran Assumption Documents"), including, if required by Lutheran, an
indemnity agreement with regard to hazardous wastes and toxic substances on the
Property (and a release from Lutheran of all obligations which Contributor
and/or any related entity may have with respect to the Lutheran Loan).
11. 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 shall be borne equally by Contributor and
FWRLP, but any taxes and costs/incurred in connection with the modification of
the Lutheran Loan shall be borne solely by FWRLP. 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.
(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
Contributor at the Closing. All other special assessments or
similar charges shall be adjusted as of the Closing Date.
(iii) Rent and Security Deposits. Rent for the month
of, and any month after, Closing collected by Contributor
prior to Closing shall be adjusted as of the date of Closing.
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
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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 arrearages due as of the Closing Date
(including, without limitation, unpaid Additional Rent
attributable to periods prior to Closing); provided, however,
that at Contributor's election (i) FWRLP will institute suit
at the request of Contributor to collect such arrearages
provided all costs (including attorney's fees) in connection
therewith are paid by Contributor, or (ii) FWRLP shall assign
to Contributor all rights with respect to such arrearages and
Contributor may pursue collection thereof. FWRLP agrees to
cooperate with Contributor in ascertaining any amounts due,
permitting Contributor to avail itself of any audit rights
with respect to any tenants and otherwise assisting
Contributor in collection of such arrearages. 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 (if
any), 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.
(iv) Debt Service on the Lutheran Loan. The amount of
interest payable under the Lutheran Loan shall be apportioned
as of 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 and other liabilities incurred in the
ordinary course of business 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
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of the final xxxx or upon completion of final computations.
Contributor 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 FWRLP. Contributor 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.
(c) Distributions. The quarterly distributions payable to
Contributor on the Units for the first record date after Closing shall be pro
rated based upon the number of days within the quarter occurring after Closing.
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
Contributor. 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 Two Hundred Thousand Dollars ($200,000.00) or more or to the
extent that Giant Food, CVS/Pharmacy, Kings Park Hardware, First Union Bank or a
tenant(s) of the Property (occupying in excess of 2,000 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; 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 ten (10) 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 the indemnities provided in Sections
13(a) and 15 hereof shall survive such termination) and the Deposit shall be
refunded to FWRLP. If FWRLP does not timely 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
Contributor's share of the proceeds of fire or other casualty insurance and rent
insurance proceeds payable with respect to the period after Closing or of the
condemnation award, as the case may be, and Contributor shall have no obligation
to repair or restore the Property; provided, however, that the cash portion and
the Unit portion (based on the Unit Price) of the Consideration (i.e., on a
40/60 basis) shall be reduced by an amount equal to the sum of (a) the
"deductible" applied by the Contributor's insurance policy, or (b) if the
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, provided FWRLP shall have previously elected not to
terminate this Agreement or has no such right of termination.
13. 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
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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'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 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, at FWRLP's cost, 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 Contributor and hold
Contributor 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.
(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 provisions of Section 13(a) above. In the event that any of such tests,
investigations and/or studies indicate, in FWRLP's sole discretion, that FWRLP's
plans for the Property would not be feasible, then FWRLP shall have the right,
at its sole election on or before the expiration of 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
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, other than the indemnities provided in Sections 13(a)
and 15, FWRLP shall return to Contributor all information provided by
Contributor, shall deliver to Contributor the written reports of any and all
studies and tests performed by FWRLP, shall keep confidential all information
disclosed by Contributor or otherwise obtained by FWRLP and shall not use any
such information to the detriment of Contributor.
(c) Audit. Contributor hereby agree to allow books and records
related to the Property to be audited (at FWRLP's sole expense) prior to Closing
at the Contributor's office 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, provided Contributor shall
incur out of pocket costs or expenses in connection therewith. FWRLP shall
provide Contributor with prior notice of such audit.
14. Indemnifications.
(a) Indemnification by Contributor. Subject to the provisions
of Section
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18(m), 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 FWRLP, 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 Contributor or its Partners 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, and relating to the Contributor or the Property, or its operations. To
the extent an indemnification obligation under clause (i) above arises out of a
breach by any Partner of the several representations and warranties set froth in
Section 5(t) hereof, only the Partner responsible for such breach shall be
obligated to indemnify FWRLP hereunder.
(b) Indemnification by FWRLP. Subject to the provisions of
Section 18(m), FWRLP hereby indemnifies and agrees to defend and hold harmless
Contributor 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 Contributor or its Partners 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 Property or its operations or pertaining to tenant security
deposits delivered to FWRLP, adjusted at Closing or set forth on Exhibit B
(whether or not adjusted).
15. 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, and Contributor and FWRLP 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.
16. 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 and all
interest thereon to Contributor as full
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and complete liquidated damages, and as the exclusive and sole right and remedy
of Contributor, 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
Section 13(a) and 15 shall nevertheless remain in full force and effect.
(b) Contributor's Default. Except for any breaches waived in
writing by FWRLP, if Contributor breaches any of its covenants or obligations
under this Agreement at or prior to Closing or has failed, refused or is 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
notify Contributor of such breach in writing and, should Contributor not cure
same within five (5) business days of receipt of such default notice, 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 Contributor 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 and/or (v) if and only if the breach, failure or refusal is due to
the wrongful act or omission of Contributor, maintain an action for damages
against Contributor in an amount not to exceed $200,000 (exclusive of court
costs and reasonable attorneys' fees). In the event this Agreement is
terminated, the indemnities set forth in Sections 13(a) and 15 shall
nevertheless remain in full force and effect.
(c) The provisions of Sections 16(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 18(m) and to
the following sentence. The foregoing notwithstanding, as to any such breach or
default other than a breach of the warranty and representation contained in
Section 5(t), any execution by FWRLP for damages awarded to FWRLP against
Contributor or its Partners shall not exceed $1,400,000 in the aggregate (and
the liability of each of the Partners of Contributor for any such damages shall
be limited to his/its pro rata share of the lesser of the loss or the $1,400,000
limitation in accordance with his/its respective current ownership interest in
Contributor).
(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.
17. 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
-24-
Contributor 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 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 Contributor's 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
17 shall survive Closing.
18. Miscellaneous Provisions.
(a) Completeness and Modification. This Agreement (together
with Exhibits A to N 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 that this Agreement may be
assigned without Contributor's consent to an entity controlled by, controlling
or under common control with FWRLP, without Contributor's consent. 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 Commonwealth of Virginia.
-25-
(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 its 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 FWRLP 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 Contributor hereunder shall be deemed a joint and several warranty,
covenant, undertaking and agreement of each person and entity collectively
comprising the Contributor.
(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 FWRLP:
First Washington Realty Limited Partnership
0000 Xxxx-Xxxx Xxxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxxxxx, Esq.
Telecopy: (000) 000-0000
(ii) if to Contributor:
Kings Park Associates
0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxx
Telecopy: (000) 000-0000
-26-
with a copy to:
Xxxxxx X. Xxxxxx, Esq.
Xxxxxx, Flyer & Xxxxx
0000 X Xxxxxx, X.X., Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Telecopy: (000) 000-0000
and
Xxxxxx X. Xxxx, Esq.
Robins, Kaplan, Xxxxxx and Xxxxxx
0000 X Xxxxxx, X.X.
Xxxxx 0000
Xxxxxxxxxx, X.X. 00000
Telecopy: (000) 000-0000
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. 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, 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. All of the covenants, indemnities,
representations and warranties of this Agreement shall survive Closing and shall
thereafter remain in effect, except as follows:
(i) the covenants, representations and warranties
contained in Section 5(a) through (r) and Section 7(a) through
(f) and (h) 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 indemnifications and other covenants and
agreements contained in Sections 14(a) and (b) shall terminate
one (1) year after the Closing Date, except as to claims as to
which a party hereto has asserted a right of indemnification
within said period; and
-27-
(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.
19. Tax Matters.
(a) FWRLP covenants that, during the period beginning on the
Closing Date and ending five 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 Lutheran Loan as of the Closing Date
(other than for (i) scheduled amortization of the mortgage loan, (ii) any
principal prepayment once each calendar year in an amount not to exceed ten
percent (10%) of the then outstanding principal balance of the mortgage loan,
and (iii) non-scheduled principal curtailments of the mortgage loan due to
application required by mortgage lender of insurance or condemnation proceeds
beyond FWRLP's reasonable control.
(b) If (1) FWRLP intends to make a principal prepayment of the
mortgage loan pursuant to clause (ii) or (iii) under subsection (a) above, or
(2) FWRLP intends to refinance the mortgage loan secured by the Property after
the fifth anniversary of the Closing Date, then FWRLP will give each Partner who
receives Units at least ten (10) days' prior written notice thereof, and each
such Partner, at his written election but with no obligation to do so, may
affirmatively make a 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.
(c) A Bottom Guaranty Election shall state that, if FWRLP
shall be in default with respect to the mortgage loan securing the Property, 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 end of the
fiscal year during which FWRLP is liquidated. For example, if the amount of the
mortgage loan were $4,000,000.00 and the amount of other Contributor Limit were
$400,000.00, the capital contribution would 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 $400,000.00
-28-
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
By: /s/
------------------------- -----------------------------
[Assistant Secretary] Xxxxxxx X. Xxxxx
President
[Corporate Seal]
Date of execution: October 22 , 1996
CONTRIBUTOR:
WITNESS: KINGS PARK ASSOCIATES
By: /s/
-------------------------------------
Xxxxxx X. Xxx
General Partner
By: /s/
--------------------------------------
Xxxxxxxx Xxxxxxxx
General Partner
By: Estate of Xxxxxxx Xxxxxxxx
General Partner
By: /s/
---------------------------------
Name: Xxxxxx X. Xxxx
Title: Personal Representative
Date of execution: October 23 , 1996
-29-
First Washington Realty Trust, Inc. joins herein solely for the purpose
of making the representations, warranties and covenants contained in Sections
7(d), 7(e) and 17 hereof.
FIRST WASHINGTON REALTY
WITNESS: TRUST, INC.
By: /s/
-------------------------- ---------------------------------
Xxxxxxx X. Xxxxx
President
Date of execution: October 22, 1996
-30-
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.
COMMERCIAL SETTLEMENTS, INC.
By: /s/
------------------------ -----------------------
Xxxxxx X. Xxxxx
Vice President
Date: October 29, 1996
-31-
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. Intentionally Omitted
EXHIBIT F. Form of Tenant Estoppel Section 5(i)
EXHIBIT G. Litigation Section 5(k)
EXHIBIT H. Intentionally Omitted
EXHIBIT I. Intentionally Omitted
EXHIBIT J. Operating Statements Section 5(p)
EXHIBIT K. Personal Property Section 5(r)
EXHIBIT L. Mortgage Section 2(c)(i)
EXHIBIT M. Note Section 2(c)(i)
EXHIBIT N. Confidential Information Statement Sections 5(t)(v), 7(e)
[Contributor to Attach Foregoing at Acceptance of this Agreement]
-32-
EXHIBIT A
LEGAL DESCRIPTION OF LAND
-33-
EXHIBIT B
LEASES AND RENT SCHEDULE
-34-
EXHIBIT C
SERVICE CONTRACTS
-35-
EXHIBIT D
TAX BILLS
-36-
EXHIBIT E
Intentionally Omitted
-37-
EXHIBIT F
Form of Tenant Estoppel
ESTOPPEL CERTIFICATE
, 199
First Washington Realty Limited Partnership
0000 Xxxx-Xxxx Xxxxxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Re: Kings Park Shopping Center
Lease dated , 199 , with [Name of Tenant]
-------------------------------------------------------------
Gentlemen:
Please be advised that the undersigned tenant hereby certifies as of
the date hereof as follows with respect to the Lease:
The Lease is unmodified and in full force and effect except for modifications,
listed by number and date on Exhibit A attached hereto.
Name of Tenant:
Description of Leased Premises:
Date of Commencement of Lease:
Date of Termination of Lease:
Options to Renew:
Base Rental: Annual Rental of $ , payable monthly in advance.
---------------
Percentage Rent: ____% of Gross Receipts over $__________.
Tax Charges: pro rata: ___ yes ___ no. ($ payable monthly in advance.)
---------
Common Area Maintenance Charges: pro rata: ___ yes ___ no. ($
-
payable monthly in advance.)
Tenant in possession of the premises under the Lease?: Yes
Amount of rent paid in advance: $
Amount of Security Deposit: $
Compliance with Construction Requirements: Landlord has complied with all
-i-
construction requirements of Tenant, and Tenant has accepted all of the leased
premises under the Lease.
Tenant has not made any claims against Landlord and has no knowledge of any
uncured default on the part of Landlord (If there is knowledge of any uncured
default, please note and attach separate sheet).
Tenant's Right of Premature Termination or Option to Renew: Tenant has no right
to premature termination and no right or option to renew or extend the term
beyond its present term and no option to lease additional space, except as
expressly set forth in the Lease.
Tenant's Right to Purchase: Tenant has no option or right in the nature of a
right of first refusal to purchase or otherwise acquire any interest in the
leased premises.
Anything in the Lease to the contrary notwithstanding, Tenant agrees that it
will not terminate the Lease or withhold any rents due thereunder because of
Landlord's default in the performance thereof until tenant has first given
notice to Landlord and to the holder of any deed of trust specifying the nature
of any such default by Landlord and allowing the said holder, at its option,
thirty (30) days after date of such notice to cure the default, or a reasonable
period of time in addition thereto if circumstances are such that the default
cannot be cured within a thirty (30) day period.
Tenant agrees to subordinate the Lease to any deed of trust on the leased
premises.
In the event of foreclosure, Tenant agrees to attorn to the purchaser of the
leased premises at the foreclosure sale.
TENANT:
By:
Name:
Title:
STATE OF )
) ss:
COUNTY OF )
Signed and sealed in my presence this day of , 199 .
---- ---------------------
Notary Public
[SEAL]
My Commission Expires:
-ii-
EXHIBIT G
LITIGATION
NONE
-iii-
EXHIBIT H
Intentionally Omitted
-iv-
EXHIBIT I
Intentionally Omitted
-v-
EXHIBIT J
OPERATING STATEMENTS AND BUDGET
-vi-
EXHIBIT K
PERSONAL PROPERTY
NONE
-vii-
EXHIBIT L
MORTGAGE
-viii-
EXHIBIT M
NOTE
-ix-
EXHIBIT N
CONFIDENTIAL INFORMATION STATEMENT
-x-
