PURCHASE AGREEMENT

 

Exhibit 2.1

GLADSTONE COMMERCIAL LIMITED PARTNERSHIP

PURCHASE AGREEMENT

EASTPARK GROUP II, L.L.C.

Dated: December __3_ , 2003

 

 

TABLE OF CONTENTS

-i-

 

EXHIBITS

-ii-

 

SUMMARY OF TERMS

 

PURCHASE AGREEMENT

PREAMBLE:

     THIS PURCHASE AGREEMENT (this “ Agreement ”) is made as of the _3       day of December, 2003 (the “ Effective Date ”), by and between GLADSTONE COMMERCIAL LIMITED PARTNERSHIP, a Delaware limited partnership (the “ Company ”), as purchaser, and EASTPARK GROUP II, L.L.C., a North Carolina limited liability company, (the “ Owner ”), as seller, of all of the fee simple interest of the Property.

RECITALS:

A.     Owner is the owner of the property (hereafter the “Property”), as more particularly described in Exhibit 1.8 attached hereto, which term Property shall include the land and all Improvements (as hereinafter defined) thereon, together with all rights and appurtenances pertaining to such land, but only to the extent any such rights exist and can be conveyed by Owner, including, without limitation: (i) all minerals, oil, gas, and other hydrocarbon substances thereon; (ii) all rights, titles and interests of Owner in and to adjacent strips, streets, roads, avenues, alleys and rights-of-way, public or private, open or proposed, including any rights in vault space adjacent to or within the boundaries of such land; (iii) all easements, covenants, privileges, and hereditaments, whether or not of record; (iv) all access, air, water, riparian, development, utility, and solar rights; (v) all signs, appliances, security systems, fixtures, mechanical systems, landscaping and other property owned by Owner located at the Property, but excluding items of property owned by Tenant (as hereinafter defined) that may be removable under the Lease; (vi) all site plans, surveys, plans and specifications, and floor plans relating to the Property; (vii) all warranties, guarantees and bonds relating to the Property; and (viii) all permits, licenses, certificates of occupancy, and other governmental approvals which relate to the Property.

B.     The Company desires to acquire, and Owner desires to sell, the Property, upon and subject to the terms and conditions set forth in this Agreement.

      NOW, THEREFORE, in consideration of the mutual promises hereinafter set forth and of other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I
DEFINITIONS

     For purposes of this Agreement, unless the context otherwise requires, the following terms shall have the meanings hereinafter set forth (such meanings to be applicable to the singular and plural forms of such terms and the masculine and feminine forms of such terms):

     Section 1.1 “ Business Day ” shall mean any day excluding Saturday, Sunday and any day which in the State of North Carolina is a legal holiday or a day on which banking institutions are authorized by law or by other governmental actions to close.

-1-

 

     Section 1.2 “ Environmental Law ” shall mean any present and future law and any amendments (whether common law, statute, rule, order, regulation or otherwise), permits and other requirements or guidelines of governmental authorities applicable to the Property and relating to the environment and environmental conditions or to any Hazardous Material (including, without limitation, CERCLA, 42 U.S.C. § 9601 et seq ., the Resource Conservation and Recovery Act of 1976, 42 U.S.C. § 6901 et seq ., the Hazardous Materials Transportation Act, 49 U.S.C. § 1801 et seq ., the Federal Water Pollution Control Act, 33 U.S.C. § 1251 et seq ., the Clean Air Act, 33 U.S.C. § 7401 et seq ., the Toxic Substances Control Act, 15 U.S.C. § 2601 et seq ., the Safe Drinking Water Act, 42 U.S.C. § 300f et seq ., the Emergency Planning and Community Right-To-Know Act, 42 U.S.C. § 1101 et seq., the Occupational Safety and Health Act, 29 U.S.C. § 651 et seq ., and any so-called “Super Fund” or “Super Lien” law, any law requiring the filing of reports and notices relating to Hazardous Materials, environmental laws administered by the Environmental Protection Agency, and any similar state and local laws, all amendments thereto and all regulations, orders, decisions, and decrees now or hereafter promulgated thereunder concerning the environment, industrial hygiene or public health or safety).

     Section 1.3 “ Governmental Authorities ” shall mean any commission, department or body of any municipality, township, city, county, state or Federal governmental unit having jurisdiction over any of the Property or the ownership, management, operation, use or improvement thereof.

     Section 1.4 “ Hazardous Conditions ” refers to the presence on, in or about any of the Property (including ground water) of Hazardous Materials, the concentration, condition, quantity, location or other characteristics of which fail to comply with applicable Environmental Laws.

     Section 1.5 “ Hazardous Materials ” shall mean (i) any asbestos and any asbestos containing material, (ii) any substance that is then defined or listed in, or otherwise classified pursuant to, any Environmental Law or any other applicable law as a “hazardous substance,” “hazardous material,” “hazardous waste,” “infectious waste,” “toxic substance,” “toxic pollutant” or any other formulation intended to define, list, or classify substances by reason of deleterious properties such as ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, or Toxicity Characteristic Leaching Procedure (TCLP) toxicity, (iii) any petroleum and drilling fluids, produced waters, and other wastes associated with the exploration, development or production of crude oil, natural gas, or geothermal resources, and (iv) any petroleum product, polychlorinated biphenyls, urea formaldehyde, radon gas, radioactive material (including any source, special nuclear, or by-product material), medical waste, chlorofluorocarbon, lead or lead-based product, and any other substance whose presence could be detrimental to the Property or hazardous to health or the environment.

     Section 1.6 “ Improvements ” shall mean all buildings, parking areas, signs, driveways, site improvements, structures and other improvements located on the Property.

     Section 1.7 “ Purchase Price ” means the amount, in U.S. dollars, that is identified in the Summary of Terms.

-2-

 

ARTICLE II
PURCHASE PRICE AND DEPOSIT

     Section 2.1 Payment of Purchase Price . On the terms and subject to the conditions of this Agreement, at the Closing (as hereinafter defined), Owner shall sell, transfer, convey, assign, and deliver to the Company, and the Company shall purchase and accept from Owner all the right, title, and interest of Owner in and to the Property for an aggregate purchase price (the “ Aggregate Purchase Price ”) in the amount stated in the Summary of Terms in U.S. Dollars. The Aggregate Purchase Price will be adjusted as explicitly set forth in this Agreement.

     Section 2.2 Deposit and Escrow Agreement . Simultaneously with the execution of this Agreement, the Company shall place in escrow with First American Title Insurance Company in Washington, DC (the “ Title Company ”) the sum of Fifty Thousand Dollars ($50,000.00), representing an initial deposit, to be held in a commercial bank in a federally-insured account in accordance with an Escrow Agreement (the “ Escrow Agreement ”) substantially in the form attached hereto as Exhibit 2.2 . Upon the expiration of the Study Period, unless this Agreement is terminated, the Company shall deliver an additional One Hundred Thousand Dollars ($100,000.00), representing an additional deposit (the initial deposit and the additional deposit, together with accrued interest thereon, are herein referred to as the “ Deposit ”). The Deposit shall be disbursed by the Title Company in accordance with the terms and conditions of this Agreement and the Escrow Agreement.

ARTICLE III
STUDY PERIOD

     Section 3.1 Term of Study Period . The term “ Initial Study Period ” shall mean the period commencing on the Effective Date and ending at midnight on the date that is forty-five (45) days after the Effective Date. Provided Company has ordered the Third Party Reports (as herein defined) within five (5) Business Days after final execution of this Agreement, the Company shall have the right to extend the Initial Study Period (the “ Extended Study Period ”) by giving notice to Owner prior to the end of the Study Period for either (i) fifteen (15) days, until the date that is sixty (60) days after the Effective Date, as a result of any unforeseen delay in its receipt of any report to be delivered to it by third parties in connection with its investigation of the Property, including but not limited to the Commitment, Survey, MIA Appraisal, Environmental Assessment and Additional Environmental Assessments (all as hereinafter defined) (collectively, the “Third Party Reports”); or (ii) as otherwise provided in Section 3.3. The Initial Study Period as extended by the Extended Study Period is hereinafter referred to as the “ Study Period .” If on or before the expiration of the Study Period, the Company, in its sole and absolute discretion, shall elect not to proceed to the Closing for any reason whatsoever, then (i) the Company shall have the right to terminate this Agreement by giving written notice of termination to Owner on or before the expiration of the Study Period, whereupon this Agreement shall automatically terminate, the Deposit shall be returned to the Company, and neither party shall have any further rights or obligations under this Agreement, except as expressly set forth in Section 12.3 and Articles 14, 16 and 18 of this Agreement; and (ii) Company shall repair and restore any damage to the Property, any property of Tenant, or to any persons caused by the entry of Company, its agents, employees, or contractors onto the Property pursuant to this Article III.

-3-

 

     Section 3.2 Information Disclosure and Testing . Until the Closing hereunder, the Company and its agents and representatives shall have the right: (a) to have full and complete access, during normal business hours and with reasonable advance notice to Owner, to inspect the books, records, files, operating statements, and other information relating to the Property (except for information relating to Owner’s loan with BB&T) and related correspondence files; and (b) subject to the requirements of the Lease, to enter upon the Property during normal business hours, taking care to avoid causing an unreasonable disruption of the operations of the Property, to make such inspections, reviews, surveys, soil tests, hydrology tests, environmental tests, and other tests or investigations as the Company may reasonably deem appropriate. The Company shall order all Third Party Reports within five (5) Business Days after the Effective Date. Owner has delivered to the Company, at no cost to the Company, legible, true, correct and complete copies of the items set forth in Exhibit 3.2 . In addition, Owner agrees to make available to the Company upon request from time to time any other information reasonably requested by the Company, and in the possession of Owner, relating to the Property. From and after the Effective Date, the Company shall be entitled to communicate directly with Tenant and any Governmental Authorities in connection with the Company’s proposed purchase, development or operation of the Property, provided that the Company shall not disclose to the Governmental Authorities the results of any Third Party Reports or any information relating to the Property or its operation, the disclosure of which might be detrimental to Owner or Tenant, except to the extent that, in the opinion of counsel to the Company, the Company is required by law, court order, governmental order or decree to disclose such results or is otherwise known or available to the public or to any Governmental Authority. The exercise by the Company of any of the preceding or any other act of the Company shall not negate any representation, warranty or covenant of Owner or modify any of the Company’s rights or Owner’s obligations in the event of any breach by Owner of any of its representations, warranties or covenants under this Agreement.

     Section 3.3 Environmental Assessments and Additional Environmental Assessment . During the Study Period, the Company shall have the right to have an environmental consultant or other professional perform a “Phase I” environmental inspection and assessment (an “ Environmental Assessment ”) of the Property and shall, after receipt of a final report for the Environmental Assessment, deliver a copy thereof to Owner. In the event (a) the results of the Environmental Assessment are inconclusive, in the Company’s sole judgment or (b) the results of the Assessment reveal environmental matters unacceptable to the Company, in the Company’s sole judgment, the Company shall provide written notice thereof to Owner within three (3) Business Days after receipt of the results. If the Company desires to perform additional so-called “Phase II” inspections and tests (each, an “ Additional Environmental Assessment ”), the Company shall provide notice of such request to Owner. Owner shall have the option to either permit the Company to perform the Additional Environmental Assessment and to extend the Closing Deadline for thirty (30) days in order to complete such Additional Environmental Assessment, or to refuse to allow the Company to perform the Additional Environmental Assessment. If Owner refuses to allow the Company to perform the Additional Environmental Assessment, the Company shall have the right to either (x) waive the request for the Additional Environmental Assessment and proceed to Closing, or (y) terminate this Agreement and receive a refund of the Deposit, in which event the parties shall have no further obligations except as expressly set forth in Section 12.3 and Articles 14, 16 and 18 , and except that Owner shall reimburse Company for Company’s Due Diligence and Contract Costs (as hereinafter defined).

-4-

 

The Company shall provide to Owner a copy of all Additional Environmental Assessments upon Owner’s request. In the event the Environmental Assessment and/or the Additional Environmental Assessment reveal that a Hazardous Condition exists at the Property, the Company shall have the right to request Owner to take appropriate remedial actions with respect to such Hazardous Condition by giving written notice to Owner on or before the date that is ten (10) Business Days after the Company receives the last of the Environmental Assessment and the Additional Environmental Assessment. Within five (5) Business Days of receiving such notice, Owner may, at its option, elect to take remedial actions with respect to such Hazardous Condition or to refuse to take remedial action, such election to be given by written notice to the Company. If Owner elects to take remedial action, then Owner may extend the Closing Deadline for up to thirty (30) days in order to effect the remedial action. If Owner elects not to take remedial action, then the Company shall have the option of (a) waiving its request of remediation and proceeding to the Closing, or (b) terminating this Agreement whereupon the Deposit shall be returned to the Company, and the parties shall have no further rights or obligations hereunder other than those set forth in Section 12.3 and Articles 14, 16 and 18.

ARTICLE IV
TITLE

     Section 4.1 State of Title . At the Closing, Owner shall own, beneficially and of record, good, marketable and indefeasible fee simple title to the Property, subject only to the Permitted Exceptions (as herein defined) and matters that will be paid off by Owner at Closing.

     Section 4.2 Title Commitment; Survey . The Company shall obtain a commitment, together with legible copies of documents referred to in such commitment (a “ Commitment ”), for an owner’s policy of title insurance covering the Property, including the requirements and endorsements set forth in Exhibit 4.2 . In addition, the Company shall obtain a current plat of survey of the Property, including the Improvements (a “ Survey ”) prepared by a licensed surveyor. The Survey shall be prepared in accordance with the requirements set forth in Exhibit 4.2(a) and shall be certified to the Company, the Company’s assignee (if any), the Company’s lenders and the Title Company. The Company shall deliver copies of the Commitment and the Survey to Owner within five (5) Business Days after receipt by Company.

     Section 4.3 Permitted Exceptions . The Company shall have the right to object, in its sole and absolute discretion, to any exceptions to title, or to any matter shown on the Survey, by giving written notice to Owner on or before the date that is ten (10) Business Days after the Company receives the last of the Commitment and the Survey. Within ten (10) days of receiving such notice, Owner shall, at its option, as to any such exception or other matter of a non-monetary nature, either (a) use reasonable efforts to remove, correct and cure such defects or such other matters, or (b) refuse to remove, correct and cure such defects or other matters; provided, however, that notwithstanding anything herein to the contrary, as to any such defect or other matter of a monetary nature that can be cured by the payment of money, such as a judgment, lien or tax, Owner shall cause such defect or other matter to be discharged and released at Closing, provided that in no event shall Owner be obligated to incur costs for the removal of such matters of an amount in excess of Net Proceeds. “Net Proceeds” shall mean the amount to be received by Owner at Closing, exclusive of all commissions, mortgage payoff, closing costs and proration of taxes, expenses and rents. If Owner elects not to cure or have

-5-

 

discharged or released any such defects, liens or encumbrances, then the Company shall have the remedies provided in Section 4.4 below. If the Company fails to provide such written objection, then the Company shall be deemed to have approved all matters affecting title disclosed in the Commitment and Survey as of the date thereof, as applicable (the “ Permitted Exceptions ”); provided, that, in no event shall any lien or encumbrance of a monetary nature be considered a Permitted Exception. Owner hereby irrevocably authorizes the Title Company to deduct from the Aggregate Purchase Price at the Closing all sums necessary to pay off and discharge any and all such liens or encumbrances to the extent that such sums do not exceed the Net Proceeds.

     Section 4.4 Owner’s Election . If Owner elects not to endeavor to cure or fails to cure the Company’s title and Survey objections, then the Company shall have the option of either (a) waiving the objections (in which case such exceptions shall thereafter be treated as Permitted Exceptions) and proceeding to the Closing, or (b) terminating this Agreement whereupon the Deposit shall be returned to the Company and the parties shall have no further rights or obligations hereunder other than those set forth in Section 12.3 and Articles 14, 16 and 18. To the extent the Company accepts the title to the Property and after the Study Period and prior to Closing, a defect in title or an intervening lien materializes which was not reflected in the Commitment or Survey, the Company shall provide written notice to Owner of said lien or defect and Owner may elect to either remove, correct or cure such defect or to refuse to do so. If Owner elects to cure the defect, then the Closing Deadline may be extended to allow for a full 30-day period to cure the defect. If Owner refuses to remove, correct or cure such defects or such other matters, the Company may, at its option, (A) terminate this Agreement, whereupon the Deposit shall be returned to Company, and the parties shall have no further rights or obligations hereunder other than those set forth in Section 12.3 and Articles 14, 16 and 18, or (B) elect to accept title to the Property and discharge or release any liens, encumbrances or other matters of a monetary nature or which may otherwise be discharged, released or removed by the payment of a monetary sum and reduce the Aggregate Purchase Price by the amount necessary to correct or cure such monetary liens, encumbrances or other matters; provided, however, such reduction shall not exceed Net Proceeds. Nothing set forth in this Article 4 shall limit the Company’s right to terminate this Agreement as set forth in Article 3.

ARTICLE V
REPRESENTATIONS AND WARRANTIES

     Section 5.1 Owner’s Representations . Owner represents and warrants to the Company that the representations and warranties set forth below are true and correct on and as of the Effective Date, and shall be true and correct in all material respects on and as of the date of the Closing, except as to any matters for which Owner provides written notice to Company of a change in any such representation or warranty:

          (a) Due Execution; Authority . (i) Owner is duly formed, validly existing and in good standing as a limited liability company under the laws of the State of North Carolina; (ii) this Agreement is, and all the documents to be delivered by Owner pursuant to this Agreement (the “ Owner Closing Documents ”) will be, when executed by Owner, binding on and enforceable against Owner in accordance with their respective terms; (iii) there are no other consents required to authorize Owner’s entry into and performance of this Agreement, the Owner Closing Documents and/or the transactions contemplated hereby or thereby; (iv) this Agreement,

-6-

 

the Owner Closing Documents and the transactions contemplated hereby and thereby have been, or will have been prior to the Closing, approved by all necessary action of Owner; and (v) the execution and delivery of the Owner Closing Documents do not and will not constitute a breach or default under any agreement by which Owner is bound, or by which any of Owner’s property is encumbered.

          (b) Contracts . There are no contracts entered into by Owner or its agents relating to the ownership, management, leasing, parking, operation, maintenance or repair of the Property (“Contracts”).

          (c) Tenant Leases .

               (i) Exhibit 5.1(c)(i) attached hereto sets forth a true and complete copy of the existing lease (the “ Tenant Lease ”) for the Property between Owner and ABB Power T&D Company (“Original Tenant”) as the original tenant, and the assignment to Elster Electricity, LLC, a Delaware limited liability company (the “ Tenant ”), including any subleases, licenses, amendments, assignments, side letters, option exercise letters and any other documents, certificates or instruments which may create future obligations under the Tenant Lease. There are no tenants with whom Owner has entered into a written lease agreement and, to the best of Owner’s knowledge, there are no tenants or other parties in possession of any part of the Property, except Tenant or as may otherwise be set forth in the Permitted Exceptions, and no one other than the Tenant has any right to occupy, operate or manage any part of the Property. The Tenant Lease is the only lease or other right or grant of occupancy of all or any part of the Property and neither Tenant nor any other person or entity has a right of first refusal, option, right, or other right to purchase all or any portion of the Property.

               (ii) The Tenant Lease has been duly authorized and executed by Owner and, to the best of Owner’s knowledge, by the Tenant. The Tenant Lease is in full force and effect according to the terms set forth therein. Owner has performed or paid all obligations required to be performed or paid by it under the Tenant Lease and is not in default of any of its obligations under the Tenant Lease, including but not limited to any obligations with respect to structural repair and maintenance of the Improvements. To the best of Owner’s knowledge, there are no uncured defaults by Tenant under the Tenant Lease and Tenant has not asserted any defense to, offsets or claims against rent payable by it or obligations under the Tenant Lease. Notwithstanding the preceding, Company has been advised by Owner, as of the date of this Agreement, the Replacement Letter of Credit (as herein defined) has not been provided by Tenant to Owner. Further, on October 7, 2003, Owner received notice of a downgrade of Tenant’s insurance company from an “A-” rating to a “B+” rating. The existence of the matters set forth in the preceding two sentences shall not be deemed a misrepresentation of any matter set forth herein by Owner. Owner has no reason to believe that Tenant is or may become unable or unwilling to cure in a timely manner or perform, as the case may be, any or all of its obligations under the Tenant Lease. The Tenant is in occupancy of its premises under the Tenant Lease, and, to the best of Owner’s knowledge, Tenant does not intend to abandon is premises or default under the Tenant Lease. To the best of Owner’s knowledge, no claim, controversy, dispute, quarrel or disagreement exists between Tenant and Owner. Tenant has not prepaid any rent more than one (1) month in advance. All of the improvements to be constructed by Owner, required under the Tenant Lease and in all collateral agreements, plans and

-7-

 

specifications respecting same, have been completed as so required. Owner has not at any time knowingly waived any provision under the Tenant Lease. Owner has not granted any concessions to Tenant except as disclosed in the Tenant Lease.

          (d) Letter of Credit . Exhibit 5.1(c)(ii) attached hereto is a true and complete copy of the letter of credit (the “ Letter of Credit ”) delivered to and currently being held by Owner ‘s lender, Branch Banking and Trust Company (“ BB&T ”) pursuant to the applicable provisions of the Tenant Lease. The Letter of Credit is in full force and effect strictly according to the terms set forth therein. Owner has been advised by Tenant that Tenant intends to provide an amendment to the Letter of Credit (the “ Replacement Letter of Credit ”) to provide for transferability to a new beneficiary. There have been no draws against the Letter of Credit by Owner or by any third party.

          (e) Leasing Commissions . Owner has paid and discharged all obligations to pay any leasing commissions with respect to the initial Tenant Lease, except that commissions owed on the Lease extension are to be paid by Owner to Capital Associates Limited Partnership at Closing of the sale of the Property.

          (f) Condemnation . Owner has no knowledge of any pending or contemplated condemnation proceedings affecting all or any part of the Property. Owner has been contacted by the North Carolina Department of Transportation regarding an easement to install stormwater piping and rip rap and to release water upon a portion of the Property.

          (g) Structural . To the best of Owner’s knowledge, no structural, mechanical, electrical, plumbing, roofing or other major systems of any Improvements are in need of material repair or replacement. Neither Owner nor, to the best of Owner’s knowledge, Tenant has received any written notice from any insurance company or Governmental Authority of any defect or inadequacy in connection with the Property’s structure or systems which has not heretofore been cured.

          (h) Zoning/Violations . To the best of Owner’s knowledge, the Property is currently zoned with a classification that permits the ownership, operation, development, construction, and use of the Property as currently being used without special exception or permit. To the best of Owner’s knowledge, there is not now pending nor is there any proposed or threatened proceeding for the rezoning of the Property or any portion thereof. Owner has no knowledge of nor has Owner, or to the best of Owner’s knowledge, Tenant received any written notice from any Governmental Authority that any zoning, subdivision, environmental, hazardous waste, building code, health, fire, safety or other law, order, ordinance or regulation is violated by the continued maintenance, operation or use of the Property, including, without limitation, any Improvements located thereon or any parking areas. On or before the Closing Deadline, Owner shall cure (or escrow sufficient funds at Closing with the Title Company to cure) all violation notices issued with respect to the Property resulting from any omission or affirmative act of Owner or its representatives.

          (i) Permitted Exceptions . Owner and, to the best of Owner’s knowledge, Tenant have performed all obligations under and are not in default in complying

-8-

 

with the terms and provisions of any of the covenants, conditions, restrictions, rights-of-way and easements constituting one or more of the Permitted Exceptions for the Property.

          (j) Permits, Etc . To the best of Owner’s knowledge, all permits, licenses, authorizations and certificates of occupancy required by Governmental Authorities for the management, occupancy, leasing and operation of the Property are in full force and effect and will remain in full force and effect after the Closing.

          (k) Litigation . Owner has received no notice of any dispute, proceeding, suit or litigation relating to the Tenant Lease or the Property, and to the best of Owner’s knowledge, no such dispute, proceeding, suit or litigation is threatened in any tribunal.

          (l) FIRPTA . Owner is not a “foreign person” within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended, and the regulations promulgated thereunder.

          (m) Indebtedness . No material defaults or events of default (as defined therein) have occurred and are continuing under the terms of any documents evidencing or securing indebtedness which is secured by the Property or for which Owner is liable.

          (n) Material Change . Neither Owner nor, to the best of Owner’s knowledge, Tenant has received written notice from any Governmental Authority of any pending or contemplated change in any regulation, code, ordinance or law, or private restriction applicable to the Property, or any natural or artificial condition upon or affecting the Property, or any part thereof, which would result in any material change in the condition of the Property or any part thereof, or would in any way limit or impede the operation or development of the Property.

          (o) Accuracy of Documents . To the best of Owner’s knowledge, all documents and records to be delivered pursuant to Section 3.2 will be true, correct and complete copies of the documents and records required to be delivered and will accurately reflect the matters contained therein.

          (p) Not Misleading . Without limiting the representations and warranties of Owner herein, to the best of Owner’s knowledge, the representations and warranties of Owner in this Agreement do not make any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

          (q) Tax Matters . Owner has relied solely on its own counsel for advice on any and all federal, state and local tax matters relating to this Agreement and the transactions contemplated herein and has not relied on any advice or representations of the Company, or its counsel with respect to any federal, state and local tax matters relating to this Agreement or the transactions contemplated herein.

          (r) Warranties . To the best of Owner’s knowledge, neither Owner nor Tenant has released or modified any warranties of builders, contractors, manufacturers or other trades persons that have been given to Owner.

-9-

 

          (s) Utilities . To the best of Owner’s knowledge, usable sanitary and storm sewers, public water, and electrical utilities (collectively, the “ Utilities ”) of adequate capacity required for the operation of the Property, are installed in, and are duly connected to, the Property and can be used without any charge except the normal user charges for sanitary sewers and the normal and usual charges imposed for public water and electric utilities.

          (t) Bankruptcy . Owner has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition by Owner’s creditors, (iii) suffered the appointment of a receiver to take possession of all or substantially all of Owner’s assets, (iv) suffered the attachment, or other judicial seizure of all, or substantially all, of Owner’s assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or compromise to its creditors generally.

     Section 5.2 Knowledge . For purposes of this Agreement, the phrase “to the best of Owner’s knowledge” or words of similar import, shall mean that the applicable party has conducted a reasonable review of its files and interviewed current employees in positions of responsibility on the subject and such review and interviews did not disclose any information contrary to the accuracy or veracity of any such representation or warranty.

     Section 5.3 Supplemental Information . Owner shall provide written notice to the Company at any time and from time to time after the Effective Date through the Closing if it acquires any information that any of the representations or warranties made in this Agreement were inaccurate in any material respect as of the Effective Date or will be inaccurate in any material respect as of the Closing.

ARTICLE VI
COVENANTS AND ADDITIONAL OBLIGATIONS OF OWNER

     Section 6.1 Covenants of Owner . Owner agrees that from the date of this Agreement to the Closing, it will:

          (a) Insurance . Maintain or cause Tenant to maintain all insurance required in accordance with Section 8.04 of the Tenant Lease, provided that on September 7, 2003, Owner was advised that the rating of Tenant’s insurance company has been downgraded from a “A-” to a “B+”. Owner agrees to cooperate with the Company and to use all commercially reasonable efforts to enforce Tenant’s requirement under the Tenant Lease to obtain a replacement insurance policy (the “Replacement Insurance Policy”), in form and content satisfactory to the Company, on or before January 1, 2004, or as soon as possible thereafter. This Section 6.1(a) shall survive the Closing until such time as Tenant produces the Replacement Insurance Policy and it becomes effective.

          (b) Contracts and Business Practice . Not become a party to any new licenses, equipment leases, contracts or agreements of any kind relating to the Property, except for such contracts or agreements as will be terminated at or prior to the Closing without cost or, expense to the Company, or contracts which the Company agrees in its sole discretion to assume at the Closing, without having obtained in each case the prior written consent of the Company,

-10-

 

which consent shall not be unreasonably withheld or delayed, and any requests for consent shall be responded to within ten (10) Business Days of receipt of request therefor. Except, as otherwise provided in this Article 6, Owner shall continue and shall require Tenant to continue to manage, maintain and operate the Property in accordance with the Lease.

          (c) Compliance With Laws . Not knowingly take, allow or fail to take any action that will cause the Property to fail to comply with any federal, state, municipal and other governmental laws, ordinances, requirements, rules, regulations, notices, codes and orders, or any agreements, covenants, conditions, easements and restrictions currently in effect relating to the Property.

          (d) Notices . Promptly upon receipt, provide the Company with copies of all written notices delivered or received under the Tenant Lease received from Tenant, neighboring property owners, any insurance company which carries insurance on the Property, from any Governmental Authorities or from any other person or entity with respect to the Property or any portion thereof.

          (e) Conditions To The Closing . Use good faith commercially reasonable efforts prior to the Closing to satisfy all conditions to the Closing which are within Owner’s power to satisfy.

          (f) No Sale or Encumbrance . Owner shall not sell, mortgage, pledge, hypothecate or otherwise transfer or dispose of all, or any part of any Property or any interest therein, nor initiate, consent to, approve or otherwise take any action with respect to zoning or any other governmental rules or regulations presently applicable to all or any part of any Property.

          (g) Contracts . Owner shall not terminate, modify, extend, amend or renew the Tenant Lease or any Contract or enter into any new lease or contract. Notwithstanding the foregoing, Owner shall terminate all Contracts relating to the Property as of Closing, except the Tenant Lease and any Contracts that Company requires or agrees to assume in writing, to remain in effect after the Closing.

          (h) Lease . No later than ten (10) days prior to the Closing, Owner shall deliver to the Company an Estoppel Certificate (“ Estoppel ”), fully executed by Tenant and dated not more than thirty (30) days prior to Closing, substantially in the form attached hereto as Exhibit 6.1(h)(1) . At Closing, Owner shall execute and deliver to the Company an executed Assignment and Assumption of Lease Agreement (the “ Lease Assignment ”) substantially in the form attached hereto as Exhibit 6.1(h)(2) , and a Memorandum of Lease (the “ Memo of Lease ”) substantially in the form attached hereto as Exhibit 6.1(h)(3), unless a Memo of Lease has already been recorded, in which event an Amendment to the Memorandum of Lease shall be required to reflect ownership of the property by Company; provided, however, that if, after using reasonable efforts, Owner is unable to obtain the signature of ABB, Inc. to the Lease Assignment, Owner shall deliver a Lease Assignment executed only by Owner and Company in the form attached; and provided, further, that Owner shall not be required to incur any costs or confer any financial benefit on ABB, Inc. in order to satisfy its obligations pursuant to this Section 6.1(h). The effective date of such Lease Assignment shall be the date of the Closing.

-11-

 

          (i) Fulfillment of Obligation . To the extent Owner is obligated, pursuant to any contract, agreement, covenant, lease, including the Tenant Lease, or other understanding entered into prior to the Effective Date with Tenant, any governmental subdivision or any other third party, to effect any construction, make any improvements or take any action, Owner shall cause any such construction, improvements and/or action to be taken, completed and fully paid for by Owner, at its expense, prior to the Closing. No such obligation shall be unfulfilled, and no liability for or payment in respect of any obligation shall be unsatisfied as of the Closing.

          (j) Letter of Credit . Owner shall use its best efforts to (i) cause Tenant or ABB, Inc. to provide the Replacement Letter of Credit, together with any additional requirements reasonably requested by Company, to assure the assignability thereof to Owner or its designee; provided, however, that Owner shall not be required to incur any costs, directly or indirectly, in connection with its obligations pursuant to this Section 6.1(j).

ARTICLE VII
ENVIRONMENTAL MATTERS

     Section 7.1 Representations and Warranties . Owner represents and warrants to the Company that the representations and warranties set forth below are true and correct as of the Effective Date, and shall be true and correct on and as of the date of the Closing, except as to any matters for which Owner provides written notice to Company of a change in any such representation or warranty:

          (a) Nature of Claims . During its ownership of the Property, neither Owner nor, to the best of Owner’s knowledge, Tenant has received any claim, complaint, notice, or request for information with respect to any alleged violation of any Environmental Law or regarding potential or alleged liability under any Environmental Law with respect to the Property.

          (b) Existing Conditions . Owner has no knowledge that any conditions exist at, on, or under the Property that, with the passage of time or the giving of notice or both, would constitute a Hazardous Condition or give rise to liability under any Environmental Law.

          (c) Compliance with Environmental Laws . To the best of Owner’s knowledge, Owner and Tenant are in compliance in all material respects with all orders, directives, permits, certificates, approvals, licenses, and other authorizations from applicable Governmental Authorities, if any, relating to Environmental Laws with respect to the Property. To Owner’s actual knowledge, the Property and all Improvements are in compliance with all Environmental Laws.

          (d) Storage Tanks . To Owner’s knowledge, there no above ground storage tanks or underground storage tanks (herein referred to as “ USTs ”) that are not in compliance with all Environmental Laws at the Property. Owner has not removed or abandoned any USTs at the Property nor does Owner have any knowledge of the abandonment or removal of USTs at the Property.

-12-

 

          (e) PCBs . To Owner’s knowledge, there are no polychlorinated biphenyls (“ PCBs ”) or friable or damaged asbestos at the Property; nor has Owner removed (or required or requested the removal of) any PCBs or damaged or friable asbestos from the Property, nor has Owner knowledge of the previous existence of any PCBs or damaged or friable asbestos at the Property.

          (f) Adjacent Property . To the best of Owner’s knowledge, having made no investigation of such property, no property adjacent to or in the vicinity of the Property has a Hazardous Condition in, on or under such property.

     Section 7.2 No Release . Notwithstanding anything to the contrary in this Agreement, nothing in this Agreement shall be construed to release Owner nor to bar any action by the Company to implead Owner nor to bar any other action by the Company against Owner where the Company or Owner may have liability to a third party or any Governmental Authorities for an environmental matter or condition which existed at or near the Property on or prior to the Closing.

ARTICLE VIII
REPRESENTATIONS, WARRANTIES AND COVENANTS OF THE COMPANY

     Section 8.1 The Company’s Representations . The Company represents and warrants to Owner that all of the representations and warranties set forth below are true and correct as of the Effective Date, and shall be true and correct in all material respects on and as of the date of the Closing.

          (a) Due Execution; Authority . The Company is (i) duly formed, validly existing and in good standing as a limited partnership under the laws of the State of Delaware; (ii) this Agreement is, and all the documents to be delivered by the Company pursuant to this Agreement “(the “ Company Closing Documents ”) will be, when executed by the Company, binding on and enforceable against the Company in accordance with their respective terms; (iii) there are no other consents required to authorize the Company’s entry into and performance of this Agreement, the Company Closing Documents and/or the transactions contemplated hereby or thereby; (iv) this Agreement, the Company Closing Documents and the transactions contemplated hereby and thereby have been, or will have been prior to the Closing, approved by all necessary action of the Company; and (v) the execution and delivery of the Company Closing Documents do not and will not constitute a breach or default under any agreement by which the Company is bound or by which any of the Company’s property is encumbered.

          (b) Bankruptcy . The Company has not (i) made a general assignment for the benefit of creditors, (ii) filed any voluntary petition in bankruptcy or suffered the filing of an involuntary petition by the Company’s creditors, (iii) suffered the appointment of a receiver to take possession of all or substantially all of the Company’s assets, (iv) suffered the attachment, or other judicial seizure of all, or substantially all, of the Company’s assets, (v) admitted in writing its inability to pay its debts as they come due, or (vi) made an offer of settlement, extension or compromise to its creditors generally.

-13-

 

ARTICLE IX
CONDITIONS PRECEDENT

     Section 9.1 The Company’s Conditions Precedent . The Company’s obligation to accept the assignment or conveyance of the fee simple title to the Property hereunder shall be subject to the full and timely satisfaction of the following conditions (all or any of which may be waived, in whole or in part, by the Company in writing in its sole discretion) at or prior to the Closing:

          (a) Title . The Company shall have received confirmation from the title insurer that there have been no changes in the state of title to the Property since the date of the Commitment and Survey (unless Owner has agreed to cure such changes or Company has agreed to accept such changes as Permitted Exceptions) and that the title insurer will issue, at the Closing, an owner’s title policy, as required (reflecting the release of any indebtedness and bringing the title current to the date of the Closing) without exceptions other than the Permitted Exceptions and with such endorsements required under this Agreement.

          (b) Governmental Compliance . The Company shall have obtained confirmation reasonably satisfactory to the Company that all licenses, permits and similar authorizations required by all Governmental Authorities relating to the ownership and operation of the Property are in full force and effect.

          (c) Representations and Warranties . The representations and warranties made by Owner in this Agreement shall be true and correct as of the Closing with the same force and effect as though such representations and warranties had been made on and as of such date. Owner shall have performed all covenants and obligations and complied with all conditions, obligations and agreements required by this Agreement to be performed or complied with by it at or before the Closing. Owner shall have executed and delivered to the Company an affidavit, dated as of the date of the Closing, to the foregoing effect.

          (d) Lease Assignment, Estoppel Certificate and Memo of Lease . As of Closing, the Company shall have received a Lease Assignment, Estoppel Certificate and Memo of Lease, as provided in Section 6.1 hereto, fully executed by Owner, Tenant and ABB, Inc., as applicable, in recordable form and without changes or additional notations (other than as may be acceptable to the Company in its sole and absolute discretion). All representations, warranties and certifications of Tenant set forth in the Estoppel Certificate and SNDA shall be true, complete and correct as of the Closing Date.

          (e) Lender Pay-Off Certificate . The Company and Title Company and its agents shall have received a certificate(s) from any lender(s) confirming the outstanding balance of any outstanding indebtedness encumbering the Property and all amounts necessary to pay and release the same.

          (f) Additional Estoppel Certificates . Owner, if requested by Company, shall provide estoppel certificates relating to monetary assessments under any covenants or cross-easement agreements affecting the Property, stating that all such assessments that have become due and payable have been paid.

-14-

 

          (g) Certificate of Occupancy . Owner shall have obtained and delivered to the Company copies of certificates of occupancy (or the local equivalent) required for the use and occupancy of the Property, including without limitation, all certificates of occupancy for all Improvements on the Property, and/or all tenants, as applicable, to the extent there have been any changes from and after the delivery of such documents to the Company before the end of the Study Period.

          (h) Zoning Compliance . A zoning compliance letter from the zoning authority for the jurisdiction in which the Property is located, identifying the zoning classification applicable to the Property and all permitted uses in connection therewith.

          (i) Letter of Credit . Owner shall deliver to the Company at Closing the Replacement Letter of Credit, including such other endorsements or instruments as the issuer of the same shall reasonably require in order to assign Owner’s interest in the same to the Company and change the named beneficiary party entitled to the benefits of the letter of credit to Company or its designee. The Replacement Letter of Credit shall, in all material respects, be in form and content satisfactory to Company.

          (j) Tenant Notification Letter . A letter to the Tenant (“ Tenant Notification Letter ”), duly executed by Owner and dated as of the Closing, notifying Tenant that (a) the Property has been sold to the Company; (b) all of Owner’s right, title and interest in and to the Tenant Lease and any Tenant deposits under the Tenant Lease have been assigned to the Company; and (c) commencing immediately, all rent and other payments and any notices under the Tenant Lease are to be paid and sent to the Company. The form and content of the Tenant Notification Letter shall be reasonably satisfactory to the Company.

          (k) Replacement Insurance Policy . As of Closing, the Company shall have received either (i) a certificate of insurance indicating that the Replacement Insurance Policy for Tenant is in effect, in form and content satisfactory to Company in its sole discretion. or (ii) evidence satisfactory to the Company, in its sole discretion, that a Replacement Insurance Policy in form and content satisfactory to it will be in effect for Tenant within a reasonable time after Closing.

     Section 9.2 Failure of Conditions . If any condition described in Section 9.1 is not satisfied at the times required and to the satisfaction of the Company, in its sole and absolute discretion, then the Company may, at its sole option, (a) extend the Closing Deadline for up to an additional thirty (30) days to allow for the satisfaction of such conditions, or (b) terminate this Agreement by giving written notice to Owner at any time on or before the Closing. If the Company extends the Closing Deadline and any such conditions remain unsatisfied at the end of such extended period, then the Company shall have the option, in its sole discretion, to either (i) terminate this Agreement, or (ii) proceed to the Closing. Upon termination of this Agreement under this Section 9.2, the Deposit shall be returned to the Company, and neither party shall have any further rights, obligations or liabilities under this Agreement (other than as set forth in Section 12.3 and Articles 14, 16 and 18), except that (i) if the failed condition is due to any breach by Owner of any of its representations, warranties, covenants or obligations hereunder which breach is a result of any omission or affirmative act of Owner or its representatives or (ii) as otherwise expressly provided in Section 3.3, then Owner shall be liable to the Company

-15-

 

for the Company’s Due Diligence and Contract Costs (as hereinafter defined). The conditions set forth in this Section 9.2 are for the Company’s sole benefit, and the Company may, in its sole discretion, waive (conditionally or absolutely) the fulfillment of