CONTRIBUTION AGREEMENT
THIS AGREEMENT (the “Agreement”)
made and entered into as of the 6 th
day of December, 2006 (the “Effective Date) by and among Duke
Realty Limited Partnership (“Duke”), an Indiana limited
partnership, the Owning Entities (as defined below), Quantico Real
Estate LLC (the “Company”), a Delaware limited
liability company and Belbrook Realty Corporation
(“Belbrook”), a Delaware corporation.
NOW, THEREFORE, in
consideration of One Dollar ($1.00), the covenants set forth in
this Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1.
Background :
(a)
The Company . The Company was formed in the State of
Delaware on November 16, 2006 and has qualified to do business in
the Commonwealth of Virginia. Duke and Belbrook intend to
enter into that certain Operating Agreement (the “Operating
Agreement”) relating to the Company, in the form attached
hereto as Exhibit B .
(b)
The Owning Entities .
(i)
Westfields Buildings, LLC (“Westfields Buildings”) is a
Delaware limited liability company, whose sole member is WTM Master
Building, LLC (“WTM Master Building”), the sole member
of which is Duke. The member interest in Westfields Buildings
is referred to as the “Westfields Buildings Member
Interest.”
(ii)
Westfields Liberty II, LLC (“Westfields II”) is a
Delaware limited liability company, the sole member of which is
Westfields Buildings. The member interest in Westfields II is
referred to as the “Westfields II Member
Interest.”
(iii)
Westfields II is the owner of property known as Liberty Center II
more particularly described in Exhibit C .
(iv)
Westfields Liberty III, LLC (“Westfields III”) is a
Delaware limited liability company, the sole member of which is
Westfields Buildings. The
1
member interest in
Westfields III is referred to as the “Westfields III Member
Interest.”
(v)
Westfields III is the owner of property known as Liberty Center III
more particularly described in Exhibit D.
(vi)
Westfields Stonecroft 4805, LLC (“Westfields 4805”) is
a Delaware limited liability company, whose sole member is
Westfields Buildings. The member interest in Westfields 4805
is referred to as the “Westfields 4805 Member
Interest”.
(vii)
Westfields 4805 is the owner of property known as 4805 Stonecroft
Boulevard more particularly described in Exhibit E
.
(viii)
Westfields Stonecroft 4803, LLC (“Westfields 4803”) is
a Delaware limited liability company whose sole member is
Westfields Buildings. The member interest in Westfields 4803
is referred to as the “Westfields 4803 Member
Interest.”
(ix)
Westfields 4803 is the owner of property known as 4803 Stonecroft
Boulevard more particularly described in Exhibit F
.
(x)
Westfields Buildings II, LLC (“Westfields Buildings
II”) is a Delaware limited liability company whose sole
member is WTM Master Building. The member interest in
Westfields Buildings II is referred to as the “Westfields
Buildings II Member Interest.”
(xi)
Westfields Buildings II is the owner of property known as 4801
Stonecroft Boulevard more particularly described in Exhibit
G .
(xii)
TransDulles Buildings, LLC (“TransDulles”) is a
Delaware Limited Liability company whose sole member is WTM Master
Building. The member interest in TransDulles is referred to
as the “TransDulles Member Interest.”
(xiii)
TransDulles is the owner of thirteen (13) parcels of property which
are described in Exhibits H-1 through H-13 .
(xiv)
Westfields Liberty I, LLC (“Westfields I”) is a
Delaware limited liability company whose sole member is Duke.
The member interest in Westfields I is referred to as the
“Westfields I Member Interest.”
2
(xv)
Westfields I is the owner of property known as Liberty Center I
more particularly described in Exhibit I .
(xvi)
Westfields II, Westfields III, Westfields 4805, Westfields 4803,
Westfields Buildings II, TransDulles and Westfields I are
collectively referred to as “Property
Owners.”
(xvii) The
Property Owners, together with Westfields Buildings, WTM Master
Building and Duke are collectively referred to as the “Owning
Entities.”
ARTICLE 2.
Agreement to Contribute; Description of Property; Defined
Terms : (a) Duke agrees to cause WTM Master Buildings to
contribute to the Company, and Belbrook agrees to cause the Company
to accept upon the terms and conditions hereinafter set forth the
Westfields Buildings Member Interest, the Westfields Buildings II
Member Interest and the TransDulles Member Interest. Duke
further agrees to contribute to the Company and Belbrook agrees to
cause the Company to accept upon the terms and conditions
hereinafter set forth the Westfields I Member Interest.
(b)
For the purposes of this Agreement, the following items referred to
in clauses (b)(i), (ii), (iii), (iv) and (v) are hereinafter
sometimes referred to as the “Property”: (i)
certain premises described in Exhibits C, D, E, F, G, H1 through
H13 and I , together with all right, title and interest of
Property Owners in and to any land lying in the bed of any street
(opened or proposed) adjacent to or abutting or adjoining such
premises, together with all right, title and interest of Property
Owners in and to all rights, privileges, rights of way and
easements appurtenant to such premises, including, without
limitation, all minerals, oil or gas on or under such premises,
development rights, air rights, water rights and any easements,
rights of way or other interests in, on, or under any land,
highway, alley, street or right of way abutting or adjoining such
premises (all of the foregoing, the “Real Property”),
(ii) all buildings and other improvements located thereon (the
“Improvements”, and, together with the Real Property,
the “Premises”), (iii) all items of personal property
owned by Property Owners and located on the Premises or used in
connection with the ownership or operation of the Premises,
described in Exhibit J attached hereto and incorporated
herein by reference, including, without implied limitation, whether
or not listed on Exhibit J , all furniture, fixtures,
equipment, machines, apparatus, appliances, supplies and personal
property of every nature and description and all replacements
thereof owned by Property Owners and located on the Premises or
used in connection therewith,
3
including the
non-exclusive right to use the trade names “Westfields”
and “TransDulles” (collectively, the “Trade
Name”), but excluding any telephone numbers assigned to the
Trade Name (collectively, the “Personal Property”),
(iv) any intangible property now or hereafter owned by Property
Owners and used in the ownership or operation of the Premises
including, without limitation, any plans and specifications,
surveys, catalogs, booklets, manuals, files, logs, records,
correspondence, tenant lists, tenant prospect lists and other
mailing lists, sales brochures and materials, leasing brochures and
materials, advertising materials and other similar items, and all
title inspections, studies and reports, market studies and similar
inspections with respect to the sale, management, leasing,
promotion, ownership, maintenance, use, occupancy and operation of
the Premises, permits, licenses, approvals, guaranties, warranties,
agreements, lease agreements, utility agreements or other rights
relating to the ownership, use or operation of the Premises
(collectively, the “Intangibles”). The parties
hereto acknowledge and agree that the cash balances of any accounts
standing in the name of the Property Owners on or before the
Closing Date shall remain the property of Duke and shall not be
included in the Property to be contributed under this
Agreement.
(c)
The terms listed below shall have the following meanings throughout
this Agreement:
|
|
Gross Agreed
Value:
|
For each Property, the
Gross Agreed Value shall be the Allocated Amount set forth in
Exhibit K plus or minus any prorations at Closing,
including, but not limited to, prorations of principal and interest
payments for any Assumed Loans (as defined below) for the month of
Closing.
|
|
|
|
|
|
|
Net Agreed
Value:
|
The amount of the Gross
Agreed Value minus the aggregate amount of all outstanding
principal and interest due and owing by Property Owners on account
of any debt secured directly or indirectly by any of the Properties
or any of the Member Interests (as hereinafter defined) (the
“Assumed Loans”).
|
ARTICLE 3.
Contribution Subject to Leases . At the time of
Closing the Premises will be subject to certain leases (hereinafter
called the “Leases”) described in Exhibit P
subject to new leasing activity permitted under this
Agreement. Prior to Closing, Property Owners agree to lease
the Premises in accordance with Property Owners’ current
leasing plan. Property Owners shall keep Belbrook apprised of
leasing activity, and prior to entering into any new
4
leases or lease
amendments, Property Owners shall obtain the consent of Belbrook,
which consent shall not be unreasonably withheld, conditioned or
delayed. No consent shall be required for any leasing
activity of existing Leases that are not in the Property
Owner’s discretion (e.g. exercise of express termination
rights, renewal rights on pre-negotiated terms, expansion rights on
pre-negotiated terms etc.).
ARTICLE 4.
Reserved :
ARTICLE 5.
Form of Contribution : (a) At each Closing, Duke shall
contribute or cause the appropriate Owning Entity to contribute the
appropriate member interest (the “Member Interest”) by
a good and sufficient Assignment of Member Interests (hereinafter
referred to as the “Assignment of Member Interests”) in
substantially the form attached hereto as Exhibit L ,
running to the Company pursuant to which the appropriate Owning
Entity shall contribute, assign and deliver to the Company the
legal and beneficial title to and ownership of one hundred percent
(100%) of the Member Interest which Member Interest shall be free
and clear of any liens or other encumbrances, all in accordance
with this Agreement. The Assignment of Member Interests shall
be duly executed, acknowledged and delivered by the appropriate
Owning Entity at Closing. It shall be a condition of Closing
that the Property shall be free from all liens, encumbrances and
encroachments from or on the Property except (i) real estate taxes
and other charges payable therewith not yet due and payable, (ii)
those of record prior to the Initial Closing or shown on a survey
received prior to the Initial Closing but not objected to by
Company and agreed to be removed by Duke prior to the Initial
Closing, (iii) those Leases applicable to the Property, subject to
new leasing activity permitted under this Agreement, and (iv) New
Title Matters (hereinafter defined) which are expressly permitted
pursuant to Section 12(a)(vi) of this Agreement. Duke
covenants and agrees not to take any action and to cause the Owning
Entities not to take any action which would cause or permit a
failure of the foregoing condition.
(b)
Except as set forth on Exhibit S , the Personal Property
shall be owned by the Owning Entities free of all liens, charges,
encumbrances, rights, restrictions and agreements of any
nature.
(c)
Except as provided for in Article 12, Duke shall not allow Owning
Entities to commit any acts which will result in New Title Matters
(hereinafter defined) or New Personal Property Matters (hereinafter
defined) between the date hereof and the Closing, and Duke shall
not commit any acts which will result in a
5
lien or other
encumbrance against the Member Interest between the date hereof and
the Closing.
ARTICLE 6.
Closing :
(a)
(i)
The closing of the contribution of the Westfields Buildings II
Member Interest and the TransDulles Member Interest (the
“Initial Closing”) shall take place at 10:00 a.m. no
later than December 4, 2006 (the “Initial Closing
Date”); at the offices of Goulston & Storrs, P.C., or at
such other location as Company shall designate by five (5) business
days prior written notice. Time is of the essence.
(ii)
The parties hereto acknowledge that certain consents from lenders
(“Existing Lenders”) of the Assumed Loans (hereinafter
defined) and modification of the relevant management agreements are
necessary prior to the contribution of Westfields I Member Interest
and the Westfields Buildings Member Interest. Each such
consent and modification shall be a “Lender Consent” if
(A) such consent does not contain any conditions which are not
reasonably satisfactory to Duke or Belbrook (Belbrook acknowledges
and consents that Belbrook will be added as a joint and several
indemnitor and/or guarantor in all instances where Duke is an
indemnitor and/or guarantor on an Assumed Loan) and (B) such
consent also grants consent to all upper tier transfers and pledges
of interest which additional consent is necessary in light of the
structure and secured credit facilities of Belbrook and its
owners. Accordingly, the closing of the contribution of such
interests (the “Phase II Closing”) and the payment
thereof shall occur five (5) business days after satisfaction of
any conditions to such Lender Consent (the “Phase II Closing
Date”); provided, however, if the Lender Consent is not
obtained by August 1, 2007, then Duke or Belbrook may terminate
this Agreement as to any contributions of interests that have not
then been consummated by notice to the other of them, provided that
said termination notice is received prior to the receipt of the
Lender Consent.
(iii)
For purposes hereof, any reference to “Closing” shall
mean the Initial Closing or each Phase II Closing as
applicable. Any reference to “Closing Date” shall
mean the Initial Closing Date or each Phase II Closing Date as
applicable.
(b)
At each Closing, Duke shall deliver, or cause Owning Entity to
deliver, the following documents, in the form annexed hereto or
otherwise reasonably satisfactory in form and substance to Belbrook
and Belbrook’s counsel, properly executed and acknowledged as
required:
6
(i)
The Assignment of Membership Interests;
(ii)
An original counterpart of the Operating Agreement executed by Duke
(for the Initial Closing);
(iii)
Lender’s Consent with respect to the Properties which are
encumbered by an Assumed Loan.
(iv)
A certification of non-foreign status in the form attached hereto
as Exhibit T;
(v)
Evidence satisfactory to the Company and to the Company’s
title insurance company (the “Title Company”) that all
necessary approvals and/or consents by any other person(s) have
been delivered and such other evidence satisfactory to Company and
the Title Company of Duke’s authority and the authority of
the signatory on behalf of any constituent person of Duke to convey
the Member Interest pursuant to this Agreement;
(vi)
Affidavits sufficient for the Title Company to delete any
exceptions for parties in possession (other than tenants under the
Leases, as tenants only), mechanics’ or materialmen’s
liens from, and to include a non-imputation endorsement to, the
owner’s title insurance policy (the “Title
Insurance”), and such other affidavits relating to the Title
Insurance as the Title Company may reasonably request;
(vii)
A certificate restating as of the relevant Closing Date all of
Duke’s and Owning Entities’ representations and
warranties contained herein updated to reflect the then existing
state of facts;
(viii)
An opinion of Duke’s and Owning Entities’ in-house
counsel to the effect that Owning Entities are duly formed, validly
existing and in good standing, that all requisite action has been
taken to authorize the transaction contemplated hereby,
7
and that this Agreement
and all documents delivered at the Closing have been duly executed
and delivered;
(ix)
An original of a closing statement setting forth the Gross Agreed
Value, and setting forth the closing adjustments and prorations
which affected the calculation of the Gross Agreed Value and the
Net Agreed Value (the “Closing Statement”);
(x)
Original tenant notification letters for each tenant under a Lease
in a form to be drafted by Company [if necessary] and reasonably
satisfactory to Duke, original notification letters to all parties
to operating and other agreements [if necessary];
(xi)
A Designation of Person Responsible for Tax Reporting under
Internal Revenue Code Section 6045 designating Duke as the party
responsible for making the returns required under Internal Revenue
Code Section 6045;
(xii)
The original Owning Entities formation documentation including all
amendments thereto or, if not available to Duke, a certified
copy;
(xiii)
A balance sheet of the Company as of the day of the Closing (the
“Balance Sheet”);
(xiv)
Such other instruments as Company may reasonably request consistent
with the terms of this Agreement; and
(xv)
An executed Future Development Investment Agreement in the form of
Exhibit N .
(c)
Attached as Exhibit K is the Gross Agreed Value of each
Owning Entity’s assets which values (minus the Closing
prorations other than closing costs) will be the Company’s
initial basis in such assets for federal income tax
purposes.
(d)
At each Closing, Belbrook shall deliver, or cause to be delivered,
the following payment and documents, reasonably satisfactory in
form and substance to Duke and Duke’s counsel properly
executed and acknowledged as required:
8
(i)
Distribution of cash in accordance with Section 4.1 of the
Operating Agreement;
(ii)
An original counterpart of the Assignment of Member Interests;
(iii)
An original counterpart of the Closing Statement;
(iv)
An original counterpart of the Operating Agreement executed by
Belbrook (for the Initial Closing);
(v)
An opinion of Belbrook’s counsel to the effect that Company
is duly formed, validly existing and in good standing, that all
requisite action has been taken to authorize the transaction
contemplated hereby, and that this Agreement and all documents
delivered at the Closing have been duly executed and delivered;
(vi)
A certificate restating as of the relevant Closing Date all of
Belbrook’s representations and warranties contained herein
updated to reflect the then existing state of facts; and
(vii)
An executed Future Development Investment Agreement in the form of
Exhibit N .
(e)
While it is not a condition of Closing, Duke shall request Existing
Lenders to execute a written statement, in a form provided to Duke
by Belbrook, certifying to Company as the date of such statement,
(i) that the Loan Documents (to be identified by Lender) are
unmodified and in full force and effect (or, if there have been
modifications, that the Loan Documents are in full force and effect
as modified and setting forth such modifications); (ii) the unpaid
principal balance of the Assumed Loan; (iii) the date to which
interest in respect of the principal indebtedness has been paid;
(iv) the amount of any such escrows, reserves or impounds then
being held by or on behalf of Lender; (v) that to the best of
Lender’s knowledge, Borrower is not in default under the
Assumed Loans (or, if Borrower is in default, describing such
default in reasonable detail); and (vi) any additional facts
reasonably requested by Belbrook.
(f)
Each Closing shall not be deemed to be completed until all
documents and payments as aforesaid have been properly delivered
(and recorded where appropriate) to the satisfaction of all
parties.
9
ARTICLE 7. Reserved :
ARTICLE 8.
Conditions to Closing :
(a)
Without limiting any of the other conditions to Company’s
obligations to close set forth in this Agreement, the obligations
of Company under this Agreement are subject to the satisfaction at
the time of each Closing for the applicable Properties and Owning
Entities of each of the following conditions (any one of which may
be waived in whole or in part by Company at or prior to
Closing):
(i)
All of the representations by Duke set forth in this Agreement or
any Exhibit attached hereto shall be true and correct in all
material respects as of the Closing and the updating certificates
thereto set forth no changes or conditions which in the judgment of
Belbrook constitute a material adverse change relating to any of
the Property or to any Owning Entity;
(ii)
Subject to the provisions of Article 11 hereof, the Property shall
be in substantially the same condition it now is, reasonable use
and wear excepted;
(iii)
Duke shall have performed, observed, and complied or shall have
caused Owning Entities to have performed, observed and complied
with all covenants and agreements required by this Agreement to be
performed by Duke at or prior to Closing;
(iv)
There shall have been no pledge of Duke’s Interest in WTM
Master Buildings or in Westfields I or any pledge of WTM Master
Buildings Interest in the Owning Entities and no pledge by
Westfields Buildings of any of its interests in any of the Property
Owners;
(v)
There shall not have been instituted and be pending any litigation
(1) brought by any tenants alleging defaults by Property Owners
under any Leases at the Properties, (2) alleging material defects
(defects which cost more than $25,000 to fix) in the physical
condition of the Improvements
10
or (3) that would
impair any Owning Entity’s right to convey the Member
Interest in accordance with the terms of this Agreement;
(vi)
There shall be no outstanding notices of violation with respect to
any Property or Owning Entities’ operation thereof from any
governmental authorities and the Property shall be in compliance
with all applicable laws;
(vii)
The assets of Property Owners shall consist of the following
(unless agreed otherwise by the parties hereto in writing):
(A)
The Property;
(B)
All operating licenses, occupancy permits, and other licenses or
permits and authorizations from governmental entities related to
the Owning Entities and the Property;
(C)
The Leases;
(D)
All Security Deposits;
(E)
All utility deposits, if any; and
(F)
All deposits and escrows required by the Assumed Loans.
(viii)
The Liabilities of the Owning Entities shall consist of the
following (unless agreed otherwise by the parties hereto in
writing), and no others:
(A)
Real Estate and Personal Property Taxes not yet due and
payable;
(B)
The liability to tenants for Security Deposits;
(C)
The obligations under Leases, and Operating Contracts and trade
accounts payable incurred in the ordinary course of business and
certified to by Duke at Closing, the latter of which, if not
prorated hereunder, shall be promptly paid by Duke after the
Closing; and
(D)
The Assumed Loans.
(b)
Upon learning of a failure of a condition in this Article 8, or any
other condition in this Agreement, Belbrook shall promptly notify
Duke thereof, and Duke shall have thirty (30) days to cure said
failure, and the Closing Date shall be extended to allow said
thirty (30) day period to run in full. If such failure
11
cannot be cured
within such thirty (30) day period, then, provided that Duke shall
have commenced to cure such failure within such thirty (30) day
period and thereafter shall diligently and continuously prosecuted
such cure, the aforesaid thirty (30) day period shall be extended
for an additional sixty (60) days. If on the Closing Date (as
may be extended hereby) the conditions of this Article 8 have not
been satisfied, then, at Company’s option, Company and
Belbrook shall not be obligated to close the transactions
contemplated hereby. In such case, if Duke is not in breach
or default of any of their representations, warranties, covenants
or obligations hereunder, after expiration of all applicable notice
and cure periods, all obligations of the parties hereto shall cease
and this Agreement shall be terminated and the parties shall be
without further recourse or remedy hereunder. If Duke is in
breach of any of their representations, warranties, covenants or
obligations hereunder, after expiration of all applicable notice
and cure periods, then Company shall have the rights and remedies
set forth in Article 9 below .
ARTICLE 9.
Default : (a) In the event of a material breach or
default by Duke of any of its representations, warranties,
covenants or obligations hereunder, which is not cured within
thirty (30) days after notice to Duke thereof (which thirty (30)
day period is to run concurrently with the thirty (30) day period
set forth in Section 8(b) above and the applicable Closing shall be
extended to allow the full cure period to run), Belbrook shall have
the right to elect one of the following rights and remedies, as its
sole and exclusive remedy with respect to any such breach or
default known to Belbrook prior to Initial Closing (it being
acknowledged that if Belbrook knows of any such breach or default
and fails to notify Duke thereof prior to Closing, Belbrook shall
be considered to have elected the option set forth in Subsection
(ii) below):
(i)
Terminate this Agreement by notice to Duke, and all obligations of
the parties under this Agreement shall terminate and Belbrook shall
be entitled to immediate payment from Duke of all out-of-pocket
costs incurred by Belbrook in connection with the Agreement and the
transactions contemplated hereby (provided that after the Initial
Closing occurs, the out-of-pocket costs shall be measured from the
most recent Closing to the date of said termination), subject to a
maximum reimbursement not to exceed $500,000.00.
(ii)
Waive the breach or default as a condition of Closing (subject to
any written agreement between the parties to address said breach or
default)and proceed to Closing in accordance with the provisions of
this Agreement.
12
(iii)
Seek specific performance.
(b)
In the event of a material breach or default by Company or Belbrook
of any of its representations, warranties, covenants or obligations
hereunder which is not cured within thirty (30) days after notice
to Belbrook thereof, Duke shall have the right to elect one of the
following rights and remedies, as its sole and exclusive
remedy:
(i)
Terminate this Agreement by notice to Belbrook, and all obligations
of the parties under this Agreement shall terminate and Duke shall
be entitled to immediate payment from Belbrook of all out-of-pocket
costs incurred by Duke in connection with the Agreement and the
transactions contemplated hereby, (provided that after the Initial
Closing occurs, the out-of-pocket costs shall be measured from the
most recent Closing to the date of said termination) subject to a
maximum reimbursement not to exceed $500,000.00.
(ii)
Waive the breach or default and proceed to Closing in accordance
with the provisions of this Agreement (subject to any written
agreement between the parties to address said breach or
default).
(iii)
Seek specific performance.
ARTICLE 10.
Entire Agreement Herein : The parties understand and
agree that their entire agreement is contained herein and that no
warran
