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), Lafayette Real
Estate LLC (the “Company”), a Delaware limited
liability company and Belcrest Realty Corporation
(“Belcrest”), 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 Belcrest 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)
Mark Center Buildings, LLC (“Mark Center 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 Mark Center
Buildings is referred to as the “MC Buildings Member
Interest”.
(ii)
Mark Center 1801/1901, LLC (“Mark Center 1801/1901”) is
a Delaware limited liability company, the sole member of which is
Mark Center Buildings. The member interest in Mark Center
1801/1901 is referred to as the “1801/1901 Member
Interest”.
(iii)
Mark Center 1801/1901 is the owner of property known and numbered
as 1801/1901 N. Beauregard Street, Mark Center, Alexandria, VA more
particularly described in Exhibit C .
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(iv)
Mark Center 2001, LLC (“Mark Center 2001”) is a
Delaware limited liability company, the sole member of which is
Mark Center Buildings. The member interest in Mark Center
2001 is referred to as the “2001 Member
Interest”.
(v)
Mark Center 2001 is the owner of property known and numbered as
2001 N. Beauregard Street, Mark Center, Alexandria, VA more
particularly described in Exhibit D .
(vi)
Mark Center Buildings II, LLC (“Mark Center II”) is a
Delaware limited liability company, whose sole member is WTM Master
Building, the sole member of which is Duke. The member
interest in Mark Center Buildings II, LLC is referred to as the
“Mark II Member Interest”.
(vii)
Mark Center II is the owner of nine parcels of property, which are
described in Exhibits E1 through E9 .
(viii)
Mark Center 1801/1901, Mark Center 2001 and Mark Center II are
collectively referred to as the “Property
Owners”.
(ix)
The Property Owners, together with Mark Center Buildings and WTM
Master Building 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 Belcrest agrees to cause the Company
to accept upon the terms and conditions hereinafter set forth the
MC Buildings Member Interest and the Mark II 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 and E1 through
E9 , 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
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“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 F attached hereto and
incorporated herein by reference, including, without implied
limitation, whether or not listed on Exhibit F , 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, including the
non-exclusive right to use the trade name Mark Center (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:
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Gross Agreed
Value:
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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.
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Net Agreed
Value:
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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
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Properties or any of
the Member Interests (as hereinafter defined) (the “Assumed
Loans”).
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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 G 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 Belcrest apprised of leasing activity, and prior to
entering into any new leases or lease amendments, Property Owners
shall obtain the consent of Belcrest, 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
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 H ,
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 Duke 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.
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(b)
Except as set forth on Exhibit I , 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 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 Mark II 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 the MC Buildings Member
Interests. 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
Belcrest (Belcrest acknowledges and consents that Belcrest 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 Belcrest 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
Belcrest 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
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“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 Belcrest
and Belcrest’s counsel, properly executed and acknowledged as
required:
(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 J;
(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
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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, 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;
(xv)
An executed assignment of membership interest in Mark Center TMP,
LLC and related documents as described in Section 7.4(b)(ii) of the
Operating Agreement; and
(xvi)
An executed Future Development Right of First Offer in the form of
Exhibit N .
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(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, Belcrest 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:
(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
Belcrest (for the Initial Closing);
(v)
An opinion of Belcrest’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;
and
(vi)
A certificate restating as of the relevant Closing Date all of
Belcrest’s representations and warranties contained herein
updated to reflect the then existing state of facts;
(vii)
An executed assignment of membership interest in Mark Center TMP,
LLC and related documents as described in Section 7.4(b)(ii) of the
Operating Agreement; and
(viii)
Executed Future Development Right of First Offer 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 Belcrest,
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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 Belcrest.
(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.
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
Belcrest 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
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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 Building or WTM Master Buildings in the Owning Entities and
no pledge by Mark Center Buildings of the 1801/1901 Member Interest
or the 2001 Member Interest;
(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 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:
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