-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, A3yFBTVZBnfKuf20jAn6+5Zt6MLpofqvQq7O/FWWbrL8MZy8g6yKXQZ7ZqjiARJP 32gGFuqxm44tckB53Ry8JQ== 0000950134-98-009932.txt : 19981229 0000950134-98-009932.hdr.sgml : 19981229 ACCESSION NUMBER: 0000950134-98-009932 CONFORMED SUBMISSION TYPE: 8-K/A PUBLIC DOCUMENT COUNT: 12 CONFORMED PERIOD OF REPORT: 19981014 ITEM INFORMATION: FILED AS OF DATE: 19981228 FILER: COMPANY DATA: COMPANY CONFORMED NAME: AMERICAN INDUSTRIAL PROPERTIES REIT INC CENTRAL INDEX KEY: 0000778437 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 756335572 STATE OF INCORPORATION: TX FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K/A SEC ACT: SEC FILE NUMBER: 001-09016 FILM NUMBER: 98776518 BUSINESS ADDRESS: STREET 1: 6210 N BELTLINE RD STREET 2: STE 170 CITY: IRVING STATE: TX ZIP: 75063 BUSINESS PHONE: 9727566000 MAIL ADDRESS: STREET 1: 6220 N BELTLINE ROAD STREET 2: SUITE 205 CITY: IRVING STATE: TX ZIP: 75063 FORMER COMPANY: FORMER CONFORMED NAME: AMERICAN INDUSTRIAL PROPERTIES REIT DATE OF NAME CHANGE: 19931203 FORMER COMPANY: FORMER CONFORMED NAME: TRAMMELL CROW REAL ESTATE INVESTORS DATE OF NAME CHANGE: 19931203 8-K/A 1 AMENDMENT NO. 1 TO FORM 8-K 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 8-K/A AMENDMENT NO. 1 TO CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Date of report (Date of earliest event reported): October 14, 1998 AMERICAN INDUSTRIAL PROPERTIES REIT (Exact Name of Registrant as Specified in its Charter) TEXAS 1-9016 75-6335572 (State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer Incorporation or Organization) Identification Number) 6210 NORTH BELTLINE ROAD, SUITE 170, IRVING, TEXAS 75063 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE) Registrant's telephone number, including area code: (972) 756-6000 2 The undersigned Registrant hereby amends its Current Report on Form 8-K dated October 14,1998, which was filed with the Securities and Exchange Commission on October 29, 1998, to include the financial statements for the A&A Portfolio Properties and the A&A Virginia Properties (together the "A&A Portfolio" or the "Properties") required by Item 7 (a) and the pro forma financial information required by Item 7 (b). The Trust evaluated the historical sources of revenue and nature of expenses related to the Properties as part of its due diligence procedures. The Trust is not aware of any material factors related to the Properties that would cause the financial information included herein not to be necessarily indicative of future operating results. ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS (a) Financial Statements: See Index to Financial Statements and Pro Forma Financial Information appearing on page F-1 of this Form 8-K/A. (b) Pro Forma Financial Information: See Index to Financial Statements and Pro Forma Financial Information appearing on page F-1 of this Form 8-K/A. (c) Exhibits The following exhibits are filed with this report: Exhibit Number Description 10.1 Purchase and Sale Agreement, dated as of May 10, 1998, by and between A&A Greenbrier, Inc., A&A Northpointe B, Inc., A&A Northpointe C, Inc. and A&A Greenbrier Tech, Inc. and DDR Office Flex Corporation. 10.2 Purchase and Sale Agreement, dated as of May 10, 1998, by and between Battlefield/Virginia, Inc. and DDR Office Flex Corporation. 10.3 Amendment to Purchase and Sale Agreement dated July 8, 1998, by and between A&A Greenbrier, Inc., A&A Northpointe B, Inc., A&A Northpointe C, Inc. and A&A Greenbrier Tech, Inc. and DDR Office Flex Corporation. 10.4 Amendment to Purchase and Sale Agreement dated July 8, 1998, by and between Battlefield/Virginia, Inc. and DDR Office Flex Corporation. 10.5 Second Amendment to Purchase and Sale Agreement dated September 30, 1998, by and between A&A Greenbrier, Inc., A&A Northpointe B, Inc., A&A Northpointe C, Inc. and A&A Greenbrier Tech, Inc. and DDR Office Flex Corporation. 10.6 Second Amendment to Purchase and Sale Agreement dated September 30, 1998, by and between Battlefield/Virginia, Inc. and DDR Office Flex Corporation. 10.7 Special Warranty Deed, dated as of October 14, 1998, by and between A&A Greenbrier, Inc. and American Industrial Properties REIT. 10.8 Special Warranty Deed, dated as of October 14, 1998, by and between A&A Northpointe B, Inc. and American Industrial Properties REIT. 10.9 Special Warranty Deed, dated as of October 14, 1998, by and between A&A Northpointe C, Inc. and American Industrial Properties REIT. 10.10 Special Warranty Deed, dated as of October 14, 1998, by and between A&A Greenbrier Tech, Inc. and American Industrial Properties REIT. 23.1 Consent of PricewaterhouseCoopers LLP 3 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. AMERICAN INDUSTRIAL PROPERTIES REIT By: /s/ CHARLES W. WOLCOTT ----------------------------------------------- Charles W. Wolcott President and Chief Executive Officer December 28, 1998 4 INDEX TO FINANCIAL STATEMENTS AND PRO FORMA FINANCIAL INFORMATION FINANCIAL STATEMENTS The A&A PORTFOLIO PROPERTIES Report of Independent Accountants................................................................. F-2 Combined Statement of Revenue and Certain Expenses for the year ended October 31, 1998.................................................................................. F-3 Notes to Combined Statement of Revenue and Certain Expenses....................................... F-4 The A&A VIRGINIA PROPERTIES Report of Independent Accountants................................................................. F-6 Combined Statement of Revenue and Certain Expenses for the year ended December 31, 1997 and the nine month period ended September 30, 1998 (Unaudited)....................................................................................... F-7 Notes to Combined Statement of Revenue and Certain Expenses....................................... F-8 PRO FORMA FINANCIAL INFORMATION............................................................................ F-10 Pro forma condensed consolidated balance sheet as of September 30, 1998........................... F-13 Pro forma condensed consolidated statement of operations for the nine months ended September 30, 1998.......................................................................... F-15 Pro forma condensed consolidated statement of operations for the year ended December 31, 1997........................................................................... F-17
5 REPORT OF INDEPENDENT ACCOUNTANTS December 10, 1998 To the Board of Directors and Shareholders of American Industrial Properties REIT We have audited the accompanying combined statement of revenue and certain expenses of The A&A Portfolio Properties, described in Note 1, for the year ended October 31, 1998. This historical statement is the responsibility of management. Our responsibility is to express an opinion on this historical statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the historical statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the historical statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the historical statement. We believe that our audit provides a reasonable basis for our opinion. The accompanying combined historical statement is prepared on the basis described in Note 2, for the purpose of complying with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission (for inclusion in Form 8-K/A of American Industrial Properties REIT) and is not intended to be a complete presentation of the combined revenues and expenses of The A&A Portfolio Properties. In our opinion, the combined historical statement referred to above presents fairly, in all material respects, the combined revenue and certain expenses of The A&A Portfolio Properties, on the basis described in Note 2, for the year ended October 31, 1998, in conformity with generally accepted accounting principles. PricewaterhouseCoopers LLP Cleveland, Ohio F-2 6 AMERICAN INDUSTRIAL PROPERTIES REIT THE A&A PORTFOLIO PROPERTIES COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES - -------------------------------------------------------------------------------
Year Ended October 31, 1998 ---------------- Revenue: Minimum rents $1,819,674 Recoveries from tenants 326,418 ---------- 2,146,092 ---------- Certain expenses: Operating and maintenance 148,264 Real estate taxes 188,039 ---------- 336,303 ---------- Revenue in excess of certain expenses $1,809,789 ==========
The accompanying notes are an integral part of this combined statement of revenue and certain expenses. F-3 7 AMERICAN INDUSTRIAL PROPERTIES REIT THE A&A PORTFOLIO PROPERTIES NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES - ------------------------------------------------------------------------------- 1. OPERATIONS For purposes of the accompanying combined statement of revenue and certain expenses, The A&A Portfolio Properties represent two light industrial properties (the "Properties") comprised of three buildings, which American Industrial Properties REIT (the "Trust") acquired in October 1998. A summary of the Properties is as follows:
Name of Property Location Year Built ---------------- -------- ---------- Battlefield / Virginia, Inc. Manassas, VA 1988 / 1989 Greenbrier Tech Chesapeake, VA 1986
A combined statement of revenue and certain expenses has been presented because the Properties have commonality of ownership, are under common control and management and have been purchased through a single transaction. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying combined statement of revenue and certain expenses has been prepared on the accrual basis of accounting. The accompanying combined financial statement is not representative of the actual operations for the periods presented as certain revenues and expenses, which may not be comparable to the revenues and expenses expected to be earned or incurred by the Trust in the future operations of the Properties, have been excluded. Revenues excluded consist of interest, gains on sales of property, and other revenues unrelated to the continuing operations of the Properties. Expenses excluded consist of depreciation on the building, financing costs, and other general and administrative expenses not directly related to the future operations of the Properties. Income Recognition Rental income is recorded on the straight line basis. Concentration of Risk The Properties are concentrated in the Manassas, VA and Chesapeake, VA area. The principal competitive factors in this market are price, location, quality of space, and amenities. The Properties represent a small portion of the total similar space in the market and compete with other properties for tenants. For the year ended October 31, 1998, 59.3% of the combined base rents were derived from the Properties' largest tenant, AT&T. AT&T is the sole tenant of the two Battlefield buildings. F-4 8 AMERICAN INDUSTRIAL PROPERTIES REIT THE A&A PORTFOLIO PROPERTIES NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES - ------------------------------------------------------------------------------- Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. ACQUISITION OF PROPERTIES BY THE TRUST On October 14, 1998, the Trust purchased Battlefield and on October 16, 1998 purchased Greenbrier Tech along with three other light industrial properties, located in Virginia and managed by Cambridge, from a group of related sellers for an aggregate purchase price of $40,170,000. The acquisition of the five properties was funded with $22,421,000 in assumed debt and the remainder in borrowings from Developers Diversified Realty Corporation, a strategic investor in the Trust. The aggregate purchase price related to the Properties was $20,224,000 including assumed debt of $12,388,000. F-5 9 REPORT OF INDEPENDENT ACCOUNTANTS December 10, 1998 To the Board of Directors and Shareholders of American Industrial Properties REIT We have audited the accompanying combined statement of revenue and certain expenses of The A&A Virginia Properties, described in Note 1, for the year ended December 31, 1997. This historical statement is the responsibility of management. Our responsibility is to express an opinion on this historical statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the historical statement is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the historical statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the historical statement. We believe that our audit provides a reasonable basis for our opinion. The accompanying combined historical statement is prepared on the basis described in Note 2, for the purpose of complying with Rule 3-14 of Regulation S-X of the Securities and Exchange Commission (for inclusion in Form 8-K/A of American Industrial Properties REIT) and is not intended to be a complete presentation of the combined revenues and expenses of The A&A Virginia Properties. In our opinion, the combined historical statement referred to above presents fairly, in all material respects, the combined revenue and certain expenses of The A&A Virginia Properties, on the basis described in Note 2, for the year ended December 31, 1997, in conformity with generally accepted accounting principles. PricewaterhouseCoopers LLP Cleveland, Ohio F-6 10 AMERICAN INDUSTRIAL PROPERTIES REIT THE A&A VIRGINIA PROPERTIES COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES - -------------------------------------------------------------------------------
NINE MONTH PERIOD ENDED YEAR ENDED SEPTEMBER 30, 1998 DECEMBER 31, (UNAUDITED) 1997 ------------------ ------------ Revenue: Minimum rents $1,847,597 $2,563,274 Recoveries from tenants 181,919 289,373 Other income 900 38,883 ---------- ---------- 2,030,416 2,891,530 ---------- ---------- Certain expenses: Operating and maintenance 519,933 647,420 Real estate taxes 141,816 189,179 ---------- ---------- 661,749 836,599 ---------- ---------- Revenue in excess of certain expenses $1,368,667 $2,054,931 ========== ==========
The accompanying notes are an integral part of this combined statement of revenue and certain expenses. F-7 11 AMERICAN INDUSTRIAL PROPERTIES REIT THE A&A VIRGINIA PROPERTIES NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES - ------------------------------------------------------------------------------- 1. OPERATIONS For purposes of the accompanying combined statement of revenue and certain expenses, The A&A Virginia Properties represents three light industrial properties (the "Virginia Properties") comprised of four buildings, which American Industrial Properties REIT (the "Trust") acquired in October 1998. A summary of the Virginia Properties is as follows:
Name of Property Location Year Built ---------------- -------- ---------- Northpointe B Sterling, VA 1986 Northpointe C Sterling, VA 1987 Greenbrier Circle Chesapeake, VA 1981 / 1983
A combined statement of revenue and certain expenses has been presented because the Virginia Properties have commonality of ownership, are under common control and management and have been purchased through a single transaction. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying combined statement of revenue and certain expenses has been prepared on the accrual basis of accounting. The accompanying combined financial statement is not representative of the actual operations for the periods presented as certain revenues and expenses, which may not be comparable to the revenues and expenses expected to be earned or incurred by the Trust in the future operations of the Virginia Properties, have been excluded. Revenues excluded consist of interest and other revenues unrelated to the continuing operations of the Virginia Properties. Expenses excluded consist of depreciation on the building, financing costs, legal fees, and other general and administrative expenses not directly related to the future operations of the Virginia Properties. Income Recognition Rental income is recorded on the straight line basis. Concentration of Risk The Virginia Properties are concentrated in the Sterling, VA and Chesapeake, VA area. The principal competitive factors in this market are price, location, quality of space, and amenities. The Virginia Properties represent a small portion of the total similar space in the market and compete with other properties for tenants. For the year ended December 31, 1997, 11.9% of the combined base rents were derived from the Virginia Properties' largest tenant, Northrup Grumann Corporation. F-8 12 AMERICAN INDUSTRIAL PROPERTIES REIT THE A&A VIRGINIA PROPERTIES NOTES TO COMBINED STATEMENT OF REVENUE AND CERTAIN EXPENSES - ------------------------------------------------------------------------------- Interim Statements The interim financial data for the nine months ended September 30, 1998 is unaudited; however, in the opinion of the Trust, the interim data includes all adjustments, consisting only of normal recurring adjustments, necessary for a fair statement of the results for the interim periods. The results for the period presented are not necessarily indicative of the results for the full year. Use of Estimates The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amount of revenues and expenses during the reporting period. Actual results could differ from those estimates. 3. ACQUISITION OF PROPERTIES BY THE TRUST On October 16, 1998, the Trust purchased the Virginia Properties along with one light industrial property and purchased another light industrial property on October 14, 1998, located in Virginia and managed by Cambridge, from a group of related sellers for an aggregate purchase price of $40,170,000. The acquisition of the five properties was funded with $22,421,000 in assumed debt and the remainder in borrowings from Developers Diversified Realty Corporation, a strategic investor in the Trust. The aggregate purchase price related to the Virginia Properties was $19,946,000 including assumed debt of $10,033,000. F-9 13 AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA FINANCIAL INFORMATION (IN THOUSANDS, EXCEPT FOR SHARE AND PER SHARE AMOUNTS) The following Pro Forma Condensed Consolidated Balance Sheet of the Trust as of September 30, 1998 has been prepared as if each of the following transactions had occurred as of September 30, 1998: (i) the acquisition of a portfolio consisting of five affiliated industrial properties (the "A&A Portfolio"); (ii) the acquisition of three unrelated properties (the "Other Recent Acquisitions"); (iii) the probable acquisition, through DDR/Tech 29 L. P., a limited partnership in which the Trust will have a controlling ownership interest, of Tech 29 ("Tech 29"), a 290,991 square foot light industrial project consisting of three buildings in Silver Spring, Maryland; (iv) probable acquisition of two unrelated properties (the "Other Probable Acquisitions"); and (v) the sale of an additional 1,958,003 Common Shares for $15.50 per share to DDR (the "DDR Stock Transaction"). The properties in the A&A Portfolio are as follows:
PROPERTY LOCATION TOTAL SQUARE FEET - -------- -------- ----------------- AT&T - Battlefield Manassas, Virginia 154,226 Greenbrier Circle Chesapeake, Virginia 228,690 Greenbrier Tech Chesapeake, Virginia 95,162 Northpointe B Sterling, Virginia 36,654 Northpointe C Sterling, Virginia 46,080
The Other Recent Acquisitions are as follows:
PROPERTY LOCATION TOTAL SQUARE FEET - -------- -------- ----------------- Technipark Ten Houston, Texas 71,635 Columbia Corporate Center Aliso Viejo, California 128,122 Winter Park Castleberry, Florida 119,684
The following Pro Forma Condensed Consolidated Statement of Operations of the Trust for the year ended December 31, 1997 has been prepared as if each of the following transactions had occurred as of January 1, 1997: (i) the acquisition of 15 industrial real estate properties; (ii) the sale of two industrial real estate properties; (iii) the merger with four publicly traded real estate limited partnerships; (iv) the acquisition of the Spieker Portfolio; (v) the acquisition of North Austin; and (vi) the acquisition, through AIP Operating, L.P., a limited partnership in which the Trust has a 99% controlling ownership interest, of Spring Valley #6 (together with North Austin, the "1998 Acquisitions"), all of the transactions listed in clauses (i) through (vi) are defined and described in Amendment No. 1 to the Current Report on Form 8-K/A of the Trust dated April 30, 1998 and filed F-10 14 with the SEC on July 13, 1998 (the "April 30, 1998 Form 8-K/A"), which is incorporated herein by reference; (vii) the acquisition of Norfolk Commerce Park ("Norfolk"), a 323,731 square foot light industrial project consisting of three buildings in Norfolk, Virginia; (viii) the acquisition of the A&A Portfolio, described above; (ix) the acquisition of the Other Recent Acquisitions, described above; (x) the probable acquisition of Tech 29, described above; (xi) the sale to DDR of 949,147 Common Shares at $15.50 per share; (xii) the acquisition of five Acquired Properties through the Merger with a subsidiary of DDR and issuance of 1,258,471 Common Shares to DDR; (xiii) the acquisition of the Other Probable Acquisitions; and (xiv) the DDR Stock Transaction. The following Pro Forma Condensed Consolidated Statement of Operations of the Trust for the nine months ended September 30, 1998 has been prepared as if each of the following transactions had occurred as of January 1, 1998: (i) the 1998 Acquisitions, described above; (ii) the acquisition of the Spieker Portfolio, described in the April 30, 1998 Form 8-K/A; (iii) the acquisition of Norfolk, described above; (iv) the acquisition of the A&A Portfolio, described above; (v) the acquisition of the Other Recent Acquisitions, described above; (vi) the probable acquisition of Tech 29, described above; (vii) the sale to DDR of 949,147 Common Shares at $15.50 per share, described above; (viii) the acquisition of the Acquired Properties through the Merger with a subsidiary of DDR and issuance of 1,258,471 Common Shares to DDR, described above (ix) the acquisition of the Other Probable Acquisitions, described above; and (x) the DDR Stock Transaction. The Pro Forma Condensed Balance Sheet as of September 30, 1998 and the Pro Forma Condensed Consolidated Statements of Operations of the Trust for the year ended December 31, 1997 and the nine months ended September 30, 1998 exclude any effect from the option of the Trust to require DDR to purchase additional shares with a total purchase price not to exceed $200 million to fund property acquisitions (less $31 million identified to purchase the Other Probable Acquisitions), as no further probable acquisitions have been identified by the Trust. The Pro Forma Financial Information of the Trust has been prepared using the purchase method of accounting for the acquisition of the Acquired Properties and other property acquisitions, whereby the assets and liabilities of the properties were adjusted to estimated fair value, based upon preliminary estimates, which are subject to change as additional information is obtained. The allocations of purchase costs are subject to final determination based upon estimates and other evaluations of fair value. Therefore, the allocations reflected in the following Pro Forma Financial Information may differ from the amounts ultimately determined. Such Pro Forma Financial Information is based in part upon (i) the Consolidated Financial Statements of the Trust for the year ended December 31, 1997 included in the Trust's Annual Report on Form 10-K for the year ended December 31, 1997; (ii) the Consolidated Financial Statements of the Trust for the nine months ended September 30, F-11 15 1998 included in the Trust's Quarterly Report on Form 10-Q for the quarter ended September 30, 1998; (iii) the Combined Statement of Revenue and Certain Expenses of Developers Diversified Realty Corporation Properties for the year ended December 31, 1997 and the six months ended June 30, 1998 filed with the SEC with Amendment No. 1 to the Trust's Current Report on Form 8-K, dated July 30, 1998; (iv) the Combined Statement of Revenue and Certain Expenses of the Norfolk Commerce Park Properties for the year ended December 31, 1997 and the six months ended June 30, 1998 filed with the SEC with the Trust's Current Report on Form 8-K, dated July 30, 1998; (v) the combined statement of revenue and certain expenses of The A&A Virginia Properties for the year ended December 31, 1997 and the nine months ended September 30, 1998, included elsewhere herein; and (vi) the Pro Forma Financial Information presented in the April 30, 1998 Form 8-K/A. The Pro Forma Financial Information is presented for information purposes only and is not necessarily indicative of the financial position or results of operations of the Trust that would have occurred if such transactions had been completed on the dates indicated, nor does it purport to be indicative of future financial position or results of operations. In the opinion of the Trust's management, all material adjustments necessary to reflect the effect of these transactions have been made. F-12 16 AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AS OF SEPTEMBER 30, 1998 (IN THOUSANDS) (UNAUDITED)
ASSETS Trust Recent Probable DDR Stock Pro Historical (A) Transactions(B) Acqusitions(C) Transaction(D) Forma ------------ ------------ ------------ ------------ ------------ Real estate, net $ 372,796 $ 66,555 $ 173,338 $ -- $ 612,689 Cash - unrestricted 7,639 -- -- 24,588 (21,859) (2,729) 7,639 Cash - restricted 4,391 -- -- -- 4,391 Other assets, net 8,304 -- -- -- 8,304 ------------ ------------ ------------ ------------ ------------ $ 393,130 $ 66,555 $ 173,338 $ -- $ 633,023 ============ ============ ============ ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY Mortgage notes payable $ 207,106 $ 27,521 $ 100,701 $ -- $ 335,328 Notes payable to affiliates -- 29,659 -- (21,859) 7,800 Accrued interest payable 1,146 -- -- -- 1,146 Accounts payable, accrued expenses and other 5,509 -- -- -- 5,509 Distributions payable 2,945 -- -- -- 2,945 Tenant security deposits 1,644 -- -- -- 1,644 ------------ ------------ ------------ ------------ ------------ 218,350 57,180 100,701 (21,859) 354,372 Minority interests 7,239 -- -- -- 7,239 Shareholders' equity: Shares of beneficial interest ($0.10 par value) 1,348 60 469 196 2,073 Additional paid-in capital 275,430 9,315 72,168 24,392 381,305 Less Shares in treasury, at cost (2,226) -- -- -- (2,226) Accumulated distributions (65,358) -- -- -- (65,358) Accumulated loss from operations and extraordinary gains (losses) (44,964) -- -- (2,729) (47,693) Accumulated net realized gain on sales of real estate 3,311 -- -- -- 3,311 ------------ ------------ ------------ ------------ ------------ 167,541 9,375 72,637 21,859 271,412 ------------ ------------ ------------ ------------ ------------ $ 393,130 $ 66,555 $ 173,338 $ -- $ 633,023 ============ ============ ============ ============ ============
(A) Represents the historical financial position of the Trust as of September 30, 1998. (B) Represents adjustments for (i) the acquisition of the A&A Portfolio, $22,421 of which was financed with the assumption of existing mortgages on the properties, which bear interest at rates ranging from 7.375% to 8.13% and mature from October 2004 to March 2016, and $17,749 of which was financed with borrowings on the Trust's demand note with DDR (the "DDR Note"), which bears interest at 10.25% and (ii) the Other Recent Acquisitions, $5,100 of which were financed with borrowings on the Trust's acquisition line of credit (the "Credit Facility"), which bears interest at the 30 day LIBOR rate plus 1.75% and which matures in one year, $11,910 of which was financed with borrowings on the DDR Note, which bears interest at 10.25%, and F-13 17 $9,375 which was financed with the proceeds of the sale of 604,838 Common Shares to DDR at $15.50 per share. (C) Represents adjustments for (i) the probable acquisition, through DDR/Tech 29 L.P., a limited partnership in which the Trust has a controlling ownership interest, of Tech 29, expected to be financed with the assumption of existing mortgages of $10,201 on Tech 29, which bear interest at a weighted average rate of 8.74% and mature in 2003 and 2006 and the proceeds from the sale of 1,034,645 Common Shares to DDR at $15.50 per share and (ii) the Other Probable Acquisitions in the amount of $147,100, which are expected to be financed with borrowings of $90,500 on the Credit Facility and the proceeds from the sale of 3,651,613 Common Shares to DDR at $15.50 per share. There can be no assurance that the acquisition of Tech 29 or the other Probable Acquisitions will occur. In addition, there can be no assurance that the Board of Trust Managers will approve the sale of Common Shares to DDR related to DDR's $200 million commitment, of which $31,349 (or 2,022,516 Common Shares), is assumed to be issued. Further, there can be no assurance that the Common Shares will be sold for $15.50 per share. (D) Represents adjustments for the investment by DDR in the Trust, as approved by the Trust's shareholders at the Special Meeting held on November 20, 1998, and the repayment of borrowings under the DDR Note with proceeds from the investment. These adjustments exclude any effect from the option of the Trust to require DDR to purchase additional shares to fund property acquisitions, as no further probable acquisitions have been identified by the Trust, other than as previously disclosed. (E) Represents adjustments to reflect the sale of 1,958,003 Common Shares for $15.50 per share (or $30,349) to DDR, less estimated costs of issuance of $5,761, for the DDR Stock Transaction, the previous issuance of 1,258,471 Common Shares related to the Merger with a subsidiary of DDR, and the sale of 949, 147 Common Shares to DDR, as follows:
Placement fees..................................... $4,600 Advisory fees (fairness opinion)................... 600 Other (legal, proxy, etc.)......................... 561 ------ Issuance costs..................................... $5,761 ======
(F) Represents adjustments for the application of the cash proceeds from DDR as follows: (i) $17,749 to the DDR Note for the A&A Portfolio and(ii) $4,110 to the DDR Note for the Other Recent Acquisitions. (G) Represents adjustments for payments to management under the Change in Control Agreements, including payments equal to 2.5 times each individual officer's base salary and targeted bonus. No adjustment is required for the vesting of dividend equivalent rights, as the amounts have been accrued at September 30, 1998. No compensation expense would F-14 18 be recorded related to the immediate vesting of the options to purchase 75,000 Shares at $15.00 per share and the options to purchase 326,000 Shares at $13.625 per share, as the exercise price exceeds the current price per Common Share. AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
Trust Recent Probable DDR Stock Pro Forma Historical(A) Transactions(B) Acquisitions(C) Transaction(D) Total ----------- ------------ ------------ ----------- ---------- INCOME Rents and tenant reimbursements $ 31,822 $ 13,696 $ 14,555 -- $ 60,073 Interest and other income 500 34 70 -- 604 ---------- ---------- ---------- ---------- ---------- 32,322 13,730 14,625 -- 60,677 ---------- ---------- ---------- ---------- ---------- EXPENSES Property operating expenses 10,128 3,572 3,416 -- 17,116 Depreciation and amortization 5,821 2,162(E) 2,601(E) -- 10,584 Interest expense 10,112 5,638(F) 5,689(G) (1,676)(H) 19,763 General and administrative 2,596 76 137 -- 2,809 ---------- ---------- ---------- ---------- ---------- Total expenses 28,657 11,448 11,843 (1,676) 50,272 ---------- ---------- ---------- ---------- ---------- Income (loss) from operations before minority interest 3,665 2,282 2,782 1,676 10,405 Minority interest (177) -- -- -- (177) ---------- ---------- ---------- ---------- ---------- Income (loss) from operations $ 3,488 $ 2,282 $ 2,782 1,676 $ 10,228 ========== ========== ========== ========== ========== Income from operations per share: Basic and diluted $ 0.30 $ 0.50 ========== ========== Weighted average number of Common Shares outstanding-basic 11,390 2,311 4,686 1,976 20,363(I) ========== ========== ========== ========== ========== Weighted average number of Common Shares outstanding-diluted 11,408 2,311 4,686 1,958 20,363(I) ========== ========== ========== ========== ==========
(A) Represents the historical results of operations of the Trust for the nine months ended September 30, 1998. Certain reclassifications have been made to the historical statements of operations of the Trust for purposes of this pro forma financial information presentation. (B) Represents adjustments for: (i) the 1998 Acquisitions; (ii) the acquisition of the Spieker Portfolio; (iii) the acquisition of Norfolk; (iv) the acquisition of the A&A Portfolio; (v) the acquisition of the Acquired Properties through the Merger with a subsidiary of DDR and issuance of 1,258,471 Common Shares to DDR; (vi) the sale to DDR of 949,147 Common Shares to DDR at $15.50 per share; and (vii) the acquisition of the Other Recent Acquisitions, which are derived from the historical operating results of the respective properties, except for depreciation and interest, F-15 19 which are based on the Trust's investment in the acquisitions and method of financing the acquisitions. (C) Represents adjustments for the probable acquisition of Tech 29 and the Other Probable Acquisitions based on historical operating results, except for depreciation and interest, which are based on the Trust's investment in the acquisitions and method of financing the acquisitions. There can be no assurance that the acquisition of Tech 29 or the Other Probable Acquisitions will occur. (D) Represents adjustments for the DDR Stock Transaction. Since the intent of the pro forma condensed statement of operations is to reflect the expected continuing impact of the sale of 949,147 Common Shares to DDR at $15.50 per share, the acquisition of the Acquired Properties, and the DDR Stock Transaction, the one-time adjustment for payments to management under the Change in Control Agreements has been excluded. Upon consummation of the DDR Stock Transaction, this expense will be recognized on the Trust's statements of operations. (E) Represents adjustment for depreciation which is calculated based on the allocation of the purchase price, with buildings depreciated using the straight-line method over a 40-year period. (F) Represents adjustments for interest expense related to mortgages assumed and borrowings under the Trust's Credit Facility and the DDR Note in connection with the purchase of the 1998 Acquisitions, the Spieker Portfolio, Norfolk, the A&A Portfolio, the Acquired Properties and the Other Recent Acquisitions, offset by the reduction in interest expense incurred under the DDR Note which was repaid with proceeds received from the sale of 949,147 Shares to DDR at $15.50 per share. The assumed mortgages bear interest at fixed rates ranging from 7.28% to 8.13%, the Credit Facility bears interest at a floating rate of the average 30-day LIBOR rate plus 1.75%, and the DDR Note bears interest at a fixed rate of 10.25%. (G) Represents adjustments for interest expense related to mortgages assumed and borrowings under the Trust's Credit Facility in connection with the purchase of Tech 29 and the Other Probable Acquisitions. The assumed mortgages have a weighted average interest rate of 8.74%, and the Credit Facility bears interest at a floating rate of the average 30-day LIBOR rate plus 1.75%. (H) Represents adjustments for the reduction in interest expense from the repayment of notes with proceeds received from the sale of 1,958,003 Common Shares to DDR for net proceeds of $21,859, as follows: (i) $17,749 to the DDR Note for the A&A Portfolio and (ii) $4,110 to the DDR Note for the Other Recent Acquisitions. (I) The pro forma weighted average shares outstanding include 18,000 weighted average Common Shares related to the 27,000 restricted shares issued to members of management on April 1, 1998, which become fully vested under the terms of the F-16 20 Change in Control Agreements. The pro forma weighted average shares outstanding -- diluted is the same as the pro forma weighted average shares outstanding -- basic upon full vesting of the restricted Shares. Excluded from the weighted average shares outstanding -- diluted are outstanding options to acquire Common Shares which have an exercise price greater than the average market price per Common Share during the period and, therefore, their effect would be antidilutive; nor are partnership units in the operating partnerships included in the weighted average shares outstanding -- diluted as their effective would be antidilutive. In addition, these adjustments exclude any effect from the option of the Trust to require DDR to purchase additional shares to fund property acquisitions, as no further probable acquisitions have been identified by the Trust. AMERICAN INDUSTRIAL PROPERTIES REIT PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997 (IN THOUSANDS, EXCEPT PER SHARE DATA) (UNAUDITED)
8-K/A No.1 DDR Pro Forma Recent Probable Stock Pro Total (A) Transactions(B) Acquisitions(C) Transaction(D) Forma ----------- ------------ ------------ ----------- ---------- INCOME Rents and tenant reimbursements $ 41,239 13,002 13,555 -- $ 67,796 Interest and other income 500 16 49 -- 565 ---------- ---------- ---------- ---------- ---------- 41,739 13,018 13,604 -- $ 68,361 ---------- ---------- ---------- ---------- ---------- EXPENSES Property operating expenses 15,262 3,367 4,427 -- 23,056 Depreciation and amortization 7,605 2,515 (E) 3,467 (E) -- 13,587 Interest expense 14,990 6,078 (F) 7,634 (G) (2,240)(H) 26,462 General and administrative 3,964 194 58 -- 4,216 ---------- ---------- ---------- ---------- ---------- Total expenses 41,821 12,154 15,586 (2,240) 67,321 ---------- ---------- ---------- ---------- ---------- Income (loss) from operations before minority interest (82) 864 (1,982) 2,240 1,040 Minority interest 208 -- -- -- 208 ---------- ---------- ---------- ---------- ---------- Income (loss) from operations $ 126 $ 864 $ (1,982) $ 2,240 $ 1,248 ========== ========== ========== ========== ========== Income (loss) from operations per share: Basic and diluted $ 0.01 $ 0.06 ========== ========== Weighted average number of Common Shares outstanding 11,193 2,813 4,686 1,985 20,677(I) ========== ========== ========== ========== ==========
(A) Reference is made to the April 30 Form 8-K/A, which is incorporated herein by reference, for the source of the Trust's pro forma statement of operations for the year ended December 31, 1997, which gives pro forma effect to the following transactions as if the transactions had occurred on January 1, 1997: F-17 21 (i) the acquisition of 15 industrial real estate properties; (ii) the sale of two industrial real estate properties; (iii) the merger with four publicly traded real estate limited partnerships; (iv) the acquisition of the Spieker Portfolio; (v) the acquisition of North Austin; and (vi) the acquisition, through AIP Operating, L.P., a limited partnership in which the Trust has a 99% controlling ownership interest, of Spring Valley #6. (B) Represents adjustments for: (i) the 1998 Acquisitions; (ii) the acquisition of the Spieker Portfolio; (iii) the acquisition of Norfolk; (iv) the acquisition of the A&A Portfolio; (v) the acquisition of the Acquired Properties through the Merger with a subsidiary of DDR and issuance of 1,258,471 Common Shares to DDR; (vi) the sale to DDR of 949,147 Common Shares to DDR at $15.50 per share; and (vii) the acquisition of the Other Recent Acquisitions, which are derived from the historical operating results of the respective properties, except for depreciation and interest, which are based on the Trust's investment in the acquisitions and method of financing the acquisitions. (C) Represents adjustments for the probable acquisition of Tech 29 and the Other Probable Acquisitions based on historical operating results, except for depreciation and interest, which are based on the Trust's investment in the acquisitions and method of financing the acquisitions. There can be no assurance that the acquisition of Tech 29 or the Other Probable Acquisitions will occur. (D) Represents adjustments for the DDR Stock Transaction. Since the intent of the pro forma condensed statement of operations is to reflect the expected continuing impact of the sale of 949,147 Common Shares to DDR at $15.50 per share, the acquisition of the Acquired Properties, and the DDR Stock Transaction, the one-time adjustment for payments to management under the Change in Control Agreements has been excluded. Upon consummation of the DDR Stock Transaction, this expense will be recognized on the Trust's statements of operations. (E) Represents adjustment for depreciation which is calculated based on the allocation of the purchase price, with buildings depreciated using the straight-line method over a 40-year period. (F) Represents adjustments for interest expense related to mortgages assumed and borrowings under the Trust's Credit Facility and the DDR Note in connection with the purchase of the 1998 Acquisitions, the Spieker Portfolio, Norfolk, the A&A Portfolio, the Acquired Properties and the Other Recent Acquisitions, offset by the reduction in interest expense incurred under the DDR Note, which was repaid with proceeds received from the sale of 949,147 Shares to DDR at $15.50 per share. The assumed mortgages bear interest at fixed rates ranging from 7.28% to 8.13%, the Credit 22 Facility bears interest at a floating rate of the average 30-day LIBOR rate plus 1.75%, and the DDR Note bears interest at a fixed rate of 10.25%. (G) Represents adjustments for interest expense related to mortgages assumed and borrowings under the Trust's Credit Facility in connection with the purchase of Tech 29 and the Other Probable Acquisitions. The assumed mortgages have a weighted average interest rate of 8.74%, and the Credit Facility bears interest at a floating rate of the average 30-day LIBOR rate plus 1.75%. (H) Represents adjustments for the reduction in interest expense from the repayment of notes with proceeds received from the sale of 1,958,003 Common Shares to DDR for net proceeds of $21,859, as follows: (i) $17,749 to the DDR Note for the A&A Portfolio and (ii) $4,110 to the DDR Note for the Other Recent Acquisitions. (I) The pro forma weighted average shares outstanding include 27,000 restricted Common Shares issued to members of management on April 1, 1998, which become fully vested under the terms of the Change in Control Agreements. The pro forma weighted average shares outstanding -- diluted equal the pro forma weighted average shares outstanding -- basic upon full vesting of the restricted shares. Excluded from the weighted average shares outstanding are outstanding options to acquire Common Shares which have an exercise price greater than the average market price per Common Share during the period and, therefore, their effect would be antidilutive; nor are partnership units in the operating partnerships included in the weighted average shares outstanding as their effect would be antidilutive. In addition, these adjustments exclude any effect from the option of the Trust to require DDR to purchase additional shares to fund property acquisitions, as no further probable acquisitions have been identified by the Trust. 23 EXHIBIT LIST
Exhibit Number Description - ------- ----------- 10.1 Purchase and Sale Agreement, dated as of May 10, 1998, by and between A&A Greenbrier, Inc., A&A Northpointe B, Inc., A&A Northpointe C, Inc. and A&A Greenbrier Tech, Inc. and DDR Office Flex Corporation. 10.2 Purchase and Sale Agreement, dated as of May 10, 1998, by and between Battlefield/Virginia, Inc. and DDR Office Flex Corporation. 10.3 Amendment to Purchase and Sale Agreement dated July 8, 1998, by and between A&A Greenbrier, Inc., A&A Northpointe B, Inc., A&A Northpointe C, Inc. and A&A Greenbrier Tech, Inc. and DDR Office Flex Corporation. 10.4 Amendment to Purchase and Sale Agreement dated July 8, 1998, by and between Battlefield/Virginia, Inc. and DDR Office Flex Corporation. 10.5 Second Amendment to Purchase and Sale Agreement dated September 30, 1998, by and between A&A Greenbrier, Inc., A&A Northpointe B, Inc., A&A Northpointe C, Inc. and A&A Greenbrier Tech, Inc. and DDR Office Flex Corporation. 10.6 Second Amendment to Purchase and Sale Agreement dated September 30, 1998, by and between Battlefield/Virginia, Inc. and DDR Office Flex Corporation. 10.7 Special Warranty Deed, dated as of October 14, 1998, by and between A&A Greenbrier, Inc. and American Industrial Properties REIT. 10.8 Special Warranty Deed, dated as of October 14, 1998, by and between A&A Northpointe B, Inc. and American Industrial Properties REIT. 10.9 Special Warranty Deed, dated as of October 14, 1998, by and between A&A Northpointe C, Inc. and American Industrial Properties REIT. 10.10 Special Warranty Deed, dated as of October 14, 1998, by and between A&A Greenbrier Tech, Inc. and American Industrial Properties REIT. 23.1 Consent of PricewaterhouseCoopers LLP
EX-10.1 2 PURCHASE AND SALE AGREEMENT-A&A GREENBRIER, INC. 1 EXHIBIT 10.1 PURCHASE AND SALE AGREEMENT THIS PURCHASE AND SALE AGREEMENT (the "Agreement"), dated as of this 10th day of May, 1998, by and between (a)(i) A&A Greenbrier, Inc. ("AAG") as to the portion of the Project (hereinafter defined) listed on Exhibit A-1 attached hereto, (ii) A&A Northpointe B, Inc. ("AANB") as to the portion of the Project listed on Exhibit A-2 attached hereto, (iii) A&A Northpointe C, Inc. ("AANC") as to the portion of the Project listed on Exhibit A-3 attached hereto and (iv) A&A Greenbrier Tech, Inc. ("AAGT") as to the portion of the Project listed on Exhibit A-4 attached hereto (AAG, AANB, AANC and AAGT shall hereinafter be referred to, individually and collectively, as the context may require, as "Seller"), and (b) DDR OFFICEFLEX CORPORATION, an Ohio corporation, or its permitted assignee or designee ("Buyer"). WITNESSETH: WHEREAS, each Seller is the owner of certain real property, together with all improvements located upon such real property and all personal property of each Seller located thereon or used in connection therewith; and WHEREAS, each Seller desires to sell to Buyer all of each Seller's undivided interest in such real and personal property, upon the terms more particularly set forth below. NOW THEREFORE, in consideration of the mutual undertakings and covenants herein contained, Seller and Buyer hereby covenant and agree as follows: SECTION 1 SALE OF PREMISES AND ACCEPTABLE TITLE 1.01 Agreement to Buy and to Sell; Project. Each Seller shall sell to Buyer, and Buyer shall purchase from each Seller, at the price and upon the terms and conditions set forth in this Agreement, all of such Seller's undivided interest in the following: (a) (i) that certain real property more particularly described on Exhibits A-1 through A-4 attached hereto and made a part hereof (the "Land"); (b) all buildings, structures and improvements on the Land and all related improvements, facilities, amenities, structures, driveways, fixtures, landscaping, paving, site work, walkways, plumbing and heating pipes, culverts, and mains located on the Land (collectively, the "Improvements"); 2 (c) all right, title and interest of Seller in and to any alleys, strips or gores adjoining the Land, and any easements, rights-of-way, water rights or other interests in, on, under or to, any land, highway, street, road, right-of-way or avenue, open or proposed, in, on, under, across, in front of, abutting or adjoining the Land, and all right, title and interest of Seller in and to any awards for damage thereto by reason of a change of grade thereof; (d) the accessions, appurtenant rights, privileges, appurtenances and all the estate and rights of Seller in and to the Land and the Improvements, as applicable, or otherwise appertaining to any of the property described in the immediately preceding subparagraphs (a), (b) and/or (c); (e) the fixtures, equipment, machinery, supplies, equipment, furniture, chattels, furnishings, and other personal property located and/or used in connection with the operation and maintenance of the Project, as defined below, or otherwise owned by Seller (collectively, the "Personal Property"); (f) all intangible property now or hereafter owned by Seller and used in connection with the Land, Improvements and Personal Property, including without limitation, the right to use any trade style or name now used in connection with the same, any contract rights, tenant security deposits to the extent in Seller's possession, utility agreements, guarantees, licenses, approvals, certificates, certificates of occupancy, plans and specifications, logos, permits, warranties or other rights related to the development of, construction of, ownership of, or use and operation of, the Project, as hereinafter defined and any other funds, deposits or monies of Seller; and (g) all of Seller's interest as lessor in all leases (herein defined in Section 5.02(a) hereof) covering the Land and Improvements, including all tenant security and other deposits and interest earned thereon and prepaid rents and interest earned thereon. All of the items described in subparagraphs (a), (b), (c) and (d) above are hereinafter collectively referred to as the "Premises". All of the items described in subparagraphs (a), (b), (c), (d), (e), (f) and (g) above are hereinafter collectively referred to as the "Project". 1.02 Title. (a) Each Seller shall convey to Buyer by a duly executed special warranty deed (the "Deed"), and Buyer shall accept fee simple title to such Seller's undivided interest in the Premises in accordance with the terms of this Agreement, and Buyer's obligation to accept said title shall be conditioned upon Buyer then being conveyed good and clear record, marketable and insurable title to the Land, excepting only the Permitted Exceptions (hereinafter defined). It shall be a condition precedent to Buyer's obligation to close hereunder that a title insurance company (the "Title Company") acceptable to Buyer and 2 3 any lender providing Buyer's financing stands ready to issue, at the Closing (herein defined) an ALTA owner's policy of title insurance, insuring Buyer's interest in the Premises, dated the day of Closing, with liability in the amount of the Purchase Price (herein defined), subject only to the Permitted Exceptions (the "Title Policy"). The Title Policy shall insure against all mechanics' liens and, provided Buyer elects to obtain a Survey (hereinafter defined), shall have full survey coverage and shall be an extended coverage policy insuring against, among other things, mechanics' liens, easements and claims of parties in possession not shown by the public records with all general and standard exceptions deleted, all at no additional premium to be paid by Buyer. (b) Simultaneously with the delivery of the Deed, each Seller shall execute and deliver to Buyer a special warranty bill of sale and instrument of transfer and assignment (the "Bill of Sale"), in form and substance reasonably satisfactory to Buyer's counsel, assigning and transferring all of the tangible and intangible personal property constituting a portion of the Project owned by such Seller, including, without limitation, such Seller's undivided interest in (i) any proceeds under any insurance policies or condemnation proceedings affecting any portion of the Premises owned by such Seller, (ii) any licenses, permits, variances (if any), governmental approvals and consents pertaining to the portion of the Project owned by such Seller, (iii) any warranties and guaranties relating to the portion of the Project owned by such Seller, (iv) any contracts and agreements which relate to the portion of the Project owned by such Seller, that Buyer has elected in writing to assume, and (v) all leases and deposits relating to any portion of the Premises owned by such Seller, free and clear of all liens and encumbrances, except the Permitted Exceptions, and indemnifying Buyer from obligations under all of the items assigned arising prior to Closing and with Buyer's indemnifying Seller from obligations under all of the items assigned arising from and after the Closing. (c) Buyer shall, promptly after the Effective Date, order (i) a commitment for title insurance (the "Commitment") by the terms of which Buyer's Title Company agrees to issue to Buyer at Closing the Title Policy; (ii) a photocopy of all documents ("Title Documents") describing all title exceptions shown on the Commitment (the "Title Exceptions"), and (iii) if Buyer so elects, an ALTA Land Title Survey of the Land (the "Survey"). If Buyer objects to any matters disclosed by the Commitment, Title Documents or Survey, Buyer shall furnish Seller with a written statement thereof within ten (10) days following receipt by Buyer of the last of the Commitment, Title Documents and Survey. All matters shown on the Title Exceptions which are not objected to by Buyer within said ten (10) day period following receipt shall be "Permitted Exceptions". Seller agrees to use its reasonable efforts to satisfy such objections noted by Buyer, provided that Seller shall obtain a satisfaction and release of any monetary liens, including, without limitation, any and all mortgages, mechanics liens and judgment liens other than the assumable financing, as hereinafter defined (collectively, "Monetary Liens") and with respect to matters other than Monetary Liens, Sellers shall be obligated to collectively spend up to $80,000 in the aggregate to cure any 3 4 title objection. Seller shall, within five (5) days after receipt of Buyer's objections, notify Buyer of Seller's proposed actions to satisfy such objections, and shall have a reasonable time, not to exceed fifteen (15) days, to satisfy such objections. If, despite its reasonable efforts to do so, Seller cannot satisfy such objections (other than the Monetary Liens, which shall be satisfied by Seller and matters other than Monetary Liens which cost up to $80,000 in the aggregate to cure) on or before the expiration of such fifteen (15) day period, as the same may be extended in Buyer's sole discretion, Buyer shall have the following options: (i) to extend such fifteen (15) day period for such additional period up to Closing that Buyer may elect, during which Seller shall continue to use its reasonable efforts to satisfy such objections; (ii) to waive its objection to such title defect and proceed to Closing; or (iii) to terminate this Agreement by written notice to Seller and obtain an immediate refund of the Deposit, as defined in Section 2.02. Notwithstanding any term or provision contained herein to the contrary, except with respect to Monetary Liens, the procurement by Seller of a commitment for the issuance of a Title Policy or an endorsement thereto insuring Buyer against any Title Exception which Buyer has disapproved pursuant to this Section shall be deemed a cure by Seller of such objection, subject to Buyer's approval not to be unreasonably withheld or delayed. (d) Notwithstanding anything to the contrary contained in Section 3.01 of this Agreement, if Buyer's objections to title matters are not satisfied prior to expiration of the Study Period, Closing shall occur on the later of (a) the date described in Section 3.01 and (b) five (5) business days following satisfaction of Buyer's title objections in accordance with this Section. SECTION 2 PURCHASE PRICE AND ESCROW DEPOSIT 2.01 Purchase Price. (a) The total purchase price ("Purchase Price") to be paid by Buyer to Seller for the Project shall be TWENTY SEVEN MILLION FIVE HUNDRED THOUSAND AND NO/100 DOLLARS ($27,500,000.00). Such Purchase Price shall be paid to Seller at Closing, as set forth in Section 2.01(b) below, of which the Deposit (as hereinafter defined) shall constitute a part, subject to prorations and adjustments as hereinafter provided in this Agreement. (b) The Purchase Price shall consist of and be payable as follows: (i) Buyer shall have the option, which option must be exercised no later than the end of the Study Period (as defined in Section 9.01 hereof), either to (A) pay the entire Purchase Price in cash at Closing, by wire transfer of immediately available funds 4 5 (provided Seller and Buyer mutually agree as to the allocation of payment of any prepayment penalties to Lenders), or (B) subject to the terms and conditions of this Agreement and further subject to Lender's prior approval, assume the existing loans on the Project with those Lenders (collectively, the "Lenders") and in those amounts as more particularly disclosed on Exhibit B attached hereto (collectively, the "Loans") of approximately $____________ in the aggregate, which is the projected balance of the Loans as of May 1, 1998, on the same terms and conditions as set forth in the loan documents evidencing the Loans (collectively, the "Loan Documents"), except Seller and any guarantor of the Loans shall be fully and completely released from the Loan Documents except for liability with respect to matters which first arose and pertain to the period of time during which Seller owned the Project (the "Assumable Financing"). If Buyer is approved for all or any portion of the Assumable Financing, then, at Closing, Buyer shall execute and deliver to the Escrow Agent, the Lenders and Seller such documents as are necessary for Buyer to consummate Buyer's assumption of the Loans. The projected balance of each of said Loans after the debt service payment due on May 1, 1998, the annual interest rate of each Loan, the amount of the monthly payments of principal and interest and the amortization schedule are set forth on Exhibit B, Buyer shall file, within ten (10) days after the Effective Date, a complete application seeking to obtain the requisite approvals from each Lender to assume the Loans on such terms and conditions as each of the Lenders may require. If prior to the end of the Study Period (a) Buyer does not elect to assume the Loans, (b) Buyer is not approved for the Assumable Financing which approval must include each Lender's agreement to release Seller and any guarantor from the Loan Documents, or (c) Buyer does not accept and approve of the terms and conditions of the Assumable Financing within five (5) days of each Lender's offer of such terms and conditions, which terms and conditions must provide for the release of the Seller and all guarantors from the Loan Documents, which acceptance or rejection by Buyer must in all events occur by the end of the Study Period, then either the Buyer or the Seller can elect to terminate this Agreement within five (5) days of any Lender's rejection of Buyer's assumption of the Loan in question or Buyer's rejection of such Lender's terms and conditions. Failure of Buyer to notify Seller of Buyer's election to assume or reject the Loans by the end of the Study Period shall be deemed to mean that Buyer has elected to accept the Loans. Notwithstanding any term or provision contained herein to the contrary, in the event Buyer for whatever reason does not assume all of the Loans, including, without limitation, in the event Buyer elects to proceed with an entire cash purchase, Seller shall have the option to terminate this Agreement. Such termination pursuant to this Section 2.01(b)(i) shall (w) not be considered a breach of the Agreement; (x) not result in the assessment of damages or penalties to either party; (y) not result in either party having liability to the other hereunder; and (z) result in the return of the Deposit to the Buyer. If neither the Buyer nor the Seller elects to terminate the Agreement pursuant to this Section 2.01(b)(i), then the cash portion of the Purchase Price shall, at the option of Seller, (i) be increased to the full Purchase Price such that the purchase described in this 5 6 Agreement shall be an all cash transaction or (ii) be increased to reflect the amount of the Loan not being assumed. Seller shall pay any and all fees, expenses and other costs associated with Buyer's application and assumption of the Loans including, without limitation, any application fees, review fees, processing fees, transfer/assumption fees and Lender's reasonable costs and expenses, except for any recordation or mortgage tax and any legal fees of Buyer. Furthermore, if this transaction is an all cash transaction without an assumption by Buyer of all of the Loans, Buyer and Seller shall hereafter mutually agree as to which of Buyer or Seller shall pay any prepayment fees, premiums and other costs and expenses required in connection with the prepayment of the Loans. (ii) If Buyer assumes all of the Loans, the balance of the cash portion of the Purchase Price shall be paid by Buyer at Closing by wire transfer of immediately available funds. If Buyer does not assume the Loans, the entire Purchase Price shall be paid by Buyer on or before 12:00 p.m. (ET) at Closing by wire transfer of immediately available funds. 2.02 Deposit; Escrow Agent (a) Within three (3) business days following the date that Commercial Title Group, Limited, 8605 Westwood Center Drive, Suite 401, Tyson's Corner, Vienna, Virginia 22182, Attention: Douglas Nichols ("Escrow Agent") receives a copy of this Agreement executed by both Seller and Buyer, Buyer shall deposit with the Escrow Agent the amount of $67,500.00, either by certified bank or cashier's check or by wire transfer, as a good faith deposit hereunder. Such $67,500.00 deposit, and all interest earned thereon, shall be referred to as the "Initial Deposit". All interest on any deposit shall be deemed income of Buyer. Escrow Agent shall maintain the Initial Deposit in an FDIC-insured interest-bearing account. The Initial Deposit shall be applied to the Purchase Price at Closing and shall be non-refundable to the Seller except as otherwise provided herein. The Initial Deposit shall be released in accordance with the terms and provisions of this Agreement. (b) Provided Buyer has not elected to terminate this Agreement during the Study Period (as defined in Section 9.01), Buyer shall within two (2) business days after the end of the Study Period deliver to the Escrow Agent the amount of $236,500.00, via certified bank check or cashier's check or wire transfer, as an additional earnest money deposit hereunder. Such $236,500.00, and all interest earned thereon, shall be referred to as the "Additional Deposit". Escrow Agent shall maintain the Additional Deposit in an FDIC-insured interest-bearing account. The Initial Deposit together with the Additional Deposit shall be referred to herein as the "Deposit". The term "Deposit" a used herein shall, in addition to referring to both the Initial Deposit and the Additional Deposit may also be deemed to refer to either the Initial Deposit or the Additional Deposit, as the context requires. Upon receipt 6 7 of the Additional Deposit by the Escrow Agent, both Deposits shall become non-refundable to Buyer, and shall be applied to the Purchase Price, unless Seller otherwise defaults in its obligations to close the transaction contemplated by this Agreement in which event the Deposits, together with all accrued interest thereupon, shall be refunded to Buyer. The failure of Buyer to timely deliver any Deposit hereunder shall be a material default, and shall entitle Seller, at Seller's sole option, to terminate this Agreement immediately. (c) Notwithstanding any other provision in this Agreement to the contrary, if prior to the end of the Study Period (as defined in Section 9.01) Buyer should discover one or more condition(s) or defect(s) in or to the Project, or have any objection to the Project, which arises pursuant to or in connection with (i) the title commitment, or (ii) the Survey, then Buyer shall immediately notify Seller in writing of any such condition(s) requesting that Seller cure or remedy said condition(s) prior to the Closing date hereof at Seller's sole expense, said written notice also to include all documentation reasonably required by Seller in support of Buyer's estimate to remedy the condition(s) (the "Cure Notice"). Within three (3) business days after receipt of the Cure Notice, Seller shall notify Buyer in writing whether or not Seller elects to cure or remedy any condition(s) which is the subject of a Cure Notice. If Seller elects not to cure or remedy such condition(s), or if Seller fails to notify Buyer of its election to cure any condition(s) which is the subject of a Cure Notice within three (3) business days as provided hereinabove, then Buyer shall have the right to (i) terminate this Agreement by written notice to Seller and obtain an immediate refund of any Deposit, together with any interest thereon, in which case neither party shall have any further rights or obligations hereunder (except for any indemnity obligations of either party pursuant to the other provisions of this Agreement), and each party shall bear its own costs incurred hereunder, or (ii) Buyer may elect to proceed with the purchase of the Project subject to such condition(s) specified in any such Cure Notice, and in such event, the Purchase Price shall be adjusted at Closing by the amount set forth in the Cure Notice with respect to the estimated cost to remedy such condition(s) subject to the dollar limitation (the "Cap") set forth in Section 1.02(c) hereof; provided however, nothing herein shall obligate Seller to institute litigation to satisfy any such condition(s), except for the release of the Loans, subject to the provisions of Section 2.01(b) hereof. In the event Seller has expended any portion of the Cap pursuant to its obligations under Section 1.02(c) ("Seller's Prior Expenditures"), any adjustment to the Purchase Price shall be subject to the Cap as reduced by Seller's Prior Expenditures. (d) The Escrow Agent joins in the execution of this Agreement for the purpose of acknowledging receipt of the Deposit and agreeing to hold and release the Deposit in accordance with the terms and provisions of this Agreement. (e) If there is a dispute between Seller and Buyer concerning Seller's or Buyer's right to receive the Deposit, or the proceeds of collection thereof, Escrow Agent shall continue to hold the Deposit until the dispute is resolved by Seller and Buyer or until 7 8 otherwise directed by a court of competent jurisdiction. Upon termination of the escrow, all interest earned on the investments shall be paid to the party entitled to receive the principal thereof. SECTION 3 THE CLOSING 3.01 Closing. All documents necessary or appropriate to transfer the Project shall be delivered and closing (the "Closing") shall be held on, or in Buyer's sole discretion, provided that Seller is furnished with at least five (5) business days prior written notice of the earlier closing date, before, the date that is thirty (30) days after expiration of the Study Period. Closing shall occur at the offices of Hale and Dorr LLP, 1455 Pennsylvania Avenue, N.W., Washington, D.C. 20004. 3.02 Conditions to Closing. It is a condition precedent to Buyer's obligation to close hereunder that as of the Closing (i) Seller shall have performed all of its covenants contained in this Agreement, and all of Seller's representations and warranties contained in this Agreement shall be true and accurate in all material respects on and as of the date of Closing as if made anew on that date, (ii) Title Company shall stand ready to issue the Title Policy in the form described in Section 1.02(a) hereof, and (iii) Seller shall have delivered to the Title Company the items described in Section 10. 3.03 Other Agreement. Contemporaneously with this Agreement, Buyer shall execute a Purchase and Sale Agreement substantially similar in form to this Agreement for the property owned by Battlefield/Virginia, Inc. (the "Battlefield Property") and identified on Exhibit H attached hereto (the "Other Agreement"). Notwithstanding anything in this Agreement or the Other Agreement to the contrary, Buyer acknowledges and agrees that in the event Buyer fails or refuses to close on any property which is listed on Exhibits A and H (including, without limitation, in the event Buyer cannot close under the Other Agreement as a result of the tenant leasing the Battlefield Property exercising its option to purchase the Battlefield Property) then Seller's obligations under this Agreement and the Other Agreement to sell any of the above-referenced properties to Buyer shall be null and void at Seller's option. Costs incurred to the date of such default or failure shall be born by Buyer, and the Deposit hereunder and the Deposit under the Other Agreement shall be retained by Seller as liquidated damages and shall be non-refundable to Buyer. In the event that the condition in this Section 3.03 is not satisfied, Seller may elect, at its sole discretion, to terminate this Agreement or waive satisfaction of the condition and close escrow. In the event of such termination, the Deposit shall be retained by Seller and shall be non-refundable to the Buyer. 8 9 SECTION 4 SELLER'S PRE-CLOSING DELIVERIES Seller shall deliver to Buyer, at Seller's sole cost and expense, within five (5) days after execution of this Agreement, copies of the following documents relating to the Project (all of the following documents and other items, together with the Additional Deliverables (hereinafter defined) shall be referred to herein collectively as the "Pre-Closing Deliverables"): 4.01 Leases. True and correct copies of the Leases and all proposed additional Leases of space in the Premises currently being negotiated by Seller. 4.02 Permits. To the extent in Seller's possession, copies of all building permits, certificates of occupancy and governmental permits. 4.03 Taxes. A copy of the most recent available real estate and personal property tax statements for the Project. 4.04 Plans and Specifications. To the extent in Seller's possession (i) originals (or copies, if originals are not available) of the "as-built" plans and specifications for the existing, and any proposed, improvements to the Project (the "Plans and Specifications") and (ii) a copy of all guaranties and warranties currently in effect made by any person for the benefit of Seller with respect to all or any part of the Project in connection with the construction and equipping of the Project. 4.05 Title Matters/Survey. To the extent in Seller's possession, a copy of Seller's existing Owner's Title Insurance Policy insuring Seller's ownership of the Land, a copy of Seller's most recent survey of the Land and a copy of the site plans of the Project, all of which, if available, are attached hereto as Exhibit C. 4.06 Utility Bills. Copies of all utility bills relating to the Project for the prior 12-month period. 4.07 Personal Property. A list of all Personal Property currently used in the maintenance and operation of the Project. 4.08 Service/Equipment Contracts. Copies of all Service/Equipment Contracts (hereinafter defined in Section 5.03). 4.09 Insurance Policies. Copies of all insurance policies (collectively, the "Insurance Policies") pertaining to the Project. 9 10 4.10 Loan Documents. Copies of all documents evidencing the Loans. 4.11 Financial Statements of the Project. A copy of the financial statements for the most recently concluded fiscal year showing all items of income and expenses, and monthly operating statements for the Project for the year-to-date. From time to time thereafter, Seller shall deliver to Buyer all information pertaining to the Project prepared by or on behalf of Seller, which is in Seller's possession and which may reasonably be requested by Buyer (collectively, the "Additional Deliverables"). SECTION 5 REPRESENTATIONS AND WARRANTIES OF SELLER Each Seller represents and warrants to Buyer as of the date hereof and as of the Closing as to itself only and the portion only of the Project owned by such Seller as follows: 5.01 Ownership. Seller is the owner of the Project of record and in fact, legally and beneficially, and, to the best of its knowledge, has good, marketable and insurable title to the Project. There are no options to purchase the Project which are effective, nor has Seller previously entered into any other contract of sale or agreement of any kind with a party other than Buyer which is presently effective and which will not be terminated before the date of this Agreement. 5.02 Leases. (a) As of the date of the Agreement there are no leases, subleases, licenses or other rental agreements or occupancy agreements (written or verbal) which grant any possessory interest in and to any space situated on or in any of the Premises or that otherwise give rights with regard to use of any portions of any of the Premises other than the Leases delivered pursuant to Section 4.01 hereof (said leases, together with any and all amendments, modifications and supplements thereto and guarantees thereof and leases entered into after the date hereof in accordance with this Agreement, are herein referred to collectively as the "Leases"); (b) The copies of the Leases provided to Buyer pursuant to Section 4.01 are true, accurate and complete as of the date hereof, are, to the best of Seller's knowledge, in full force and effect and none of them has been modified, amended or extended; attached as Exhibit D is a Certified Rent Roll, which Seller hereby certifies is true, accurate and complete in all material respects, setting forth the Leases; 10 11 (c) No renewal or extension options have been granted to tenants other than as now set forth in the Leases; (d) No tenant, or any other person, entity or association has an option to purchase, right of first refusal, right of first offer or other similar right in respect of all or any other portion of the Premises; (e) No tenant is entitled to rental concessions or abatements for any period subsequent to the Closing other than as set forth or permitted in the Leases; (f) To the best of Seller's knowledge, no parties to any of the Leases are in default nor do any conditions exist that with the passage of time, or giving of notice shall constitute a default; (g) To the best of Seller's knowledge, Seller has received no notice of any action or proceeding instituted against Seller by any tenant of any portion of the Project; (h) There are no security deposits or other deposits other than those set forth in the Leases; and (i) No rent has been paid more than one month in advance under any Lease. 5.03 Service and Management Contracts. To the best of Seller's knowledge, the agreements provided under Section 4.09 are all of the agreements concerning the operation and maintenance of the Project entered into by Seller and affecting the Project (collectively, "Service/Equipment Contracts"). Seller is not in default under any of the Service/Equipment Contracts and, to the best of Seller's knowledge, no other parties to any of the Service/Equipment Contracts are in default, nor do any conditions exist that, with the passage of time, or giving of notice, or both, shall constitute a default. To the best of Seller's knowledge, the copies of the Service/Equipment Contracts provided to Buyer pursuant to Section 4.08 are true, accurate and complete as of the date hereof, are in full force and effect and none of them has been modified, amended or extended. 5.04 Hazardous Substances. The Project has not been used by Seller for the generation, treatment, storage or disposal of any hazardous substances during the period in which Seller has owned the Project and, to the best of Seller's knowledge, during the period of time prior to Seller's ownership and, to the best of Seller's knowledge, there exist no hazardous substances on, under or at the Premises. Except as disclosed in Exhibit F, attached hereto, or on the surveys of the Project delivered by Seller to Buyer, to the best of Seller's knowledge, there are no underground storage tanks located on or under the Premises. For the purposes of this Section 5.04, "hazardous substances" shall include "hazardous substances" as defined in the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et seq., and regulations adopted pursuant to said Act, or any similar environmental protection law of the or its political subdivisions. 11 12 5.05 Ability to Perform. AAG is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia. AANB is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia. AANC is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia. AAGT is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia. Seller has full power and authority to execute, deliver and carry out the terms and provisions of this Agreement and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and this Agreement constitutes the legal, valid and binding obligation of Seller enforceable in accordance with its terms, subject to creditors' rights, bankruptcy and any other equitable principles. The execution and delivery of this Agreement by the party signing on behalf of Seller has been duly authorized. To the best of Seller's knowledge, no order, permission, consent, approval, license, authorization, registration or validation of, or filing with, or exemption by, any governmental agency, commission, board or public authority is required to authorize, or is required in connection with, the execution, delivery and performance of this Agreement by Seller or the taking by Seller of any action contemplated by this Agreement. 5.06 Compliance with Laws. Neither the entering into of this Agreement nor the consummation of the transaction contemplated hereby will constitute or result in a violation or breach by Seller of any judgment, order, writ, injunction or decree issued against or imposed upon it, or will result in a violation of any applicable law, order, rule or regulation of any governmental authority. There are no actions, suits, proceedings, arbitrations or investigations pending or, to the best of Seller's knowledge, threatened (i) against, relating to or affecting Seller which might interfere in a material respect with the transaction contemplated by this Agreement, become a cloud on the title to the Project or any portion thereof or otherwise affect the Project or Seller's ability to consummate the transaction contemplated hereby or (ii) against, relating to or affecting the Project. 5.07 No Violation Notice. To the best of its knowledge, Seller has not received written notice: (a) from any federal, state, county or municipal authority alleging any material fire, health, safety, building, pollution, environmental, zoning or other violation of law in respect of the Premises or any part thereof, including, without limitation, the occupancy or operation thereof, which has not been corrected; (b) concerning the possible or anticipated condemnation of any part of the Project, or the widening, change of grade or limitation on use of streets abutting the same or concerning any special taxes or assessments levied or to be levied against the Premises or any part thereof; 12 13 (c) concerning any change in the zoning classification of the Premises or any part thereof. If any such notice is received prior to the Closing, Seller shall promptly notify Buyer thereof and comply with any requirements of such notice pursuant to Section 6 hereof prior to the Closing. 5.08 Assessments. To the best of Seller's knowledge, there are no pending or proposed special assessments affecting or which may affect the Project or any portion thereof. 5.09 Loans. Seller has provided true, correct and complete copies of all documents evidencing the Loans, the Loans are in full force and effect, and there are no defaults under the Loans. 5.10 Miscellaneous Representations and Warranties. (a) The business operations of the Project will be conducted in the usual and normal manner until the Closing. After the expiration of the Study Period, Seller shall not, without the prior written consent thereto of Buyer, which consent shall not be unreasonably withheld, delayed or conditioned, make (or knowingly permit) any material physical change in the Project. (b) Prior to the expiration of the Study Period, Seller shall not, without the prior written consent thereto of Buyer, which consent shall not be unreasonably withheld, delayed or conditioned, enter into any lease affecting the Project or alter, modify, terminate or renew any existing Lease. After the expiration of the Study Period, Seller shall not, without the prior written consent of Buyer, which consent may be withheld by Buyer for any reason or no reason at all, enter into any lease affecting the Project or alter, modify, terminate or renew any existing Lease. (c) Seller is not a "foreign person", as defined in the Internal Revenue Code. (d) The premiums are paid and current for the Insurance Policies and to the best of Seller's knowledge, the Insurance Policies are in full force and effect. (e) Except as disclosed in Exhibit G attached hereto and as otherwise described in Section 10.03 hereof, there are no brokerage fees pursuant to agreements entered into by Seller which will be Buyer's responsibility after Closing. 13 14 (f) As of the Closing there will be no employees of Seller employed at the Project. 5.11 Notice of Change. In the event that Buyer becomes aware at any time prior to Closing that a representation or warranty made by Seller herein, while true as of the date made, no longer remains true in all material respects, due to a change of circumstances beyond the reasonable control of Seller subsequent to the date of this Agreement, Buyer shall promptly give written notice of such fact to Seller. Seller shall use its reasonable efforts to remedy such change of circumstances that causes the representation or warranty to be untrue. In the event Seller is unable to remedy such change of circumstances by the Closing, then Buyer shall have the option to (a) terminate this Agreement, whereupon all obligations of all parties hereto shall cease except for those obligations which survive a termination, and the Deposit shall be returned to Buyer, or (b) proceed with Closing notwithstanding such change of circumstances with no adjustment to the Purchase Price. 5.12 No Other Representations or Warranties. Except as set forth in Sections 5.01 through 5.11 hereof, Seller disclaims the making of any representations or warranties, express or implied, regarding the Project or matters affecting the Project, including, without limitation, the physical condition of the Project, the existence of certain wetlands on the Project, the quality of any work or materials used in connection with the improvements on the Project, title to or the boundaries of the Project, pest control matters, soil condition, hazardous waste, toxic substance or other environmental matters, compliance with building, health, safety, land use and zoning laws, regulations and orders, structural and other engineering characteristics, traffic patterns, the development potential of the Project and the Project's use, fitness, value or adequacy for any particular purpose, and all other information pertaining to he Project. Buyer, moreover, acknowledges (i) that Buyer has entered into this Agreement with the intention of making and relying upon its own independent investigation, inspection, analysis, examination and evaluation of the physical, environmental, economic and legal condition of the Project and all other relevant facts and circumstances and (ii) that, except as set forth in Sections 5.01 through 5.11 hereof, Buyer is not relying upon any representations and warranties made by Seller, Seller's agents, brokers, management agent or anyone else acting or claiming to act on Seller's behalf concerning the Project. Buyer further acknowledges that it has not received from Seller any investment, accounting, tax, legal, environmental, architectural, engineering, property management or other advice with respect to this transaction and is relying solely upon the advice of its own investment, accounting, tax, legal environmental, architectural, engineering, property management and other advisors. Subject to the provisions of Sections 5.01 through 5.11 of this Agreement, Buyer shall accept the Project in its "as-is, where-is" condition, with all faults, on the Closing, and assumes the risk that adverse physical, environmental, economic or legal conditions may not have been revealed by its investigation. 14 15 Buyer hereby specifically acknowledges that Buyer has carefully reviewed this Section 5.12 and discussed its import with legal counsel and that the provisions of this Section 5.12 are a material part of this Agreement. The disclaimer contained in this Section 5.12 shall not merge with the transfer of the Project and shall survive Closing, without any limitation as to a survival period. SECTION 5A Buyer represents, warrants and covenants to Seller as of the date hereof and as of the Closing as follows: 5.01A Ability to Perform. Buyer is a corporation organized, validly existing and in good standing under the laws of the State of Ohio. Buyer has full power and authority to execute, deliver and carry out the terms and provisions of this Agreement and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and this Agreement constitutes the legal, valid and binding obligation of Buyer enforceable in accordance with its terms, subject to creditors' rights, bankruptcy and other equitable principles. The execution and delivery of this Agreement by the party signing on behalf of Buyer has been duly authorized. No order, permission, consent, approval, license, authorization, registration or validation of, or filing with, or exemption by, any governmental authority or agency, commission, board or public authority is required to authorize, or is required in connection with, the execution, delivery and performance of this Agreement by Buyer or the taking by Buyer of any action contemplated by this Agreement. 5.02A Compliance with Laws, etc. Neither the entering into of this Agreement nor the consummation of the transaction contemplated hereby will constitute or result in a violation or breach by Buyer of any judgment, order, writ, injunction or decree issued against or imposed upon it, or will result in a violation of any applicable law, order, rule or regulation of any governmental authority. There are no actions, suits, proceedings, arbitrations or investigations pending or, to the best of Buyer's knowledge, threatened against, relating to or affecting Buyer which might interfere in a material respect with the transaction contemplated by this Agreement or otherwise affect Buyer's ability to consummate the transaction contemplated hereby. There are no facts, events, conditions or occurrences by reason of which any such action, suit, proceeding, arbitration or investigation may be brought by any person or entity against Buyer. 5.03A Bankruptcy. No attachment, execution, assignment, for the benefit of creditors or voluntary proceedings in bankruptcy has been commenced by the Buyer and, to the best of Buyer's knowledge, no such action has been contemplated or threatened, nor has any involuntary proceedings in bankruptcy been commenced against the Buyer. 15 16 5.04A Miscellaneous Agreements. Buyer acknowledges that all information with respect to the Project furnished to Buyer, including, without limitation, Pre-Closing Deliverables (collectively, the "Confidential Information"), is and has been so furnished on the condition that Buyer maintains the confidentiality thereof. Accordingly, Buyer shall, and shall cause its directors, officers, employees, agents, contractors and representatives to, hold in strict confidence, and not disclose to any other person or entity without the prior written consent of Seller until the Closing shall have been consummated, any of the Confidential Information in respect of the Project delivered to Buyer by Seller or any of its agents, representatives, directors, officers or employees. If the Closing does not occur and this Agreement is terminated, Buyer shall promptly return, or cause to be returned, to Seller all copies of such Confidential Information without retaining, or permitting retention of, any copy thereof. Notwithstanding anything to the contrary hereinabove set forth, Buyer may disclose such Confidential Information (i) on a need-to-know basis to its employees, its title insurer and members of professional firms serving it in connection with this transaction, including, without limitation, its attorneys, architects, environmental consultants and engineers, and its clients; (ii) as any governmental agency or authority may require in order to comply with applicable laws or regulations; and (iii) if required by an order of any court of competent jurisdiction, and this provision shall survive Closing. SECTION 6 VIOLATIONS OF LAW 6.01 Responsibility for Violations. All notices of violations of laws, ordinances, or regulations ("Violations of Law"), which are issued or sent prior to the Closing by any governmental department, agency or bureau having jurisdiction as to conditions affecting the Project shall be remedied or complied with by Seller prior to Closing; provided, however, that if Seller is unable to remedy such Violations of Law or comply with such notices by the Closing then Buyer shall have the option to (a) terminate this Agreement, whereupon all obligations of all parties hereto shall cease, the Deposit shall be returned to Buyer and this Agreement shall be void and without recourse to the parties hereto, except for provisions which are expressly stated to survive such termination; or (b) proceed with Closing notwithstanding such Violations of Law. Notwithstanding any term or provision contained herein to the contrary, in no event shall the Sellers collectively be obligated to spend more than $16,000 to remedy any Violations of Law. In the event the Violations of Law require Sellers to spend collectively more than $16,000 in the aggregate to remedy, Seller shall notify Buyer of its election not to remedy such Violations of Law, and Buyer shall elect, by written notice to Seller within five (5) days of receipt of such notification from Seller, to either (i) waive its objection to such Violations of Law and proceed to Closing or (ii) terminate this Agreement and obtain a refund of the Deposit. 16 17 SECTION 7 INSURANCE 7.01 Maintenance of Insurance. Until the Closing, Seller shall maintain its present insurance on the Project, which insurance in respect of fire and casualty shall be covered by a standard All-Risk Policy in an amount at least equal to the full replacement value of the Project. Subject to the provisions of Section 7.02, the risk of loss in and to the Project shall remain vested in Seller until the recordation of the Deed to Buyer. 7.02 Casualty or Condemnation. If prior to the Closing, the Project or any "material" portion thereof is damaged or destroyed by fire or casualty, or any part of the Project is taken or threatened to be taken by eminent domain by any governmental entity, then Buyer shall have the option, exercisable by written notice given to Seller at or prior to the Closing, either to (a) terminate this Agreement, whereupon all obligations of all parties hereto shall cease, the Deposit shall be returned to Buyer and this Agreement shall be void and without recourse to the parties hereto except for provisions which are expressly stated to survive such termination; or (b) proceed with the purchase of the Project, and in such case, unless Seller shall have previously restored the Project to its condition prior to the occurrence of any such damage or destruction, Seller shall pay over or assign to Buyer, without recourse, all amounts received or due (plus an amount equal to the sum of any deductible under any insurance policy covering the Project) from, and all claims against, any insurance company or governmental entity as a result of such destruction or taking. Within thirty (30) days after receipt of written notice of such casualty or condemnation, Buyer will advise Seller in writing whether Buyer desires to proceed with this transaction in light of such casualty or condemnation. The term "material" as used in this Section 7.02 shall mean damage or destruction in an amount equal to or greater than $200,000 per portion of the Project owned by any individual Seller. SECTION 8 SELLER'S OBLIGATIONS PRIOR TO CLOSING Seller covenants that between the date of this Agreement and the Closing (all of which must be true and correct in all material respects as of the Closing and shall constitute conditions precedent to Buyer's obligation to close hereunder): 8.01 Replacement of Personal Property; Inventory. No material personal property included as part of the Project shall be removed from the Project unless the same is replaced with similar items of at least equal quality prior to the Closing. 17 18 8.02 Prudent Business Practices. Each Seller shall maintain the portion of the Project owned by such Seller in good operating condition and repair, shall not commit or allow to occur waste of the Project so that the Project, except for normal wear and tear, is in good repair on the date of Closing and substantially the same state of repair and condition as existed as of the Effective Date. 8.03 Tenant Estoppels. Seller shall use reasonable efforts to obtain and deliver to Buyer at least (5) business days prior to the Closing an executed estoppel letter dated within sixty (60) days of the Closing, in form reasonably satisfactory to both Seller's and Buyer's counsels, a pro-forma copy being attached hereto as Exhibit E (the "Tenant Estoppels"), from tenants whose leases constitute in the aggregate not less than eighty percent (80%) of the rentable square footage of the Improvements, or in the form described or contemplated in the lease, the substance and content of which must be consistent in all material respects with the Lease, and the Certified Rent Roll. It is expressly understood and agreed that if Seller agrees under any circumstance to extend the Closing date as referenced in Section 3.01 hereof to a date which would cause the Tenant Estoppels to be dated more than sixty (60) days prior to the Closing, that the Tenant Estoppels shall be deemed satisfactory provided they are dated within the sixty (60) day period prior to the originally stated Closing date. In no event shall the preceding sentence imply any obligation or agreement on the part of Seller to extend the Closing date. Upon delivery to Buyer prior to or after Closing of a Tenant Estoppel confirming the matters set forth in Section 5.02 hereof as to such tenant's Lease, the representations and warranties of the Seller set forth in Section 5.02 hereof shall be deemed terminated and the Seller shall have no liability to the Buyer therefor. Notwithstanding the foregoing, Buyer acknowledges and agrees that, with respect to any Lease with any U.S. governmental agency and Leases with State agencies, Seller shall be deemed to have satisfied its obligation to deliver an estoppel certificate if it uses reasonable efforts to obtain from such U.S. governmental agency a Lease Status Report or from the State agencies their form of estoppel certificate or lease status report. If Buyer does not terminate this Agreement prior to the expiration of the Study Period, Buyer shall be deemed to have accepted the Tenant Estoppels for all purposes and Seller shall be deemed to have satisfied this covenant. Seller shall reasonably cooperate with Buyer and any lender of Buyer in connection with obtaining subordination, non-disturbance and attornment agreements and tenant estoppels required by any lender of Buyer from the tenants occupying space within the Project. 18 19 SECTION 9 STUDY PERIOD 9.01 Study Period. Buyer shall have until 6:00 p.m. on the date that is sixty (60) days following the Effective Date, as defined below (the "Study Period") to perform a feasibility study of the Project, including, but not limited to, test borings, soil analyses, hydrologic and environmental surveys, marketing and feasibility studies, structural and engineering investigations, reviewing the books and records of the Seller and the Project, financial analyses and verifications of existing zoning and status of title and conferences with governmental staff members. In the event that any such examinations, studies, tests, reviews and/or inspections cause Buyer, in its sole and absolute discretion, to believe that it is not prudent to proceed to Closing, then Buyer may, at any time during the Study Period, terminate this Agreement by giving written notice of such termination to Seller, whereupon the parties hereto shall be released from any and all further liability and obligation hereunder and the Initial Deposit shall promptly be returned to Buyer. In the event Buyer does not provide written notification to Seller during the Study Period of termination of this Agreement, Buyer shall be deemed not to have elected to terminate this Agreement and the parties hereto shall remain subject to the terms and conditions of this Agreement. In the event Buyer does not terminate the Agreement as provided in this Section 9.01, Buyer and/or its designees shall have the continued right until Closing, as hereinafter defined, to inspect, survey and make other tests of the Project. 9.02 Access. Upon execution of this Agreement, Buyer and its agents shall have full access to the Project, subject to the rights of tenants with reasonable notice to them, and full access during business hours upon reasonable advance notice to Seller to all books, records, files, financial data, leases and contracts relating to the Project. Seller reserves the right to have a representative present during any such inspections. Buyer and its agents shall have the right to inspect and copy the foregoing documents, conduct all surveys, tests, test borings, soil analyses, engineering, hazardous waste and environmental studies, studies, examinations and to make such inquiries concerning the Project as Buyer may determine necessary or desirable. Seller shall use reasonable efforts to cooperate in such examinations and shall instruct Seller's agents, servants, employees, and representatives to cooperate in assisting Buyer in the exercise of Buyer's study rights including, without limitation, allowing Buyer access to such materials in the Project Manager's office or elsewhere. In the event Buyer enters upon the Project for purposes of this Section 9.02, Buyer will indemnify, defend and hold harmless Seller and its agents, servants and employees from and against any loss, cost, expense, claim or liability made against Seller or its agents, servants or employees as a result of such entry, including, without limitation, the costs of restoring the Project to its original condition existing immediately prior to Buyer's action, or death or injury to any person which occurs as a result of the acts or omissions of Buyer or any of its employees, consultants, engineers, agents and representatives, during any entry onto or inspection of the Project, or during the conduct of any of the Feasibility Studies, by Buyer or any of its employees, agents or representatives. Buyer agrees to restore the Project to its condition existing immediately prior to Buyer's or its agent's actions. This Section 9.02 shall survive any termination of this Agreement or Closing hereunder. Seller shall also 19 20 furnish Buyer, within the Study Period, all additional information in Seller's possession which Buyer may reasonably request with respect to the Seller, the Project or the operation of the Project. SECTION 10 SELLER'S CLOSING OBLIGATIONS 10.01 Closing, Deliveries and Obligations. At or prior to the Closing, Seller shall deliver the following to Buyer (all of which shall constitute condition precedents to Buyer's obligation to close hereunder): (a) Deed; Bill of Sale. The Deed and Bill of Sale, all in form reasonably satisfactory to Buyer's counsel, duly executed and acknowledged, which together convey the Project to Buyer, subject only to the Permitted Exceptions. (b) Assignment of Leases. An assignment of the Leases, in form reasonably satisfactory to Buyer's counsel. (c) Lease Records. The original Leases, or to the extent not in Seller's possession, photocopies, certified by Seller as true and complete, of Leases, and all rent records and related documents in the possession or under the control of Seller. To the extent any deposits are in a form other than cash, such deposits shall be transferred to Buyer at Closing in a manner reasonably acceptable to Buyer. (d) Plans, Specifications, Warranties, Guaranties and Licenses. To the extent in Seller's possession, copies of all current site plans, surveys, soil and substrata studies, architectural drawings, plans and specifications, engineering plans and studies, floor plans, landscape plans and other plans or studies of any kind that relate to all or any part of the Project. Seller shall also deliver (i) originals (or copies, if originals are not then available) of all then effective assignable guaranties, warranties and/or payment and performance bonds made by any person for the benefit of Seller, with respect to the Project or any of its components, together with an instrument assigning such guaranties and warranties to Buyer and (ii) originals (or copies, if originals are not then available) of all certificates, Licenses, permits, authorizations and approvals issued for or with respect to the Project by governmental and quasi-governmental authorities having jurisdiction, to the extent such items are in Seller's possession. (e) Title Affidavits. Such affidavits, indemnities and lien waivers as Buyer's title insurer may reasonably require. 20 21 (f) Files. To the extent available, originals (or copies, if originals are not available) of all documents and books and records necessary for the continued operation of the Project, other than proprietary information, including without limitation, lease files, rent records, escalation records and statements and maintenance records. (g) Notices of Sale. Sufficient original letters, executed by Seller in form and substance reasonably satisfactory to Buyer, advising tenants under the Leases of the sale of the Project to Buyer and directing that all rents and other payments thereafter becoming due be sent to Buyer or as Buyer may direct. (h) Certificate as to Representations, Warranties and Covenants. A certificate by each Seller to the effect that all of the representations, warranties and covenants of such Seller as it relates to the portion of the Project owned by such Seller set forth in Sections 5 and 8 remain true and correct in all material respects as of the Closing. (i) Notices. Any required approval or notice required by any federal, state or local government authority required in connection with the transfer of the title hereunder. (j) Evidence of Tax Payments. A receipt or receipts from the appropriate taxing authorities evidencing that all real estate taxes and personal property taxes affecting the Project are not delinquent. (k) Organizational Documents. The organizational documents of Seller together with an original resolution of Seller authorizing the execution of this Agreement, the conveyance documents and all other documents to be executed by Seller and the performance by Seller hereunder and thereunder together with a good standing certificate of Seller. (l) Assumable Financing. The Loan Documents, if any, and an assignment thereto. 10.02 Possession. At the Closing and as a condition precedent to Closing, Seller shall deliver full possession of the Project, free of all tenants or occupants other than under the Leases, which Leases shall be in full force and effect. 10.03 Covenant and Indemnity. (a) As additional consideration for Buyer's purchasing the Project and paying the Purchase Price to the Seller, each Seller hereby covenants and agrees as it relates to the portion of the Project owned by such Seller to remain fully liable for the performance and payment of all tenant improvements and the payment of all leasing commissions currently due and owing (including any delinquent amounts) under any of the Leases or under any leasing/commission agreement or which shall hereafter be due and owing under any of the Leases or under any leasing/commission agreement, excluding, however, tenant 21 22 improvement costs and leasing commissions with respect to any option to renew or extend leases and leasing commissions and tenant improvements costs which shall hereafter be owing under any leases or leasing/commission agreements for any new Leases approved by Buyer after the Effective Date or new Leases executed by Buyer subsequent to the Closing (collectively, the "Buyer's Commissions and Costs"). It is expressly understood and agreed that Buyer is assuming and agreeing to be bound by and liable for such Buyer's Commissions and Costs. Buyer is not assuming the obligations to perform or pay for any tenant improvements or to pay for any leasing commissions which have heretofore accrued, and which are now owing under any of the Leases or under any leasing/commission agreement other than as aforesaid. Notwithstanding anything to the contrary contained herein, Buyer shall pay, by reimbursing Seller for any amount it has paid therefor prior to Closing and assuming any amount which is unpaid as of Closing those items described in Exhibit G, attached hereto. (b) Buyer and Seller shall each indemnify, defend and hold the other party (together with its officers, directors, partners, and employees) harmless from and against all claims, demands, causes of actions, judgments, damages, costs and expenses (including, without limitation, reasonable, actual attorneys' fees and court costs), deficiencies, settlements and investigations which relate to matters, actions or omissions which arise out of or are based upon any of the following during such parties' period of ownership, which for Seller shall be the period of time prior to Closing and for Buyer shall be the period of time on and after Closing: (i) any obligation under any contracts, agreements and writings entered into by or on behalf of such party in respect of the use, construction, operation, ownership, occupancy or maintenance of any portion of the Project arising out of an event occurring during such parties' period of ownership; (ii) any accident, injury, death or damage whatsoever caused to any person or entity or loss of property, occurring in or about the Premises or any part thereof, or on any other property connected with or adjacent thereto during such parties' period of ownership; or (iii) any breach of the covenant set forth in Section 10.03(a), above, or with respect to any payment or performance obligation under any of the Leases for tenant improvements or under any of the Leases and/or leasing/commission agreements for leasing commissions which have heretofore accrued, which are now due and owing or which shall hereafter accrue. (iv) any breach of a representation or warranty set forth in this Agreement. This Section 10.03 shall survive the Closing until the first anniversary of the Closing; provided, however, subject to the terms of Section 8.03, the representations set forth in Section 5.02, above, shall survive until the expiration of each lease currently in effect at the Project. 22 23 SECTION 11 BUYER'S CLOSING OBLIGATIONS At the Closing, Buyer shall: 11.01 Payment of Purchase Price. Deliver to Seller the Purchase Price, as adjusted for apportionments under Section 12, and any other adjustments thereto required pursuant to the express provisions of this Agreement. 11.02 Assumable Financing. Deliver the assumption, if applicable, of the Loan Documents and other documents relative thereto as required by Lender and the Escrow Agent, together with causing each Lender to deliver such documents as are necessary to release Seller and the new guarantor of the Loans from any and all liability under the Loans except for liabilities with respect to matters which first arose and pertain to the period of time during which the Seller owned the Project. 11.03 Closing Certificate. A certificate by Buyer (i) to the effect that all of the representations, warranties and covenants of Buyer set forth in Section 5A remain true and correct in all material respects as of the Closing and (ii) confirming the waivers and acknowledgments set forth in Section 5.12 hereof. 11.04 Indemnity. Buyer hereby covenants and agrees to indemnify, defend and hold Seller (and its officers, directors and employees) harmless from and against all claims, demands, causes of actions, judgments, damages, costs and expenses (including, without limitation, reasonable attorneys' fees and court costs), deficiencies, settlements and investigations which relate to matters, actions or omissions which arise out of or are based upon any obligations under any of the Loan Documents (except for liability with respect to matters which first arose and pertain to the period of time during which Seller owned the Project). 11.05 Other Documents. Deliver any other documents required by this Agreement to be delivered by Buyer, including, without limitation, the Bill of Sale and Assignment of Leases. 23 24 SECTION 12 APPORTIONMENTS AND ADJUSTMENTS TO PURCHASE PRICE; CLOSING EXPENSES 12.01 Apportionments. The following items shall be prorated as of 12:01 A.M. on the Closing and the net amount thereof shall be added to or deducted from, as the case may be, the amount of the Purchase Price to be paid at the Closing; (a) general real estate, personal property and ad valorem taxes and assessments for the current tax year of the Project. If any such taxes or assessments are payable in installments all installments due through the Closing together with the accrued but unpaid portion of any other installments not yet due as of the Closing shall be paid for by the Seller; (b) taxes, water, sewer and front foot benefit charges, and charges for electricity, gas, telephone and other utilities and license fees; (c) rent and other charges under the Leases (to the extent monies have actually been collected therefor); (d) all other income and expenses relating to the Project, including principal and interest payable under each of the Loans; and (e) any other items that are customarily prorated in transactions of this nature excluding, however, insurance premiums under the Insurance Policies. Any and all security deposits, prepaid rent and all interest earned thereon shall be a credit to Buyer at Closing. Seller shall be fully liable for any wages and other amounts due and owing any employees at the Project. Seller shall retain, and shall not be entitled to any credit for, the deposits, if any, made by Seller in connection with the provision of electric, sewer, water, telephone and other utility services to the Project. Seller shall retain any and all deposits and escrows relating to the Loans. For purposes of calculating prorations, Buyer shall be deemed to be in title to the Project, and, therefore, entitled to the income therefrom and responsible for the expenses thereof for the entire day upon which the Closing occurs. All such prorations shall be made on the basis of the actual number of days of the month which shall have elapsed as of the day of the Closing and based upon the actual number of days in the month and a three hundred sixty-five (365) day year. The amount of such prorations shall be initially performed by Title Company at Closing but shall be subject to adjustment in cash after the Closing outside 24 25 of escrow as and when complete and accurate information becomes available, if such information is not available at the Closing. Seller and Buyer agree to cooperate and use their best efforts to make such adjustments no later than sixty (60) days after the Closing (except with respect to property taxes, which shall be adjusted within sixty (60) days after the tax bills for the applicable period are received). Without limiting the generality of the foregoing, Seller and Buyer hereby agree that with respect to any year-end reconciliations of reimbursable expenses under the Leases, Seller and Buyer shall cooperate to complete such reconciliations as soon as possible after the Closing, with Seller responsible for amounts owing to tenants under the Leases, and entitled to Rents (hereinafter defined) payable by tenants under the Leases (as the case may be), with respect to periods prior to the Closing, and with Buyer responsible for amounts owing to tenants under the Leases, and entitled to Rents payable by tenants under the Leases (as the case may be), with respect to periods from and after the Closing (and, with respect to any such amounts payable to Seller, Buyer shall have no obligation to collect such Rents, including having no obligation to institute legal proceedings, including any action for unlawful detainer, against a tenant owing any such Rents, other than to use commercially reasonable efforts to collect such rents and to respond to any periodic inquiries made by Seller relating to the collection of such rents and to the extent Buyer actually receives any delinquent Rents owing to Seller Buyer shall tender the same to Seller to the extent of amounts delinquent and actually due Seller but only after (y) reimbursing Buyer for its actual out-of-pocket costs and expenses of collection incurred with respect to such tenant, and (z) all Rents due and owing to Buyer have been paid to Buyer in full (including, without limitation, the payment to Buyer of delinquencies in Rent owing to Buyer)). The term "Rent" as used herein shall mean all rents, including any percentage rent and any accrued tax and operating expense escalation, charges, and other revenue of any kind generated from or in connection with the Leases. Except as set forth in this Section 12.01, all items of income and expense which accrue for the period prior to the Closing will be for the account of Seller and all items of income and expense which accrue for the period on and after the Closing will be for the account of Buyer. Buyer shall receive a credit against the Purchase Price for all amounts of Rent which are allocable to the period on and after the Closing and which have been prepaid as of the Closing Date. The provisions of this Section 12.01 shall survive the Closing. 12.02 Operating Expense Pass-throughs. With respect to expenses of the Project which are chargeable to the tenants pursuant to the provisions of the Leases (the "CAM Charges"), Seller shall determine (1) the amount of those expenses paid or payable by Seller from January 1 in the year in which the Closing occurs through the date of Closing (or, with regard to taxes and assessments, the amount of the proration thereof charged to Seller) and (2) the amount tenants have paid to Seller from January 1 in the year in which Closing occurs until the date of Closing as the tenants' pro rata share of such tenant expenses. Buyer shall be 25 26 entitled to a credit at Closing equal to the amount Seller has received as of the Closing Date as pro rata expense payments from tenants in excess of the expenses paid or payable by Seller through the Closing Date. If accurate allocations of CAM Charges cannot be made at Closing because current bills are not obtainable, the parties shall allocate such expenses at Closing on the best and most current information available, subject to adjustment in cash after the Closing outside of escrow as and when final bills or other evidence of the applicable expense are received. Buyer shall also be entitled to a credit at Closing equal to any CAM Charges for 1997 and prior years which are owing to any of the tenants (to the extent collected from such tenants) of the Project which are presently in occupancy. The provisions of this Section 12.02 shall survive the Closing. 12.03 Closing Expenses. Buyer shall pay for all of its diligence costs and expenses including, without limitation, the costs of the survey of the Premises, the charges for the title commitment and report, and the premium for the Title Policy. Buyer shall also pay for one-half of any escrow charges and for any and all state and local transfer, recordation and documentary taxes and any and all recording costs applicable to the transactions contemplated herein except for the Virginia Grantor's Tax which shall be paid for by Seller. Each party will be responsible for its own legal fees, consultant's fees and costs of inspection. Seller shall pay for one-half of any escrow charges, the Virginia Grantor's Tax and any and all fees, expenses and other costs associated with Buyer's application and assumption of the Loan including, without limitation, any application fees, review fees, processing fees, transfer/assumption fees and Lender's costs and expenses, excluding, however, Buyer's legal fees and expenses incurred in connection with such application and assumption and excluding any mortgage or other taxes incurred in connection therewith. The provisions of this Section 12.03 shall survive the Closing. SECTION 13 FAILURE TO PERFORM 13.01 Seller's Default. If at the Closing, Seller is unable to give title or to make conveyance, or to deliver possession of the Project, or to satisfy all of the terms and conditions precedent to Closing as set forth in this Agreement, all as herein stipulated, or if on such date the Project does not conform with the provisions hereof, and Buyer does not elect to take title, Seller shall be in default under this Agreement and Buyer shall have the right to terminate the Agreement and the Deposit shall be forthwith returned to Buyer, and Buyer may pursue the right to compel specific performance and the right to collect its costs and expenses incurred in connection therewith as its sole and exclusive remedy. Buyer hereby waives and releases all other claims for damages and other remedies against Seller for non-performance and expressly acknowledges and agrees that in no event shall any officer, director, member, partner or shareholder of Seller ever have any liability hereunder. 26 27 13.02 Buyer's Default. The parties acknowledge that in the event of Buyer's failure to fulfill its obligations hereunder it is impossible to compute exactly the damages which would accrue to the Seller in such event. The parties have taken these facts into account in setting the amount of the Deposit, required pursuant to Section 2.02, and hereby agree that: (i) such amount is the pre-estimate of such damages which would accrue to Seller from a default by Buyer; (ii) such amount represents damages and not any penalty against Buyer; and (iii) if this Agreement shall be terminated by Seller by reason of Buyer's failure to fulfill Buyer's obligations hereunder, the Deposit shall be Seller's full and liquidated damages in lieu of all other rights and remedies (including the right of specific performance) which Seller may have against Buyer at law or in equity. Seller's sole and exclusive remedy for Buyer's default shall be to receive the Deposit as liquidated damages in lieu of all other rights and remedies which Seller may have against Buyer at law or in equity. Seller hereby waives and releases all other claims for damages and other remedies against Buyer for non-performance and expressly acknowledges and agrees that in no event shall any officer, director or shareholder of Buyer ever have any liability hereunder. SECTION 14 BROKERAGE FEES 14.01 For the Seller. The Seller represents and warrants that it has not engaged any broker or finder or incurred any liability for brokerage fees, commissions or finder's fees in connection with the transactions contemplated by this Agreement. The Seller agrees to indemnify and hold harmless the Buyer against any claims or liabilities asserted against Buyer by any person acting or claiming to act as a broker or finder in connection with the transaction described in this Agreement. 14.02 For the Buyer. The Buyer represents and warrants that it has not engaged any broker or finder or incurred any liability for brokerage fees, commissions or finder's fees in connection with the transactions contemplated by this Agreement. The Buyer agrees to indemnify and hold harmless the Seller against any other claims or liabilities asserted against it by any person acting or claiming to act as a broker or finder on behalf of the Buyer. 27 28 SECTION 15 NOTICES 15.01 Effective Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if delivered personally or sent by telecopy machine, Federal Express or other recognized overnight courier, registered or certified mail, postage prepaid, addressed as follows or to such other address of which the parties may have given notice: To the Seller: Samnan Trading Establishment P.O. Box 28008 Alsour Street Alnaser Building Safat, Kuwait Attention: Dr. Louai Alassar Phone No.: 011 965-240-5701/2 Telecopy No.: 011 965-240-5703 With a copy to: Cambridge Holdings 560 Herndon Parkway Suite 210 Herndon, Virginia 20170 Attention: Mr. Andrew J. Czekaj Phone No.: 703-709-8866 Telecopy No.: 703-847-9611 With a copy to: Hale and Dorr LLP 1455 Pennsylvania Avenue, N.W. Suite 1000 Washington, D.C. 20004 Attention: Steven S. Snider, Esq. Phone No.: (202) 942-8494 Telecopy No.: (202) 942-8484 To the Buyer: DDR OfficeFlex Corporation c/o Developer's Diversified Realty Corporation 34555 Chagrin Boulevard Moreland, Ohio 44022 Attention: James A. Schoff, Esq. Executive Vice-President and Chief Operating Officer Phone No.: (216) 247-4700 Telecopy No.: (216) 247-1118 28 29 With a copy to: Developer's Diversified Realty Corporation 34555 Chagrin Boulevard Moreland Hills, OH 44022 Attention: Joan Allgood, Esq. General Counsel Phone No.: (440) 247-1731 Telecopy No.: (440) 247-2385 To Escrow Agent: Commercial Title Group, Ltd. 8605 Westwood Center Drive Suite 401, Tysons Corner Vienna, Virginia 22182 Attention: Mr. Douglas Nichols Phone No.: (703) 506-1520 Telecopy No.: (703) 506-9615 Unless otherwise specified herein, such notices or other communications shall be deemed to be effective: (a) one (1) business day after deposit with the courier if sent by Federal Express or other recognized overnight delivery service; or (b) upon receipt if accomplished by hand delivery or by telecopied delivery. Either party may, from time to time, by notice in writing served upon the other party, in the same manner as prescribed in this Section, designate a different mailing address or a different or additional person to which all such notices are thereafter to be addressed. 29 30 SECTION 16 MISCELLANEOUS PROVISIONS 16.01 Integration. This Agreement embodies and constitutes the entire understanding between the parties with respect to the transaction contemplated herein, and all prior agreements, understandings, representations and statements, oral or written, are merged into this Agreement. Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except by an instrument signed by the party against whom the enforcement of such waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument. 16.02 Governing Law. This Agreement shall be governed by, and construed in accordance with the laws of, the Commonwealth of Virginia. 16.03 Captions. The captions in this Agreement are inserted for convenience of reference only and in no way define, describe or limit the scope or intent of this Agreement or any of the provisions hereof. 16.04 Escrow Agent. Escrow Agent shall hold the Deposit in accordance with the terms and provisions of this Agreement, subject to the following: (a) Escrow Agent undertakes to perform only such duties as are expressly set forth in this Agreement and no implied duties or obligations shall be read into this Agreement against Escrow Agent. (b) Escrow Agent may act in reliance upon any writing or instrument or signature which it, in good faith, believes of any statement or assertion contained in such writing or instrument, and may assume that any person purporting to give any writing, notice, advice or instrument in connection with the provisions of this Agreement has been duly authorized to do so. Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form, manner and execution, or validity of any instrument deposited in escrow, nor as to the identity, authority, or right of any person executing the same, and Escrow Agent's duties under this Agreement shall be limited to those provided in this Agreement. (c) Unless Escrow Agent discharges any of its duties under this Agreement in a negligent manner or is guilty of willful misconduct with regard to its duties under this Agreement, Seller and Buyer shall indemnify Escrow Agent and hold it harmless from any and all claims, liabilities, losses, actions, suits or proceedings at law or in equity, or other expenses, fees, or charges of any character or nature, which it may incur or with which it may 30 31 be threatened by reason of its acting as Escrow Agent under this Agreement; and in such connection Seller and Buyer shall indemnify Escrow Agent against any and all expenses including reasonable attorneys' fees and the cost of defending any action, suit or proceeding or resisting any claim in such capacity. (d) If the parties (including Escrow Agent) shall be in disagreement about the interpretation of this Agreement, or about their respective rights and obligations, or the propriety of any action contemplated by Escrow Agent, Escrow Agent may, but shall not be required to, file an action in interpleader to resolve the disagreement. Escrow Agent shall be indemnified for all costs and reasonable attorneys' fees in its capacity as Escrow Agent in connection with any such interpleader action and shall be fully protected in suspending all or part of its activities under this Agreement until a final judgment in the interpleader action is received. (e) Escrow Agent may consult with counsel of its own choice and have full and complete authorization and protection in accordance with the opinion of such counsel. Escrow Agent shall otherwise not be liable for any mistakes of fact or errors of judgment, or for any acts or omissions of any kind, unless caused by its negligence or willful misconduct. (f) The Escrow Agent may in its sole discretion resign by giving thirty (30) days' written notice thereof to the Buyer and Seller. The Buyer and Seller shall furnish to the Escrow Agent written instructions for the release of the escrow funds and escrow documents in such event. If the Escrow Agent shall not have received such written instructions, the Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor Escrow Agent, and upon such appointment deliver the escrow funds and escrow documents to such successor. 16.05 Bind and Inure. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective permitted successors and assigns. 16.06 Drafts. This Agreement shall not be binding or effective until properly executed and delivered by both Seller and Buyer. The delivery by Buyer to Seller of an executed counterpart of this Agreement shall constitute an offer which may be accepted by the delivery to Buyer of a duly executed counterpart of this Agreement and the satisfaction of all conditions under which such offer is made, but such offer may be revoked by Buyer by written notice given at any time prior to such acceptance and satisfaction. 16.07 Number and Gender. As used in this Agreement, the masculine shall include the feminine and neuter, the singular shall include the plural and the plural shall include the singular, as the context may require. 31 32 16.08 Attachments. If the provisions of any exhibit, schedule or rider to this contract are inconsistent with the provisions of this Agreement, the provisions of such schedule or rider shall prevail. The Exhibits attached are hereby incorporated as integral parts of this Agreement. 16.09 Survival of Representations. Subject to the terms and conditions of Section 8.03, above, all representations and warranties made by the parties herein or in any instrument or document furnished in connection herewith shall survive the Closing and any investigation at any time made by or on behalf of the parties hereto for a period of twelve (12) months from the Closing. 16.10 Dates. Whenever used herein, unless expressly provided otherwise, the term "days" shall mean consecutive calendar days, except that if the expiration of any time period measured in days occurs on a Saturday, Sunday, legal holiday or other day when federal offices are closed in Washington, D.C., such expiration shall automatically be extended to the next business day. 16.11 Time of the Essence. Time is of the essence of this Agreement. 16.12 Assignment. This Agreement may not be assigned by Buyer without the prior written consent of Seller not to be unreasonably withheld. Any assignment approved by Seller shall be subject to the assignor remaining liable under this Agreement. Prior to any request for an assignment hereunder, Buyer and the proposed assignee shall provide Seller with such information as Seller may need in order to evaluate the proposed assignment. 16.13 Effective Date. The Effective Date of this Agreement (the "Effective Date") shall be the date on which this Agreement has been executed by both Seller and Buyer. The execution hereof by Buyer shall constitute an offer by Buyer to Seller to purchase the Project on the terms and conditions herein stated, which must be accepted by Seller on or before 5:00 p.m. on May ____, 1998 by the execution hereof by Seller. If Buyer's offer is not timely accepted, this Agreement shall be thereafter null and void. 16.14 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall be one and the same document. 32 33 IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the date first above written. SELLER: A&A Greenbrier, Inc. By: -------------------------- Name: Louai Alassar Title: President A&A Northpointe B, Inc. By: -------------------------- Name: Louai Alassar Title: President A&A Northpointe C, Inc. By: -------------------------- Name: Louai Alassar Title: President A&A Greenbrier Tech, Inc. By: -------------------------- Name: Louai Alassar Title: President - ------------------ Date 33 34 BUYER: DDR OFFICEFLEX CORPORATION, an Ohio corporation By: - ---------------- -------------------------------- Date James A. Schoff Executive Vice President and Chief Operating Officer 34 35 JOINDER BY ESCROW AGENT Commercial Title Group, Limited, referred to in this Agreement as the "Escrow Agent," hereby acknowledges that it received this Agreement executed by Seller and Buyer on the ____ day of ________, 1998, and accepts the obligations of the Escrow Agent as set forth herein. It further acknowledges that it received the Deposit on the _____ day of __________ 1998. The Escrow Agent hereby agrees to hold and distribute the Deposit in accordance with the terms and provisions of this Agreement. It further acknowledges that it hereby assumes all responsibilities for information reporting required under Section 6045(e) of the Internal Revenue Code. COMMERCIAL TITLE GROUP, LIMITED By: ------------------------------- Name: Douglas Nichols Title: Vice President Address: 8605 Westwood Center Drive Suite 401 Tyson's Corner Vienna, Virginia 22182 35 36 SCHEDULE OF EXHIBITS Exhibit A-1 through Exhibit A-4 - breakdown of land ownership on a Seller by Seller basis Exhibit B - Information on Loans Exhibit C - Title/Survey Exhibit D - Certified Rent Roll Exhibit E - Form of Tenant Estoppel Certificate Exhibit F - Underground Storage Tanks Exhibit G - Buyer Leasing and Tenant Improvement Payments Exhibit H - ATT Property 36 37 EXHIBIT A-1 THROUGH A-4 LAND 37 38 EXHIBIT B INFORMATION ON LOANS 38 39 EXHIBIT C TITLE/SURVEY 39 40 EXHIBIT D CERTIFIED RENT ROLL 40 41 EXHIBIT E TENANT'S ESTOPPEL CERTIFICATE 41 42 EXHIBIT F UNDERGROUND STORAGE TANKS [AS DESCRIBED IN COPIES OF EXISTING ENVIRONMENTAL REPORT, PROVIDED BY SELLER TO BUYER] 42 43 EXHIBIT G BUYER LEASING AND TENANT IMPROVEMENT PAYMENTS
GREENBRIER CIRCLE Leasing Ti's Total - ----------------- Huntsman Chemicals 17,608.48 71,880.90 89,489.38 Gramman/Northrop Corp. 8,490.83 -0- 8,490.83 Applied Technical Services 31,254.11 134,591.97 165,846.08 NORTHPOINTE-B - ------------- Orbital Sciences 35,092.78 82,640.00 117,732.78
43 44 EXHIBIT H ATT PROPERTY 44 EX-10.2 3 PURCHASE AND SALE AGREEMENT-BATTLEFIELD/VIRGINIA 1 EXHIBIT 10.2 AMENDMENT TO PURCHASE AND SALE AGREEMENT THIS AMENDMENT TO PURCHASE AND SALE AGREEMENT ("Amendment") is entered into as of the ______ day of July, 1998 by and between the undersigned parties. W I T N E S S E T H: WHEREAS, the undersigned entered into that certain Purchase and Sale Agreement, dated as of May 10, 1998 (the "Agreement"), regarding the sale of certain real property located in Prince William County, Virginia, which property is more particularly described in the Agreement (the "Property"); WHEREAS, the parties desire to amend the Agreement as set forth below. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. The undersigned hereby agree that Section 2.02 is hereby amended as follows: a. The Initial Deposit (in the amount of $32,500 together with all interest earned thereon) currently held by Escrow Agent shall, simultaneously with the execution of this Amendment, be wire transferred to Seller in accordance with the instructions set forth in Exhibit A, attached hereto and made a part hereof, to be held by Seller in accordance with the terms set forth in the Agreement; b. Section 2.02(b) is hereby deleted and the following is substituted in lieu thereof: "(b) Buyer shall upon execution of this Amendment, deliver to Seller via cure transfer an additional earnest money deposit in the amount of $113,500 (the "Additional Deposit")" c. Section 2.02 (e) of the Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof: "(e) At the time of execution of this Amendment, Buyer shall deliver to Seller (in accordance with the wire transfer instructions set forth in Exhibit A) the Additional Deposit (in the amount of $113,500) and a supplemental deposit in the amount of $64,000 (the "Supplemental Deposit"). The Initial Deposit, Additional Deposit and Supplemental Deposit shall hereinafter be referred to as the "Deposit." The term "Deposit" as used herein shall, in addition to referring to the Initial Deposit, the Additional Deposit and the Supplemental Deposit may also be deemed to refer to any one of the terms Initial Deposit, Additional Deposit or Supplemental Deposit, as the context requires. The Deposit, together with all interest earned through the date hereof with respect 2 to the Initial Deposit, if any, shall be applied to the Purchase Price at Closing and shall be non-refundable to the Buyer unless Seller shall default in tendering the Deed and other closing documents described in Section 10.01 to Buyer at Closing." 2. The Escrow Agent is hereby authorized and instructed to transfer the Initial Deposit, together with any interest earned thereon, to the Seller as described in paragraph 1. above and is hereby released from any and all obligations or responsibilities relating to the Deposit. 3. Section 3.01 of the Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof: "3.01 Closing. All documents necessary or appropriate to transfer the Project shall be delivered and closing (the "Closing") shall be held on, or in Buyer's sole discretion, provided that Seller is furnished with five (5) days prior written notice of the earlier Closing Date, before September 30, 1998 at the offices of Hale and Dorr LLP, 1455 Pennsylvania Avenue, N.W., Washington, D.C. 20004. 4. Section 3.02 of the Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof: "3.02 Conditions to Closing. There are no conditions precedent to Buyer's obligation to close hereunder. Notwithstanding anything to the contrary contained in the Agreement, any and all conditions precedent to Closing, or any provisions set forth in the Agreement whereby Buyer has the option to terminate the Agreement, are hereby waived and deemed satisfied by Buyer and Buyer shall proceed to Closing on or before September 30, 1998. In the event Buyer does not close on or before September 30, 1998, Seller shall retain the Deposit, including all interest earned thereon, in accordance with Section 13.04." 5. Except as amended herein, the Agreement is hereby confirmed to remain in full force and effect. 6. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement. 7. This Amendment may be executed in counterparts, each of which shall be deemed to be an original but all of which shall be one and the same document. 2 3 IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written. Battlefield/Virginia, Inc., a Virginia corporation By: --------------------------------- Louai Alassar President DDR Office Flex Corporation, an Ohio corporation By: --------------------------------- James A. Schoff Executive Vice President and Chief Operating Officer JOINDER BY ESCROW AGENT Commercial Title Group, Ltd., referred to in the Agreement as the "Escrow Agent" hereby acknowledges the instructions set forth above to transfer the Initial Deposit, together with all interest earned thereon, to Seller in accordance with the provisions set forth above. Commercial Title Group, Ltd. By: -------------------------- Douglas Nichols President 3 EX-10.3 4 AMENDMENT TO PURCHASE AND SALE AGREEMENT 1 EXHIBIT 10.3 AMENDMENT TO PURCHASE AND SALE AGREEMENT THIS AMENDMENT TO PURCHASE AND SALE AGREEMENT ("Amendment") is entered into as of the ______ day of _____________, 1998 by and between the undersigned parties. W I T N E S S E T H: WHEREAS, the undersigned entered into that certain Purchase and Sale Agreement, dated as of May 10, 1998 (the "Agreement"), regarding the sale of certain real property located in Chesapeake, Virginia (Greenbrier Industrial Center) , Loudoun county, Virginia (Lots 2-A and 3-A of Le Bourget Business Park), and Chesapeake, Virginia (Greenbrier Technology Center ), which property is more particularly described in the Agreement (the "Property"); WHEREAS, the parties desire to amend the Agreement as set forth below. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. The undersigned hereby agree that Section 2.02 is hereby amended as follows: a. The Initial Deposit (in the amount of $67,500 together with all interest earned thereon) currently held by Escrow Agent shall, simultaneously with the execution of this Amendment, be wire transferred to Seller in accordance with the instructions set forth in Exhibit A, attached hereto and made a part hereof, to be held by Seller in accordance with the terms set forth in the Agreement; b. Section 2.02(b) is hereby deleted and the following is substituted in lieu thereof: "(b) Buyer shall upon execution of this Amendment, deliver to Seller, via wire transfer, an additional earnest money deposit in the amount of $236,500 (the "Additional Deposit")" c. Section 2.02 (e) of the Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof: "(e) At the time of execution of this Amendment, Buyer shall deliver to Seller (in accordance with the wire transfer instructions set forth in Exhibit A) the Additional Deposit and a supplemental deposit in the amount of $136,000 (the "Supplemental Deposit"). The Initial Deposit, Additional Deposit and Supplemental Deposit shall hereinafter be referred to as the "Deposit." The term "Deposit" as used herein shall, in addition to referring to the Initial Deposit, the Additional Deposit and the Supplemental Deposit may also be deemed to refer to any one of the terms Initial Deposit, Additional Deposit or Supplemental Deposit, as the context requires. The Deposit, together with all interest earned through the date hereof with respect to the Initial Deposit, if 2 any, shall be applied to the Purchase Price at Closing and shall be non-refundable to the Buyer unless Seller shall default in tendering the Deed and other closing documents described in Section 10.01 to Buyer at Closing." 2. The Escrow Agent is hereby authorized and instructed to transfer the Initial Deposit, together with any interest earned thereon, to the Seller as described in paragraph 1. above and is hereby released from any and all obligations or responsibilities relating to the Deposit. 3. Section 3.01 of the Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof: "3.01 Closing. All documents necessary or appropriate to transfer the Project shall be delivered and closing (the "Closing") shall be held on, or in Buyer's sole discretion, provided that Seller is furnished with five (5) days prior written notice of the earlier Closing Date, before September 30, 1998 at the offices of Hale and Dorr LLP, 1455 Pennsylvania Avenue, N.W., Washington, D.C. 20004. 4. Section 3.02 of the Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof: "3.02 Conditions to Closing. There are no conditions precedent to Buyer's obligation to close hereunder. Notwithstanding anything to the contrary contained in the Agreement, any and all conditions precedent to Closing, or any provisions set forth in the Agreement whereby Buyer has the option to terminate the Agreement, are hereby waived and deemed satisfied by Buyer and Buyer shall proceed to Closing on or before September 30, 1998. In the event Buyer does not close on or before September 30, 1998, Seller shall retain the Deposit, including all interest earned thereon, in accordance with Section 13.04." 5. Except as amended herein, the Agreement is hereby confirmed to remain in full force and effect. 6. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement. 7. This Amendment may be executed in counterparts, each of which shall be deemed to be an original but all of which shall be one and the same document. 2 3 IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first above written. A & A Greenbrier, Inc., a Virginia corporation By: --------------------------- Louai Alassar President A & A Northpointe B, Inc., a Virginia corporation By: --------------------------- Louai Alassar President A & A Northpointe C, Inc., a Virginia corporation By: --------------------------- Louai Alassar President A & A Greenbrier Tech, Inc., a Virginia corporation By: --------------------------- Louai Alassar President DDR Office Flex Corporation, an Ohio corporation By: ---------------------------------- James A. Schoff Executive Vice President and Chief Operating Officer 3 4 JOINDER BY ESCROW AGENT Commercial Title Group, Ltd., referred to in the Agreement as the "Escrow Agent" hereby acknowledges the instructions set forth above to transfer the Initial Deposit, together with all interest earned thereon, to Seller in accordance with the provisions set forth above. Commercial Title Group, Ltd. By: -------------------------- Douglas Nichols President 4 EX-10.4 5 AMENDMENT TO PURCHASE AND SALE AGREEMENT 1 EXHIBIT 10.4 PURCHASE AND SALE AGREEMENT THIS PURCHASE AND SALE AGREEMENT (the "Agreement"), dated as of this ____ day of April, 1998, by and between Battlefield/Virginia, Inc. (hereinafter referred to as "Seller"), and (B) DDR OFFICEFLEX CORPORATION, an Ohio corporation, or its permitted assignee or designee ("Buyer"). WITNESSETH: WHEREAS, Seller is the owner of certain real property, together with all improvements located upon such real property and all personal property of Seller located thereon or used in connection therewith; and WHEREAS, Seller desires to sell to Buyer all of such real and personal property upon the terms more particularly set forth below. NOW THEREFORE, in consideration of the mutual undertakings and covenants herein contained, Seller and Buyer hereby covenant and agree as follows: SECTION 1 SALE OF PREMISES AND ACCEPTABLE TITLE 1.1 Agreement to Buy and to Sell; Project. Seller shall sell to Buyer, and Buyer shall purchase from Seller, at the price and upon the terms and conditions set forth in this Agreement, all of the following: (a) (i) that certain real property more particularly described on Exhibits A attached hereto and made a part hereof (the "Land"); (b) all buildings, structures and improvements on the Land and all related improvements, facilities, amenities, structures, driveways, fixtures, landscaping, paving, site work, walkways, plumbing and heating pipes, culverts, and mains located on the Land (collectively, the "Improvements"); (c) all right, title and interest of Seller in and to any alleys, strips or gores adjoining the Land, and any easements, rights-of-way, water rights or other interests in, on, under or to, any land, highway, street, road, right-of-way or avenue, open or proposed, in, on, under, across, in front of, abutting or adjoining the Land, and all right, title and interest of Seller in and to any awards for damage thereto by reason of a change of grade thereof; (d) the accessions, appurtenant rights, privileges, appurtenances and all the estate and rights of Seller in and to the Land and the Improvements, as applicable, or otherwise 2 appertaining to any of the property described in the immediately preceding subparagraphs (a), (b) and/or (c); (e) the fixtures, equipment, machinery, supplies, equipment, furniture, chattels, furnishings, and other personal property located and/or used in connection with the operation and maintenance of the Project, as defined below, or otherwise owned by Seller (collectively, the "Personal Property"); (f) all intangible property now or hereafter owned by Seller and used in connection with the Land, Improvements and Personal Property, including without limitation, the right to use any trade style or name now used in connection with the same, any contract rights, tenant security deposits to the extent in Seller's possession, utility agreements, guarantees, licenses, approvals, certificates, certificates of occupancy, plans and specifications, logos, permits, warranties or other rights related to the development of, construction of, ownership of, or use and operation of, the Project, as hereinafter defined and any other funds, deposits or monies of Seller; and (g) all of Seller's interest as lessor in all leases (herein defined in Section 5.02(a) hereof) covering the Land and Improvements, including all tenant security and other deposits and interest earned thereon and prepaid rents and interest earned thereon. All of the items described in subparagraphs (a), (b), (c) and (d) above are hereinafter collectively referred to as the "Premises". all of the items described in subparagraphs (a), (b), (c), (d), (e), (f) and (g) above are hereinafter collectively referred to as the "Project". 1.2 Title. (a) Seller shall convey to Buyer by a duly executed special warranty deed (the "Deed"), and Buyer shall accept fee simple title to the Premises in accordance with the terms of this Agreement, and Buyer's obligation to accept said title shall be conditioned upon Buyer then being conveyed good and clear record, marketable and insurable title to the Land, excepting only the Permitted Exceptions (hereinafter defined). It shall be a condition precedent to Buyer's obligation to close hereunder that a title insurance company (the "Title Company") acceptable to Buyer and any lender providing Buyer's financing stands ready to issue, at the Closing (herein defined) an ALTA owner's policy of title insurance, insuring Buyer's interest in the Premises, dated the day of Closing, with liability in the amount of the Purchase Price (herein defined), subject only to the Permitted Exceptions (the "Title Policy"). The Title Policy shall insure against all mechanics' liens and, provided Buyer elects to obtain a Survey (hereinafter defined), shall have full survey coverage and shall be an extended coverage policy insuring against, among other things, mechanics' liens, easements and claims of parties in possession not shown by the public records with all general and standard exceptions deleted, all at no additional premium to be paid by Buyer. (b) Simultaneously with the delivery of the Deed, Seller shall execute and deliver to Buyer a special warranty bill of sale and instrument of transfer and assignment (the "Bill of Sale"), in form and substance reasonably satisfactory to Buyer's counsel, assigning and transferring all of the tangible and intangible personal property, including, without limitation, such Seller's interest in 2 3 (i) any proceeds under any insurance policies or condemnation proceedings affecting the Premises, (ii) any licenses, permits, variances (if any), governmental approvals and consents pertaining to the Project, (iii) any warranties and guaranties relating to the Project, (iv) any contracts and agreements which relate to the Project that Buyer has elected in writing to assume, and (v) all leases and deposits relating to the Premises, free and clear of all liens and encumbrances, except the Permitted Exceptions, and indemnifying Buyer from obligations under all of the items assigned arising prior to Closing and with Buyer's indemnifying Seller from obligations under all of the items assigned arising from and after the Closing. (c) Buyer shall, promptly after the Effective Date, order (i) a commitment for title insurance (the "Commitment") by the terms of which Buyer's Title Company agrees to issue to Buyer at Closing the Title Policy; (ii) a photocopy of all documents ("Title Documents") describing all title exceptions shown on the Commitment (the "Title Exceptions"), and (iii) if Buyer so elects, an ALTA Land Title Survey of the Land (the "Survey"). If Buyer objects to any matters disclosed by the Commitment, Title Documents or Survey, Buyer shall furnish Seller with a written statement thereof within ten (10) days following receipt by Buyer of the last of the Commitment, Title Documents and Survey. All matters shown on the Title Exceptions which are not objected to by Buyer within said ten (10) day period following receipt shall be "Permitted Exceptions". Seller agrees to use its reasonable efforts to satisfy such objections noted by Buyer, provided that Seller shall obtain a satisfaction and release of any monetary liens, including, without limitation, any and all mortgages, mechanics liens and judgment liens other than the assumable financing, as hereinafter defined (collectively, "Monetary Liens") and with respect to matters other than Monetary Liens, Seller shall be obligated to collectively spend up to $20,000 in the aggregate to cure any title objection. Seller shall, within five (5) days after receipt of Buyer's objections, notify Buyer of Seller's proposed actions to satisfy such objections, and shall have a reasonable time, not to exceed fifteen (15) days, to satisfy such objections. If, despite its reasonable efforts to do so, Seller cannot satisfy such objections (other than the Monetary Liens, which shall be satisfied by Seller and matters other than Monetary Liens which cost up to 420,000 in the aggregate to cure) on or before the expiration of such fifteen (15) day period, as the same may be extended in Buyer's sole discretion, Buyer shall have the following options: (i) to extend such fifteen (15) day period for such additional period up to Closing that Buyer may elect, during which Seller shall continue to use its reasonable efforts to satisfy such objections; (ii) to waive its objection to such title defect and proceed to Closing or (iii) to terminate this Agreement by written notice to Seller and obtain an immediate refund of the Deposit, as defined in Section 2.02. Notwithstanding any term or provision contained herein to the contrary, except with respect to Monetary Liens, the procurement by Seller of a commitment for the issuance of a Title Policy or an endorsement thereto insuring Buyer against any Title Exception which Buyer has disapproved pursuant to this Section shall be deemed a cure by Seller of such objection, subject to Buyer's approval not to be unreasonably withheld or delayed. (d) Notwithstanding anything to the contrary contained in Section 3.01 of this Agreement, if Buyer's objections to title matters are not satisfied prior to expiration of the Study Period, Closing shall occur on the later of (a) the date described in Section 3.01 and (b) five (5) business days following satisfaction of Buyer's title objections in accordance with this Section. 3 4 SECTION 2 PURCHASE PRICE AND ESCROW DEPOSIT 2.1 Purchase Price. (a) The total purchase price ("Purchase Price") to be paid by Buyer to Seller for the Project shall be THIRTEEN MILLION TWO HUNDRED THOUSAND AND NO/100 DOLLARS ($13,200,000.00). Such Purchase Price shall be paid to Seller at Closing, as set forth in Section 2.01(b) below, of which the Deposit (as hereinafter defined) shall constitute a part, subject to prorations and adjustments as hereinafter provided in this Agreement. (b) The Purchase Price shall consist of and be payable as follows: (i) Buyer shall have the option, which option must be exercised no later than the end of the Study Period (as defined in Section 9.01 hereof), either to (A) pay the entire Purchase Price in cash at Closing by wire transfer of immediately available funds (provided Seller and Buyer mutually agree as to the allocation of payment of any prepayment penalties to Lenders), or (B) subject to the terms and conditions of this Agreement and further subject to Lender's prior approval, assume the existing loan on the Project with the Lender (the "Lender") and in the amount as more particularly disclosed on Exhibit B attached hereto (the "Loan") of approximately $8,114,573.46, which is the projected balance of the Loan as of May 1, 1998, on the same terms and conditions as set forth in the loan documents evidencing the Loan (collectively, the "Loan Documents"), except Seller and any guarantor of the Loan shall be fully and completely released from the Loan Documents except for liability with respect to matters which first arose and pertain to the period of time during which Seller owned the Project (the "Assumable Financing"). If Buyer is approved for the Assumable Financing, then, at Closing, Buyer shall execute and deliver to the Escrow Agent, the Lender and Seller such documents as are necessary for Buyer to consummate Buyer's assumption of the Loan. The projected balance of said Loan after the debt service payment due on May 1, 1998, the annual interest rate of the Loan, the amount of the monthly payments of principal and interest and the amortization schedule are set forth on Exhibit . Buyer shall file, within ten (10) days after the Effective Date, a complete application seeking to obtain the requisite approval from the Lender to assume the Loan on such terms and conditions as the Lender may require. If prior to the end of the Study Period (a) Buyer does not elect to assume the Loan, (b) Buyer is not approved for the Assumable Financing which approval must include the Lender's agreement to release Seller and any guarantor from the Loan Documents, or (c) Buyer does not accept and approve of the terms and conditions of the Assumable Financing within five (5) days of the Lender's offer of such terms and conditions, which terms and conditions must provide for the release of the Seller and all guarantors from the Loan Documents, which acceptance or rejection by Buyer must in all events occur by the end of the Study Period, then either the Buyer or the Seller can elect to terminate this Agreement within five (5) days of any Lender's rejection of Buyer's assumption of the Loan or Buyer's rejection of the Lender's terms and conditions. 4 5 Failure of Buyer to notify Seller of Buyer's election to assume or reject the Loan by the end of the Study Period shall be deemed to mean that Buyer has elected to accept the Loan. Notwithstanding any term or provision contained herein to the contrary, in the event Buyer for whatever reason does not assume the Loan, including, without limitation, in the event Buyer elects to proceed with an entire cash purchase, Seller shall have the option to terminate this Agreement. Such termination pursuant to this Section 2.01(b)(i) shall (w) not be considered a breach of the Agreement; (x) not result in the assessment of damages or penalties to either party; (y) not result in either party having liability to the other hereunder; and (z) result in the return of the Deposit to the Buyer. If neither the Buyer nor the Seller elects to terminate the Agreement pursuant to this Section 2.01(b)(i), then the cash portion of the Purchase Price shall, at the option of Seller, (i) be increased to the full Purchase Price such that the purchase described in this Agreement shall be an all cash transaction or (ii) be increased to reflect the amount of the Loan not being assumed. Seller shall pay any and all fees, expenses and other costs associated with Buyer's application and assumption of the Loan including, without limitation, any application fees, review fees, processing fees, transfer/assumption fees and Lender's reasonable costs and expenses, except for any recordation or mortgage tax and any legal fees of Buyer. Furthermore, if this transaction is an all cash transaction without an assumption by Buyer of the Loan, Buyer and Seller shall hereafter mutually agree as to which of Buyer or Seller shall pay any prepayment fees, premiums and other costs and expenses required in connection with the prepayment of the Loan. (ii) If Buyer assumes the Loan, the balance of the cash portion of the Purchase Price shall be paid by Buyer at Closing by wire transfer of immediately available funds. If Buyer does not assume the Loan, the entire Purchase Price shall be paid by Buyer on or before 12:00 p.m. (ET) at Closing by wire transfer of immediately available funds. 2.2 Deposit; Escrow Agent (a) Within three (3) business days following the date that Commercial Title Group, Limited, 8605 Westwood Center Drive, Suite 401, Tyson's Corner, Vienna, Virginia 22182, Attention: Douglas Nichols ("Escrow Agent") receives a copy of this Agreement executed by both Seller and Buyer, Buyer shall deposit with the Escrow Agent the amount of $32,500.00, either by certified bank or cashier's check or by wire transfer, as a good faith deposit hereunder. Such $32,500.00 deposit, and all interest earned thereon, shall be referred to as the "Initial Deposit". All interest on any deposit shall be deemed income of Buyer. Escrow Agent shall maintain the Initial Deposit in an FDIC-insured interest-bearing account. The Initial Deposit shall be applied to the Purchase Price at Closing and shall be non-refundable to the Seller except as otherwise provided herein. The Initial Deposit shall be released in accordance with the terms and provisions of this Agreement. (b) Provided Buyer has not elected to terminate this Agreement during the Study Period (as defined in Section 9.01), Buyer shall within two (2) business days after the end of the 5 6 Study Period deliver to the Escrow Agent the amount of $113,500.00, via certified bank check or cashier's check or wire transfer, as an additional earnest money deposit hereunder. Such $113,500.00, and all interest earned thereon, shall be referred to as the "Additional Deposit". Escrow Agent shall maintain the Additional Deposit in an FDIC-insured interest-bearing account. The Initial Deposit together with the Additional Deposit shall be referred to herein as the "Deposit". The term "Deposit" a used herein shall, in addition to referring to both the Initial Deposit and the Additional Deposit may also be deemed to refer to either the Initial Deposit or the Additional Deposit, as the context requires. Upon receipt of the Additional Deposit by the Escrow Agent, both Deposits shall become non-refundable to Buyer, and shall be applied to the Purchase Price, unless Seller otherwise defaults in its obligations to close the transaction contemplated by this Agreement in which event the Deposits, together with all accrued interest thereupon, shall be refunded to Buyer. The failure of Buyer to timely deliver any Deposit hereunder shall be a material default, and shall entitle Setter, at Seller's sole option, to terminate this Agreement immediately. (c) Notwithstanding any other provision in this Agreement to the contrary, if prior to the end of the Study Period (as defined in Section 9.01) Buyer should discover one or more condition(s) or defect(s) in or to the Project, or have any objection to the Project, which arises pursuant to or in connection with (i) the title commitment, or (ii) the Survey, then Buyer shall immediately notify Seller in writing of any such condition(s) requesting that Seller cure or remedy said condition(s) prior to the Closing date hereof at Seller's sole expense, said written notice also to include all documentation reasonably required by Seller in support of Buyer's estimate to remedy the condition(s) (the "Cure Notice"). Within three (3) business days after receipt of the Cure Notice, Seller shall notify Buyer in writing whether or not Seller elects to cure or remedy any condition(s) which is the subject of a Cure Notice. If Seller elects not to cure or remedy such condition(s), or if Seller fails to notify Buyer of its election to cure any condition(s) which is the subject of a Cure Notice within three (3) business days as provided hereinabove, then Buyer shall have the right to (i) terminate this Agreement by written notice to Seller and obtain an immediate refund of any Deposit, together with any interest thereon, in which case neither party shall have any further rights or obligations hereunder (except for any indemnity obligations of either party pursuant to the other provisions of this Agreement), and each party shall bear its own costs incurred hereunder, or (ii) Buyer may elect to proceed with the purchase of the Project subject to such condition(s) specified in any such Cure Notice, and in such event, the Purchase Price shall be adjusted at Closing by the amount set forth in the Cure Notice with respect to the estimated cost to remedy such condition(s) subject to the dollar limitation (the "Cap) set forth in Section 1.02(c) hereof; provided however nothing herein shall obligate Seller to institute litigation to satisfy any such condition(s), except for the release of the Loan, subject to the provisions of Section 2.01(b) hereof. In the event Seller has expended any portion of the Cap pursuant its obligations under Section 1.02(c) ("Seller's Prior Expenditures"), any adjustment to the Purchase Price shall be subject to the Cap as reduced by Seller's Prior Expenditures. (d) The Escrow Agent joins in the execution of this Agreement for the purpose of acknowledging receipt of the Deposit and agreeing to hold and release the Deposit in accordance with the terms and provisions of this Agreement. 6 7 (e) If there is a dispute between Seller and Buyer concerning Seller's or Buyer's right to receive the Deposit, or the proceeds of collection thereof, Escrow Agent shall continue to hold the Deposit until the dispute is resolved by Seller and Buyer or until otherwise directed by a court of competent jurisdiction. Upon termination of the escrow, all interest earned on the investments shall be paid to the party entitled to receive the principal thereof. SECTION 3 THE CLOSING 3.1 Closing. All documents necessary or appropriate to transfer the Project shall be delivered and closing (the "Closing") shall be held on, or in Buyer's sole discretion, provided that Seller is furnished with at least five (5) business days prior written notice of the earlier closing date, before, the date that is thirty (30) days after expiration of the Study Period. Closing shall occur at the offices of Hale and Dorr LLP, 1455 Pennsylvania Avenue, N.W., Washington, D.C. 20004. 3.2 Conditions to Closing. It is a condition precedent to Buyer's obligation to close hereunder that as of the Closing (i) Seller shall have performed all of its covenants contained in this Agreement, and all of Seller's representations and warranties contained in this Agreement shall be true and accurate in all material respects on and as of the date of Closing as if made anew on that date, (ii) Title Company shall stand ready to issue the Title Policy in the form described in Section 1.02(a) hereof, and (iii) Seller shall have delivered to the Title Company the items described in Section 10. 3.3 Other Agreement. Contemporaneously with this Agreement, Buyer shall execute a Purchase and Sale Agreement substantially similar in form to this Agreement for the property owned by certain other entities and identified on Exhibit H attached hereto (the "Other Agreement"). Notwithstanding anything in this Agreement or the Other Agreement to the contrary, Buyer acknowledges and agrees that in the event Buyer fails or refuses to close on any property which is listed on Exhibits A and H then Seller's obligations under this Agreement and the Other Agreement to sell any of the above-referenced properties to Buyer shall be null and void at Seller's option. Costs incurred to the date of such default or failure shall be born by Buyer, and the Deposit hereunder and the Deposit under the Other Agreement shall be retained by Seller as liquidated damages and shall be nonrefundable to Buyer. In the event that the condition in this Section 3.03 is not satisfied, Seller may elect, at its sole discretion, to terminate this Agreement or waive satisfaction of the condition and close escrow. In the event of such termination, the Deposit shall be retained by Seller and shall be non-refundable to the Buyer. Seller and AT&T, Inc. ("AT&T) have entered into a certain lease pertaining to the Premises (the "AT&T Lease") whereby AT&T has an option to purchase the Project (the "Option"). Seller's obligation to sell the Project to Buyer is contingent upon AT&T not exercising the Option. In the 7 8 event AT&T exercises the Option this Section 3.03 shall not be applicable to AT&T and the acquisition of the Project by AT&T shall not be conditioned upon or subject to any of the terms or conditions of the Other Agreement. SECTION 4 SELLER'S PRE-CLOSING DELIVERIES Seller shall deliver to Buyer, at Seller's sole cost and expense, within five (5) days after execution of this Agreement, copies of the following documents relating to the Project (all of the following documents and other items, together with the Additional Deliverables (hereinafter defined) shall be referred to herein collectively as the "Pre-Closing Deliverables"): 4.1 Leases. True and correct copies of the Leases and all proposed additional Leases of space in the Premises currently being negotiated by Seller. 4.2 Permits. To the extent in Seller's possession, copies of all building permits, certificates of occupancy and governmental permits. 4.3 Taxes. A copy of the most recent available real estate and personal property tax statements for the Project. 4.4 Plans and Specifications. To the extent in Seller's possession (1) originals (or copies, if originals are not available) of the "as-built" plans and specifications for the existing, and any proposed, improvements to the Project (the "Plans and Specifications ") and (ii) a copy of all guaranties and warranties currently in effect made by any person for the benefit of Seller with respect to all or any part of the Project in connection with the construction and equipping of the Project. 4.5 Title Matters/Survey. To the extent in Seller's possession, a copy of Seller's existing Owner's Title Insurance Policy insuring Seller's ownership of the Land, a copy of Seller's most recent survey of the Land and a copy of the site plans of the Project, all of which, if available, are attached hereto as Exhibit C. 4.6 Utility Bills. Copies of all utility bills relating to the Project for the prior 12-month period. 4.7 Personal Property. A list of all Personal Property currently used in the maintenance and operation of the Project. 4.8 Service/Equipment Contracts. Copies of all Service/ Equipment Contracts (hereinafter defined in Section 5.03). 8 9 4.9 Insurance Policies. Copies of all insurance policies (collectively, the "Insurance Policies") pertaining to the Project. 4.10 Loan Documents. Copies of all documents evidencing the Loans. 4.11 Financial Statements of the Project. A copy of the financial statements for the most recently concluded fiscal year showing all items of income and expenses, and monthly operating statements for the Project for the year-to-date. From time to time thereafter, Seller shall deliver to Buyer all information pertaining to the Project prepared by or on behalf of Seller, which is in Seller's possession and which may reasonably be requested by Buyer (collectively, the "Additional Deliverables"). SECTION 5 REPRESENTATIONS AND WARRANTIES OF SELLER Seller represents and warrants to Buyer as of the date hereof and as of the Closing as follows: 5.1 Ownership. Seller is the owner of the Project of record and in fact, legally and beneficially, and, to the best of its knowledge, has good, marketable and insurable title to the Project. Except as set forth in the AT&T Lease, there are no options to purchase the Project which are effective, nor has Seller previously entered into any other contract of sale or agreement of any kind with a party other than Buyer which is presently effective and which will not be terminated before the date of this Agreement. 5.2 Leases. (a) As of the date of the Agreement there are no leases, subleases, licenses or other rental agreements or occupancy agreements (written or verbal) which grant any possessory interest in and to any space situated on or in any of the Premises or that otherwise give rights with regard to use of any portions of any of the Premises other than the Leases delivered pursuant to Section 4.01 hereof (said leases, together with any and all amendments, modifications and supplements thereto and guarantees thereof and leases entered into after the date hereof in accordance with this Agreement, are herein referred to collectively as the "Leases"); (b) The copies of the Leases provided to Buyer pursuant to Section 4.01 are true, accurate and complete as of the date hereof, are, to the best of Seller's knowledge, in full force and effect and none of them has been modified, amended or extended; attached as Exhibit D is a Certified Rent Roll, which Seller hereby certifies is true, accurate and complete in all material respects, setting forth the Leases; 9 10 (c) No renewal or extension options have been granted to tenants other than as now set forth in the Leases; (d) No tenant, or any other person, entity or association has an option to purchase, right of first refusal, right of first offer or other similar right in respect of all or any other portion of the Premises other than AT&T; (e) No tenant is entitled to rental concessions or abatements for any period subsequent to the Closing other than as set forth or permitted in the Leases; (f) To the best of Seller's knowledge, no parties to any of the Leases are in default nor do any conditions exist that with the passage of time, or giving of notice shall constitute a default; (g) To the best of Seller's knowledge, Seller has received no notice of any action or proceeding instituted against Seller by any tenant of any portion of the Project; (h) There are no security deposits or other deposits other than those set forth in the Leases; and (i) No rent has been paid more than one month in advance under any Lease. 5.3 Service and Management Contracts. To the best of Seller's knowledge, the agreements provided under Section 4.09 are all of the agreements concerning the operation and maintenance of the Project entered into by Seller and affecting the Project (collectively, "Service/ Equipment Contracts'). Seller is not in default under any of the Service/Equipment Contracts and, to the best of Seller's knowledge, no other parties to any of the Service/Equipment Contracts are in default, nor do any conditions exist that, with the passage of time, or giving of notice, or both, shall constitute a default. To the best of Seller's knowledge, the copies of the Service/Equipment Contracts provided to Buyer pursuant to Section 4.08 are true, accurate and complete as of the date hereof, are in full force and effect and none of them has been modified, amended or extended. 5.4 Hazardous Substances. The Project has not been used by Seller for the generation, treatment, storage or disposal of any hazardous substances during the period in which Seller has owned the Project and, to the best of Seller's knowledge, during the period of time prior to Seller's ownership and, to the best of Seller's knowledge, there exist no hazardous substances on, under or at the Premises. Except as disclosed in Exhibit F attached hereto, or the surveys of the Project delivered by Seller to Buyer, to the best of Seller's knowledge, there are no underground storage tanks located on or under the Premises. For the purposes of this Section 5.04, "hazardous substances" shall include "hazardous substances" as defined in the Comprehensive Environmental Response Compensation and Liability Act of 1980, as amended, 42 U.S.C.[][]9601 et seq., and regulations adopted pursuant to said Act, or any similar environmental protection law of the or its political subdivisions. 10 11 5.5 Ability to Perform. Seller is a corporation duly organized, validly existing and in good standing under the laws of the Commonwealth of Virginia. Seller has full power and authority to execute, deliver and carry out the terms and provisions of this Agreement and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and this Agreement constitutes the legal, valid and binding obligation of Seller enforceable in accordance with its terms, subject to creditors' rights, bankruptcy and any other equitable principles. The execution and delivery of this Agreement by the party signing on behalf of Seller has been duly authorized. To the best of Seller's knowledge, no order, permission, consent, approval, license, authorization, registration or validation of, or filing with, or exemption by, any governmental agency, commission, board or public authority is required to authorize, or is required in connection with, the execution, delivery and performance of this Agreement by Seller or the taking by Seller of any action contemplated by this Agreement. 5.6 Compliance with Laws. Neither the entering into of this Agreement nor the consummation of the transaction contemplated hereby will constitute or result in a violation or breach by Seller of any judgment, order, writ, injunction or decree issued against or imposed upon it, or will result in a violation of any applicable law, order, rule or regulation of any governmental authority. There are no actions, suits, proceedings, arbitrations or investigations pending or, to the best of Seller's knowledge, threatened (i) against, relating to or affecting Seller which might interfere in a material respect with the transaction contemplated by this Agreement, become a cloud on the title to the Project or any portion thereof or otherwise affect the Project or Seller's ability to consummate the transaction contemplated hereby or (ii) against, relating to or affecting the Project. 5.7 No Violation Notice. To the best of its knowledge, Seller has not received written notice: (a) from any federal, state, county or municipal authority alleging any material fire, health, safety, building, pollution, environmental, zoning or other violation of law in respect of the Premises or any part thereof, including, without limitation, the occupancy or operation thereof, which has not been corrected; (b) concerning the possible or anticipated condemnation of any part of the Project, or the widening, change of grade or limitation on use of streets , abutting the same or concerning any special taxes or assessments levied or to be levied against the Premises or any part thereof; (c) concerning any change in the zoning classification of the Premises or any part thereof. If any such notice is received prior to the Closing, Seller shall promptly notify Buyer thereof and comply with any requirements of such notice pursuant to Section 6 hereof prior to the Closing. 11 12 5.8 Assessments. To the best of Seller's knowledge, there are no pending or proposed special assessments affecting or which may affect the Project or any portion thereof. 5.9 Loans. Seller has provided true, correct and complete copies of all documents evidencing the Loans, the Loans are in full force and effect, and there are no defaults under the Loans. 5.10 Miscellaneous Representations and Warranties. (a) The business operations of the Project will be conducted in the usual and normal manner until the Closing. After the expiration of the Study Period, Seller shall not, without the prior written consent thereto of Buyer, which consent shall not be unreasonably withheld, delayed or conditioned, make (or knowingly permit) any material physical change in the Project. (b) Prior to the expiration of the Study Period, Seller shall not, without the prior written consent thereto of Buyer, which consent shall not be unreasonably withheld, delayed or conditioned, enter into any lease affecting the Project or alter, modify, terminate or renew any existing Lease. After the expiration of the Study Period, Seller shall not, without the prior written consent of Buyer, which consent may be withheld by Buyer for any reason or no reason at all, enter into any lease affecting the Project or alter, modify, terminate or renew any existing Lease. (c) Setter is not a "foreign person", as defined in the internal Revenue Code. (d) The premiums are paid and current for the insurance Policies and to the best of Seller's knowledge, the insurance Policies are in full force and effect. (e) Except as disclosed in Exhibit G attended hereto and as otherwise described in Section 10.03 hereof, there are no brokerage fees pursuant to agreements entered into by Seller which will be Buyer's responsibility after Closing. (f) As of the Closing there will be no employees of Seller employed at the Project. 5.11 Notice of Change. In the event that Buyer becomes aware at any time prior to Closing that a representation or warranty made by Seller herein, while true as of the date made, no longer remains true in all material respects, due to a change of circumstances beyond the reasonable control of Seller subsequent to the date of this Agreement, Buyer shall promptly give written notice of such fact to Seller. Seller shall use its reasonable efforts to remedy such change of circumstances that causes the representation or warranty to be untrue. In the event Seller is unable to remedy such change of circumstances by the Closing, then Buyer shall have the option to (a) terminate this Agreement, whereupon all obligations of all parties hereto shall cease except for those obligations which survive a termination, and the Deposit shall be returned to Buyer, or (b) proceed with Closing notwithstanding such change of circumstances with no adjustment to the Purchase Price. 12 13 5.12 No Other Representations or Warranties. Except as set forth in Sections 5.01 through 5.11 hereof, Seller disclaims the making of any representations or warranties, express or implied, regarding the Project or matters affecting the Project, including, without limitation, the physical condition of the Project, the existence of certain wetlands on the Project, the quality of any work or materials used in connection with the improvements on the Project, title to or the boundaries of the Project, pest control matters, soil condition, hazardous waste, toxic substance or other environmental matters, compliance with building, health, safety, land use and zoning laws, regulations and orders, structural and other engineering characteristics, traffic patterns, the development potential of the Project and the Project's use, fitness, value or adequacy for any particular purpose, and all other information pertaining to he Project. Buyer, moreover, acknowledges (i) that Buyer has entered into this Agreement with the intention of making and relying upon its own independent investigation, inspection, analysis, examination and evaluation of the physical, environmental, economic and legal condition of the Project and all other relevant facts and circumstances and (ii) that, except as set forth in Sections 5.01 through 5.11 hereof, Buyer is not relying upon any representations and warranties made by Seller, Seller's agents, brokers, management agent or anyone else acting or claiming to act on Seller's behalf concerning the Project. Buyer further acknowledges that it has not received from Setter any investment, accounting, tax, legal, environmental, architectural, engineering, property management or other advice with respect to this transaction and is relying solely upon the advice of its own investment, accounting, tax, legal environmental, architectural, engineering, property management and other advisors. Subject to the provisions of Sections 5.01 through 5.11 of this Agreement, Buyer shall accept the Project in its "as-is, where-is" condition, with all faults, on the Closing, and assumes the risk that adverse physical, environmental, economic or legal conditions may not have been revealed by its investigation. Buyer hereby specifically acknowledges that Buyer has carefully reviewed this Section 5.12 and discussed its import with legal counsel and that the provisions of this Section 5.12 are a material part of this Agreement. The disclaimer contained in this Section 5.12 shall not merge with the transfer of the Project and shall survive Closing, without any limitation as to a survival period. SECTION 5A Buyer represents, warrants and covenants to Seller as of the date hereof and as of the Closing as follows: 5.01A Ability to Perform. Buyer is a corporation organized, validly existing and in good standing under the laws of the State of Ohio. Buyer has full power and authority to execute, deliver and carry out the terms and provisions of this Agreement and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and this Agreement constitutes the legal, valid and binding obligation of Buyer enforceable in accordance with its terms, subject to creditors' rights, bankruptcy and other equitable principles. The execution and delivery of this Agreement by the party signing on behalf of Buyer has been duly authorized. No order, permission, consent, approval, license, authorization, registration or validation of, or filing with, or exemption by, any governmental authority or agency, commission, board or public authority is required to 13 14 authorize, or is required in connection with, the execution, delivery and performance of this Agreement by Buyer or the taking by Buyer of any action contemplated by this Agreement. 5.02A Compliance with Laws, etc. Neither the entering into of this Agreement nor the consummation of the transaction contemplated hereby will constitute or result in a violation or breach by Buyer of any judgment, order, writ, injunction or decree issued against or imposed upon it, or will result in a violation of any applicable law, order, rule or regulation of any governmental authority. There are no actions, suits, proceedings, arbitrations or investigations pending or, to the best of Buyer's knowledge, threatened against, relating to or affecting Buyer which might interfere in a material respect with the transaction contemplated by this Agreement or otherwise affect Buyer's ability to consummate the transaction contemplated hereby. There are no facts, events, conditions or occurrences by reason of which any such action, suit, proceeding, arbitration or investigation may be brought by any person or entity against Buyer. 5.03A Bankruptcy. No attachment, execution, assignment, for the benefit of creditors or voluntary proceedings in bankruptcy has been commenced by the Buyer and, to the best of Buyer's knowledge, no such action has been contemplated or threatened, nor has any involuntary proceedings in bankruptcy been commenced against the Buyer. 5.04A Miscellaneous Agreements. Buyer acknowledges that all information with respect to the Project furnished to Buyer, including, without limitation, Pre-Closing Deliverables (collectively, the "Confidential Information"), is and has been so furnished on the condition that Buyer maintains the confidentiality thereof. Accordingly, Buyer shall, and shall cause its directors, officers, employees, agents, contractors and representatives to, hold in strict confidence, and not disclose to any other person or entity without the prior written consent of Seller until the Closing shall have been consummated, any of the Confidential Information in respect of the Project delivered to Buyer by Seller or any of its agents, representatives, directors, officers or employees. If the Closing does not occur and this Agreement is terminated, Buyer shall promptly return, or cause to be returned, to Seller all copies of such Confidential Information without retaining, or permitting retention of, any copy thereof. Notwithstanding anything to the contrary hereinabove set forth, Buyer may disclose such Confidential Information (1) on a need-to-know basis to its employees, its title insurer and members of professional firms serving it in connection with this transaction, including, without limitation, its attorneys, architects, environmental consultants and engineers, and its clients; (ii) as any governmental agency or authority may require in order to comply with applicable laws or regulations; and (iii) if required by an order of any court of competent jurisdiction, and this provision shall survive Closing. SECTION 6 VIOLATIONS OF LAW 6.1 Responsibility for Violations. All notices of violations of laws, ordinances, or regulations ("Violations of Law"), which are issued or sent prior to the Closing by any governmental department, agency or bureau having jurisdiction as to conditions affecting the Project shall be 14 15 remedied or complied with by Seller prior to Closing; provided, however, that if Seller is unable to remedy such Violations of Law or comply with such notices by the Closing then Buyer shall have the option to (a) terminate this Agreement, whereupon all obligations of all parties hereto shall cease, the Deposit shall be returned to Buyer and this Agreement shall be void and without recourse to the parties hereto, except for provisions which are expressly stated to survive such termination; or (b) proceed with Closing notwithstanding such Violations of Law. Notwithstanding any term or provision contained herein to the contrary, in no event shall the Seller be obligated to spend more than $4,000 to remedy any Violations of Law. In the event the Violations of Law require Seller to spend more than $4,000 in the aggregate to remedy, Seller shall notify Buyer of its election not to remedy such Violations of Law, and Buyer shall elect, by written notice to Seller within five (5) days of receipt of such notification from Seller, to either (i) waive its objection to such Violations of Law and proceed to Closing or (ii) terminate this Agreement and obtain a refund of the Deposit. SECTION 7 INSURANCE 7.1 Maintenance of Insurance. Until the Closing, Seller shall maintain its present insurance on the Project, which insurance in respect of fire and casualty shall be covered by a standard All-Risk Policy in an amount at least equal to the full replacement value of the Project. Subject to the provisions of Section 7.02, the risk of loss in and to the Project shall remain vested in Seller until the recordation of the Deed to Buyer. 7.2 Casualty or Condemnation. If prior to the Closing, the Project or any "material" portion thereof is damaged or destroyed by fire or casualty, or any part of the Project is taken or threatened to be taken by eminent domain by any governmental entity, then Buyer shall have the option, exercisable by written notice given to Seller at or prior to the Closing, either to (a) terminate casualty or condemnation, Buyer will advise Seller in writing whether Buyer desires to proceed with this transaction in light of such casualty or condemnation. The term "material" as used in this Section 7.02 shall mean damage or destruction in an amount equal to or greater than $200,000. This Agreement, whereupon all obligations of all parties hereto shall cease, the Deposit shall be returned to Buyer and this Agreement shall be void and without recourse to the parties hereto except for provisions which are expressly stated to survive such termination; or (b) proceed with the purchase of the Project, and in such case, unless Seller shall have previously restored the Project to its condition prior to the occurrence of any such damage or destruction, Seller shall pay over or assign to Buyer, without recourse, all amounts received or due (plus an amount equal to the sum of any deductible under any insurance policy covering the Project) from, and all claims against, any insurance company or governmental entity as a result of such destruction or taking. Within thirty (30) days after receipt of written notice of such casualty or condemnation, Buyer will advise Seller in writing whether Buyer desires to proceed with this transaction in light of such casualty or condemnation. The term "material" as used in this Section 7.02 shall mean damage or destruction in an amount equal to or greater than $200,000. 15 16 SECTION 8 SELLER'S OBLIGATIONS PRIOR TO CLOSING Seller covenants that between the date of this Agreement and the Closing (all of which must be true and correct in all material respects as of the Closing and shall constitute conditions precedent to Buyer's obligation to close hereunder): 8.1 Replacement of Personal Property; Inventory. No material personal property included as part of the Project shall be removed from the Project unless the same is replaced with similar items of at least equal quality prior to the Closing. 8.2 Prudent Business Practices. Seller shall maintain the Project in good operating condition and repair, shall not commit or allow to occur waste of the Project so that the Project, except for normal wear and tear, is in good repair on the date of Closing and substantially the same state of repair and condition as existed as of the Effective Date. 8.3 Tenant Estoppels. Seller shall use reasonable efforts to obtain and deliver to Buyer at least (5) business days prior to the Closing an executed estoppel letter dated within sixty (60) days of the Closing, in form reasonably satisfactory to both Seller's and Buyer's counsels, a pro-forma copy being attached hereto as Exhibit E (the "Tenant Estoppels"), from tenants whose leases constitute in the aggregate not less than eighty percent (80%) of the rentable square footage of the Improvements, or in the form described or contemplated in the lease, the substance and content of which must be consistent in all material respects with the Lease, and the Certified Rent Roll. It is expressly understood and agreed that if Seller agrees under any circumstance to extend the Closing date as referenced in Section 3.01 hereof to a date which would cause the Tenant Estoppels to be dated more than sixty (60) days prior to the Closing, that the Tenant Estoppels shall be deemed satisfactory provided they are dated within the sixty (60) day period prior to the originally stated Closing date. In no event shall the preceding sentence imply any obligation or agreement on the part of Seller to extend the Closing date. Upon delivery to Buyer prior to or after Closing of a Tenant Estoppel confirming the matters set forth in Section 5.02 hereof as to such tenant's Lease, the representations and warranties of the Setter set forth in Section 5.02 hereof shall be deemed terminated and the Seller shall have no liability to the Buyer therefor. Notwithstanding the foregoing, Buyer acknowledges and agrees that with respect to any Lease with any U.S. governmental agency and Leases with State agencies, Seller shall be deemed to have satisfied its obligation to deliver an estoppel certificate if it uses reasonable efforts to obtain from such U.S. governmental agency a Lease Status Report or from the State agencies their form of estoppel certificate or lease status report. If Buyer does not terminate this Agreement prior to the expiration of the Study Period, Buyer shall be deemed to have accepted the Tenant Estoppels for all purposes and Seller shall be deemed to have satisfied this covenant. Seller shall reasonably 16 17 cooperate with Buyer and any lender of Buyer in connection with obtaining subordination, non-disturbance and attornment agreements and tenant estoppels required by any lender of Buyer from the tenants occupying space within the Project. SECTION 9 STUDY PERIOD 9.1 Study Period. Buyer shall have until 6:00 p.m. on the date that is sixty (60) days following the Effective Date, as defined below (the "Study Period") to perform a feasibility study of the Project, including, but not limited to, test borings, soil analyses, hydrologic and environmental surveys, marketing and feasibility studies, structural and engineering investigations, reviewing the books and records of the Setter and the Project, financial analyses and verifications of existing zoning and status of title and conferences with governmental staff members. In the event that any such examinations, studies, tests, reviews and/or inspections cause Buyer, in its sole and absolute discretion, to believe that it is not prudent to proceed to Closing, then Buyer may, at any time during the Study Period, terminate this Agreement by giving written notice of such termination to Seller, whereupon the parties hereto shall be released from any and all further liability and obligation hereunder and the Initial Deposit shall promptly be returned to Buyer. In the event Buyer does not provide written notification to Seller during the Study Period of termination of this Agreement, Buyer shall be deemed not to have elected to terminate this Agreement and the parties hereto shall remain subject to the terms and conditions of this Agreement. In the event Buyer does not terminate the Agreement as provided in this Section 9.01, Buyer and/or its designees shall have the continued right until Closing, as hereinafter defined, to inspect, survey and make other tests of the Project. 9.2 Access. Upon execution of this Agreement, Buyer and its agents shall have full access to the Project, subject to the rights of tenants with reasonable notice to them, and full access during business hours upon reasonable advance notice to Seller to all books, records, files, financial data, leases and contracts relating to the Project. Seller reserves the right to have a representative present during any such inspections. Buyer and its agents shall have the right to inspect and copy the foregoing documents, conduct all surveys, tests, test borings, soil analyses, engineering, hazardous waste and environmental studies, studies, examinations and to make such inquiries concerning the Project as Buyer may determine necessary or desirable. Seller shall use reasonable efforts to cooperate in such examinations and shall instruct Seller's agents, servants, employees, and representatives to cooperate in assisting Buyer in the exercise of Buyer's study rights including, without limitation, allowing Buyer access to such materials in the Project Manager's office or elsewhere. In the event Buyer enters upon the Project for purposes of this Section 9.02, Buyer will indemnify, defend and hold harmless Seller and its agents, servants and employees from and against any loss, cost, expense, claim or liability made against Seller or its agents, servants or employees as a result of such entry, including, without limitation, the costs of restoring the Project to its original condition existing immediately prior to Buyer's action, or death or injury to any person which occurs as a result of the acts or omissions of Buyer or any of its employees, consultants, engineers, agents and representatives, during any entry onto or inspection of the Project, or during the conduct of any 17 18 of the Feasibility Studies, by Buyer or any of its employees, agents or representatives. Buyer agrees to restore the Project to its condition existing immediately prior to Buyer's or its agent's actions. This Section 9.02 shall survive any termination of this Agreement or Closing hereunder. Seller shall also furnish Buyer, within the Study Period, all additional information in Seller's possession which Buyer may reasonably request with respect to the Seller, the Project or the operation of the Project. SECTION 10 SELLER'S CLOSING OBLIGATIONS 10.1 Closing, Deliveries and Obligations. At or prior to the Closing, Seller shall deliver the following to Buyer (all of which shall constitute condition precedents to Buyer's obligation to close hereunder): (a) Deed; Bill of Sale . The Deed and Bill of Sale, all in form reasonably satisfactory to Buyer's counsel, duly executed and acknowledged, which together convey the Project to Buyer, subject only to the Permitted Exceptions. (b) Assignment of Leases . An assignment of the Leases, in form reasonably satisfactory to Buyer's counsel. (c) Lease Records. The original Leases, or to the extent not in Seller's possession, photocopies, certified by Seller as true and complete, of Leases, and all rent records and related documents in the possession or under the control of Seller. To the extent any deposits are in a form other than cash, such deposits shall be transferred to Buyer at Closing in a manner reasonably acceptable to Buyer. (d) Plans, Specifications, Warranties, Guaranties and Licenses. To the extent in Seller's possession, copies of all current site plans, surveys, soil and substrata studies, architectural drawings, plans and specifications, engineering plans and studies, floor plans, landscape plans and other plans or studies of any kind that relate to all or any part of the Project. Seller shall also deliver (i) originals (or copies, if originals are not then available) of all then effective assignable guaranties, warranties and/or payment and performance bonds made by any person for the benefit of Seller, with respect to the Project or any of its components, together with an instrument assigning such guaranties and warranties to Buyer and (ii) originals (or copies, if originals are not then available) of all certificates, Licenses, permits, authorizations and approvals issued for or with respect to the Project by governmental and quasi-governmental authorities having jurisdiction, to the extent such items are in Seller's possession. (e) Title Affidavits . Such affidavits, indemnities and lien waivers as Buyer's title insurer may reasonably require. 18 19 (f) Files. To the extent available, originals (or copies, if originals are not available) of all documents and books and records necessary for the continued operation of the Project, other than proprietary information, including without limitation, lease files, rent records, escalation records and statements and maintenance records. (g) Notices of Sale. Sufficient original letters, executed by Seller in form and substance reasonably satisfactory to Buyer, advising tenants under the Leases of the sale of the Project to Buyer and directing that all rents and other payments thereafter becoming due be sent to Buyer or as Buyer may direct. (h) Certificate as to Representations, Warranties and Covenants . A certificate by Seller to the effect that all of the representations, warranties and covenants of Seller set forth in Sections 5 and 8 remain true and correct in all material respects as of the Closing. (i) Notices . Any required approval or notice required by any federal, state or local government authority required in connection with the transfer of the title hereunder. (j) Evidence of Tax Payments . A receipt or receipts from the .appropriate taxing authorities evidencing that all real estate taxes and personal property taxes affecting the Project are not delinquent. (k) Organizational Documents . The organizational documents of Seller together with an-original resolution of Seller authorizing the execution of this Agreement, the conveyance documents and all other documents to be executed by Seller and the performance by Seller hereunder and thereunder together with a good standing certificate of Seller. (l) Assumable Financing. The Loan Documents, if any, and an assignment thereto. (m) Option . In the event the Option is recorded in the real property records, a waiver of the Option executed by AT&T in recordable form. 10.2 Possession. At the Closing and as a condition precedent to Closing, Seller shall deliver full possession of the Project, free of all tenants or occupants other than under the Leases, which Leases shall be in full force and effect. 10.3 Covenant and Indemnity. (a) As additional consideration for Buyer's purchasing the Project and paying the Purchase Price to the Seller, Seller hereby covenants and agrees to remain fully liable for the performance and payment of all tenant improvements and the payment of all leasing commissions currently due and owing (including any delinquent amounts) under any of the Leases or under any leasing/commission agreement or which shall hereafter be due and owing under any of the Leases or under any leasing/commission agreement, excluding, however, tenant 19 20 improvement costs and leasing commissions with respect to any option to renew or extend leases and leasing commissions and tenant improvements costs which shall hereafter be owing under any leases or leasing/ commission agreements for any new Leases approved by Buyer after the Effective Date or new Leases executed by Buyer subsequent to the Closing (collectively, the "Buyer's Commissions and Costs"). It is expressly understood and agreed that Buyer is assuming and agreeing to be bound by and liable for such Buyer's Commissions and Costs. Buyer is not assuming the obligations to perform or pay for any tenant improvements or to pay for any leasing commissions which have heretofore accrued, and which are now owing under any of the Leases or under any leasing/ commission agreement other than as aforesaid. Notwithstanding anything to the contrary contained herein, Buyer shall pay, by reimbursing Seller for any amount it has paid therefor prior to Closing and assuming any amount which is unpaid as of Closing those items described in Exhibit G attached hereto. (b) Buyer and Seller shall each indemnify, defend and hold the other party (together with its officers, directors, partners, and employees) harmless from and against all claims, demands, causes of actions, judgments, damages, costs and expenses (including, without limitation, reasonable, actual attorneys' fees and-court costs), deficiencies, settlements and investigations which relate to matters, actions or omissions which arise out of or are based upon any of the following during such parties' period of ownership, which for Seller shall be the period of time prior to Closing and for Buyer shall be the period of time on and after Closing: (i) any obligation under any contracts, agreements and writings entered into by or on behalf of such party in respect of the use, construction, operation, ownership, occupancy or maintenance of any portion of the Project arising out of an event occurring during such parties' period of ownership; (ii) any accident, injury, death or damage whatsoever caused to any person or entity or loss of property, occurring in or about the Premises or any part thereof, or on any other property connected with or adjacent thereto during such parties' period of ownership; or (iii) any breach of the covenant set forth in Section 10.03(a) above, or with respect to any payment or performance obligation under any of the Leases for tenant improvements or under any of the Leases and/or leasing/commission agreements for teasing commissions which have heretofore accrued, which are now due and owing or which shall hereafter accrue. (iv) any breach of a representation or warranty set forth in this Agreement. This Section 10.03 shall survive the Closing until the first anniversary of the Closing; provided, however, subject to the terms of Section 8.03, the representations set forth in Section 5.02, above, shall survive until the expiration of each lease currently in effect at the Project. 20 21 SECTION 11 BUYER'S CLOSING OBLIGATIONS At the Closing, Buyer shall: 11.1 Payment of Purchase Price. Deliver to Seller the Purchase Price, as adjusted for apportionments under Section 12 and any other adjustments thereto required pursuant to the express provisions of this Agreement. 11.2 Assumable Financing. Deliver the assumption, if applicable, of the Loan Documents and other documents relative thereto as required by Lender and the Escrow Agent, together with causing the Lender to deliver such documents as are necessary to release Setter and the new guarantor of the Loan from any and liability under the Loan except for liabilities with respect to matters which first arose and pertain to the period of time during which the Seller owned the Project. 11.3 Closing Certificate. A certificate by Buyer (i) to the effect that all of the representations, warranties and covenants of Buyer set forth in Section 5A remain true and correct in all material respects as of the Closing and (ii) confirming the waivers and acknowledgments set forth in Section 5.12 hereof. 11.4 Indemnity. Buyer hereby covenants and agrees to indemnify, defend and hold Seller (and its officers, directors and employees) harmless from and against all claims, demands, causes of actions, judgments, damages, costs and expenses (including, without limitation, reasonable attorneys' fees and court costs), deficiencies, settlements and investigations which relate to matters, actions or omissions which arise out of or are based upon any obligations under any of the Loan Documents (except for liability with respect to matters which first arose and pertain to the period of time during which Seller owned the Project). 11.5 Other Documents. Deliver any other documents required by this Agreement to be delivered by Buyer, including, without limitation, the Bill of Sale and Assignment of Leases. SECTION 12 APPORTIONMENTS AND ADJUSTMENTS TO PURCHASE PRICE; CLOSING EXPENSES 12.1 Apportionments. The following items shall be prorated as of 12:01 A.M. on the Closing and the net amount thereof shall be added to or deducted from, as the case may be, the amount of the Purchase Price to be paid at the Closing; (a) general real estate, personal property and ad valorem taxes and assessments for the current tax year of the Project. If any such taxes or assessments are payable in installments all installments due through the Closing together with the accrued but unpaid portion of any other installments not yet due as of the Closing shall be paid for by the Seller; 21 22 (b) taxes, water, sewer and front foot benefit charges, and charges for electricity, gas, telephone and other utilities and license fees; (c) rent and other charges under the Leases (to the extent monies have actually been collected therefor); (d) all other income and expenses relating to the Project, including principal and interest payable under each of the Loans; and (e) any other items that are customarily prorated in transactions of this nature excluding, however, insurance premium under the Insurance Policies. Any and all security deposits, prepaid rent and all interest earned thereon shall be a credit to Buyer at Closing. Seller shall be fully liable for any wages and other amounts due and owing any employees at the Project. Seller shall retain, and shall not be entitled to any credit for, the deposits, if any, made by Seller in connection with the provision of electric, sewer, water, telephone and other utility services to the Project. Seller shall retain any and all deposits and escrows relating to the Loans. For purposes of calculating prorations, Buyer shall be deemed to be in title to the Project, and, therefore, entitled to the income therefrom and responsible for the expenses thereof for the entire day upon which the Closing occurs. All such prorations shall be made on the basis of the actual number of days of the month which shalt have elapsed as of the day of the Closing and based upon the actual number of days in the month and a three hundred sixty-five (365) day year. The amount of such prorations shall be initially performed by Title Company at Closing but shall be subject to adjustment in cash after the Closing outside of escrow as and when complete and accurate information becomes available, if such information is not available at the Closing. Seller and Buyer agree to cooperate and use their best efforts to make such adjustments no later than sixty (60) days after the Closing (except with respect to property taxes, which shall be adjusted within sixty (60) days after the tax bills for the applicable period are received). Without limiting the generality of the foregoing, Seller and Buyer hereby agree that with respect to any year-end reconciliations of reimbursable expenses under the Leases, Seller and Buyer shall cooperate to complete such reconciliations as soon as possible after the Closing, with Seller responsible for amounts owing to tenants under the Leases, and entitled to Rents (hereinafter defined) payable by tenants under the Leases (as the case may be), with respect to periods prior to the Closing, and with Buyer responsible for amounts owing to tenants under the Leases, and entitled to Rents payable by tenants under the Leases (as the case may be), with respect to periods from and after the Closing (and, with respect to any such amounts payable to Seller, Buyer shall have no obligation to collect such Rents, including having no obligation to institute legal proceedings, including any action for unlawful detainer, against a tenant owing any such Rents, other than to use 22 23 commercially reasonable efforts to collect such rents and to respond to any periodic inquiries made by Seller relating to the collection of such rents and to the extent Buyer actually receives any delinquent Rents owing to Seller Buyer shall tender the same to Seller to the extent of amounts delinquent and actually due Seller but only after (y) reimbursing Buyer for its actual out-of-pocket costs and expenses of collection incurred with respect to such tenant, and (z) all Rents due and owing to Buyer have been paid to Buyer in full (including, without limitation, the payment to Buyer of delinquencies in Rent owing to Buyer)). The term "Rent" as used herein shall mean all rents, including any percentage rent and any accrued tax and operating expense escalation, charges, and other revenue of any kind generated from or in connection with the Leases. Except as set forth in this Section 12.01, all items of income and expense which accrue for the period prior to the Closing will be for the account of Seller and all items of income and expense which accrue for the period on and after the Closing will be for the account of Buyer. Buyer shall receive a credit against the Purchase Price for all amounts of Rent which are allocable to the period on and after the Closing and which have been prepaid as of the Closing Date. The provisions of this Section 12.01 shall survive the Closing. 12.2 Operating Expense Pass-throughs. With respect to expenses of the Project which are chargeable to the tenants pursuant to the provisions of the Leases (the "CAM Charges"), Seller shall determine (1) the amount of those expenses paid or payable by Seller from January 1 in the year in which the Closing occurs through the date of Closing (or, with regard to taxes and assessments, the amount of the proration thereof charged to Seller) and (2) the amount tenants have paid to Seller from January 1 in the year in which Closing occurs until the date of Closing as the tenants' pro rata share of such tenant expenses. Buyer shall be entitled to a credit at Closing equal to the amount Seller has received as of the Closing Date as pro rata expense payments from tenants in excess of the expenses paid or payable by Seller through the Closing Date. If accurate allocations of CAM Charges cannot be made at Closing because current bills are not obtainable, the parties shall allocate such expenses at Closing on the best and most current information available, subject to adjustment in cash after the Closing outside of escrow as and when final bills or other evidence of the applicable expense are received. Buyer shall also be entitled to a credit at Closing equal to any CAM Charges for 1997 and prior years which are owing to any of the tenants (to the extent collected from such tenants) of the Project which are presently in occupancy. The provisions of this Section 12.02 shall survive the Closing. 12.3 Closing Expenses. Buyer shall pay for all of its diligence costs and expenses including, without limitation, the costs of the survey of the Premises, the charges for the title commitment and report, and the premium for the Title Policy. Buyer shall also pay for one-half of any escrow charges and for any and all state and local transfer, recordation and documentary taxes and any and all recording costs applicable to the transactions contemplated herein except for the Virginia Grantor's Tax which shall be paid for by Seller. Each party will be responsible for its own legal fees, consultant's fees and costs of inspection. Seller shall pay for one-half of any escrow charges, the Virginia Grantor's Tax and any and all fees, expenses and other costs associated with Buyer's application and assumption of the Loan including, without limitation, any application fees, 23 24 review fees, processing fees, transfer/ assumption fees and Lender's costs and expenses, excluding, however, Buyer's legal fees and expenses incurred in connection with such application and assumption and excluding any mortgage or other taxes incurred in connection therewith. The provisions of this Section 12.03 shall survive the Closing. SECTION 13 FAILURE TO PERFORM 13.1 Seller's Default. If at the Closing, Seller is unable to give title or to make conveyance, or to deliver possession of the Project, or to satisfy all of the terms and conditions precedent to Closing as set forth in this Agreement, all as herein stipulated, or if on such date the Project does not conform with the provisions hereof, and Buyer does not elect to take title, Seller shall be in default under this Agreement and Buyer shall have the right to terminate the Agreement and the Deposit shall be forthwith returned to Buyer, and Buyer may pursue the right to compel specific performance and the right to collect its costs and expenses incurred in connection therewith as its sole and exclusive remedy. Buyer hereby waives and releases all other claims for damages and other remedies against Seller for non-performance and expressly acknowledges and agrees that in no event shall any officer, director, member, partner or shareholder of Seller ever have any liability hereunder. 13.2 Buyer's Default. The parties acknowledge that in the event of Buyer's failure to fulfill its obligations hereunder it is impossible to compute exactly the damages which would accrue to the Seller in such event. The parties have taken these facts into account in setting the amount of the Deposit, required pursuant to Section 2.02 and hereby agree that: (i) such amount is the pre-estimate of such damages which would accrue to Seller from a default by Buyer; (ii) such amount represents damages and not any penalty against Buyer; and (iii) if this Agreement shall be terminated by Seller by reason of Buyer's failure to fulfill Buyer's obligations hereunder, the Deposit shall be Seller's full and liquidated damages in lieu of all other rights and remedies (including the right of specific performance) which Seller may have against Buyer at law or in equity. Seller's sole and exclusive remedy for Buyer's default shall be to receive the Deposit as liquidated damages in lieu of all other rights and remedies which Seller may have against Buyer at law or in equity. Seller hereby waives and releases all other claims for damages and other remedies against Buyer for non-performance and expressly acknowledges and agrees that in no event shall any officer, director or shareholder of Buyer ever have any liability hereunder. SECTION 14 BROKERAGE FEES 14.1 For the Seller. The Seller represents and warrants that it has not engaged any broker or finder or incurred any liability for brokerage fees, commissions or finder's fees in connection with the transactions contemplated by this Agreement. The Seller agrees to indemnify and hold harmless 24 25 the Buyer against any claims or liabilities asserted against Buyer by any person acting or claiming to act as a broker or finder in connection with the transaction described in this Agreement. 14.2 For the Buyer. The Buyer represents and warrants that it has not engaged any broker or finder or incurred any liability for brokerage fees, commissions or finder's fees in connection with the transactions contemplated by this Agreement. The Buyer agrees to indemnify and hold harmless the Seller against any other claims or liabilities asserted against it by any person acting or claiming to act as a broker or finder on behalf of the Buyer. SECTION 15 NOTICES 15.1 Effective Notices. Any notices or other communications required or permitted hereunder shall be sufficiently given if delivered personally or sent by telecopy machine, Federal Express or other recognized overnight courier, registered or certified mail, postage prepaid, addressed as follows or to such other address of which the parties may have given notice: To the Seller: Samnan Trading Establishment P.O. Box 28008 Alsour Street Ainaser Building Safat, Kuwait Attention: Dr. Louai Alassar Phone No.: 011965-240-5701/2 Telecopy No.: 011965-240-5703 With a copy to: Cambridge Holdings 560 Herndon Parkway Suite 210 Herndon, Virginia 20170 Attention: Mr. Andrew J. Czekaj Phone No.: 703-709-8866 Telecopy No.: 703-847-9611 With a copy to: Hale and Dorr LLP 1455 Pennsylvania Avenue, N.W. Suite 1000 Washington, D.C. 20004 Attention: Steven S. Snider, Esq. Phone No.: (202) 942-8494 Telecopy No.: (202) 942-8484 25 26 With a copy to: DDR OfficeFlex Corporation c/o Developer's Diversified Realty Corporation 34555 Chagrin Boulevard Moreland, Ohio 44022 Attention: James A. Schoff, Esq. Executive Vice-President and Chief Operating Officer Phone No.: (216) 247-4700 Telecopy No.: (216) 247-1118 With a copy to: Developer's Diversified Realty Corporation 34555 Chagrin Boulevard Moreland Hills, OH 44022 Attention: Joan Allgood, Esq. General Counsel Phone No.: (440) 247-1731 Telecopy No.: (440) 247-2385 To Escrow Agent: Commercial Title Group, Ltd. 8605 Westwood Center Drive Suite 401, Tysons Corner Vienna, Virginia 22182 Attention: Mr. Douglas Nichols Phone No.: (703) 506-1520 Telecopy No.: (703) 506-9615 Unless otherwise specified herein, such notices or other communications shall be deemed to be effective: (a) one (1) business day after deposit with the courier if sent by Federal Express or other recognized overnight delivery service; or (b) upon receipt if accomplished by hand delivery or by telecopied delivery. Either party may, from time to time, by notice in writing served upon the other party, in the same manner as prescribed in this Section, designate a different mailing address or a different or additional person to which all such notices are thereafter to be addressed. SECTION 16 MISCELLANEOUS PROVISIONS 16.1 Integration. This Agreement embodies and constitutes the entire understanding between the parties with respect to the transaction contemplated herein, and all prior agreements, understandings, representations and statements, oral or written, are merged into this Agreement. Neither this Agreement nor any provision hereof may be waived, modified, amended, discharged or terminated except by an instrument signed by the party against whom the enforcement of such 26 27 waiver, modification, amendment, discharge or termination is sought, and then only to the extent set forth in such instrument. 16.2 Governing Law. This Agreement shall be governed by, and construed in accordance with the laws of, the Commonwealth of Virginia. 16.3 Captions. The captions in this Agreement are inserted for convenience of reference only and in no way define, describe or limit the scope or intent of this Agreement or any of the provisions hereof. 16.4 Escrow Agent. Escrow Agent shall hold the Deposit in accordance with the terms and provisions of this Agreement, subject to the following: (a) Escrow Agent undertakes to perform only such duties as are expressly set forth in this Agreement and no implied duties or obligations shalt be read into this Agreement against Escrow Agent. (b) Escrow Agent may act in reliance upon any writing or instrument or signature which it, in good faith, believes of any statement or assertion contained in such writing or instrument, and may assume that any person purporting to give any writing, notice, advice or instrument in connection with the provisions of this Agreement has been duty authorized to do so. Escrow Agent shall not be liable in any manner for the sufficiency or correctness as to form, manner and execution, or validity of any instrument deposited in escrow, nor as to the identity, authority, or right of any person executing the same, and Escrow Agent's duties under this Agreement shall be limited to those provided in this Agreement. (c) Unless Escrow Agent discharges any of its duties under this Agreement in a negligent mariner or is guilty of willful misconduct with regard to its duties under this Agreement, Seller and Buyer shall indemnify Escrow Agent and hold it harmless from any and all claims, liabilities, losses, actions, suits or proceedings at law or in equity, or other expenses, fees, or charges of any character or nature, which it may incur or with which it may be threatened by reason of its acting as Escrow Agent under this Agreement; and in such connection Seller and Buyer shall indemnify Escrow Agent against any and all expenses including reasonable attorneys' fees and the cost of defending any action, suit or proceeding or resisting any claim in such capacity (d) If the parties (including Escrow Agent) shall be in disagreement about the interpretation of this Agreement, or about their respective rights and obligations, or the propriety of any action contemplated by Escrow Agent, Escrow Agent may, but shall not be required to, file an action in interpleader to resolve the disagreement. Escrow Agent shall be indemnified for all costs and reasonable attorneys' fees in its capacity as Escrow Agent in connection with any such interpleader action and shall be fully protected in suspending all or part of its activities under this Agreement until a final judgment in the interpleader action is received. 27 28 (e) Escrow Agent may consult with counsel of its own choice and have full and complete authorization and protection in accordance with the opinion of such counsel. Escrow Agent shall otherwise not be liable for any mistakes of fact or errors of judgment, or for any acts or omissions of any kind, unless caused by its negligence or willful misconduct. (f) The Escrow Agent may in its sole discretion resign by giving thirty (30) days' written notice thereof to the Buyer and Seller. The Buyer and Seller shall furnish to the Escrow Agent written instructions for the release of the escrow funds and escrow documents in such event. If the Escrow Agent shall not have received such written instructions, the Escrow Agent may petition any court of competent jurisdiction for the appointment of a successor Escrow Agent, and upon such appointment deliver the escrow funds and escrow documents to such successor. 16.5 Bind and Inure. This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective permitted successors and assigns. 16.6 Drafts. This Agreement shall not be binding or effective until property executed and delivered by both Seller and Buyer. The delivery by Buyer to Seller of an executed counterpart of this Agreement shall constitute an offer which may be accepted by the delivery to Buyer of a duly executed counterpart of this Agreement and the satisfaction of all conditions under which such offer is made, but such offer may be revoked by Buyer by written notice given at any time prior to such acceptance and satisfaction. 16.7 Number and Gender. As used in this Agreement, the masculine shall include the feminine and neuter, the singular shall include the plural and the plural shall include the singular, as the context may require. 16.8 Attachments. If the provisions of any exhibit, schedule or rider to this contract are inconsistent with the provisions of this Agreement, the provisions of such schedule or rider shall prevail. The Exhibits attached are hereby incorporated as integral parts of this Agreement. 16.9 Survival of Representations. Subject to the terms and conditions of Section 8.03, above, all representations and warranties made by the parties herein or in any instrument or document furnished in connection herewith shall survive the Closing and any investigation at any time made by or on behalf of the parties hereto for a period of twelve (12) months from the Closing. 16.10 Dates. Whenever used herein, unless expressly provided otherwise, the term "days" shall mean consecutive calendar days, except that if the expiration of any time period measured in days occurs on a Saturday, Sunday, legal holiday or other day when federal offices are closed in Washington, D.C., such expiration shall automatically be extended to the next business day. 16.11 Time of the Essence. Time is of the essence of this Agreement. 28 29 16.12 Assignment. This Agreement may not be assigned by Buyer without the prior written consent of Seller not to be unreasonably withheld. Any assignment approved by Seller shall be subject to the assignor remaining liable under this Agreement. Prior to any request for an assignment hereunder, Buyer and the proposed assignee shall provide Seller with all information that Seller may need in order to evaluate the proposed assignment. 16.13 Effective Date. The Effective Date of this Agreement (the "Effective Date") shall be the date on which this Agreement has been executed by both Seller and Buyer. The execution hereof by Buyer shall constitute an offer by Buyer to Seller to purchase the Project on the terms and conditions herein stated, which must be accepted by Seller on or before 5:00 p.m. on May ___, 1998 by the execution hereof by Seller. If Buyer's offer is not timely accepted, this Agreement shall be thereafter null and void. 16.14 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed to be an original, but all of which shall be one and the same document. IN WITNESS WHEREOF, the parties hereto have executed this Agreement under seal as of the date first above written. SELLER: Battlefield/Virginia, Inc. By:/s/ Louai Alassar --------------------------- Name: Louai Alassar Title: President BUYER: DDR OFFICEFLEX CORPORATION, an Ohio corporation /s/ 5/6/98 By:/s/ James A. Schoff - ----------- --------------------------------------- Date James A. Schoff Executive Vice President and Chief Operating Officer 29 30 JOINDER BY ESCROW AGENT Commercial Title Group, Limited, referred to in this Agreement as the "Escrow Agent," hereby acknowledges that it received this Agreement executed by Seller and Buyer on the ___ day of ___________, 1998, and accepts the obligations of the Escrow Agent as set forth herein. It further acknowledges that it received the Deposit on the ___ day of _____________, 1998. The Escrow Agent hereby agrees to hold and distribute the Deposit in accordance with the terms and provisions of this Agreement. It further acknowledges that it hereby assumes all responsibilities for information reporting required under Section 6045(e) of the Internal Revenue Code. COMMERCIAL TITLE GROUP, LIMITED By: ------------------------- Name: Douglas Nichols Title: Vice President Address: 8605 Westwood Center Drive Suite 401 Tyson's Corner Vienna, Virginia 22182 30 31 SCHEDULE OF EXHIBITS Exhibit A - Land Exhibit B - Information on Loan Exhibit C - Title/Survey Exhibit D - Certified Rent Roll Exhibit E - Form of Tenant Estoppel Certificate Exhibit F - Underground Storage Tanks Exhibit G - Buyer leasing and Tenant Improvement Payments Exhibit H - Other Property 31 32 EXHIBIT A LAND 32 EX-10.5 6 2ND AMENDMENT TO PURCHASE AND SALE AGREEMENT 1 EXHIBIT 10.5 SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT ("Second Amendment") is entered into as of the 30th day of September, 1998 by and between the undersigned parties. W I T N E S S E T H: WHEREAS, the undersigned entered into that certain Purchase and Sale Agreement, dated as of May 10, 1998 (the "Agreement"), regarding the sale of certain real property located in Chesapeake, Virginia (Greenbrier Industrial Center) , Loudoun County, Virginia (Lots 2-A and 3-A of Le Bourget Business Park), and Chesapeake, Virginia (Greenbrier Technology Center ), which property is more particularly described in the Agreement (the "Property"); WHEREAS, the Agreement was amended pursuant to that certain Amendment to Purchase and Sale Agreement, by and between the undersigned parties, dated as of July 8, 1998 (the "First Amendment"); and WHEREAS, the parties desire to amend the Agreement and the First Amendment as set forth below. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Section 3.01 of the Agreement is hereby deleted in its entirety and the following is substituted in lieu thereof: "3.01 Closing. All documents necessary or appropriate to transfer the Project shall be delivered and closing (the "Closing") shall be held on, or in Buyer's sole discretion, provided that Seller is furnished with two (2) days prior written notice of the earlier Closing Date, before October 15, 1998 at the offices of Hale and Dorr LLP, 1455 Pennsylvania Avenue, N.W., Washington, D.C. 20004. Closing shall not occur any later than October 15, 1998, as time is of the essence. 2. Notwithstanding anything to the contrary contained in the Agreement, the First Amendment or this Second Amendment, in the event the documentation regarding the loan assumptions is not executed as of the Closing Date, the Buyer and Seller shall proceed to Closing on the Closing Date, with all conveyance documents being delivered to the Escrow Agent to be held in escrow until the loan assumption documents have been fully-executed by all parties; provided, however, that on the Closing Date, Seller shall remit payment of the Purchase Price to Buyer. The conveyance documents shall be held in escrow until the fully-executed loan assumption documents are delivered to the Escrow Agent, at which time the Deed shall be recorded along with any and all loan assumption documents which need to be recorded in the land records in the appropriate jurisdiction and the fully-executed conveyance documents shall be released by the Escrow Agent to the Seller and the Buyer. 2 3. Notwithstanding anything to the contrary contained herein, the Deposit (in the total amount of $440,000, but with no interest thereon) shall continue to be held by Seller until the Closing of the sale of the Property has been consummated, at which time, the Deposit shall continue to be held by Seller and shall be added to the Deposit under that certain Purchase and Sale Agreement, dated as of May 10, 1998, regarding the sale of certain real property located in Prince William County, Virginia (the "Battlefield Agreement") (hereinafter, the Deposit under the Agreement and the Deposit under the Battlefield Agreement shall be referred to as the "Aggregate Deposit"). The Aggregate Deposit (in the amount of $1,000,0000) shall be non-refundable to the Buyer unless Seller shall default in tendering the Deed and other conveyance documents to Buyer at Closing under the Battlefield Agreement. 4. Provided Closing occurs under the Agreement and under the Battlefield Agreement, the parties hereto agree to a reduction in the Purchase Price in the amount of $300,000 (the "Reduction"), which reduction shall be paid at such time (and only at such time, if any) that the sale of the property under the Battlefield Agreement is consummated; provided, however, that in order for the Reduction to be effective, the sale of the property under the Battlefield Agreement and the sale of the Property under the Agreement must be consummated no later than the Closing Date set forth in this Second Amendment and in the Second Amendment to Purchase and Sale Agreement to the Battlefield Agreement, as time is of the essence for such Closings. In the event the sale of the Property under the Battlefield Agreement is not consummated, the Purchase Price under the Agreement shall remain the amount originally set forth in the Agreement and there shall be no retroactive reduction in the Purchase Price. 5. Section 13.02 of the Agreement is hereby deleted and the following is inserted in lieu thereof: "13.02 Buyer's Default. In the event of Buyer's failure to fulfill its obligations hereunder, Seller may elect either to (i) compel specific performance and shall have the right to collect its costs and expenses incurred in connection therewith or (ii) terminate this Agreement and retain the deposit as Seller's full and liquidated damages in lieu of other rights and remedies which Seller may have against Buyer at law or in equity. In the event Seller determines not to compel specific performance and to retain the Deposit, both parties acknowledge that the Deposit represents a pre-estimate of damages which would accrue to Seller from a default by Buyer and is not a penalty against Buyer. 6. Except as amended herein, the Agreement and the First Amendment are hereby confirmed to remain in full force and effect. 7. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement. 2 3 8. This Second Amendment may be executed in counterparts, each of which shall be deemed to be an original but all of which shall be one and the same document. IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as of the date first above written. A & A Greenbrier, Inc., a Virginia corporation By: --------------------------- Louai Alassar President A & A Northpointe B, Inc., a Virginia corporation By: --------------------------- Louai Alassar President A & A Northpointe C, Inc., a Virginia corporation By: --------------------------- Louai Alassar President A & A Greenbrier Tech, Inc., a Virginia corporation By: --------------------------- Louai Alassar President American Industrial Properties REIT, successor by merger to DDR Office Flex Corporation By: --------------------------------- Name: Title: 3 EX-10.6 7 2ND AMENDMENT TO PURCHASE AND SALE AGREEMENT 1 EXHIBIT 10.6 SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT THIS SECOND AMENDMENT TO PURCHASE AND SALE AGREEMENT ("Second Amendment") is entered into as of the 30th day of September, 1998 by and between the undersigned parties. W I T N E S S E T H: WHEREAS, the undersigned entered into that certain Purchase and Sale Agreement, dated as of May 10, 1998 (the "Agreement"), regarding the sale of certain real property located in Prince William County, Virginia, which property is more particularly described in the Agreement (the "Battlefield Property"); WHEREAS, the Agreement was amended pursuant to that certain Amendment to Purchase and Sale Agreement, by and between the undersigned parties, dated as of July 8, 1998 (the "First Amendment"); and WHEREAS, the parties desire to amend the Agreement and the First Amendment as set forth below. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: 1. Section 3.01 of the Agreement, as modified by the First Amendment, is hereby deleted in its entirety and the following is substituted in lieu thereof: "3.01 Closing. All documents necessary or appropriate to transfer the Project shall be delivered and closing (the "Closing") shall be held on, or in Buyer's sole discretion, provided that Seller is furnished with two (2) days prior written notice of the earlier Closing Date, before November 16, 1998 at the offices of Hale and Dorr LLP, 1455 Pennsylvania Avenue, N.W., Washington, D.C. 20004. Closing shall not occur any later than November 16, 1998, as time is of the essence. 2. Notwithstanding anything to the contrary contained in the Agreement, the First Amendment or this Second Amendment, in the event the documentation regarding the loan assumptions is not executed as of the Closing Date, the Buyer and Seller shall proceed to Closing on the Closing Date, with all conveyance documents being delivered to the Escrow Agent to be held in escrow until the loan assumption documents have been fully-executed by all parties; provided, however, that on the Closing Date, Seller shall remit payment of the Purchase Price to Buyer. The conveyance documents shall be held in escrow until the fully-executed loan assumption documents are delivered to the Escrow Agent, at which time the Deed shall be recorded along with any and all loan assumption documents which need to be recorded in the land records in the appropriate jurisdiction and the fully-executed conveyance documents shall be released by the Escrow Agent to the Seller and the Buyer. 2 3. Notwithstanding anything to the contrary contained herein, the Deposit (in the total amount of $210,000, but with no interest thereon) shall continue to be held by Seller and shall be applied to the Purchase Price at Closing. Notwithstanding anything to the contrary contained herein, the Deposit shall be non-refundable to the Buyer unless Seller shall default in tendering the Deed and other conveyance documents to Buyer at Closing. 4. Notwithstanding anything to the contrary contained in the Agreement, the First Amendment or this Second Amendment, the Buyer shall, at the time of execution of this Second Amendment, deliver to Seller (in accordance with wire transfer instructions set forth in Exhibit A attached hereto) a second supplemental deposit in the amount of $350,000 (the "Second Supplemental Deposit"). Hereinafter, the term "Deposit" shall, in addition to referring to the Initial, the Additional Deposit and the Supplemental Deposit, shall also include the Second Supplemental Deposit. The Deposit, including the Second Supplemental Deposit, shall be applied to the Purchase Price at Closing and shall be non-refundable to the Buyer unless Seller shall default in tendering the Deed and other conveyance documents to Buyer at Closing. 5. Upon the Closing of the sale of certain properties under that certain Purchase and Sale Agreement, dated as of May 10, 1998 by and between the Buyer and DDR Office Flex Corporation, or its permitted assignee or designee, regarding real property located in Chesapeake, Virginia (Greenbrier Industrial Center), Loudoun County, Virginia (Lots 2-A and 3-A of Le Bourget Business Park) and Chesapeake, Virginia (Greenbrier Technology Center) (the "Other Agreement"), the Deposit being held by the Seller pursuant to the Other Agreement (in the amount of $440,000 but with no interest thereon) shall be added to the Deposit under the Agreement, thereby increasing the Deposit currently held by Seller under the Agreement, the First Amendment and this Second Amendment to $1,000,000. Such Deposit shall be applied to the Purchase Price under the Agreement and shall be non-refundable to the Buyer unless Seller shall default in tendering the Deed and other conveyance documents to Buyer at Closing under the Agreement. 6. Section 13.02 of the Agreement is hereby deleted and the following is inserted in lieu thereof: "13.02 Buyer's Default. In the event of Buyer's failure to fulfill its obligations hereunder, Seller may elect either to (i) compel specific performance and shall have the right to collect its costs and expenses incurred in connection therewith, or (ii) terminate this Agreement and retain the Deposit as Seller's full and liquidated damages in lieu of other rights and remedies which Seller may have against Buyer at law or in equity. In the event Seller determines not to compel specific performance and to retain the Deposit, both parties acknowledge that the Deposit represents a pre-estimate of damages which would accrue to Seller from a default by Buyer and is not a penalty against Buyer. 2 3 7. Except as amended herein, the Agreement and the First Amendment are hereby confirmed to remain in full force and effect. 8. Capitalized terms not otherwise defined herein shall have the meanings ascribed to them in the Agreement. 9. This Second Amendment may be executed in counterparts, each of which shall be deemed to be an original but all of which shall be one and the same document. IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment as of the date first above written. Battlefield/Virginia, Inc., a Virginia corporation By: --------------------------- Louai Alassar President American Industrial Properties REIT, successor by merger to DDR Office Flex Corporation By: --------------------------------- Name: Title: 3 EX-10.7 8 SPECIAL WARRANTY DEED-A&A GREENBRIER, INC. 1 EXHIBIT 10.7 This document was prepared outside of the Commonwealth of Virginia SPECIAL WARRANTY DEED THIS DEED, made and entered into this ____ day of October, 1998 by and between A&A GREENBRIER, INC., a Virginia corporation ("Grantor"), with an address of c/o Cambridge Holdings Limited Partnership, 560 Herndon Parkway, Suite 210, Herndon, Virginia 20170, and AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas real estate investment trust ("Grantee"), with an address of 6210 North Beltline Road, Suite 170, Irving, Texas 75063-2656. WITNESSETH: That for and in consideration of the sum of Ten Dollars ($10.00) in hand paid and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Grantor does hereby grant, bargain, sell and convey unto Grantee, in fee simple, with Special Warranty of title, that certain real property located in the City of Chesapeake, Virginia and more particularly described in Exhibit A attached hereto and made a part hereof. Together with all improvements located thereon, and all title, right, privilege, alleys, ways, easements, appurtenances and advantages thereunto belonging, or in anywise appertaining thereto. Subject only to those matters set forth and identified on Exhibit B attached hereto and made a part hereof. AND FURTHER SUBJECT TO (pursuant to Grantee's assumption thereof) that certain promissory note in the original principal amount of $7,400,000, dated November 12, 2 1996, executed by Grantor and payable to the order of Jackson National Life Insurance Company (the "Note") and secured by a Deed of Trust, Security Agreement and Financing Statement, dated of even date therewith, and recorded on November 13, 1996 in Deed Book 3424, Page 104 in the Clerk's Office of the Circuit Court of the City of Chesapeake, Virginia (the "Deed of Trust") upon which Note there now remains an outstanding principal balance of $7,219,922.06. To have and to hold the property hereby conveyed to the Grantee, its successors and assigns, in fee simple forever. IN TESTIMONY WHEREOF, the said Grantor has, as of the date first written above, caused these presents to be signed, acknowledged and delivered, under seal, by its duly authorized representative as its act and deed. A&A Greenbrier, Inc., a Virginia corporation By: ---------------------- Dr. Louai Alassar President 3 DISTRICT OF ) ) SS: COLUMBIA ) The undersigned, a Notary Public in and for the jurisdiction aforesaid, does hereby certify that Dr. Louai Alassar, the President of A&A Greenbrier, Inc./Virginia, Inc., a Virginia corporation, known to me (or satisfactory proven) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same on behalf of A&A Greenbrier, Inc., for the purpose therein contained. GIVEN under my hand and seal _____ this day of October, 1998. (SEAL) ------------------- Notary Public My commission expires: ------------ 4 EXHIBIT A (Legal Description) 5 EXHIBIT B (Permitted Encumbrances) EX-10.8 9 SPECIAL WARRANTY DEED-A&A NORTHPOINTE B, INC. 1 EXHIBIT 10.8 This document was prepared outside of the Commonwealth of Virginia SPECIAL WARRANTY DEED THIS DEED, made and entered into this ____ day of October, 1998 by and between A&A NORTHPOINTE B, INC., a Virginia corporation ("Grantor"), with an address of c/o Cambridge Holdings Limited Partnership, 560 Herndon Parkway, Suite 210, Herndon, Virginia 20170, and AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas real estate investment trust ("Grantee"), with an address of 6210 North Beltline Road, Suite 170, Irving, Texas 75063-2656. WITNESSETH: That for and in consideration of the sum of Ten Dollars ($10.00) in hand paid and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Grantor does hereby grant, bargain, sell and convey unto Grantee, in fee simple, with Special Warranty of title, that certain real property located in Loudoun County, Virginia and more particularly described in Exhibit A attached hereto and made a part hereof. Together with all improvements located thereon, and all title, right, privilege, alleys, ways, easements, appurtenances and advantages thereunto belonging, or in anywise appertaining thereto. Subject only to those matters set forth and identified on Exhibit B attached hereto and made a part hereof. AND FURTHER SUBJECT TO (pursuant to Grantee's assumption thereof) that certain promissory note in the original principal amount of $3,000,000 dated February 27, 1996, executed by Grantor and A&A Northpointe C, Inc., jointly and severally, and payable to the order of Security Life of Denver Insurance Company (the "Note") and secured by a Deed of Trust, 2 Assignment of Rents and Leases, and Security Agreement, dated of even date therewith, and recorded on February 28, 1996 in Deed Book 1416, Page 998 in the Land Records of Loudoun County, Virginia (the "Deed of Trust") upon which Note there now remains an outstanding principal balance of $2,812,754.95. To have and to hold the property hereby conveyed to the Grantee, its successors and assigns, in fee simple forever. IN TESTIMONY WHEREOF, the said Grantor has, as of the date first written above, caused these presents to be signed, acknowledged and delivered, under seal, by its duly authorized representative as its act and deed. A&A Northpointe B, Inc., a Virginia corporation By: ----------------------- Dr. Louai Alassar President 3 DISTRICT OF ) ) SS: COLUMBIA ) The undersigned, a Notary Public in and for the jurisdiction aforesaid, does hereby certify that Dr. Louai Alassar, the President of A&A Northpointe B, Inc., a Virginia corporation, known to me (or satisfactory proven) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same on behalf of A&A Northpointe B, Inc., for the purpose therein contained. GIVEN under my hand and seal this ____ day of October, 1998. (SEAL) --------------------- Notary Public My commission expires: ---------------- 4 EXHIBIT A (Legal Description) 5 EXHIBIT B (Permitted Encumbrances) EX-10.9 10 SPECIAL WARRANTY DEED-A&A NORTHPOINTE C, INC. 1 EXHIBIT 10.9 This document was prepared outside of the Commonwealth of Virginia SPECIAL WARRANTY DEED THIS DEED, made and entered into this ____ day of October, 1998 by and between A&A NORTHPOINTE C, INC., a Virginia corporation ("Grantor"), with an address of c/o Cambridge Holdings Limited Partnership, 560 Herndon Parkway, Suite 210, Herndon, Virginia 20170, and AMERICAN INDUSTRIAL PROPERTIES REIT, a Texas real estate investment trust ("Grantee"), with an address of 6210 North Beltline Road, Suite 170, Irving, Texas 75063-2656. WITNESSETH: That for and in consideration of the sum of Ten Dollars ($10.00) in hand paid and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Grantor does hereby grant, bargain, sell and convey unto Grantee, in fee simple, with Special Warranty of title, that certain real property located in Loudoun County, Virginia and more particularly described in Exhibit A attached hereto and made a part hereof. Together with all improvements located thereon, and all title, right, privilege, alleys, ways, easements, appurtenances and advantages thereunto belonging, or in anywise appertaining thereto. Subject only to those matters set forth and identified on Exhibit B attached hereto and made a part hereof. AND FURTHER SUBJECT TO (pursuant to Grantee's assumption thereof) that certain promissory note in the original principal amount of $3,000,000.00 dated 2 February 27, 1996, executed by Grantor and A&A Northpointe B, Inc., jointly and severally, and payable to the order of Security Life of Denver Insurance Company (the "Note") and secured by a Deed of Trust, Assignment of Rents and Leases, and Security Agreement, dated of even date therewith, and recorded on February 28, 1996 in Deed Book 1416, Page 998 in the Land Records of Loudoun County, Virginia (the "Deed of Trust") upon which Note there now remains an outstanding principal balance of $2,812,754.95. To have and to hold the property hereby conveyed to the Grantee, its successors and assigns, in fee simple forever. IN TESTIMONY WHEREOF, the said Grantor has, as of the date first written above, caused these presents to be signed, acknowledged and delivered, under seal, by its duly authorized representative as its act and deed. A&A Northpointe C, Inc., a Virginia corporation By: ---------------------- Dr. Louai Alassar President 3 DISTRICT OF ) ) SS: COLUMBIA ) The undersigned, a Notary Public in and for the jurisdiction aforesaid, does hereby certify that Dr. Louai Alassar, the President of A&A Northpointe C, Inc., a Virginia corporation, known to me (or satisfactory proven) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same on behalf of A&A Northpointe C, Inc., for the purpose therein contained. GIVEN under my hand and seal this ____ day of October, 1998. (SEAL) ----------------------- Notary Public My commission expires: ---------------- 4 EXHIBIT A (Legal Description) 5 EXHIBIT B (Permitted Encumbrances) EX-10.10 11 SPECIAL WARRANTY DEED-A&A GREENBRIER TECH, INC. 1 EXHIBIT 10.10 This document was prepared outside of the Commonwealth of Virginia SPECIAL WARRANTY DEED THIS DEED, made and entered into this ____ day of October, 1998 by and between A&A GREENBRIER TECH, INC., a Virginia corporation ("Grantor"), with an address of c/o Cambridge Holdings Limited Partnership, 560 Herndon Parkway, Suite 210, Herndon, Virginia 20170, and AIP/GREENBRIER GP, INC., a Texas corporation ("Grantee"), with an address of 6210 North Beltline Road, Suite 170, Irving, Texas 75063-2656. WITNESSETH: That for and in consideration of the sum of Ten Dollars ($10.00) in hand paid and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, Grantor does hereby grant, bargain, sell and convey unto Grantee, in fee simple, with Special Warranty of title, that certain real property located in the City of Chesapeake, Virginia and more particularly described in Exhibit A attached hereto and made a part hereof. Together with all improvements located thereon, and all title, right, privilege, alleys, ways, easements, appurtenances and advantages thereunto belonging, or in anywise appertaining thereto. Subject only to those matters set forth and identified on Exhibit B attached hereto and made a part hereof. AND FURTHER SUBJECT TO (pursuant to Grantee's assumption thereof) that certain secured promissory notes in the original principal amounts of $3,147,000 and $1,253,000, each dated July 29, 1997, executed by Grantor and payable to the order of 2 Principal Mutual Life Insurance Company (the "Notes") and secured by a Deed of Trust, Security Agreement and Assignment of Rents, dated of even date therewith, and recorded on July 30, 1997 in Deed Book 3530, Page 145 in the Clerk's Office of the Circuit Court of the City of Chesapeake, Virginia (the "Deed of Trust") upon which Notes there now remains an aggregate outstanding principal balance of $4,304,140.77. To have and to hold the property hereby conveyed to the Grantee, its successors and assigns, in fee simple forever. IN TESTIMONY WHEREOF, the said Grantor has, as of the date first written above, caused these presents to be signed, acknowledged and delivered, under seal, by its duly authorized representative as its act and deed. A&A Greenbrier Tech, Inc., a Virginia corporation By: ------------------------ Dr. Louai Alassar President 3 DISTRICT OF ) ) SS: COLUMBIA ) The undersigned, a Notary Public in and for the jurisdiction aforesaid, does hereby certify that Dr. Louai Alassar, the President of A&A Greenbrier Tech, Inc., a Virginia corporation, known to me (or satisfactory proven) to be the person whose name is subscribed to the within instrument and acknowledged that he executed the same on behalf of A&A Greenbrier Tech, Inc., for the purpose therein contained. GIVEN under my hand and seal this ____ day of October, 1998. (SEAL) ------------------------- Notary Public My commission expires: ---------------- 4 EXHIBIT A (Legal Description) 5 EXHIBIT B (Permitted Encumbrances) EX-23.1 12 CONSENT OF PRICEWATERHOUSECOOPERS LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT ACCOUNTANTS We hereby consent to the incorporation by reference in the Prospectuses constituting part of the Registration Statements on Form S-3 (No. 333-46699), Form S-3 (No. 333-48555) and Form S-3 (No. 333-52879) of American Industrial Properties REIT of our reports dated December 10, 1998 relating to the combined statement of revenue and certain expenses of The A&A Portfolio Properties and The A&A Virginia Properties, both of which appear in the Current Report on Form 8-K/A of American Industrial Properties REIT dated October 14, 1998. /s/ PRICEWATERHOUSECOOPERS LLP PricewaterhouseCoopers LLP Cleveland, Ohio December 28, 1998 -----END PRIVACY-ENHANCED MESSAGE-----