EXHIBIT 10.18
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CONTRIBUTION AGREEMENT
dated as of July 18, 2003
between
FIRST POTOMAC MANAGEMENT, INC.
as Contributor,
and
FIRST POTOMAC REALTY INVESTMENT LIMITED PARTNERSHIP
a Delaware limited partnership,
as Acquiror
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TABLE OF CONTENTS
PAGE
TABLE OF CONTENTS
ARTICLE I DEFINITIONS; RULES OF CONSTRUCTION........................................................ 1
1.1 Definitions................................................................................... 1
1.2 Rules of Construction......................................................................... 2
ARTICLE II CONTRIBUTION AND ACQUISITION; PAYMENT OF CONSIDERATION................................... 3
2.1 Contribution and Acquisition.................................................................. 3
2.2 Contribution.................................................................................. 3
2.3 Partnership Agreement......................................................................... 3
ARTICLE III CONTRIBUTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS................................... 4
3.1 Organization and Power........................................................................ 4
3.2 Authority..................................................................................... 4
3.3 Authorization, No Violations and Notices...................................................... 4
3.4 Interests..................................................................................... 5
3.5 Brokerage Commission.......................................................................... 5
3.6 The Contributed Entity........................................................................ 5
3.7 Tax Matters with respect to Contributed Entity................................................ 5
3.8 Contracts and Agreements...................................................................... 6
3.9 Compliance with Existing Laws................................................................. 6
3.10 Insurance..................................................................................... 6
3.11 Litigation.................................................................................... 6
3.12 Organizational Documents...................................................................... 6
3.13 Bankruptcy with respect to Contributed Entity................................................. 7
3.14 Investment Representations.................................................................... 7
3.15 Tax Matters with Respect to Contributor....................................................... 7
3.16 Noncontravention.............................................................................. 7
3.17 Survival...................................................................................... 8
ARTICLE IV ACQUIROR'S REPRESENTATIONS, WARRANTIES AND COVENANTS...................................... 8
4.1 Organization and Power........................................................................ 8
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TABLE OF CONTENTS
(continued)
PAGE
4.2 Noncontravention.............................................................................. 8
4.3 Litigation.................................................................................... 8
4.4 Bankruptcy.................................................................................... 8
4.5 No Brokers.................................................................................... 8
4.6 Valid Issuance of Partnership Units........................................................... 9
ARTICLE V CONDITIONS TO OBLIGATIONS OF ACQUIROR..................................................... 9
5.1 Contributor's Deliveries...................................................................... 9
5.2 Representations, Warranties and Covenants; Obligations of Contributor; Certificate............ 9
5.3 No Injunction................................................................................. 9
ARTICLE VI CONDITIONS TO OBLIGATIONS OF CONTRIBUTOR.................................................. 9
6.1 Acquiror's Deliveries......................................................................... 9
6.2 Representations, Warranties and Covenants; Obligations of Acquiror; Certificate............... 9
ARTICLE VII CLOSING; ADDITIONAL COVENANTS............................................................. 10
7.1 Closing....................................................................................... 10
7.2 Contributor's Deliveries...................................................................... 10
7.3 Acquiror's Deliveries......................................................................... 10
7.4 Fees and Expenses; Closing Costs.............................................................. 10
7.5 Right to Distribute Cash...................................................................... 10
7.6 Right to Distribute Assets.................................................................... 11
7.7 Acknowledgement and Release................................................................... 11
ARTICLE VIII LIABILITY OF ACQUIROR; INDEMNIFICATION BY CONTRIBUTOR; RESTRICTION ON DISPOSITION,
TERMINATION RIGHTS........................................................................ 11
8.1 Liability of Acquiror......................................................................... 11
8.2 Indemnification by Contributor................................................................ 12
8.3 Indemnity Procedures.......................................................................... 12
8.4 Termination................................................................................... 13
8.5 Effect of Termination......................................................................... 14
ARTICLE IX MISCELLANEOUS PROVISIONS.................................................................. 14
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TABLE OF CONTENTS
(continued)
PAGE
9.1 Completeness; Modification.................................................................... 14
9.2 Assignments................................................................................... 14
9.3 Successors and Assigns........................................................................ 14
9.4 Days.......................................................................................... 14
9.5 Governing Law; Jurisdiction................................................................... 14
9.6 Counterparts.................................................................................. 15
9.7 Severability.................................................................................. 15
9.8 Notices....................................................................................... 15
9.9 Incorporation by Reference.................................................................... 15
9.10 Survival...................................................................................... 15
9.11 Further Assurances............................................................................ 16
9.12 No Partnership................................................................................ 16
9.13 Time of Essence............................................................................... 16
9.14 Confidentiality............................................................................... 16
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CONTRIBUTION AGREEMENT
PREAMBLE
THIS CONTRIBUTION AGREEMENT ("Agreement"), dated as of the 18th day of
July, 2003, between First Potomac Management, Inc., a Delaware corporation (the
"Contributor"), and First Potomac Realty Investment Limited Partnership, a
Delaware limited partnership (the "Acquiror"), provides:
ARTICLE I
DEFINITIONS; RULES OF CONSTRUCTION
1.1 Definitions. The following terms shall have the indicated
meanings:
"Acquiror" shall have the meaning set forth in the Preamble.
"Act of Bankruptcy" shall mean if a party hereto or any general partner
thereof shall (a) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee or liquidator of itself or of all
or a substantial part of its property, (b) admit in writing its inability to pay
its debts as they become due, (c) make a general assignment for the benefit of
its creditors, (d) file a voluntary petition or commence a voluntary case or
proceeding under the Federal Bankruptcy Code (as now or hereafter in effect),
(e) be adjudicated bankrupt or insolvent, (f) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency, reorganization,
winding-up or composition or adjustment of debts, (g) fail to controvert in a
timely and appropriate manner, or acquiesce in writing to, any petition filed
against it in an involuntary case or proceeding under the Federal Bankruptcy
Code (as now or hereafter in effect), or (h) take any corporate or partnership
action for the purpose of effecting any of the foregoing; or if a proceeding or
case shall be commenced, without the application or consent of a party hereto or
any general partner thereof, in any court of competent jurisdiction seeking (1)
the liquidation, reorganization, dissolution or winding-up, or the composition
or readjustment of debts, of such party or general partner, (2) the appointment
of a receiver, custodian, trustee or liquidator or such party or general partner
or all or any substantial part of its assets, or (3) other similar relief under
any law relating to bankruptcy, insolvency, reorganization, winding-up or
composition or adjustment of debts, and such proceeding or case shall continue
undismissed; or an order (including an order for relief entered in an
involuntary case under the Federal Bankruptcy Code, as now or hereafter in
effect) judgment or decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of 90 consecutive
days.
"Agreed Value" shall have the meaning set forth for such term in the
Partnership Agreement.
"Assignment and Assumption Agreements" shall mean, collectively, those
certain assignment and assumption agreements by and between the Contributor and
the Acquiror, in substantially the form of Exhibit A hereto.
1
"Authorizations" shall mean all licenses, permits and approvals
required by any governmental or quasi-governmental agency, body or officer for
the ownership, operation and use of the business of the Contributed Entity or
any part thereof.
"Closing" shall mean the Closing of the contribution and acquisition of
the Contributed Interests pursuant to this Agreement.
"Closing Date" shall mean the date on which the Closing occurs.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Shares" shall mean common shares of beneficial ownership of the
REIT.
"Consideration" shall have the meaning set forth in Section 2.2 hereof.
"Contributed Entity" shall mean FPM Management, L.L.C.
"Contributor" shall have the meaning set forth in the Preamble.
"Contributor's Interest" means all of the capital interests and not
less than 90% of the profits interests in the Contributed Entity.
"Fair Market Value" shall mean, as of any day, (i) the average of the
closing price for the previous 10 trading days of the Common Shares (or, in the
case of Units, the Common Shares into which such Units are convertible) on the
principal securities market, exchange or trading system on which the Common
Shares are regularly traded or (ii) if the Common Shares are not then traded on
a securities market, exchange or system the fair market value of the Common
Shares as determined in good faith by the Board of Trustees of the REIT (or, in
the case of Units, the Common Shares into which such Units are convertible).
"Governmental Authority" shall mean any commission, department or body
of any municipality, township, city, county, state or Federal governmental unit
having jurisdiction over any of the assets of the Contributed Entity or the
ownership, management, operation or use thereof.
"Insurance Policies" shall mean those certain policies of insurance
described on Schedule 3.9 hereto.
"Partnership Agreement" means the Amended and Restated Partnership
Agreement of Acquiror, in substantially the form of Exhibit B hereto, to be
executed and delivered at the Closing.
"Partnership Units" shall mean units of limited partnership in the
Acquiror.
"REIT" shall mean First Potomac Realty Trust, a Maryland real estate
investment trust.
1.2 Rules of Construction. The following rules shall apply to the
construction and interpretation of this Agreement:
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(a) Singular words shall connote the plural number as
well as the singular and vice versa, and the masculine shall include the
feminine and the neuter.
(b) All references herein to particular articles,
sections, subsections, clauses or exhibits are references to articles, sections,
subsections, clauses or exhibits of this Agreement.
(c) The table of contents and headings contained herein
are solely for convenience of reference and shall not constitute a part of this
Agreement nor shall they affect its meaning, construction or effect.
(d) Each party hereto and its counsel have reviewed and
revised (or requested revisions of) this Agreement, and therefore any usual
rules of construction requiring that ambiguities are to be resolved against a
particular party shall not be applicable in the construction and interpretation
of this Agreement or any exhibits hereto.
ARTICLE II
CONTRIBUTION AND ACQUISITION;
PAYMENT OF CONSIDERATION
2.1 Contribution and Acquisition. The Contributor agrees, at the
Closing, to contribute, assign and transfer the Contributor's Interest to the
Acquiror and the Acquiror agrees to accept and acquire the Contributor's
Interest in exchange for the Consideration and in accordance with the terms and
conditions set forth herein. The parties agree that the Acquiror has the right
to designate an alternate entity or person to take title to the Contributor's
Interest at the time of Closing.
2.2 Contribution.
(a) The consideration (the "Consideration") for the
contribution of the Contributed Entity shall consist of 233,333 Partnership
Units.
(b) The aggregate Agreed Value of the Contributor's
Interest for purposes of the Partnership Agreement shall be Three Million Five
Hundred Thousand Dollars ($3,500,000).
(c) The parties agree that the transfer of the
Contributor's Interest to the Acquiror in exchange for Partnership Units shall
be treated on their respective federal income tax returns as a contribution of
the Contributor's Interests to the Acquiror in exchange for a partnership
interest in the Acquiror that qualifies as a tax-free contribution under Section
721 of the Code, but the Acquiror makes no representation or warranty with
respect to such tax treatment.
2.3 Partnership Agreement. The Contributor shall, upon receipt of
the Partnership Units, become a limited partner of the Acquiror and shall
execute the Partnership Agreement at the Closing.
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ARTICLE III
CONTRIBUTOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS
To induce the Acquiror to enter into this Agreement and to purchase the
Contributed Interests, the Contributor hereby makes the representations and
warranties set forth below solely to the extent such representations and
warranties relate to such Contributor and (ii) jointly and severally the
representations and warranties set forth below:
3.1 Organization and Power. The Contributor is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Delaware and has all corporate power and all governmental licenses,
authorizations, consents and approvals to carry on its business as now conducted
and to enter into and perform its obligations under this Agreement and any
document or instrument required to be executed and delivered on behalf of the
Contributor hereunder.
3.2 Authority. The Contributor has the requisite power and
authority to execute and deliver this Agreement and any other document or
instrument required to be executed and delivered hereunder, to perform his
obligations and to consummate the transactions contemplated hereby and thereby.
3.3 Authorization, No Violations and Notices.
(a) This Agreement has been duly executed by the
individuals set forth on Schedule I and is a valid and binding obligation
enforceable against them in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation or similar laws relating to the
enforcement of creditors' rights and remedies or by other equitable principles
of general application.
(b) Neither the execution, delivery, or performance by
the Contributor of this Agreement, nor the consummation of the transactions
contemplated hereby and under any document executed pursuant hereto will:
(i) violate, conflict with, result in a breach
of any provision of, constitute a default (or an event that,
which, with notice or lapse of time or both, would constitute
a default) under, result in the termination of, accelerate the
performance required by, or result in a right of termination
or acceleration, or the creation or imposition of any lien,
security interest, charge, or encumbrance upon any of the
properties or assets of the Contributed Entity under any of
the terms, conditions, or provisions of any note, bond,
mortgage, indenture, deed of trust, license, lease, agreement,
or other instrument, or obligation to which the Contributed
Entity is a party, by which it may be bound or affected, or to
which it may be subject; or
(ii) violate any judgment, ruling, order, writ,
injunction, decree, statute, rule, or regulation applicable to
the Contributed Entity or its property or assets.
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3.4 Interests. The Contributor's Interest will be free and clear
of all liens and encumbrances on the Closing Date and the Contributor has good,
merchantable title thereto and the right to convey its interests in accordance
with the terms of this Agreement. Upon delivery of the Assignment and Assumption
Agreements to the Acquiror at Closing, good valid and merchantable title to the
Contributor's Interests, free and clear of all liens and encumbrances, will pass
to the Acquiror.
3.5 Brokerage Commission. The Contributor has not engaged the
services of, nor has it or will it or Acquiror become liable to, any real estate
agent, broker, finder or any other person or entity for any brokerage or
finder's fee, commission or other amount with respect to the transactions
described herein on account of any action by the Contributor.
3.6 The Contributed Entity.
(a) The Contributed Entity is a limited liability company
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all requisite powers necessary to carry on its
business as now conducted.
(b) Except for the Contributor, no party has any interest
in the Contributed Entity or the right or option to acquire any interest in the
Contributed Entity. The parties acknowledge that, subsequent to the date of this
Agreement and prior to the Closing, the Contributed Entity will issue a profits
interest in the Contributed Entity to certain employees of the Contributed
Entity.
3.7 Tax Matters with respect to Contributed Entity. The
Contributed Entity has filed when due (or due on extension) all federal income
tax returns and applicable state and local income tax returns required to be
filed with the United States Government and with all states and political
subdivisions thereof where any such returns are required to be filed and where
the failure to file such return or report would subject the Contributed Entity
or its managers or members to any material liability or penalty. All tax returns
and reports filed by the Contributed Entity are true and correct in all material
respects. All taxes imposed by the United States, or by any foreign country, or
by any state, municipality, subdivision, or instrumentality of the United States
or of any foreign country or by any other taxing authority, which are (i) due
and payable by the Contributed Entity, (ii) not yet due and payable but are
attributable to the Contributed Entity's operations during a taxable period
ending prior to the Closing Date or (iii) not yet due and payable but are
attributable, in the case of a taxable period that begins before and ends after
the Closing Date, to the Contributed Entity's operations during the portion of
such taxable period ending on the Closing Date (as determined in accordance with
a hypothetical closing of the books), have been paid in full or adequately
provided for by reserves shown in the Contributed Entity's records and books of
account and in the Contributed Entity's financial information. The Contributed
Entity is not currently delinquent in the payment of any tax, assessment, or
governmental charge (except for tax assessments or governmental charges being
contested) and has no tax deficiency or claim outstanding, assessed, or proposed
in writing. The Contributed Entity has not obtained or received any extension of
time (beyond the Closing Date) for the assessment of deficiencies for any years
or waived or extended the statute of limitations for the determination or
collection of any tax. To the Contributor's knowledge, no unassessed tax
deficiency is proposed or threatened against the Contributed Entity. There are
no tax liens,
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whether imposed by the United States, any state, local, or other taxing
authority, outstanding against the Contributed Entity or its assets. The
federal, state, and local tax returns of the Contributed Entity have not been
audited, nor has any such entity received any notice of any federal state, or
locate audit.
3.8 Contracts and Agreements. Except as set forth on Schedule 3.7,
there is no loan agreement, service agreement, management contract, maintenance
agreement, guarantee, note, bond, indenture or other debt instrument, lease or
other contract to which the Contributed Entity is a party or by which any of its
assets are bound which is not terminable on thirty (30) days or less notice
without penalties. The Contributed Entity is not in default under any agreement
listed on Schedule 3.7 with respect to (i) an amount in excess of $1,000, or
(ii) any other material term thereof.
3.9 Compliance with Existing Laws. The Contributed Entity
possesses all Authorizations, each of which is valid and in full force and
effect, and no provision, condition or limitation of any of the Authorizations
has been breached or violated which could reasonably be expected to have a
material adverse effect on the Contributed Entity. The Contributed Entity has
not misrepresented or failed to disclose any material relevant fact in obtaining
all Authorizations, and the Contributor has no knowledge of any change in the
circumstances under which those Authorizations were obtained that result in
their termination, suspension, modification or limitation.
3.10 Insurance. All of the Contributed Entity's Insurance Policies,
as listed on Schedule 3.9, are valid and in full force and effect, all premiums
for such policies were paid when due and all future premiums for such policies
(and any replacements thereof) shall be paid by the Contributed Entity on or
before the due date therefor. The Contributed Entity shall pay all premiums on,
and shall not cancel or voluntarily allow to expire, any of the Contributed
Entity's Insurance Policies prior to the Closing Date unless such policy is
replaced, without any lapse of coverage, by another policy or policies providing
coverage at least as extensive as the policy or policies being replaced. The
Contributed Entity shall name the Acquiror as an additional insured on each of
the Contributed Entity's Insurance Policies.
3.11 Litigation. There is no action, suit, claim or proceeding
pending or known to be threatened in writing against or affecting the
Contributed Entity or its assets or the Contributor in any court, before any
arbitrator or before or by any governmental agency which (a) in any manner
raises any question affecting the validity or enforceability of this Agreement
or seeks restraint, prohibition, damages or other relief in connection with this
Agreement or any other material agreement or instrument to which the Contributed
Entity is a party or by which it is bound and that is or is to be used in
connection with, or is contemplated by, this Agreement, (b) could reasonably be
expected to materially and adversely affect the business, financial position or
results of operations of the Contributed Entity, or (c) could reasonably be
expected to materially and adversely affect the ability of the Contributed
Entity or the Contributor to perform their respective obligations hereunder, or
under any document to be delivered pursuant hereto.
3.12 Organizational Documents. The Certificate of Formation of the
Contributed Entity is in full force and effect and has not been modified or
supplemented since July 18, 2003,
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and no fact or circumstance has occurred that, by itself or with the giving of
notice or the passage of time or both, would constitute a default thereunder.
3.13 Bankruptcy with respect to Contributed Entity. No Act of
Bankruptcy has occurred with respect to the Contributor or Contributed Entity.
3.14 Investment Representations. The Contributor represents and
warrants to the Acquiror:
(a) The Contributor is an "accredited investor" as
defined in Rule 501(a) under the Securities Act, has such knowledge,
sophistication and experience in business and financial matters so as to be
capable of evaluating the merits and risks of the prospective investment in the
Partnership Units, has so evaluated the merits and risks of such investment, is
able to bear the economic risk of such investment and, at the present time, is
able to afford a complete loss of such investment. The Contributor is aware of
the Acquiror's business affairs and financial condition and has acquired
sufficient information about Acquiror to reach an informed and knowledgeable
decision to acquire the Partnership Units. The Contributor is electing to
receive the Partnership Units for investment for its own account and not with a
view to any distribution thereof within the meaning of the Securities Act.
(b) The Contributor understands that the Partnership
Units and the Common Shares issuable upon redemption of the Partnership Units
are "restricted securities" under applicable federal and state securities laws
and that, pursuant to these laws, the Contributor must hold such securities
indefinitely unless they are registered with the Securities and Exchange
Commission and qualified by state authorities, or an exemption from such
registration and qualification requirements is available.
(c) The Contributor acknowledges that it has received,
reviewed, been given the opportunity to ask questions of representatives of the
Acquiror and the REIT regarding the Partnership Agreement.
(d) The Contributor understands that the Partnership
Units and the Common Shares issuable upon redemption of the Partnership Units
shall not have been registered under the Securities Act as of the Closing Date.
3.15 Tax Matters with Respect to Contributor. The Contributor
represents and warrants that it has obtained from its own counsel or tax
accountant advice regarding the tax consequences of (i) the transfer of the
Contributor's Interest to the Acquiror and the receipt of Partnership Units as
consideration therefor, (ii) the Contributor's admission as a partner of the
Acquiror, and (iii) any other transaction contemplated by this Agreement. The
Contributor further represents and warrants it has not relied on the Acquiror,
the REIT or their representatives or counsel for such advice.
3.16 Noncontravention. The execution and delivery of, and the
performance by the Contributor of its obligations under this Agreement do not
and will not contravene, or constitute a default under, any provision of
applicable law or regulation or any agreement, judgment, injunction, order,
decree or other instrument binding upon the Contributor, or result in the
creation of any lien or other encumbrance on any asset of the Contributor.
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3.17 Survival. Each of the representations, warranties and
covenants contained in this Article III and its various subparagraphs are
intended for the benefit of the Acquiror and may be waived in whole or in part,
by the Acquiror, but only by an instrument in writing signed by the Acquiror.
Each of said representations and warranties shall survive the Closing for twelve
(12) months; provided, that the representations and warranties in Sections 3.4,
3.6 and 3.14 shall survive until the expiration of the applicable statute of
limitations. No investigation, audit, inspection, review or the like conducted
by or on behalf of the Acquiror shall be deemed to terminate the effect of any
such representations, warranties and covenants, it being understood that the
Acquiror has the right to rely thereon and that each such representation,
warranty and covenant constitutes a material inducement to the Acquiror to
execute this Agreement and to close the transaction contemplated hereby and to
pay the Consideration to the Contributor.
ARTICLE IV
ACQUIROR'S REPRESENTATIONS, WARRANTIES AND COVENANTS
To induce the Contributor to enter into this Agreement and to sell the
Contributed Entity, the Acquiror hereby makes the following representations and
warranties:
4.1 Organization and Power. The Acquiror is a limited partnership
duly organized, validly existing and in good standing under the laws of the
State of Delaware, and has all partnership powers and all governmental licenses,
authorizations, consents and approvals to carry on its business as now conducted
and to enter into and perform its obligations under this Agreement and any
document or instrument required to be executed and delivered on behalf of the
Acquiror hereunder.
4.2 Noncontravention. The execution and delivery of this Agreement
and the performance by the Acquiror of its obligations hereunder do not and will
not contravene, or constitute a default under, any provisions of applicable law
or regulation, the Acquiror's partnership agreement or any agreement, judgment,
injunction, order, decree or other instrument binding upon the Acquiror or
result in the creation of any lien or other encumbrance on any asset of the
Acquiror.
4.3 Litigation. There is no action, suit or proceeding, pending or
known to be threatened, against or affecting the Acquiror in any court or before
any arbitrator or before any Governmental Authority which (i) in any manner
raises any question affecting the validity or enforceability of this Agreement
or any other agreement or instrument to which the Acquiror is a party or by
which it is bound and that is to be used in connection with, or is contemplated
by, this Agreement, (ii) could reasonably be expected to materially and
adversely affect the business, financial position or results of operations of
the Acquiror, or (iii) could reasonably be expected to materially and adversely
affect the ability of the Contributor to perform its obligations hereunder, or
under any document to be delivered pursuant hereto.
4.4 Bankruptcy. No Act of Bankruptcy has occurred with respect to
the Acquiror.
4.5 No Brokers. The Acquiror has not engaged the services of, nor
is it or will it become liable to, any real estate agent, broker, finder or any
other person or entity for any brokerage or finder's fee, commission or other
amount with respect to the transaction described herein.
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4.6 Valid Issuance of Partnership Units. The Partnership Units to
be issued to the Contributor hereunder, when issued and delivered in accordance
with the terms of this Agreement for the consideration expressed herein, will be
duly and validly issued, and will be free of restrictions on transfer except as
provided for in the Partnership Agreement and under applicable state and federal
securities laws.
ARTICLE V
CONDITIONS TO OBLIGATIONS OF ACQUIROR
5.1 Contributor's Deliveries. The Contributor shall have delivered
or caused to be delivered to the Acquiror, as the case may be, on or before the
Closing Date, all of the documents and other information required of Contributor
pursuant to Section 7.2.
5.2 Representations, Warranties and Covenants; Obligations of
Contributor; Certificate. All of the Contributor's representations and
warranties made in this Agreement shall be true and correct in all material
respects as of the date hereof and as of the Closing Date as if then made
(except with respect to representations and warranties which are made as of a
specific date), there shall have occurred no material adverse change in the
financial condition of the Contributed Entity since the date hereof, the
Contributor shall have performed and complied in all material respects with all
covenants and other obligations under this Agreement required by this Agreement
to be so performed or complied with by the Contributor at or prior to the
Closing and the Contributor shall have executed and delivered to the Acquiror at
Closing a certificate to the foregoing effect.
5.3 No Injunction. On the Closing Date, there shall be no
effective injunction, writ, preliminary restraining order or other order issued
by a court of competent jurisdiction restraining or prohibiting the consummation
of the transactions contemplated hereby.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF CONTRIBUTOR
6.1 Acquiror's Deliveries. The Acquiror shall have delivered or
caused to be delivered to the Contributor, as the case may be, on or before the
Closing Date, all of the documents and other information required of Acquiror
pursuant to Section 7.3.
6.2 Representations, Warranties and Covenants; Obligations of
Acquiror; Certificate. All of the Acquiror's representations and warranties made
in this Agreement shall be true and correct in all material respects as of the
date hereof and as of the Closing Date as if then made (except with respect to
representations and warranties which are made as of a specific date), there
shall have occurred no material adverse change in the financial condition of the
Acquiror since the date hereof, the Acquiror shall have performed and complied
with in all material respects with all covenants and other obligations under
this Agreement required by this Agreement to be so performed or complied with by
the Contributor at or prior to the Closing and the Acquiror shall have executed
and delivered to the Contributor at Closing a certificate to the foregoing
effect.
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ARTICLE VII
CLOSING; ADDITIONAL COVENANTS
7.1 Closing. Closing shall be held at a location that is mutually
acceptable to the parties.
7.2 Contributor's Deliveries. At Closing, the Contributor shall
deliver or cause to be delivered to Acquiror all of the following instruments,
each of which shall have been duly executed and, where applicable, acknowledged
on behalf of the Contributor and shall be dated as of the Closing Date:
(a) The certificate required by Section 5.2.
(b) The Partnership Agreement, executed by the
Contributor.
(c) The Assignment and Assumption Agreements.
(d) Certified copies of the Contributed Entity's
Organizational Documents.
(e) Such proof as the Acquiror may reasonably require
with respect to Contributor's compliance with the bulk sales laws or similar
statutes.
(f) All books, records, operating reports, appraisal
reports, files and other materials in the Contributor's possession or control
which are necessary in the Acquiror's discretion to maintain continuity of
operation of the business of the Contributed Entity.
(g) Any other document or instrument reasonably requested
by the Acquiror or required hereby.
7.3 Acquiror's Deliveries. At Closing, the Acquiror shall pay,
deliver or cause to be delivered to the Contributor the following:
(a) The Consideration as set forth in Section 2.2.
(b) The certificate required by Section 6.2.
(c) The Assignment and Assumption Agreements.
(d) Any other document or instrument reasonably requested
by the Contributor or required hereby.
7.4 Fees and Expenses; Closing Costs. The Acquiror shall pay all
fees, expenses and closing costs relating to the transactions contemplated by
this Agreement.
7.5 Right to Distribute Cash. Any cash held by the Contributed
Entity may be distributed to the Contributor at any time at or prior to the
Closing.
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7.6 Right to Distribute Assets. The Contributor may cause all or
any of the assets set forth on Schedule 7.6 to be distributed or transferred to
any Person at any time at or prior to the Closing.
7.7 Acknowledgement and Release.
(a) The Contributor acknowledges that the terms of this
Agreement, including without limitation the Consideration, were negotiated at
arm's length among the officers of the REIT, in its capacity as the general
partner of the Acquiror, and the Contributor and that the Consideration
represents full, fair and adequate consideration for the Contributor's Interests
contributed hereunder. The Contributor acknowledges that it has carefully
reviewed the terms of this Agreement and has had the opportunity to retain
counsel.
(b) The Contributor, on behalf of itself, its successors,
heirs and assigns, hereby releases and forever discharges the REIT, the Acquiror
and the Contributed Entity, and each of their respective individual, joint or
mutual, past, present and future officers, directors, general partners,
Affiliates, stockholders, controlling persons, successors and assigns
(individually, a "Releasee" and collectively, "Releasees") from any and all
claims, demands, proceedings, causes of action, orders, obligations, contracts,
agreements, debts and liabilities whatsoever, whether known or unknown,
suspected or unsuspected, both at law and in equity, which the Contributor or
any of its respective successors, heirs or assigns now has, have ever had or may
hereafter have against the respective Releasees arising contemporaneously with
or prior to the Closing Date or on account of or arising out of any matter,
cause or event occurring contemporaneously with or prior to the Closing Date,
including, but not limited to, any rights to indemnification or reimbursement
from any Releasee, whether pursuant to contracts or otherwise and whether or not
relating to claims pending on, or asserted after, the Closing Date; provided,
however, that nothing contained herein shall operate to release any obligations
arising under this Agreement or any agreement, certificate or instrument
executed in connection with this Agreement.
(c) The Contributor hereby irrevocably covenants to
refrain from, directly or indirectly, asserting any claim or demand, or
commencing, instituting or causing to be commenced, any proceeding of any kind
against any Releasee, based upon any matter purported to be released hereby.
(d) If any provision of this Section 7.7 is held invalid
or unenforceable by any court of competent jurisdiction, the other provisions of
this Section 7.7 will remain in full force and effect. Any provision of this
Section 7.7 held invalid or unenforceable only in part or degree will remain in
full force and effect to the extent not held invalid or unenforceable.
ARTICLE VIII
LIABILITY OF ACQUIROR; INDEMNIFICATION BY CONTRIBUTOR;
RESTRICTION ON DISPOSITION, TERMINATION RIGHTS
8.1 Liability of Acquiror. Except for any obligation expressly
assumed or agreed to be assumed by the Acquiror hereunder and in the Assignment
and Assumption Agreements, the Acquiror does not assume any obligation of the
Contributor or any liability for claims arising out of any occurrence prior to
Closing.
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8.2 Indemnification by Contributor. The Contributor shall
indemnify and hold harmless the Acquiror, from and against any and all claims,
costs, penalties, damages, losses, liabilities and expenses (including
reasonable attorneys' fees) ("Losses") that may at any time be incurred by the
Acquiror, whether before or after Closing, as a result of any breach of the
representations, warranties, covenants or obligations of the Contributor set
forth herein or in any other document delivered hereunder by the Contributor.
Notwithstanding the foregoing, the Contributor will not be liable for any Loss
relating to the Contributed Entity to the extent that the amount of all Losses
relating to the Contributed Entity exceed the Fair Market Value of the
Consideration on the Closing Date. Notwithstanding the foregoing, no claim may
be made for indemnification hereunder with respect to any breach of a
representation, warranty or covenant on and after the date such representation,
warranty or covenant no longer survives as provided in Section 3.16 or 9.10.
8.3 Indemnity Procedures.
(a) In the event that the Acquiror shall sustain a Loss
against which Acquiror is indemnified under this Agreement, Acquiror shall
notify the Contributor in writing of any such Loss so sustained. The Contributor
agrees to pay Acquiror the amount of such Loss so sustained within thirty (30)
days after transmittal of such notice, subject to its right to contest any
claim, as hereinafter provided in Section 8.3(b) hereof;
(b) The Acquiror shall promptly notify the Contributor of
the existence of any claim, demand, or other matter involving liabilities to
third parties to which the Contributor's indemnification obligations would
apply; provided, that the failure to notify the Contributor will not relieve the
Contributor of any liability except to the extent that the Contributor
demonstrate that the defense of such claim, demand or matter is prejudiced by
the Acquiror's failure to give such notice. The Acquiror shall give the
Contributor a reasonable opportunity to participate in the defense of the same
or prosecute such action to conclusion or settlement satisfactory to the
Acquiror at the Contributor's own expense and with counsel of the Contributor's
own selection so long as the Contributor diligently conducts such defenses to a
final conclusion such that (i) no compromise or settlement of such claims may be
effected by the Contributor without the Acquiror's consent (which shall not be
unreasonably withheld, conditioned or delayed) unless (A) there is no finding or
admission of violation of any law or any violation of the rights of any person
or entity and no effect on any other claims that may be made against the
Acquiror, and (B) the sole relief provided is monetary damages that are paid in
full by the Contributor; and (ii) the Acquiror will not have liability with
respect to any compromise or settlement of such claims effected without its
consent and the Acquiror shall receive a full release; provided, that the
Acquiror shall at all times also have the right to fully participate in the
defense at its owns expense; provided, however that the control of such defense
shall rest primarily with the Contributor. If the Contributor shall, within a
reasonable amount of time after said notice, fail to defend, the Acquiror shall
have the right, but not the obligation, to undertake the defense of, and to
compromise or settle (exercising reasonable business judgment) the claim or
other matter on behalf, for the account, and at the risk and expense of the
Contributor. Except as provided in the preceding sentence, the Acquiror shall
not compromise or settle the claim or other matter without the prior written
consent of the Contributor. If the claim is one that cannot by its nature be
defended solely by the Contributor, the Acquiror shall make available all
information and assistance that the Contributor may reasonably request, provided
that any associated expenses
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shall be paid by the Contributor. Notwithstanding the above, if the Acquiror
determines in good faith that there is a reasonable probability that such a
claim, demand or matter may adversely affect it or its affiliates other than as
a result of monetary damages for which it is entitled to indemnification under
this Agreement, the Acquiror may by notice to the Contributor hire its own
counsel at Contributor's expense and/or assume the exclusive right to defend,
compromise or settle such demand, claim or matter, but if Acquiror assumes
exclusive right to defend, the Contributor shall not be bound by any
determination of any demand, claim or matter so defended for the purposes of
this Agreement or any compromise or settlement affected without the consent of
the Contributor (which may not be unreasonably delayed, conditioned or
withheld).
(c) If the Contributor contests or challenges any claim
or action asserted against Acquiror referred to in this Section 8.3, they shall
do so at their own cost and expense, holding Acquiror harmless from all costs,
fees, expenses, debts, liabilities and charges in connection with such contest,
shall diligently defend against any such claim, and shall hold Acquiror's
business and assets free and harmless from any attachment, execution, judgment,
lien or other legal process.
(d) Any indemnification payments made pursuant to this
Article VIII hereof may be paid, at the option of the Contributor, in cash or
Partnership Units. Any Partnership Units used to make an indemnification payment
shall be deemed to have a per unit value equal to the Fair Market Value;
provided, that, if the Contributor disagrees with such value, Contributor shall
have the right to challenge the value by submitting such challenge in writing to
the Acquiror within 15 days from the date the Contributor received notice of the
Acquiror's determination. Any dispute, controversy or claim that cannot be
resolved by the parties arising out of or relating to this Section 8.3(d) shall
be settled by binding arbitration in accordance with the Commercial Arbitration
Rules of the American Arbitration Association ("AAA"), and judgment upon the
award rendered by the arbitrator may be entered in any court having jurisdiction
thereof. The arbitration shall be held in Wilmington, Delaware, or in such other
location as the parties may mutually agree upon. The arbitration will be
conducted before a panel of three arbitrators, with one arbitrator named by each
party and the third named by the two party-appointed arbitrators, or (if they
should fail to agree on the third) by the AAA. The arbitrators may not award
non-monetary or equitable relief of any sort. They shall have no power to award
punitive damages or any other damages not measured by the prevailing party's
actual damages. All aspects of the arbitration shall be treated as confidential.
Neither the parties nor the arbitrators may disclose the existence, content or
results of the arbitration, except as necessary to comply with legal or
regulatory requirements. Before making any such disclosure, a party shall give
written notice to all other parties and shall afford such parties a reasonable
opportunity to protect their interests. The non-prevailing party shall pay all
expenses related to or arising out of such arbitration proceeding, including
reasonable attorneys' fees.
8.4 Termination. This Agreement may be terminated at any time
prior to the Closing, notwithstanding any prior approvals relating thereto:
(a) by mutual written consent of the Acquiror and the
Contributor;
(b) by Acquiror if a material breach of any provision of
this Agreement has been committed by the Contributor and such breach has not
been waived by Acquiror;
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(c) by the Contributor if a material breach of any
provision of this Agreement has been committed by Acquiror and such breach has
not been waived by the Contributor;
(d) by Acquiror if any condition in Article V has not
been satisfied as of the Closing Date of if satisfaction of such a condition by
such date is or becomes impossible (other than through the failure of Acquiror
to comply with its obligations under this Agreement); and Acquiror has not
waived such condition on or before such date; or
(e) the Contributor if any condition in Article VI has
not been satisfied as of the Closing Date or if satisfaction of such a condition
by such date is or becomes impossible (other than through the failure of the
Contributor to comply with its obligations under this Agreement), and the
Contributor has not waived such conditions in on or before such date.
8.5 Effect of Termination. In the event of Termination of this
Agreement pursuant to Section 8.4, this Agreement shall become null and void and
there shall be no liability on the part of any party hereto under this
Agreement.
ARTICLE IX
MISCELLANEOUS PROVISIONS
9.1 Completeness; Modification. This Agreement constitutes the
entire agreement between the parties hereto with respect to the transactions
contemplated hereby and supersedes all prior discussions, understandings,
agreements and negotiations between the parties hereto. This Agreement may be
modified only by a written instrument duly executed by the parties hereto.
9.2 Assignments. The Acquiror may assign its rights hereunder to
any affiliate of Acquiror without the consent of the Contributor. No such
assignment shall relieve the Acquiror of any of its obligations and liabilities
hereunder.
9.3 Successors and Assigns. This Agreement shall be binding upon,
inure to the benefit of, and be enforceable by the respective successors and
permitted assigns of the parties hereto.
9.4 Days. If any action is required to be performed, or if any
notice, consent or other communication is given, on a day that is a Saturday or
Sunday or a legal holiday in the jurisdiction in which the action is required to
be performed or in which is located the intended recipient of such notice,
consent or other communication, such performance shall be deemed to be required,
and such notice, consent or other communication shall be deemed to be given, on
the first business day following such Saturday, Sunday or legal holiday. Unless
otherwise specified herein, all references herein to a "day" or "days" shall
refer to calendar days and not business days.
9.5 Governing Law; Jurisdiction. This Agreement and all documents
referred to herein shall be governed by and construed and interpreted in
accordance with the laws of the State of Delaware. Subject to Section 8.3(b)
hereof, the parties hereto irrevocably consent to the jurisdiction of the
federal and state courts located in the State of Maryland in any suit or
proceeding based on or arising under this Agreement and irrevocably agree that
any and all
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claims arising out of this Agreement or related to the transactions contemplated
by this Agreement shall be determined exclusively in such courts. The parties
hereto irrevocably waive the defense of an inconvenient forum to the maintenance
of such suit or proceeding.
9.6 Counterparts. To facilitate execution, this Agreement may be
executed in as many counterparts as may be required. It shall not be necessary
that the signature on behalf of both parties hereto appear on each counterpart
hereof. All counterparts hereof shall collectively constitute a single
agreement.
9.7 Severability. If any term, covenant or condition of this
Agreement, or the application thereof to any person or circumstance, shall to
any extent be invalid or unenforceable, the remainder of this Agreement, or the
application of such term, covenant or condition to other persons or
circumstances, shall not be affected thereby, and each term, covenant or
condition of this Agreement shall be valid and enforceable to the fullest extent
permitted by law.
9.8 Notices. All notices, requests, demands and other
communications hereunder shall be in writing and shall be delivered by hand,
transmitted by facsimile transmission, sent prepaid by Federal Express (or a
comparable overnight delivery service) or sent by the United States mail,
certified, postage prepaid, return receipt requested, at the addresses and with
such copies as designated below. Any notice, request, demand or other
communication delivered or sent in the manner aforesaid shall be deemed given or
made (as the case may be) when actually delivered to the intended recipient.
If to the Contributor: First Potomac Management, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
If to the Acquiror: First Potomac Realty Investment Limited Partnership
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Or to such other address as the intended recipient may have specified in a
notice to the other party. Any party hereto may change its address or designate
different or other persons or entities to receive copies by notifying the other
party in a manner described in this Section.
9.9 Incorporation by Reference. All of the exhibits attached
hereto are by this reference incorporated herein and made a part hereof.
9.10 Survival. Except as provided in Section 3.16 hereof, all of
the representations and warranties of the Contributor and the Acquiror made in
this Agreement shall survive for a period of twelve (12) months following
Closing, and shall not merge into any document or instrument executed and
delivered in connection herewith.
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9.11 Further Assurances. The Contributor and the Acquiror each
covenant and agree to sign, execute and deliver, or cause to be signed, executed
and delivered, and to do or make, or cause to be done or made, upon the written
request of the other party, any and all agreements, instruments, papers, deeds,
acts or things, supplemental, confirmatory or otherwise, as may be reasonably
required by either party hereto for the purpose of or in connection with
consummating the transactions described herein.
9.12 No Partnership. This Agreement does not and shall not be
construed to create a partnership, joint venture or any other relationship
between the parties hereto except the relationship of Contributor and Acquiror
specifically established hereby.
9.13 Time of Essence. Time is of the essence with respect to every
provision hereof.
9.14 Confidentiality. Contributor shall keep the existence and
terms of this Agreement strictly confidential, except to the extent disclosure
is compelled by law, and then only to the extent of such compulsion.
[Remainder of Page Intentionally Left Blank]
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IN WITNESS WHEREOF, the Contributor and the Acquiror have duly executed
this Agreement as of the date first written above.
ACQUIROR:
FIRST POTOMAC REALTY INVESTMENT
LIMITED PARTNERSHIP,
a Delaware limited partnership
By: First Potomac Realty Trust, its sole general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Chief Executive Officer
CONTRIBUTOR
FIRST POTOMAC MANAGEMENT, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: President
EXHIBIT A
Assignment and Assumption Agreement
EXHIBIT B
Amended and Restated Limited Partnership Agreement
