CONTRIBUTION AND EXCHANGE AGREEMENT

 

CONTRIBUTION AND EXCHANGE AGREEMENT

 

THIS CONTRIBUTION AND EXCHANGE AGREEMENT (this “ Agreement ”) made this 21 ^st day of November, 2005 (the “ Execution Date ”), by and between the persons set forth on Exhibit A annexed hereto (each a “ GP Contributor ” and collectively, the “ GP Contributors ”), Tenth Springhill Lake Associates L.L.L.P. (“ Tenth LLLP ”), a Maryland limited liability limited partnership, Eleventh Springhill Lake Associates L.L.L.P. (“ Eleventh LLLP ”), a Maryland limited liability limited partnership, Twelfth Springhill Lake Associates L.L.L.P. (“ Twelfth LLLP ”), a Maryland limited liability limited partnership, Fourteenth Springhill Lake Associates L.L.L.P. (“ Fourteenth LLLP ” and together with Tenth LLLP, Eleventh LLLP and Twelfth LLLP each shall be referred to herein individually as a “ Property LLLP ” and together as the “ Property LLLPs ”), a Maryland limited liability limited partnership, Greenbelt Associates (“ Greenbelt ”), a Maryland general partnership, and Sixteenth Springhill Lake Associates L.L.L.P. (“ Sixteenth LLLP ” and together with Greenbelt each shall be referred to herein individually as an “ Option Property Owner ” and together as the “ Option Property Owners ”), a Maryland limited liability limited partnership and MACK-CALI REALTY, L.P. (“ MCRLP ”) , a Delaware limited partnership. The Property LLLPs and the Option Property Owners shall hereinafter be referred to individually as a “ Capital Office Owner ” and collectively as the “ Capital Office Owners ”.

 

RECITALS

 

WHEREAS , MCRLP desires to acquire from the GP Contributors and the limited partner contributors set forth on Exhibit B annexed hereto (the “ LP Contributors ” and together with the GP Contributors the “ Contributors ”) and the Contributors desire to either (i) transfer to MCRLP all of the ownership and beneficial interests in and to each Property LLLP following the Conversion (as hereinafter defined) of each Property LLLP to a limited liability company, or (ii) in the event that the Conversion of any Property LLLP cannot be accomplished in accordance with the terms of this Agreement, cause to be transferred to MCRLP the fee interest in each Property (as defined below);

 

WHEREAS , MCRLP desires to acquire the Option (as hereinafter defined) to acquire from the Contributors and the Contributors desire to grant the Option to MCRLP to acquire all of the ownership and beneficial interests in and to each Option Property Owner following the Conversion (as such term is defined in the Option Agreement (as hereinafter defined)) of each Option Property Owner to a limited liability company; however, in the event that the Conversion of any Option Property Owner cannot be accomplished in accordance with the terms of the Option Agreement, MCRLP desires to acquire an option to acquire the fee interest in each Option Property from the Option Property Owners;

 

WHEREAS , provided the requisite consent of the LP Contributors is obtained authorizing the Conversion at or prior to Closing, each LP Contributor and MCRLP shall execute and deliver the LP Contributors Joinder Agreement in the form annexed hereto as Exhibit C whereby each LP Contributor shall make certain representations, warranties and agreements with respect to such LP Contributor’s ownership in any applicable Property Owner and shall agree to be bound by the terms and conditions of this Agreement;

 

 

WHEREAS , each Contributor is a partner in a Property LLLP or a partner in an Option Property Owner (an “ Option Contributor ”) and in such capacity is the record and beneficial owner of the limited liability limited partnership interest or the general partnership interest (the “ Property Owner Interests ”) in the Capital Office Owner set forth opposite such Contributor’s name on Exhibit D-1 through Exhibit D-6 annexed hereto;

 

WHEREAS , the Capital Office Owners are the owners of that certain real property known as “Capital Office Park”, which includes 6301 Ivy Lane, 6303 Ivy Lane, 6305 Ivy Lane, 6404 Ivy Lane, 6406 Ivy Lane and 6411 Ivy Lane, Greenbelt, Maryland, and 9200 Edmonston Road, Greenbelt, Maryland, which is located outside of Capital Office Park, all such real property as more particularly described in Exhibit E annexed hereto (each a “ Property ” and together the “ Properties ”), and certain unimproved real property designated as Parcel J, Parcel K, Parcel L, Outlot A, Parcel I-1, Parcel A and Parcel G on Exhibit F annexed hereto (each an “ Option Property ” and together the “ Option Properties ”) (the owner of each Property is set forth opposite the name of each Property LLLP on Exhibit G annexed hereto and the ownership of each Option Property is set forth opposite the name of each Option Property Owner on Exhibit H annexed hereto);

 

WHEREAS , prior to the Closing Date each GP Contributor shall endeavor to obtain the requisite consent or approval of the partners of any Property LLLP in which such GP Contributor is a partner to the conversion of such Property LLLP to a limited liability company (the “ Conversion ”) and the contribution of 100% of the membership and beneficial interests in and to such limited liability company to MCRLP (each a “ Transferred Interest, ” and, collectively, the “ Transferred Interests ”), and, upon receipt of such requisite consent or approval, each GP Contributor shall cause the Conversion of the Property LLLP to a limited liability company;

 

WHEREAS , on the Closing Date (as defined below) the Contributors desire to transfer the Exchange Property (as hereinafter defined) to MCRLP and to grant an option to MCRLP with respect to the Option Properties pursuant to the terms of the Option Agreement (as defined below) in exchange for (i) MCRLP’s assumption of those certain non-recourse first mortgage loans set forth on Exhibit I annexed hereto (collectively, the “ Assumed Debt ”) and each of which is evidenced and secured by those certain documents and instruments described in Exhibit J-1 through Exhibit J-7 annexed hereto (collectively, the “ Existing Loan Documents ”), which Existing Loan Documents include, without limitation, non-recourse first mortgages on each of the Properties, (ii) common operating partnership units (“ Units ”) of MCRLP and (iii) cash, or a combination cash and Units, on and subject to, the terms, covenants and conditions set forth herein; and

 

WHEREAS, subject to the terms and conditions of this Agreement, each Contributor and MCRLP shall, at the Closing (as defined below), execute a separate Limited Agreement of Indemnity (in the form attached hereto as Exhibit K ) or a separate Guaranty Agreement (in the form attached hereto as Exhibit S ) pursuant to Article 21 hereof whereby such Contributor shall indemnify MCRLP and/or Mack-Cali Realty Corporation (the “ Company ” and together with MCRLP “ Mack-Cali ”), MCRLP’s general partner, with respect to certain indebtedness of MCRLP and/or the Company as described herein.

 

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NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth herein and other good and valuable consideration, the mutual receipt and legal sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound hereby, do hereby agree as follows:

 

1.                                       CONTRIBUTION AND EXCHANGE; ALTERNATIVE STRUCTURE.

 

1.1.                               Provided the GP Contributors have obtained the requisite consent or approval of the partners of each Property LLLP authorizing the Conversion of such Property LLLP to a limited liability company, upon, and subject to, the terms, covenants and conditions of this Agreement, on the Closing Date (as defined below), each Contributor shall contribute the Transferred Interest to MCRLP, and MCRLP shall acquire the Transferred Interests.

 

1.2.                               Alternatively, in the event that the GP Contributors are unable to obtain the requisite consent or approval of the partners of any Property LLLP to the Conversion of such Property LLLP to a limited liability company prior to the Closing, the GP Contributor of such Property LLLP shall cause the Property LLLP to contribute the Properties owned by such Property LLLP to MCRLP, or its designee, by deed transfer at Closing. Notwithstanding the foregoing, each GP Contributor shall endeavor prior to the Closing to obtain the requisite consent or approval of the partners of any such Property LLLP in which such GP Contributor is a partner to the Conversion of such Property LLLP to a limited liability company. The Property conveyed by deed transfer pursuant to this Section 1.2 and/or the Transferred Interests contributed by assignment by each Contributor pursuant to Section 1.1 shall hereinafter be collectively referred to as the “ Exchange Property ”.

 

2.                                       CONSIDERATION AND DEPOSIT.

 

2.1.                               The aggregate consideration (the “ Consideration ”) for the Exchange Property shall be ONE HUNDRED SIXTY-ONE MILLION SEVEN HUNDRED TWENTY EIGHT THOUSAND DOLLARS ($161,728,000), and shall be allocated among the Properties as set forth on Schedule 2.1 (the “ Allocated Property Values ”) and payable as follows:

 

(a)                                   By MCRLP assuming the Assumed Debt as of the Closing Date (as defined below). The parties hereto acknowledge and agree that, as of the date hereof, the Assumed Debt has an approximate outstanding balance of SIXTY-THREE MILLION SEVEN HUNDRED EIGHTY-ONE THOUSAND EIGHT HUNDRED TWENTY-FOUR DOLLARS ($63,781,824) (the outstanding balance of the Assumed Debt shall hereinafter be referred to as the “ Assumed Debt Amount ”);

 

(b)                                  By payment of an amount of cash, if any, (i) in respect of any Contributor who elects to receive cash for part or all of its share of the Exchange Property, (ii) in respect of any Contributor who has not demonstrated to the reasonable satisfaction of MCRLP that it qualifies as an “accredited investor” (as such term is defined in Rule 501(a) of Regulation D under the Securities Act (as hereinafter defined)), (iii) in respect of any Contributor for fractional Units as provided in Section 2.1(c) hereof and (iv) in respect of any Property LLLP that elects to receive cash in exchange for part or all of the applicable Property in the event any Property is conveyed by Deed pursuant to Section 1.2 hereof. Each Contributor and/or Property LLLP, as applicable,

 

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that elects to receive cash for all or part of its Exchange Property in accordance with this Section 2.1(b), shall notify MCRLP of such election, in writing, as soon as practicable following the date hereof and no later then fifteen (15) days prior to Closing; and, thereafter, Schedule 2.1(b)   annexed hereto shall be completed and shall set forth the name of each Contributor and the amount of cash paid to such Contributor pursuant to this Section 2.1(b). Notwithstanding anything herein to the contrary, unless otherwise agreed upon by MCRLP in its sole discretion, the cash portion of the Consideration, if any, shall in no event exceed an amount equal to the Consideration, less the Assumed Debt Amount and less the sum of a maximum amount of $70,000,000; and

 

(c)                                   By the issuance of Units, in respect of the Contributors, having a value (the “ Unit Value ”) equal to the sum of the Consideration less the amount of cash received pursuant to Section 2.1(b) above, if any, and the Assumed Debt Amount as of the Closing Date. The aggregate number of such Units (the “ Contributor Units ”) to be issued shall be calculated by dividing the Unit Value by the average closing price as reported on the New York Stock Exchange for the common stock, par value $0.01 per share (the “ Common Stock ”), of the Company over the twenty (20) consecutive trading days ending two (2) trading days prior to the Closing Date (the “ Base Value ”). No fractional Units shall be issued in respect of any Contributor, and any Contributor who is entitled to receive a fractional Unit shall instead receive cash with respect to such fractional Unit in an amount equal to the fractional Unit multiplied by the Base Value. Notwithstanding anything herein to the contrary, the Consideration shall be comprised of at least SEVENTY MILLION DOLLARS ($70,000,000) of Contributor Units, the value of such Contributor Units to be determined in accordance with this Section 2.1(c). If Contributors do not elect or do not qualify to receive Contributor Units with a Unit Value equal to at least SEVENTY MILLION DOLLARS ($70,000,000), MCRLP shall have the right, at its sole option, to terminate this Agreement by delivering written notice to Contributors’ counsel (as designated in Article 26 of this Agreement).

 

2.2.                               At the Closing, each Contributor shall be admitted to MCRLP as a limited partner with respect to the Contributor Units issued in respect of such Contributor as set forth on Schedule 2.2-A annexed hereto (which schedule shall be completed immediately prior to Closing), with the initial capital account balance set forth opposite such Contributor’s name on Schedule 2.2-B annexed hereto (which schedule shall be completed immediately prior to Closing). Each Contributor shall be issued a certificate (with respect to each Contributor, the “ Certificate ”) in the form attached hereto as Exhibit L , representing the Contributor Units, which Certificate shall contain the legend set forth in Section 7.5 of this Agreement.

 

2.3.                               (a)                                   In consideration for the execution of this Agreement and the mutual undertakings, covenants and obligations contained herein, concurrent with its execution of this Agreement, MCRLP shall deposit with Lawyers Title Insurance Corporation, as escrow agent (the “ Escrow Agent ”), TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000) (the “ Refundable Deposit ”), which deposit shall be unconditionally refundable prior to the expiration of the Inspection Period (as defined below), or otherwise pursuant to the terms of this Agreement and an additional TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000) deposit on or before the expiration of the Inspection Period (together with the Refundable Deposit, the “ Deposit ”).

 

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(b)                                  MCRLP shall have the right to satisfy all or any portion of the Deposit with one or more unconditional irrevocable letters of credit issued by a banking institution reasonably satisfactory to the Contributors, having offices in the District of Columbia, presentable and payable on sight, naming the Escrow Agent as the beneficiary thereunder and naming MCRLP as the account party (the “ Letter of Credit ”). The Letter of Credit is to have an expiration date of at least one (1) year from its issuance. In the event that the Letter of Credit is not renewed by the date which is thirty (30) days prior to its then stated expiration date (and this Agreement remains in full force and effect) or in the event that the Contributors are entitled to the Deposit as provided herein, Escrow Agent shall present the Letter of Credit to the issuer at any time thereafter for payment and retain the proceeds thereof. The cash proceeds of any presentment of the Letter of Credit shall be held by the Escrow Agent in accordance with the terms of this Agreement.

 

(c)                                   If MCRLP satisfied the Deposit by either a check or wire transfer of funds, then so long as the Closing has occurred, the Escrow Agent shall return the Deposit to MCRLP at Closing. In the event that the Deposit is a Letter of Credit, then so long as the Closing has occurred, the Letter of Credit shall be returned to MCRLP, along with an acknowledgment from the beneficiary of the Letter of Credit, in a form reasonably acceptable to MCRLP, that said beneficiary has no further claim or interest in said Letter of Credit. If the Closing does not occur for any reason other than a default by any Contributor or a failure of any condition precedent to Closing set forth in Article 14 hereof, the Deposit shall be paid to, or the Letter of Credit may be drawn by, the Contributors. If the Closing does not occur for any reason other than a default by MCRLP or a failure of any condition precedent to Closing set forth in Article 14, the Deposit shall be returned to MCRLP.

 

2.4.                               With respect to the first Partnership Record Date (as defined in the OP Agreement) on or after the Closing Date, each Contributor shall receive a pro-rata distribution payable with respect to the Units held by such Contributor in accordance with the terms of the OP Agreement, as from time to time amended and in effect on the date hereof, on MCRLP’s next distribution payment date. Such pro-rata distribution shall be equal to (a) the amount of such distribution, multiplied by (b) a fraction, the numerator of which is equal to the number of days from the Closing Date to and including the end date of the period for which such distribution is being paid (the “ Distribution Date ”), and the denominator of which is equal to the number of days from (but excluding) the previous Distribution Date to and including the Distribution Date in question.

 

2.5.                               (a)                                   Subject to the terms and conditions set forth in this Agreement and with the benefit of all of the exculpatory provisions, if any, which are contained in the Existing Loan Documents, MCRLP shall accept and, if required by the Assumed Debt Lenders, expressly assume, as of the Closing Date all of the Assumed Debt, MCRLP acknowledging that such Assumed Debt will not be repaid at Closing. It shall be a condition to MCRLP’s obligation to assume any Assumed Debt, that the GP Contributors shall have obtained or caused the Property LLLP in which such GP Contributor is a partner to obtain the express written consent from each of the Assumed Debt Lenders to the transaction contemplated herein, together with an estoppel certificate from each of the Assumed Debt Lenders containing the certifications and agreements set forth on Schedule 2.5(a)   (“ Lender’s Estoppel ”). Each GP Contributor, Property LLLP and MCRLP covenant to the other to use diligent and good faith efforts and take all commercially

 

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reasonable actions to obtain the express written consent and Lender’s Estoppel to the transactions contemplated herein from each of the Assumed Debt Lenders prior to the Closing Date and to provide such information and/or documentation as the Assumed Debt Lenders shall reasonably require in connection with such assumption. In the event that any GP Contributor or any Property LLLP is unable to obtain the requisite consent or approval from any Assumed Debt Lenders, MCRLP shall have the right, at its sole option, to terminate this Agreement by delivering written notice to Contributors’ counsel (as designated in Article 26 of this Agreement) to such effect within twenty (20) days after its receipt of written notification of any such occurrence; provided, however, in the event that MCRLP elects to terminate, as aforesaid, the Property LLLPs shall reimburse MCRLP for its reasonable attorney’s fees up to a maximum amount of $150,000.

 

(b)                                  MCRLP and the Property LLLPs agree to split on a 50/50 basis all costs and fees associated with the assumption of the Assumed Debt and the Existing Loan Documents including, without limitation, any and all assignment, transfer or other fees, application or other costs and any and all costs and expenses incurred by the applicable Assumed Debt Lender, including, without limitation, legal fees and disbursements and costs and expenses related to updated title, survey, environmental reports and/or other legal, due diligence or compliance matters required by the applicable Assumed Debt Lender. Notwithstanding the foregoing, each party shall pay for their respective legal fees in connection with such assumption of the Assumed Debt.

 

(c)                                   MCRLP and the GP Contributors agree that the GP Contributors and any guarantor and any environmental indemnitor under any of the Existing Loan Documents shall only be liable for obligations and liabilities with respect to matters first arising prior to the Closing Date and it shall be a condition to the GP Contributor’s obligation to Close hereunder that the Assumed Debt Lenders shall have released the GP Contributors and any guarantor and any environmental indemnitor from any and all obligations and liabilities first arising from and after the Closing Date. MCRLP agrees to assume liability for so-called “carve-outs” to non-recourse provisions and for any environmental indemnities contained in any of the Existing Loan Documents, but only for obligations and liabilities first arising from and after the Closing Date and not for any obligations or liabilities relating to any periods prior to Closing Date. MCRLP and Contributors agree to use commercially reasonable efforts to cause the Assumed Debt Lenders to require MCRLP to assume obligations and liabilities under the Existing Loan Documents only with respect to matters first arising from and after the Closing Date.

 

3.                                       REDEMPTION.

 

3.1.                               The Contributor Units received as Consideration for the transfer of the Exchange Property shall be redeemable by the Contributors in accordance with the Second Amended and Restated Agreement of Limited Partnership of MCRLP, as amended from time to time (the “ OP Agreement ”), at any time and from time to time subsequent to the first anniversary of the Closing Date on the basis of one (1) Unit for either cash equal to the fair market value of a share of Common Stock at the time of the redemption or, at the option of MCRLP acting through the Company, one (1) share of Common Stock (with such adjustments thereto as are provided in the OP Agreement).

 

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4.                                       OPTION TO PURCHASE.

 

4.1.                               For the one (1) year period beginning on the Closing Date, MCRLP, or its designee, shall have the option (the “ Option ”) to notify the Option Contributors’ counsel (as designated in the Option Agreement (as hereinafter defined)) that it elects to acquire either all of the ownership and beneficial interests in and to each Option Property Owner or the fee interest in each Option Property for a purchase price of THIRTEEN MILLION DOLLARS ($13,000,000) (the “ Option Purchase Price ”), which shall be payable Units or, at the election of the Option Contributors or if an Option Contributor is not an “accredited investor” or as otherwise provided in the Option Agreement, cash. At Closing, the Option Contributors and MCRLP or its designee shall enter into an option agreement (the “ Option Agreement ”) in the form of Exhibit M annexed hereto pursuant to which the respective rights and obligations of the Option Contributors and MCRLP or its designee shall be set forth.

 

5.                                       INSPECTION PERIOD; MCRLP’S RIGHT OF TERMINATION AND REJECTION PRIOR TO CLOSING; AS IS CONDITION.

 

5.1.                               Through the period ending on the Execution Date, as it may be extended (the “ Inspection Period ”), MCRLP has performed, or cause to be performed, tests, investigations and studies of or related to the Properties including, but not limited to, soil tests and borings, ground water tests and investigations, percolator tests, surveys, architectural, engineering, subdivision, environmental, access, financial, market analysis, development and economic feasibility studies and other tests, investigations or studies as MCRLP, in its sole discretion, determined is necessary or desirable in connection with the Properties and inspected the physical (including environmental) and financial condition of the Properties, including but not limited to (i) all leases and other agreements with respect to the use and occupancy of the Properties, together with all amendments and modifications thereto and any guaranties provided thereunder (individually, a “ Lease ”, and collectively, the “ Leases ”), (ii) contracts and agreements for the servicing, maintenance and/or operation of any Property (the “ Service Contracts ”), (iii) engineering and environmental reports, (iv) development approval agreements, (v) permits and approvals, which inspection shall be satisfactory to MCRLP in its sole and absolute discretion, (vi) all Books and Records (as defined below), (vii) Existing Loan Documents, including, without limitation, the Existing Loan Documents, (viii) tenant correspondence files and (ix) other documents and information relating to the foregoing. MCRLP shall conduct any tests and studies in a manner which does not unreasonably impede the day-to-day operations of any Property, and shall repair and restore any portion of the surface of any Property disturbed by MCRLP, its agents or contractors during the conduct of any tests and studies to substantially the same condition as existed prior to such disturbance. Such right of inspection and the exercise of such right shall not constitute a waiver by MCRLP of the breach of any representation, warranty, covenant or agreement of any Contributor which might, or should, have been disclosed by such inspection. Each Contributor acknowledges that each of the Property LLLPs and Mack-Cali Realty Acquisition Corporation, a Delaware corporation and affiliate of MCRLP, have entered into that certain Access Agreement dated as of July 14, 2005 (the “ Access Agreement ”), with respect to MCRLP’s access to the Properties during the Inspection Period and thereafter and certain other matters. In the event of any conflict or inconsistency between the provisions of Sections 5.1 or 5.2 and any provision of the Access Agreement, the Access Agreement shall control.

 

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5.2.                               During and after the Inspection Period and pursuant to the Access Agreement, MCRLP, its agents and contractors, shall have access to the Properties subject to the terms of the Access Agreement and other information pertaining thereto in the possession or within the control of any Contributor or any Property LLLP for the purpose of performing such studies, tests, borings, investigations and inspections for the purposes described in this Article 5. Each GP Contributor shall reasonably cooperate and shall cause each Property LLLP to cooperate with MCRLP in facilitating its due diligence inquiry and will deliver to MCRLP, promptly after request, true and complete copies of all test borings, Environmental Documents (as defined below), surveys, title materials and engineering and architectural data and the like relating to any Property that are in any GP Contributor’s or any Property LLLP’s possession or under its/his control. In the event that any additional materials or information come within any GP Contributor’s or any Property LLLP’s possession or control after the date of this Agreement, such GP Contributor shall promptly submit or cause any Property LLLP to submit true and complete copies of the same to MCRLP. Each GP Contributor shall notify MCRLP of any dangerous conditions on the Property of which such GP Contributor has knowledge, including, without limitation, conditions which due to the nature of the borings, studies, investigations, inspections or testing to be performed by or on behalf of MCRLP may pose a dangerous condition to MCRLP or MCRLP’s agents and contractors.

 

5.3.                               MCRLP may terminate this Agreement for any reason or for no reason, by written notice to the Contributors’ counsel (as designated in Article 26 of this Agreement) delivered on or prior to the expiration of the Inspection Period. In the event that MCRLP terminates this Agreement during the Inspection Period, this Agreement shall be null and void and the parties hereto shall be relieved of all further obligations hereunder except as otherwise provided herein. In the event MCRLP does not send notice by the end of the Inspection Period waiving its right to terminate this Agreement pursuant to this Section 5.3, MCRLP shall be deemed to have elected to terminate this Agreement. Upon such termination, the Refundable Deposit shall be returned to MCRLP.

 

5.4.                               EXCEPT AS PROVIDED IN THE EXPRESS REPRESENTATIONS AND WARRANTIES OF THE CONTRIBUTORS SET FORTH IN THIS AGREEMENT AND IN ANY CLOSING DOCUMENTS, INSTRUMENTS OR AFFIDAVITS TO BE DELIVERED AT CLOSING (COLLECTIVELY, THE “ EXPRESS REPRESENTATIONS ”), THE CONTRIBUTORS DO NOT, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, AND THE CONTRIBUTORS SHALL NOT, BY THE EXECUTION AND DELIVERY OF ANY DOCUMENT OR INSTRUMENT EXECUTED AND DELIVERED IN CONNECTION WITH CLOSING, MAKE ANY OTHER REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, OF ANY KIND OR NATURE WHATSOEVER, WITH RESPECT TO THE PROPERTIES, AND ALL SUCH WARRANTIES ARE HEREBY DISCLAIMED.

 

5.5.                               NOTWITHSTANDING ANYTHING TO THE CONTRARY SET FORTH IN THIS AGREEMENT, BUT SUBJECT TO THE REPRESENTATIONS AND WARRANTIES SET FORTH IN ARTICLE 7 (REPRESENTATIONS AND WARRANTIES OF CONTRIBUTORS) AND COVENANTS OF THE CONTRIBUTORS SET FORTH IN ARTICLE 8 (COVENANTS OF THE CONTRIBUTORS), AND SUBJECT TO ARTICLES 17 (CASUALTY LOSS) AND 18 (CONDEMNATION), MCRLP SHALL ACCEPT THE

 

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PROPERTIES, INCLUDING WITHOUT LIMITATION THE ROOFS, ALL STRUCTURAL COMPONENTS, ALL HEATING, VENTILATING, AIR CONDITIONING, MECHANICAL, PLUMBING, AND ELECTRICAL SYSTEMS, FIRE AND LIFE SAFETY AND ALL OTHER PARTS OF THE BUILDINGS CONSTITUTING A PORTION OF THE PROPERTIES IN THEIR “AS IS” “WHERE IS” CONDITION ON THE CLOSING DATE, “WITH ALL FAULTS” AND “SUBJECT TO ALL DEFECTS.”  MCRLP HEREBY ACKNOWLEDGES, REPRESENTS AND WARRANTS THAT IT IS NOT IN A DISPARATE BARGAINING POSITION WITH RESPECT TO THE CONTRIBUTORS IN CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY, THAT MCRLP FREELY AND FAIRLY AGREED TO THE WAIVERS AND CONDITIONS OF THIS SECTION 5.5 AS PART OF THE NEGOTIATIONS OF THIS AGREEMENT, AND MCRLP HAS BEEN REPRESENTED BY COMPETENT LEGAL COUNSEL IN CONNECTION HEREWITH AND HAS CONFERRED WITH SUCH LEGAL COUNSEL CONCERNING THE WAIVERS AND OTHER CONDITIONS OF THIS SECTION 5.5.

 

5.6.                               Notwithstanding the expiration of the Inspection Period, MCRLP shall continue to have the rights to conduct further investigations of the Properties as set forth in this Article 5.

 

6.                                       TITLE; MATTERS TO WHICH THIS EXCHANGE IS SUBJECT.

 

6.1.                               The Properties at Closing shall be subject to the following (collectively, the “ Permitted Encumbrances ”):

 

(a)                                   The liens of real estate Taxes (as hereinafter defined), personal property Taxes, water charges, and sewer charges provided same are not due and payable, but subject to adjustment as provided herein;

 

(b)                                  The rights of those parties listed on Schedule 7.1(b)   occupying space at any of the Properties or tenants under leases entered into after the date hereof in accordance with the terms hereof (collectively, “ Tenants ”), as tenants only;

 

(c)                                   Any and all laws, statutes, ordinances, codes, rules, regulations, requirements, or executive mandates affecting the Properties including, without limitation, those related to zoning and land use, as of the date hereof;

 

(d)                                  The Service Contracts, except those Service Contracts which MCRLP elects not to assume in accordance with Section 8.1(h);

 

(e)                                   Any installment not yet due and payable of assessments imposed after the date hereof and affecting the Properties (or any portion thereof);

 

(f)                                     The lien of the mortgages on those Properties encumbered by Existing Loan Documents as of the date hereof in respect of Assumed Debt (but subject to the terms and conditions of this Agreement); and

 

(g)                                  Any matters not objected to, approved or deemed approved by MCRLP pursuant to Section 6.2 below.

 

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6.2.                               (a)                                   MCRLP has, prior to the date hereof, directed Lawyers Title Insurance Corporation (“ Lawyers Title ”) to prepare title insurance searches and commitments for owner’s title insurance policies for each of the Properties (the “ Title Commitments ”). MCRLP shall direct Lawyers Title, or such other or additional title insurance companies as may be selected by MCRLP (collectively, the “ Title Company ”), to deliver to the Contributors’ counsel (as designated in Article 26 of this Agreement) copies of the Title Commitments and the documents describing the title exceptions shown on the Title Commitments (collectively, the “ Title Documents ”) which are to be delivered to MCRLP and its counsel.

 

(b)                                  MCRLP has, prior to the date hereof, advised Contributors’ counsel (as designated in Article 26 of this Agreement) in writing (“ MCRLP’s Title Objection Letter ”) of certain defects, objections or exceptions in the title to the Properties that appear in the Title Commitments (other than the Permitted Encumbrances) which MCRLP is not required to accept under the terms of this Agreement and to which MCRLP objects. The GP Contributors may, at their election (but shall have no obligation to), undertake to eliminate or cause to be eliminated such unacceptable defects, objections or exceptions, except that the GP Contributors shall be obligated to remove (i) judgments against the Contributors or the Property LLLPs, (ii) mortgages or other liens which can be satisfied by payment of a liquidated amount other than the Assumed Debt, (iii) payments to the mortgagees which are currently required pursuant to existing loan documents in order to cause the mortgagees to consent to MCRLP taking subject to the mortgages. Except as provided in the preceding sentence or below, the Contributors shall have no obligation to incur any expense in connection with curing such defects, objections or exceptions. Subject to the terms of this Section 6.2(b) and the GP Contributors’ right to adjourn the Closing as set forth below, the GP Contributors agree to respond to MCRLP’s Title Objection Letter (“ Contributors’ Title Response ”) within three (3) days of the Execution Date indicating whether they intend to undertake to eliminate or cause to be eliminated any objections, and, unless the GP Contributors elect to adjourn the Closing, as set forth below, MCRLP agrees to respond to Contributors’ Title Response prior to the expiration of the Inspection Period. The GP Contributors, in their discretion, may adjourn the Closing for up to sixty (60) days in the aggregate in order to eliminate unacceptable defects, objections or exceptions. Other than the items described in (i) through (iii) above, which the GP Contributors agree to cure or cause to be cured at their sole cost and expense without regard to the cost thereof, if, after complying with the foregoing requirements, the GP Contributors are unable to eliminate or cause to be eliminated all unacceptable defects, objections or exceptions in accordance with the terms of this Agreement on or before such adjourned date for the Closing, MCRLP shall elect either (w) to terminate this Agreement by notice given to the Contributors’ counsel (as designated in Article 26 of this Agreement) in which event the provisions of Section 25.2 shall apply, or (x) to accept title subject to such unacceptable defects, objections or exceptions and receive no credit against or reduction of the consideration to be given hereunder for any Property. Each GP Contributor agrees and covenants that it shall not voluntarily place or consent or permit any encumbrances or restrictions to title to any of the Properties from and after the date hereof, and if any encumbrance or restrictions are placed of record by any Contributor or Property LLLP against any of the Properties, the GP Contributors shall be obligated to remove them at or prior to Closing.

 

6.3.                               It shall be a condition to Closing that the Title Company be prepared to insure, title to each Property conveyed through the contribution of the Exchange Property, in the amount

 

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of the Allocated Property Value thereof (at a standard rate for such insurance) in the name of MCRLP or its designees, after delivery of the deeds or assignments of the Contributed Interests, by a standard 1992 ALTA Owners Policy, with such ALTA endorsements (including without limitation a comprehensive owner’s endorsement and a non-imputation endorsement, where available, for each Property) as are available in each applicable state where the Properties are located and as required by MCRLP attached, free and clear of all liens, encumbrances and other matters, other than the Permitted Encumbrances (the “ Title Policy ”). The Title Company shall provide affirmative insurance that any: (i) Permitted Encumbrances have not been violated, and that any future violation thereof will not result in a forfeiture or reversion of title; and (ii) the exceptions for Taxes shall apply only to the Taxes not yet due and payable. Each Contributor shall provide or cause to be provided such affidavits and undertakings as the Title Company insuring title to the Properties may reasonably require. The words “insurable title” and “insurable” as used in this Agreement are hereby defined to mean title which is insurable at standard rates (without special premium) by the Title Company without exception other than the Permitted Encumbrances, and standard printed policy exceptions.

 

6.4.                               Any unpaid Taxes, water charges, sewer rents and assessments, together with the interest and penalties thereon to the Closing Date (in each case subject to any applicable apportionment), and any mortgages or other liens created by or permitted by any Contributor, which such Contributor is obligated to pay and discharge pursuant to the terms of this Agreement, together with the cost of recording or filing of any instruments necessary to discharge such liens and such judgments, shall be paid at the Closing by such Contributor. The Contributors shall deliver to MCRLP, on the Closing Date, instruments in recordable form sufficient to discharge any such mortgages or other liens that are required to be paid and discharged pursuant to the terms of this Agreement.

 

6.5.                               If the Title Commitments disclose judgments, bankruptcies or other returns against other persons having names the same as or similar to that of any Contributor or any Property LLLP, such Contributor, on request by MCRLP, shall deliver to the Title Company affidavits showing that such judgments, bankruptcies or other returns are not against any Contributors, any Property LLLP or any affiliates. Upon request by MCRLP, each Contributor shall deliver any affidavits and documentary evidence as are reasonably required by the Title Company to eliminate the standard or general exceptions on the ALTA form Owner’s Policy. Each Contributor further agrees to deliver to the Title Company non-imputation indemnities or affidavits in the form attached hereto as Exhibit N necessary for the Title Company to issue a non-imputation endorsement for each Property, where available.

 

6.6.                               It is recognized and acknowledged that the portion of the Property known as Capital Office Park Buildings 5 and 6 and the Option Property described as Parcel I-1 are burdened and benefited by the terms of that certain Declaration of Easements dated January 7, 1986 and recorded among the Land Records of Prince George’s County, Maryland in Liber 6277 at Folio 240 (the “ Declaration ”). Notwithstanding anything contained herein to the contrary, Fourteenth LLLP, as declarant under the Declaration, shall be authorized prior to Closing hereunder, to record a modification to the Declaration in order to recognize and confirm that (i) the property subject to the Declaration, formerly known as Parcel F, has been further subdivided into Parcels H, I-1 and I-2, (ii) Capital Office Park Buildings 5 and 6 have been constructed on Parcels H and I-2, respectively, (iii) nothing in the Declaration shall be

 

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interpreted as precluding the owner of Parcel I-1 from developing an office building on Parcel I-1, and (iv) Parcels H, I-1 and I-2 shall continue to be benefited and burdened by the various easements and rights-of-way provided under the Declaration. The form of any such modification shall be submitted to MCRLP for review and approval not less than fifteen (15) days prior to the Closing and MCRLP’s approval shall not be arbitrarily withheld, delayed or conditioned.

 

7.                                       REPRESENTATIONS AND WARRANTIES OF THE GP CONTRIBUTORS AND THE PROPERTY LLLPs.

 

7.1.                               In order to induce MCRLP to perform as required hereunder, as of the date hereof and as of the Closing Date, each Property LLLP hereby warrants and represents, jointly and severally, all of the matters set forth in this Section 7.1. Without limiting the foregoing, in order to further induce MCRLP to perform as required hereunder, each GP Contributor agrees to, and shall, be liable for any breach of any of the warranties and representations set forth in this Section 7.1, subject in all respects to the limitations on (i) survival set forth in Section 7.4 hereof, (ii) knowledge set forth in Section 7.8 hereof, (iii) liability set forth in Sections 25.3(b) hereof and (iv) security for any breach set forth in Section 25.4 hereof. Anything contained herein to the contrary notwithstanding, the GP Contributors shall have no personal liability for any breach of any representation or warranty under this Section 7.1 and MCRLP’s sole remedy with respect to such breaches shall be to recover Units from the Escrow Pool pursuant to Section 25.4 hereof.

 

(a)                                   There are no actions, suits, labor disputes, litigation or proceedings currently pending or, to the knowledge of any Property LLLP in which such GP Contributor is a partner, threatened in writing against or related to such Property LLLP with respect to the Property, the environmental condition thereof, or the operation thereof, except as set forth on Schedule 7.1(a)   annexed hereto.

 

(b)                                  Annexed hereto as Schedule 7.1(b)   is a true, complete and correct schedule of all of the Leases to which the Properties are subject. The Leases are valid and bona fide obligations of the landlord thereunder and are in full force and effect. To the knowledge of each Property LLLP, no defaults remain uncured pursuant to notices of default sent to any Tenants and no condition exists which, solely with the passage of time or the giving of written notice or both, will become a default. Except as disclosed in writing to MCRLP, no Property LLLP has received any written notices of default by the applicable Tenant under any Lease which remain uncured or which were cured within the last two (2) years. The Leases constitute all of the Leases, tenancies or occupancies or rights to use and occupancy affecting any Property on the date hereof (except as a result of any subleases of portions of any Property), except as set forth on the Rent Roll, all Tenants have commenced occupancy and there are no other rights with respect to the use or occupancy of the Properties (except as a result of any subleases of portions of any Property). Except as expressly set forth in the Leases, no Tenant is entitled to now or in the future any concession, rebate, offset, allowance or free rent for any period nor has any such claim been asserted by any Tenant.

 

(c)                                   Annexed hereto as Schedule 7.1(c)   is a listing (the “ Rent Roll ”) of the following, as of the date hereof and as of the Closing Date, which is true, complete and correct in all material respects for the Property and which lists, among other things, the amount deposited or

 

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posted as a letter of credit (the “Security Deposit” ) under any Lease in the nature of security for the performance of the obligations of the Tenant or user, if any.

 

(d)                                  All undisputed bills and claims for labor performed and materials furnished to or for the account of the applicable owner of any Property arising prior to the Closing Date will be paid in full by such owner within customary time periods but not later than the Closing Date. To the extent any bills and claims for labor performed and materials furnished to or for the account of the applicable owner of any Property prior to the Closing Date are disputed, the applicable Property LLLP shall commence any actions related to such bills and claims promptly, such commencement being no later than forty-five (45) days from the receipt of an invoice by the applicable Property LLLP, and shall diligently prosecute same to its conclusion. If such action results in (i) a lien on any Property which lien remains unbonded for thirty (30) days, or (ii) any vendor providing unique services or services at below market price refusing to service any Property, the Property LLLP shall cause payment of same to be made to remedy same within ten (10) days thereafter. To the knowledge of such Property LLLP, the landlord under any Lease with respect thereto has performed all of the obligations and observed all of the covenants required of the landlord under the Leases. All work, alterations, improvements or installations required to be made for or on behalf of all Tenants under the Leases have in all respects been carried out, performed and completed and there is no agreement with any Tenant for the performance of any work to be done in the future, except as provided in any Lease.

 

(e)                                   No Property LLLP has received any written notice and has no knowledge of (i) any pending, threatened or contemplated annexation or condemnation proceedings, or private purchase in lieu thereof, affecting or which may affect any Property, or any part thereof, (ii) any proposed or pending proceeding to change or redefine the zoning classification of all or any part of any Property, (iii) any proposed or pending special assessments affecting any Property or any portion thereof, (iv) any penalties or interest due with respect to real estate taxes assessed against any Property and (v) any proposed change(s) in any road or grades with respect to the roads providing a means of ingress and egress to any Property.

 

(f)                                     No Property LLLP has received any written notice and has no knowledge of any suits or judgments relating to any violations (including, without limitation, Environmental Laws (as defined herein)) of any laws, ordinances or regulations affecting any Property, or any violations or conditions that may give rise thereto, from any agency, board, bureau, commission, department or body of any municipal, country, state or federal governmental unit, or any subdivision thereof, having, asserting or acquiring jurisdiction over all or any part of any Property or the management, operation, use or improvement thereof (collectively, the “ Governmental Authorities ”), and there are no outstanding orders, judgments, injunctions, decrees or writ of any Governmental Authorities against or involving the Contributors in respect of any Property.

 

(g)                                  No Property LLLP has received any written notice of outstanding requirements or recommendations by the holder of any mortgage encumbering any of any Property, which require or recommend any repairs or work to be done on any Property of a material nature.

 

(h)                                  There are no Service Contracts, union contracts, employment agreements or other agreements affecting any Property or the operation thereof, except the Service Contracts. True,

 

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accurate and complete copies of all the Service Contracts have been made available for review and are listed on Schedule 7.1(h)   annexed hereto. All sums presently due and payable by the Property LLLPs under the Service Contracts which are due as of the Closing Date shall be fully paid on the Closing Date.

 

(i)                                      No Property LLLP has received any written notice that any of the permits and licenses required in connection with the operation of the Properties are subject to, or in jeopardy of, revocation or non-renewal.

 

(j)                                      There are no employees working at or in connection with any Property, except as set forth on Schedule 7.1(j) . There are no union agreements affecting any Property as of the date hereof, nor shall any such agreements affect any Property as of the Closing Date.

 

(k)                                   Annexed hereto as Schedule 7.1(k) , is a true, accurate and complete schedule of all leasing commission obligations affecting any Property. The respective obligations of the Property LLLPs, the GP Contributors and MCRLP with respect to said commissions are set forth in Article 9.

 

(l)                                      All personal property, fixtures, equipment, inventory and fixtures (“ Personal Property ”) owned by any Property LLLP and located on or at any Property, and used in connection with the operation of any Property is now owned and will on the Closing Date be owned by such Property LLLP free and clear of any conditional bills of sale, chattel mortgages, security agreements or financing statements or other security interests of any kind, except the lien of the Existing Loan Documents.

 

(m)                                To the knowledge of the Property LLLPs, all pre-existing aboveground and underground storage tanks and vessels, if any, at any Property have been removed and their contents disposed of in accordance with and pursuant to all applicable Environmental Laws or their continued use and operation is in accordance with all applicable Environmental Laws.

 

(n)                                  No Property LLLP has knowingly permitted, and shall not knowingly permit any person or entity to engage in any activity on the Property, in violation of Environmental Laws. The Property LLLPs have provided MCRLP with all environmental site assessments, investigations, and documents related to Contaminants and to prior operations set forth on Schedule 7.1(n) attached hereto.

 

(i)                                      “ Environmental Laws ” means each and every applicable federal, state, county, or municipal statute, ordinance, rule, regulation, order, code, directive or requirement of any Governmental Authority in any way related to Contaminants.

 

(ii)                                   “ Contaminants ” shall include, without limitation, any regulated substance, toxic substance, hazardous substance, hazardous waste, pollution, pollutant or contaminant, as defined or referred to in the Resource Conservation and Recovery Act, as amended, 42 U.S.C. §6901 et seq .; the Comprehensive Environmental Response Compensation and Liability Act, as amended, 42 U.S.C. §9601 et seq .; (“ CERCLA ”); the Federal Water Pollution Control Act, as amended, 33 U.S.C. §1251 et seq .; together with any amendments thereto, regulations promulgated thereunder and all substitutions thereof, as well as words of similar purport or meaning referred to in any other applicable

 

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federal, state, county or municipal environmental statute, ordinance, rule or regulation, including, without limitation, asbestos, polychlorinated biphenyls, urea formaldehyde and petroleum products and petroleum-based derivatives.

 

(iii)                                “ Discharge ” shall mean the releasing, spilling, leaking, leaching, disposing, pumping, pouring, emitting, emptying, treating or dumping of Contaminants at, into, onto or from the Properties, as the case may be, regardless of whether the result of an intentional or unintentional action or omission.

 

(iv)                               “ Environmental Documents ” shall mean all environmental documentation in the possession or under the control of the GP Contributors or the Property LLLPs concerning the Properties, as the case may be, or their environs, including, without limitation, all sampling plans, cleanup plans, preliminary assessment plans and reports, remedial action plans and reports, or the equivalent, sampling results, sampling result reports, data, diagrams, charts, maps, analysis, conclusions, quality assurance/quality control documentation, correspondence to or from any Governmental Authority, submissions to any Governmental Authority and directives, orders, approvals and disapprovals from any Governmental Authority.

 

(v)                                  “ Environmental Laws ” means each and every applicable federal, state, county or municipal statute, ordinance, rule, regulation, order, code, directive or requirement of any Governmental Authority in any way related to Contaminants.

 

(o)                                  The current principal balance outstanding under the Assumed Debt as of the date hereof, is SIXTY-THREE MILLION SEVEN HUNDRED EIGHTY-ONE THOUSAND EIGHT HUNDRED TWENTY-FOUR DOLLARS ($63,781,824). All monetary payments due and payable under the Existing Loan Documents on or before the date hereof by the Property LLLPs (or any successor entity) have been paid and no written notice has been received by any of the Property LLLPs and none of the Property LLLPs have any knowledge of any monetary or non-monetary defaults on the part of any party to the Existing Loan Documents as of the date hereof and no condition exists which with the giving of notice or the passage of time, or both, would constitute a default under the Existing Loan Documents. Except for any documents being entered into by MCRLP, the Existing Loan Documents constitute all of the documents evidencing, securing or otherwise dealing with the Assumed Debt.

 

(p)