-----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, Oh8ryR6zzMwee4/Aezspo1+gnc9zCvccjyga8Emh88peLXC/bngKTJ6jYion6knT I8/WPQIbjRHFzh5FQPnIpQ== 0000908737-97-000409.txt : 19971017 0000908737-97-000409.hdr.sgml : 19971017 ACCESSION NUMBER: 0000908737-97-000409 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971001 ITEM INFORMATION: ITEM INFORMATION: FILED AS OF DATE: 19971016 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: HEALTH & RETIREMENT PROPERTIES TRUST CENTRAL INDEX KEY: 0000803649 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 046558834 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: SEC FILE NUMBER: 001-09317 FILM NUMBER: 97696788 BUSINESS ADDRESS: STREET 1: 400 CENTRE ST CITY: NEWTON STATE: MA ZIP: 02158 BUSINESS PHONE: 6173323990 MAIL ADDRESS: STREET 1: 400 CENTRE STREET CITY: NEWTON STATE: MA ZIP: 02158 FORMER COMPANY: FORMER CONFORMED NAME: HEALTH & REHABILITATION PROPERTIES TRUST DATE OF NAME CHANGE: 19920703 8-K 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 --------- FORM 8-K 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 1, 1997 HEALTH AND RETIREMENT PROPERTIES TRUST (Exact name of registrant as specified in charter) Maryland 1-9317 04-6558834 (State or other (Commission file (IRS employer jurisdiction of number) identification no.) incorporation) 400 Centre Street, Newton, Massachusetts 02158 (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code: 617-332-3990 Item 2. Acquisition or Disposition of Assets As previously announced, on October 1, 1997, Health and Retirement Properties Trust and subsidiaries (the "Company") purchased a 420,368 square foot office building located at 7 West 34th Street in New York City, New York from 7 West Associates LLC, a wholly owned subsidiary of Orchard Properties, Inc., for $110 million. The building has been and will continue to be rented as commercial office space. The building is currently 100% occupied with 60% leased to health care companies, including the corporate headquarters of Health Insurance Plan of Greater New York. As previously announced, on May 15, 1997, the Company acquired two medical office buildings and two garages located adjacent to Cedars-Sinai Medical Center in Los Angeles, California. The properties were acquired by a limited partnership owned 99% by the Company. The Company contributed and loaned an aggregate of $108.5 million to such limited partnership and Medical Office Buildings, Ltd., a Washington limited partnership, the Company's limited partner, contributed the land and the buildings which it acquired from Wright-Carlyle Partners, in the case of the buildings, and Prudential Insurance Company of America, in the case of the land, pursuant to existing rights of first refusal and options, the exercises of which were funded by the Company's funding of the limited partnership. The two medical office towers and the two parking garages are interconnected to each other and to the Cedars-Sinai Medical Center by pedestrian bridges. The medical office buildings are currently more than 95% occupied and have over 150 separate medical practices as tenants. The average occupancy of these buildings for the last ten years was approximately 97.2%. The Company currently intends that the building will continue to be operated as a medical office building. The properties described above are managed for the Company by M&P Partners Limited Partnership ("M&P"), which provides property agent and management services for certain of the Company's multi-tenant buildings. M&P is owned by its general partner, HRPT Advisors, Inc., the Company's advisor, and Messrs. Gerar M. Martin and Barry M. Portnoy, who are managing trustees of the Company. Management fees paid to M&P are based on a percentage of revenues derived from the multi-tenant buildings under its management. The consideration for each of these acquisitions was funded initially by drawings under the Company's existing revolving line of credit with Dresdner Kleinwort Benson NorthAmerica LLC, as agent and Fleet National Bank, as administrative agent and available cash. Item 7. Financial Statements, Pro Forma Financial Information and Exhibits. (a) Financial Statements of Business Acquired. The audited financial statements of the properties described in Item 2 of this Report are not filed herewith but will be filed on an amendment to this Form 8-K within 60 days of the date hereof. (c) Exhibits. 2.1 Purchase and Sale Agreement dated September 25, 1997 by and between 7 West Associates LLC, as seller and the Company, as purchaser. 2.2 Contribution Agreement (and Escrow Instructions) with respect to the acquisition of the Cedars-Sinai Medical Office Towers dated as of April 20, 1997 by and between Medical Office Buildings, Ltd., as seller, and the Company, as buyer. 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 thereunto duly authorized. HEALTH AND RETIREMENT PROPERTIES TRUST By: /s/ Ajay Saini Ajay Saini, Treasurer and Chief Financial Officer Date: October 16, 1997 EX-2.1 2 Exhibit 2.1 Purchase And Sale Agreement 7 West 34th Street New York, New York between 7 West Associates LLC, as Seller and Health and Retirement Properties Trust, as Purchaser Dated: September 25, 1997
Purchase And Sale Agreement Table of Contents Page Article 1 Definitions........................................................................1 Section 1.1 Definitions.............................................................................1 Article 2 Purchase and Sale..................................................................5 Section 2.1 Purchase and Sale.......................................................................5 Section 2.2 Payment of the Purchase Price...........................................................5 Article 3 Purchaser's Review.................................................................6 Section 3.1 Property Documents......................................................................6 Section 3.2 Physical Review.........................................................................6 Section 3.3 Indemnity and Survival..................................................................8 Article 4 Title Documents....................................................................8 Section 4.1 Title Commitment and Survey.............................................................8 Section 4.2 Title Defects...........................................................................8 Article 5 Representations, Warranties, and Covenants........................................11 Section 5.1 Seller's Representations and Warranties................................................11 Section 5.2 Survival of Seller's Representations and Warranties....................................17 Section 5.3 Purchaser's Representations, Warranties and Covenants..................................18 Section 5.4 Seller's Covenants.....................................................................19 Section 5.5 As Is..................................................................................22 Article 6 Closing...........................................................................23 Section 6.1 Conditions to Purchaser's Obligations to Close.........................................23 Section 6.2 Conditions to Seller's Obligations to Close............................................24 Section 6.3 Escrow and Closing.....................................................................25 Section 6.4 Prorations.............................................................................30 Section 6.5 Closing Costs..........................................................................37 Section 6.6 Closing Deliveries.....................................................................38 Section 6.7 Access to Records......................................................................42 Section 6.8 Survival...............................................................................43 Article 7 Brokerage.........................................................................43 Article 8 Casualty and Condemnation.........................................................44 Section 8.1 ..................................................................................44 Section 8.2 ..................................................................................44 Section 8.3 ..................................................................................44 i Page Section 8.4 ..................................................................................45 Article 9 Defaults..........................................................................47 Section 9.1 Purchaser's Default....................................................................47 Section 9.2 Seller's Default.......................................................................47 Section 9.3 Delivery of Earnest Money Deposit in the Event of a Default............................48 Article 10 Miscellaneous.....................................................................48 Section 10.1 Indemnification.......................................................................48 Section 10.2 Assurances Of Cooperation.............................................................49 Section 10.3 Successors And Assigns................................................................49 Section 10.4 Interpretation........................................................................50 Section 10.5 Joint Cooperation.....................................................................52 Section 10.6 Publicity.............................................................................52 Section 10.7 Notices...............................................................................53 Section 10.8 Exculpations..........................................................................54 Section 10.10 Counterparts.........................................................................55 Exhibit A The Land Exhibit B The Permitted Title Exceptions Exhibit C The Contracts Exhibit D The Rent Roll Exhibit E The Personal Property Exhibit F-1 The Bill of Sale Exhibit F-2 The Assignment of Contracts, Intangible Property Licenses and Utility Deposits Exhibit F-3 The Assignment of Leases Exhibit F-4 The Bargain and Sale Deed Exhibit G The Claims Exhibit H The Property Documents Exhibit I Schedule of Insurance Exhibit J Form of Tenant's Estoppel Letter Exhibit K Intentionally Omitted Exhibit L Licenses Exhibit M Certificate of Occupancy Exhibit N Intentionally Omitted Exhibit O Pending Real Estate Tax Appeals Exhibit P Intentionally Omitted Exhibit Q Intentionally Omitted Exhibit R Letters of Credit Exhibit S Supplies Exhibit T Brokerage Agreements
ii THIS PURCHASE AND SALE AGREEMENT is made as of the 25th day of September, 1997, by and between 7 WEST ASSOCIATES LLC, a Delaware limited liability company ("Seller") and HEALTH AND RETIREMENT PROPERTIES TRUST, a Maryland real estate investment trust ("Purchaser"). In consideration of the respective agreements, covenants, representations, warranties and conditions contained in this Agreement, and for other good and valuable consideration, the parties hereto agree as follows: Article 1 Definitions Section 1.1 Definitions. As used herein, the following terms shall have the following meanings: Additional Rents: As defined in Section 6.4.1 of this Agreement. Adjustment Point: As defined in Section 6.4 of this Agreement. Agreement: This Agreement, including all exhibits and schedules hereto, all of which are incorporated into this Agreement by this reference. BID: As defined in Section 5.1.2.8 of this Agreement. Claims: As defined in Section 5.1.2.1 of this Agreement. Closing: As defined in Section 6.3.8 of this Agreement. Closing Date: October 1, 1997, as such date may be extended pursuant to the terms of this Agreement or by mutual consent of the parties hereto. Closing Statement: As defined in Section 6.4 of this Agreement. 2 Contracts: All written contracts and agreements affecting all or any portion of the Property to which Seller or any predecessor in interest to Seller is a party (including without limitation, all agreements relating to the management, servicing or maintenance of the Real Property or the Personal Property, and all agreements for the purchase of materials, supplies, equipment or parts, but excluding the Leases and any documents evidencing the Permitted Title Exceptions). The Contracts are identified on Exhibit C. Curable Liens: As defined in Section 4.2.2(a) of this Agreement. Cure Amount: As defined in Section 4.2.2(a) of this Agreement. Earnest Money Deposit: Five Million Dollars ($5,000,000). The term "Earnest Money Deposit" shall also include any interest earned on the deposited monies. Escrow Agent: Paul, Weiss, Rifkind, Wharton & Garrison. Existing Mortgage: That certain first mortgage on the Real Property held by Credit Lyonnais. Governmental Authority: The United States of America, or any state, county, municipality, or other unit of local government, or any agency, board, or other public entity empowered or constituted by any of them having, jurisdiction over the Real Property, the Property or its or their use or ownership. HIP: As defined in Section 5.1.1.5 of this Agreement. Improvements: All buildings, structures, fixtures, and other improvements of every kind located on or under the Land, including any and all plumbing, air conditioning, heating, ventilating, mechanical, electrical and other utility systems servicing the building, security devices, signs and light fixtures, but not including publicly owned or privately owned (unless owned by Seller) utility lines or equipment or tenant fixtures which under the terms of any Tenant's Lease or as a matter of law may be removed from the demised premises by such Tenant on the expiration of its term. 3 Intangible Property: All intangible property excluding Contracts, Leases and Licenses which pertain to the Real Property or Personal Property, including all of Seller's rights in and to guarantees, warranties, plans and specifications and reports pertaining to the Property (or any portion thereof), if any. Land: That certain parcel of land described on Exhibit A. Leases: All leases and other agreements for the occupancy of any portion of the Improvements, including any amendments and modifications thereof, each of which is identified on Exhibit D. Legal Requirements: All laws, statutes, regulations and requirements of any Governmental Authority having jurisdiction over the Real Property or the Property. Licenses: All licenses, permits, certificates of occupancy, authorizations or other approvals issued by any Governmental Authority regarding operation of the Real Property or Personal Property but not including those required for completed tenant improvements or work which any Tenant is performing and those related to any Tenant's business or issued to any Tenants. Major Tenant: Each of the Tenants listed on Exhibit P to this Agreement. Material Part: As defined in Section 8.3 of this Agreement. Member: As defined in Section 5.1.1.1 of this Agreement. New Leases: As defined in Section 5.4.2.4 of this Agreement. Owner's Policy: As defined in Section 4.1 of this Agreement. Permitted Title Exceptions: Those matters listed on Exhibit B to this Agreement. Personal Property: The items of property identified on Exhibit E to this Agreement. Property: The Real Property, the Leases, the Personal Property, the Licenses, the Contracts and the Intangible Property. 4 Property Documents: As defined in Section 3.1 of this Agreement. Prorations: As defined in Section 6.4 of this Agreement. Purchase Price: One Hundred Ten Million Dollars ($110,000,000). Purchaser: As defined in the Introduction to this Agreement. Purchaser's Broker: Williams Real Estate Co. Real Property: The Land and the Improvements. Rent Roll: The rent roll attached to this Agreement as Exhibit D. Rents: As defined in Section 6.4.1 of this Agreement. Seller: As defined in the Introduction to this Agreement. Seller's Broker: CB Commercial Real Estate Group, Inc. Seller's Closing Documents: As defined in Section 6.6.1 of this Agreement. Studies: As defined in Section 3.2.2 of this Agreement. Survey: As defined in Section 4.1 of this Agreement. Tenant: A party in possession of a portion of the Improvements pursuant to one of the Leases. Title Commitment: As defined in Section 4.1 hereof. Title Defect: A lien, claim, charge, right, interest, burden, encumbrance, defect, objection, exception or security interest which is asserted against or which burdens the Real Property, or the Personal Property which has a materially adverse effect on the use or operation of the Property or the value thereof and which is not identified in this Agreement as a Permitted Title Exception. Title Insurer: Lawyers Title Insurance Corporation. 5 Article 2 Purchase and Sale Section 2.1 Purchase and Sale. Subject to the terms and conditions contained in this Agreement, Purchaser agrees to purchase the Property from Seller and Seller agrees to sell the Property to Purchaser, subject only to the Permitted Title Exceptions. Section 2.2 Payment of the Purchase Price. Purchaser agrees to pay the Purchase Price to Seller, and Seller agrees to accept payment of the Purchase Price in the following manner: 2.2.1 Prior to the execution of this Agreement, a portion of the Earnest Money Deposit, equal to $1,100,000 in cash, was delivered by Purchaser to Escrow Agent. Concurrently with the execution and delivery of this Agreement, the balance of the Earnest Money Deposit shall be delivered to Escrow Agent in immediately available funds. 2.2.2 On the Closing Date, (a) Purchaser shall pay the balance of the Purchase Price, consisting of the sum of $105,000,000 to Seller or as directed by Seller, by wire transfer of immediately available funds to Seller's account at Morgan Guaranty Trust Company of New York or other financial institution designated by Seller, plus or minus net Prorations and (b) the Earnest Money Deposit, with the interest earned thereon credited to Purchaser. 6 Article 3 Purchaser's Review Section 3.1 Property Documents. At any reasonable time and from time to time from the date of the execution and delivery of this Agreement, until the Closing Date, Seller will permit Purchaser and its authorized agents to examine and copy the instruments and documents listed on Exhibit H, to the extent in Seller's Possession or otherwise readily available to Seller (the "Property Documents"). Such inspection shall take place at the offices of Seller, as Seller shall otherwise direct or at Purchaser's request and expense, Seller shall provide Purchaser with copies of such documents. Section 3.2 Physical Review. At all times prior to the Closing, Purchaser, its representatives or agents, shall have the right to enter upon the Real Property. The Purchaser's right to inspect the Real Property shall be subject to the following: 3.2.1 Purchaser may examine and test the Real Property, which tests may include non-invasive soil tests, environmental tests and engineering tests. Purchaser may conduct invasive testing which will not cause material damage to the Property provided it obtains prior consent from Seller, which consent Seller agrees shall not be unreasonably withheld, delayed or conditioned; and 3.2.2 Purchaser may inspect the Improvements to evaluate their suitability for Purchaser's needs; provided, however, that examination of the interior of space leased to Tenants may be limited as provided in such Tenants' Leases. 7 All of the examinations, inspections, studies, tests and reports conducted or prepared pursuant to Sections 3.2.1 and 3.2.2 prior to Closing are referred to in this Agreement as the "Studies." 3.2.3 Purchaser's right to enter onto the Real Property to conduct the Studies is subject to the following conditions: 3.2.3.1 Purchaser shall provide Seller with reasonable advance notice of any entry on the Real Property (which notice may be oral), and Seller may, at its election, have a representative present during any such entry; 3.2.3.2 All investigations and other activities conducted by Purchaser shall be at Purchaser's sole cost and expense, and Purchaser shall keep the Real Property free of any liens which may be asserted against Seller or the Real Property as a result of these activities; 3.2.3.3 Purchaser shall exercise due care with respect to the Real Property in connection with its entry thereon so as to minimize any damage caused to the Real Property and any interference with Seller's use thereof. Promptly following any test or other examination which results in any alteration of the Real Property, Purchaser will promptly restore the Real Property at Purchaser's sole cost and expense to the condition which existed prior to such test or examination; and 3.2.3.4 Purchaser or its agents will not contact any Tenants directly or indirectly prior to the Closing, without Seller's consent. 8 Section 3.3 Indemnity and Survival. Purchaser hereby agrees to indemnify, defend, protect and hold Seller harmless from any and all costs, loss and damages, including reasonable attorneys' fees and litigation expenses, which Seller shall incur as a result of the Studies or any breach of Purchaser's obligations under Sections 3.1 and 3.2. In the event this Agreement is terminated, this indemnity shall survive the termination of this Agreement. If this Agreement is not terminated, this indemnification shall survive the Closing. Article 4 Title Documents Section 4.1 Title Commitment and Survey. Purchaser has obtained (a) an updated survey of the Real Property (the "Survey") and (b) a report on title (the "Title Commitment") from the Title Insurer for an owner's policy of title insurance (the "Owner's Policy") in the amount of the Purchase Price, and has caused copies of the Survey and the Title Commitment to be delivered to Seller's counsel, together with specification of those exceptions to title contained in the Title Commitment and/or Survey which (a) are not Permitted Title Exceptions and (b) are not acceptable to Purchaser. Section 4.2 Title Defects. 4.2.1 If Seller shall elect (or shall be required under Section 4.2.2 below) to attempt to remove any defect in or objection to title so specified by Purchaser, then Seller shall be entitled, on notice to Purchaser given on or prior to the Closing Date, to adjourn the Closing Date one or more times, for a period not to 9 exceed sixty (60) days in the aggregate, to enable Seller to take such action as may be required to cause the Title Insurer to issue the Owner's Policy in accordance with the provisions of this Agreement. If Seller does not so elect to adjourn the Closing, or if at the adjourned date(s) the Title Insurer is not prepared to issue the Owner's Policy in accordance with the provisions of this Agreement, Purchaser may terminate this Agreement by written notice to Seller, whereupon the Escrow Agent shall return the Earnest Money Deposit to Purchaser and neither party shall have any further obligations under this Agreement except for those provisions which specifically survive the termination hereof. 4.2.2 (a) If Seller elects to adjourn the Closing as provided above, this Agreement shall remain in effect for the period or periods of adjournment in accordance with its terms. In no event, however, shall Seller be required to take or bring any action or proceeding or take any other steps to remove any defect in or objection to title; provided, however, that if an examination of title indicates the existence of one or more liens or encumbrances which, in either case, are in liquidated amounts and can be removed or discharged by payment of a sum of money ("Curable Liens") which is not in excess of Five Hundred Thousand Dollars ($500,000) (the "Cure Amount") in the aggregate, and if such removal or discharge can reasonably be expected to be accomplished prior to the Closing Date initially provided for in Section 1.1 hereof or within a period of sixty (60) days thereafter or such longer period of time as Purchaser may approve, Seller agrees to take such action as is reasonably required in order to remove or discharge such Curable Liens and, if required, to 10 adjourn the Closing Date for the period required for such purpose. Seller will be deemed to have satisfied the foregoing requirement with respect to any Curable Liens, other than as to Curable Liens which are, in the aggregate, in excess of One Million Dollars ($1,000,000), if the Title Insurer will issue or bind itself to issue the Owner's Policy without additional premium (unless Seller shall pay such premium) which will (i) insure Purchaser against collection of such Curable Liens or enforcement thereof against the Real Property and (ii) agree to issue a title commitment to any subsequent mortgagee or purchaser of the Property from Purchaser, which commitment will insure such mortgagee or purchaser against collection of such Curable Liens or enforcement against the Real Property. (b) Seller will, in addition, without limitation as to the amount thereof, cause to be removed at or prior to the Closing (i) all mortgages, assignments of leases and rents and financing statements entered into by Seller or its predecessors in title whether created prior to or after the date hereof, (ii) judgments or tax liens (other than real estate tax liens which are addressed in Section 6.4.1) incurred by Seller which are liens against the Real Property and (iii) other title exceptions which are not Permitted Title Exceptions and which are willfully caused by Seller from and after the date hereof. 4.2.3 Notwithstanding the provisions of Section 4.2 hereof, Purchaser may at any time accept such title as Seller is able to deliver, without reduction of the Purchase Price or any credit or allowance on account thereof or any claims against Seller. 11 Article 5 Representations, Warranties, and Covenants Section 5.1 Seller's Representations and Warranties. In order to induce Purchaser to enter into this Agreement, Seller represents and warrants to Purchaser as follows: 5.1.1 As to Organization, Power, Authority and Title. 5.1.1.1 Seller is a limited liability company duly organized, validly existing and in good standing under the laws of the State of Delaware. Seller's only member is Orchid Properties, Inc. (the "Member"). 5.1.1.2 Seller has full right, power and authority to enter into and perform its obligations under this Agreement and the other instruments and documents contemplated herein to be executed and performed by it, including without limitation, those conveying the Property. The execution and delivery of this Agreement and such other instruments and documents and the consummation of the transactions contemplated hereby and thereby (l) have been duly authorized by all necessary action on the part of the Seller (2) do not require any consent or approval of or notice to any Governmental Authority, and (3) will not result in the breach of the limited liability company agreement of Seller or any agreement or other instrument to which Seller or the Member is a party or to which Seller, the Member or the Property is bound. Further, this Agreement constitutes the valid and binding obligation of Seller. 12 5.1.1.3 Seller has not made an assignment for the benefit of creditors, nor has Seller filed, or had filed against it, any petition in bankruptcy or insolvency. 5.1.1.4 Seller is a "non-foreign person" within the meaning of section 1445 of the United States Internal Revenue Code of 1986, as amended, and the regulations issued thereunder. 5.1.1.5 Seller is the sole owner of the Property and has full right, power and authority to sell and convey the same to Purchaser. No third party other than Health Insurance Plan of Greater New York ("HIP") has any contract, option or right of first refusal with respect to the Property; HIP's right of first refusal has been waived in writing by HIP. 5.1.2 As to the Property. 5.1.2.1 There is no litigation, action or proceeding pending, or to Seller's knowledge, threatened against Seller, the Property, or any part thereof, before any court, arbitrator or Governmental Authority nor has Seller received written notice of any litigation, action or proceeding threatened against Seller, the Property, or any part thereof (the "Claims") other than negligence claims fully covered by insurance maintained by Seller, and as set forth in Exhibit G attached hereto. 5.1.2.2 Exhibit I is a complete list of all insurance policies applicable to the Real Property as of the date hereof and each such 13 policy is presently in full force and effect. All the premiums under the insurance policies set forth on Exhibit I have been paid in full. 5.1.2.3 Seller has no knowledge of and has not received any written notice from any Governmental Authority with respect to any actual or threatened taking of any portion of the Real Property by the exercise of the right of condemnation or eminent domain. 5.1.2.4 Seller has one employee. 5.1.2.5 Except as set forth in Exhibit C, there are no Contracts relating to the Property which would be binding on the Purchaser subsequent to the Closing. Exhibit C is a complete list of all such Contracts, such Contracts are all in full force and effect and have not been amended or modified, except as disclosed in Exhibit C. Seller is not in default under any such Contract and to the best of Seller's knowledge, no other party is in default under any such Contract. 5.1.2.6 There are no proceedings pending to reduce the assessment of the Real Property for real estate tax purposes except for the 1992/93, 1993/94, 1994/95, 1995/96 1996/97 and 1997/98 New York City Fiscal Years, copies of the applications for which are attached hereto as Exhibit O. 5.1.2.7 There are no outstanding special assessments with respect to the Real Property. 14 5.1.2.8 The Real Property is located in the 34th Street Business Improvement District ("BID"). 5.1.2.9 The Real Property has not been designated a New York City Landmark. 5.1.2.10 The Real Property constitutes a separate tax lot. 5.1.2.11 Seller has not transferred any development rights with respect to the Real Property. 5.1.2.12 Seller has received no notice that the Real Property is in violation in any material respect of any material federal, state, municipal and other governmental statutes, ordinances, rules, regulations or any other legal requirements, including, without limitation, those relating to construction, occupancy, zoning, adequacy of parking, environmental protection, occupational health and safety and fire safety applicable thereto; and to Seller's knowledge there are presently in effect all material licenses, permits and other authorizations necessary for the current use, occupancy and operation thereof. 5.1.2.13 Except as disclosed to Purchaser or as described in any environmental report delivered to Purchaser, to Seller's knowledge, no material adverse environmental conditions or hazards exist with respect to the Real Property. 5.1.3 As to Leases, Licenses, Etc. 5.1.3.1 (1) There are no occupancy rights (written or oral), leases or tenancies presently affecting the Real Property or the Personal Property other than the Leases; (2) Seller has heretofore delivered to Purchaser 15 a true and complete copy of each of the Leases, including all amendments thereto; each such Lease represents the complete agreement between Seller and the respective Tenant as to all rights, liabilities and obligations of Seller and said Tenant in and to the premises demised thereunder; and the Leases have not been modified or amended, except as set forth on Exhibit D hereto; (3) the Leases are in full force and effect; (4) to the best of Seller's knowledge, said Tenants have not assigned their rights under the Leases or sublet any portion of their respective premises except as noted on Exhibit D; (5) said Tenants have not been granted any renewal or extension options except as disclosed in the Leases, nor do any of said Tenants have an option to purchase the Real Property or any part thereof (other than the first refusal right in favor of HIP described in Section 5.1.1.5 hereof); (6) except as otherwise described on Exhibit D, Seller has performed its obligations under the Leases in all material respects; and Seller has not received from any Tenant any written notice claiming any material default by Seller under any of the Leases which has not been complied with, or claiming any right of set-off or counterclaim against Seller; (7) except as set forth on Exhibit D, Seller has not given any Tenant any written notice claiming any material defaults or nonpayment of rent by such Tenant under any of the Leases which has not been complied with; (8) except as set forth on Exhibit D, all Tenants are in occupancy of their respective premises under the Leases and all work required to be performed by the landlord pursuant to the Leases has been completed and fully paid for; (9) the information contained in 16 the Rent Roll annexed hereto as Exhibit D is true and correct in all material respects and contains a schedule of every Lease and each modification and amendment to each Lease; (10) except as set forth on Exhibit D, Seller has not accepted any prepaid rent or prepayment of any other sum due under the Leases more than thirty (30) days in advance; (11) the security deposits set forth on Exhibit D hereto are all the security deposits paid by Tenants under their Leases; (12) except as set forth in Exhibit D, all Tenants are in possession of their respective premises and are not more than 30 days in arrears in payment of fixed rent due under their respective leases, and no Tenant has contested in a written notice to landlord any amounts payable under its Lease; and (13) no appraisal or other process provided for in any Lease has been instituted in writing by Seller or any Tenant to establish the rental rate payable with respect to any pending extension or expansion or with respect to any negotiation or appraisal of rent under any Lease. Except as set forth in Exhibit D, no brokerage commission, fee or other compensation is payable (or will, with the passage of time or occurrence of any event or both, be payable), with respect to any Lease pursuant to any existing agreement which would be binding on the landlord under such Lease after the Closing Date. True and complete copies of the agreements (and all amendments thereto) pursuant to which such brokerage commissions, fees or other compensation are payable are attached hereto as Exhibit T. There will not remain in effect after the Closing any exclusive or continuing brokerage agreements binding on Purchaser as to any of the space 17 covered by the Leases or as to any space in the Improvements. As of the Closing Date, no actual or pending claims or rights exist or may accrue against Seller and which will be binding on Purchaser for any brokerage commission, fee or other compensation in respect of all or any portion of the Improvements that is subject to a Lease. 5.1.3.2 No management commission, fee or other compensation will be payable by Purchaser from and after the Closing Date with respect to the management of the Real Property prior to the Closing Date. 5.1.3.3 To the best of Seller's knowledge, the documents listed on Exhibit L hereto are all of the Licenses (including all amendments, modifications, supplements and extensions thereof) and Seller has not received any written notice from any Governmental Authority that Seller is in default under or has breached any of the Licenses. No representation is made as to the transferability of such licenses. Attached hereto as Exhibit M is a true, correct and complete copy of the current certificate of occupancy for the Improvements. 5.1.3.4 Seller has no patents, registered trademarks or registered trade names which are used by Seller with respect to the Real Property. Section 5.2 Survival of Seller's Representations and Warranties. At Closing, Seller shall deliver to Purchaser a certificate of the Seller which will confirm that its warranties and representations contained in this Agreement are in all material respects true and correct as of the date of the Closing (to the best of Seller's 18 knowledge, where so specified above and limited to the time period described above, where so specified). Seller's representations and warranties shall not survive the Closing except as follows: (i) the representations and warranties contained in Sections 5.1.1.5., 5.1.2.1, 5.1.2.3-13 and 5.1.3.1-4 shall survive the Closing, provided that Purchaser shall be deemed to have irrevocably waived any claim with respect thereto as to which Purchaser has not given Seller written notice within a period of one (1) year after the Closing Date, and (ii) the representations and warranties contained in subsections 5.1.1.1-4 shall survive indefinitely, subject to the statute of limitations. Section 5.3 Purchaser's Representations, Warranties and Covenants. In order to induce Seller to enter into this Agreement, Purchaser hereby represents and warrants to and covenants with Seller as follows: 5.3.1 Purchaser is a real estate investment trust duly organized, validly existing and in good standing under the laws of the State of Maryland. Purchaser has full right, power and authority to enter into and perform its obligations under this Agreement and the other instruments and documents contemplated herein to be executed and performed by it. The execution and delivery of this Agreement and such other instruments and documents and the consummation of the transactions contemplated hereby and thereby (1) have been duly authorized by all necessary action on the part of the Purchaser, (2) do not require any consent or approval of or notice to any Governmental Authority, and (3) will not result in the breach of any agreement, indenture or other instrument to which Purchaser is a party 19 or is otherwise bound. Further, this Agreement constitutes the valid and binding obligation of Purchaser. 5.3.2 At Closing, Purchaser shall deliver to Seller a certificate of the Purchaser which will confirm that its warranties and representations contained in this Agreement are in all material respects true and correct as of the date of the Closing. Purchaser's representations and warranties contained in Section 5.3.1 shall survive the Closing indefinitely, subject to the statute of limitations. 5.3.3 Prior to the Closing, Purchaser shall not, without the prior written consent of Seller, enter into any New Lease (as defined below), nor shall Seller solicit or entertain inquiries with respect to the leasing of space in the Improvements. Section 5.4 Seller's Covenants. 5.4.1 Seller agrees that between the date hereof and the Closing Date it shall continue to operate the Real Property and the Personal Property in substantially the same manner it has been operated prior to the date hereof. Such normal operation by Seller shall include, without limitation, the maintenance by Seller of Seller's usual books and records and compliance by Seller with its obligations as Landlord under the Leases, subject to the express provisions of this Agreement. 5.4.2 Seller covenants and agrees that from and after the date of this Agreement until the Closing Date or earlier termination of this Agreement: 5.4.2.1 Except as otherwise provided in Section 5.4.2.8 below, Seller will not, without the prior written consent of Purchaser, enter into 20 any new employment, service or maintenance agreements relating to the Property or renew or extend any Contracts, unless such new agreements and such Contracts, as renewed or extended, will be cancelable by Purchaser on not more than thirty (30) days prior notice without any costs for such cancellation. 5.4.2.2 The insurance policies described on Exhibit I (or substantially similar substitute polices and with companies of similar or better financial strength) shall be maintained in full force and effect. 5.4.2.3 Seller will not sell, encumber or grant any interest in the Property or any part thereof or interest therein. 5.4.2.4 Seller will not, without the prior written consent of Purchaser, enter into any new Lease, permit occupancy of space on the Real Property which is presently vacant or which may hereafter become vacant or extend or renew any of the Leases (collectively, a "New Lease"). 5.4.2.5 Seller will not terminate or accept a surrender of any Lease which is not in default or modify, cancel, or amend any Lease, or release any Tenant from liability under any Lease without the prior written consent of Purchaser. 5.4.2.6 Seller will not initiate any action to alter or amend the zoning classification of the Real Property, or otherwise intentionally perform any act or deed which shall diminish, encumber or affect Purchaser's rights in and to the Property or prevent Seller from performing fully its obligations hereunder. 21 5.4.2.7 Seller shall not solicit or encourage directly or indirectly (including solicitation or encouragement by any broker retained by Seller), inquiries or proposals with respect to, furnish any information relating to, or participate in any negotiation concerning any proposal for the sale of the Real Property or the Property. 5.4.2.8 Seller shall not enter into any new management agreement relating to the Real Property (and shall cancel or cause the cancellation as of the Closing Date of any existing management agreement relating to the Real Property.) 5.4.2.9 Seller shall, upon learning of any material change in any condition with respect to the Property or of any event or circumstance which makes any representation or warranty of Seller to Purchaser under this Agreement untrue or misleading, promptly notify Purchaser thereof. 5.4.3 From and after the date of this Agreement, Seller will defend or will cause its insurance carrier to defend any claims resulting from Seller's alleged breach of any contractual obligation of Seller (including without limitation, any of the Leases) and any tort claims with respect to the Real Property or the Property which arose before the Closing Date so that Purchaser will have no liability with respect to such claims for any loss, costs or damages in connection therewith, including litigation costs and expenses. 5.4.4 Seller shall remove or comply with any violations of law or municipal ordinances, or orders or requirements noted or issued by any 22 Governmental Authority against or affecting the Real Property prior to the date hereof; provided, however, that if such removal or compliance has not been completed prior to the Closing, Purchaser shall receive at the Closing a credit against the Purchase Price in an amount to be agreed upon by Seller and Purchaser to cover the reasonably estimated unpaid cost to effect or complete such removal or compliance, and Purchaser shall be required to accept title to the Real Property or the Personal Property subject thereto. Notwithstanding the foregoing, Purchaser shall have the right to adjourn the Closing in the event that Seller has failed to remove or comply with any of the aforementioned matters if the reasonably estimated unpaid cost to effect or complete such removal or compliance is greater than $500,000 until such time as Seller removes or complies with such matters to the extent that the reasonably estimated unpaid cost to effect or complete such removal or compliance with respect to such matters is less than $500,000, at which time the Closing shall occur within three (3) business days notice by Seller to Purchaser, provided Seller shall, at such time, provide Purchaser with evidence reasonably satisfactory to Purchaser of such removal or compliance. Notwithstanding the foregoing, violations which a Tenant in occupancy is required to remove or comply with pursuant to the terms of its Lease, may not be asserted by Purchaser as objections to title and Seller shall have no obligation to remove the same. Section 5.5 As Is. Purchaser is purchasing the Property "as is" and in its present condition, subject to reasonable use, wear, tear and natural deterioration between the date hereof and the Closing, without any reduction in the Purchase Price for any such change in such condition by reason thereof subsequent to the date hereof. 23 Purchaser acknowledges that in entering into this Agreement Purchaser has made such examination of the Property, the operation, income and expenses thereof and all other matters affecting or relating to this transaction as Purchaser has deemed necessary. In entering into this Agreement, Purchaser has not been induced by and has not relied upon any representations, warranties or statements, whether express or implied, made by Seller or any agent, employee or other representative of Seller or by any other person purporting to represent Seller, which are not expressly set forth in this Agreement, whether or not any such representations, warranties or statements were made in writing or orally. Article 6 Closing Section 6.1 Conditions to Purchaser's Obligations to Close. The obligation of Purchaser to close under this Agreement and to pay the Purchase Price shall be subject to the fulfillment on and as of the Closing Date of all of the following conditions (in addition to any other conditions to Purchaser's obligations under this Agreement which are set forth elsewhere herein): 6.1.1 Seller shall have delivered to Purchaser all of Seller's Closing Documents provided for in Section 6.6 hereof. 6.1.2 All of the representations and warranties of Seller contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date as if the same were made on and effective as of such date. 24 6.1.3 Seller shall have performed and observed, in all material respects, all covenants, agreements and conditions of this Agreement to be performed and observed by Seller as of the Closing Date. Purchaser shall have the right, at its election, at or prior to the Closing by notice to Seller, to waive the fulfillment of any condition precedent to Purchaser's obligation to close hereunder and by effecting the Closing, Purchaser shall be deemed to have waived any such condition not then fulfilled. Nothing contained in the preceding sentence, however, shall limit, constitute a waiver or otherwise affect the liability of Seller with respect to any covenants, indemnities, warranties and representations which survive the Closing pursuant to the terms hereof. 6.1.4 All management agreements relating to the Real Property shall have been cancelled. 6.1.5 Seller shall have provided evidence reasonably satisfactory to Purchaser and the Title Insurer that Seller's execution and delivery of this Agreement and the instruments executed and delivered pursuant hereto have been duly authorized by all necessary action on the part of Seller. 6.1.6 No action shall be pending or threatened with a condemnation or taking by power of eminent domain of all or any material portion of the Real Property. 6.1.7 Shall have delivered to Purchaser an unaudited financial statement (prepared by extrapolation from an audited statement covering other properties as well as the Real Property) for the Real Property with respect to the 1996 25 calendar year and the period beginning January 1, 1997 and ending on the last day of the most recent calendar month prior to the Closing Date which ends at least 15 days prior to the Closing Date, such financial statements to be in form and substance reasonably acceptable to Purchaser. Section 6.2 Conditions to Seller's Obligations to Close. The obligation of Seller to close under this Agreement shall be subject to the fulfillment on or before the Closing Date of all of the following conditions (in addition to any other conditions to Seller's obligations under this Agreement which are set forth in this Agreement): 6.2.1 Purchaser shall have delivered to Seller all of the items required to be delivered to Seller pursuant to Section 6.6 hereof, and the Escrow Agent shall pay the Earnest Money Deposit to Seller. 6.2.2 All of the representations and warranties of Purchaser contained in this Agreement shall be true and correct in all material respects on and as of the Closing Date as if the same were made on and effective as of such date. 6.2.3 Purchaser shall have performed and observed, in all material respects, all covenants, agreements and conditions of this Agreement to be performed or observed by Purchaser as of the Closing Date. Seller shall have the right, at its election at or prior to the Closing by notice to Purchaser, to waive the fulfillment of any condition precedent to Seller's obligation to close hereunder and by effecting the Closing, Seller shall be deemed to have waived any such condition not then fulfilled. Nothing contained in the preceding sentence, however, shall limit, constitute a waiver or otherwise affect the liability of Purchaser with respect to any 26 covenants, warranties, representations or indemnities which survive the Closing pursuant to the terms hereof. 6.2.4 Purchaser shall have provided evidence reasonably satisfactory to Seller that Purchaser's execution and delivery of this Agreement and the instruments executed and delivered pursuant hereto have been duly authorized by all necessary action on the part of Purchaser. Section 6.3 Escrow and Closing. 6.3.1 Prior to the date hereof, Purchaser and Seller have caused an escrow to be opened by the Escrow Agent for the purpose of holding the Earnest Money Deposit. The Earnest Money Deposit shall be held in escrow by Escrow Agent until (a) the Closing, upon which event the Earnest Money Deposit shall be delivered to Seller; (b) five (5) business days after Escrow Agent shall have given Seller or Purchaser notice that it has received a written notice sent by the other party to this Agreement stating that this Agreement has been terminated and that the party so notifying Escrow Agent is entitled to the Earnest Money Deposit, following which period the Earnest Money Deposit shall be (i) delivered to Seller, in the case of a notice from Seller stating that Seller is entitled to the Earnest Money Deposit, or (ii) delivered to Purchaser, in the case of a notice from Purchaser stating that Purchaser is entitled to the Earnest Money Deposit, provided that within such five (5) business day period Escrow Agent does not receive either a notice containing contrary instructions from the other party hereto or a court order restraining payment of the Earnest Money Deposit; or (c) a joint notice is received from Seller and Purchaser, in 27 which event Escrow Agent shall deliver the Earnest Money Deposit or the proceeds thereof in accordance with the instructions therein contained. The Earnest Money Deposit shall be invested by Escrow Agent in an interest bearing money market or bank account at Citibank, N.A. or any other member bank of the New York Clearinghouse Association, but Escrow Agent shall not be liable for any failure to do so or for any loss incurred by reason of any such investments. Interest earned on the Earnest Money Deposit shall be credited to Purchaser at the Closing. 6.3.2 In the event that (i) Escrow Agent shall have received a notice containing conflicting instructions as provided for in Section 6.3.1 hereof and within the time therein prescribed, or a court order restraining payment of the Earnest Money Deposit or under the Letter of Credit or (ii) any other disagreement or dispute shall arise between the parties hereto resulting in adverse claims or demands being made upon Escrow Agent for the Earnest Money Deposit or the Letter of Credit or the proceeds thereof, whether or not litigation has been instituted, then and in any such event Escrow Agent shall refuse to comply with any claims or demands on it and continue to hold the Earnest Money Deposit or the Letter of Credit or the proceeds thereof, until Escrow Agent receives either (a) a written notice signed by both Seller and Purchaser directing the disposition of the Earnest Money Deposit or the Letter of Credit or the proceeds thereof, or (b) a final order of a court of competent jurisdiction, entered in a proceeding in which Seller, Purchaser and Escrow Agent are named as parties, directing the disposition of the Earnest Money Deposit or the Letter of Credit or the proceeds thereof, in either of which events Escrow Agent shall then dispose of 28 the Earnest Money Deposit or the Letter of Credit or the proceeds thereof, in accordance with said direction. Escrow Agent shall not be or become liable in any way to any person or entity for its refusal to comply with any such claims or demands until and unless it has received a direction of the nature described in (a) or (b) above. Upon the taking by Escrow Agent of any of the actions described in (a) and (b) above, Escrow Agent shall be released of and from all liability hereunder except as otherwise expressly provided for herein. Notwithstanding the foregoing provisions of this Section 6.3.2, Escrow Agent shall have the following rights in the circumstances described in subsections (i) and (ii) above: (x) if Escrow Agent shall have received a written notice signed by either Seller or Purchaser advising that litigation between Seller or Purchaser over entitlement to the Earnest Money Deposit or the Letter of Credit or the proceeds thereof has been commenced, Escrow Agent may, on written notice to Seller and Purchaser, deposit the Earnest Money Deposit or the Letter of Credit or the proceeds thereof with the Clerk of the court in which such litigation is pending, or (y) Escrow Agent may, on written notice to Seller and Purchaser, take such affirmative steps as it may, at its option, elect in order to terminate its duties as Escrow Agent hereunder, including, but not limited to, the deposit of the Earnest Money Deposit or the Letter of Credit or the proceeds thereof with a court of competent jurisdiction and the commencement of an action for interpleader, the costs thereof to be borne by whichever of Seller or Purchaser is the losing party, i.e., the party not entitled to the Earnest Money Deposit or the Letter of Credit or the proceeds thereof. Upon the taking by Escrow Agent of either of the actions described in (x) 29 or (y) above, Escrow Agent shall be released of and from all liability hereunder except for any previous willful misconduct or gross negligence. 6.3.3 Seller and Purchaser understand that Escrow Agent acts hereunder as depository only and is not responsible in any manner whatever for the sufficiency, correctness, genuineness or validity of any instrument delivered to it, or for the form of execution of such instrument or for the identity, authority or rights of any person(s) executing or delivering the same or for the terms or conditions of any instrument pursuant to which the parties may act. Escrow Agent shall not have any liability or obligation for loss of all or any portion of the Earnest Money Deposit or the Letter of Credit or the proceeds thereof by reason of the insolvency or failure of the institution or depositary with which such proceeds are maintained. 6.3.4 Escrow Agent shall not have any duties or responsibilities except those set forth in this Agreement and shall not incur any liability in acting upon any signature, notice, request, waiver, consent, receipt or other paper or document believed by Escrow Agent to be genuine, and Escrow Agent may assume that any person purporting to give it any notice on behalf of any party in accordance with the provisions hereof has been duly authorized to do so. Escrow Agent shall not be liable for any errors in judgment or for any acts done or omitted by it in good faith, or for any mistakes of fact or law and is released and exculpated from all liability hereunder except for willful misconduct or gross negligence. 6.3.5 Subject to Section 6.3.2 as to the costs to be borne by Seller or Purchaser, Seller and Purchaser jointly and severally agree to reimburse 30 Escrow Agent for its reasonable costs and expenses, including reasonable attorneys' fees (either paid to retained attorneys or representing the fair value of legal services rendered by Escrow Agent to itself), disbursements and other charges, incurred as a result of any dispute or litigation concerning the right to the Earnest Money Deposit. Escrow Agent has executed this Agreement solely to confirm that it is holding and will hold the Earnest Money Deposit in escrow pursuant to the provisions herein contained and for no other purpose. 6.3.6 Purchaser acknowledges that Escrow Agent is representing Seller in connection with the sale of the Property pursuant to this Agreement and agrees that Escrow Agent may continue to represent Seller with respect thereto and in any dispute arising out of this Agreement or the documents and instruments contemplated hereby, notwithstanding that Escrow Agent shall simultaneously be acting as the escrow agent hereunder or in such dispute. 6.3.7 The terms and provisions herein contained shall create no right in any person, firm or corporation other than Seller and Purchaser and their respective successors and permitted assigns, and no third party shall have the right to enforce or benefit from any of the terms and provisions herein contained. 6.3.8 The closing of the transaction provided for in this Agreement (the "Closing") will be held at 10:00 a.m. at the offices of Paul, Weiss, Rifkind, Wharton & Garrison in New York, New York (or at Purchaser's request, at the offices of Purchaser's lender in New York City, or at such other place upon which Seller and Purchaser shall agree) on the Closing Date. Time shall be of the essence as 31 to each party's obligation to close title to the Property on the scheduled closing date, as such date may be adjourned as provided in this Agreement. Notwithstanding the foregoing, the Closing Date may be adjourned by Seller or Purchaser one or more times to a business day not later than ten (10) days in the aggregate following the Closing Date, by notice given to the other party at least two (2) business days prior to the original or previously scheduled Closing Date. Section 6.4 Prorations. Each of the following shall be apportioned between Seller and Purchaser as of 11:59 P.M. Eastern Standard Time on the day preceding the date of the Closing (the "Adjustment Point") and shall be documented in a statement (the "Closing Statement") executed and delivered by Seller and Purchaser: 6.4.1 Rents as and when collected. The word "Rents" as used in this Section 6.4.1 shall be deemed to include fixed monthly rents as well as any additional rents (including, without limitation, real estate tax, cost of living, operating cost and labor wage rate escalations and electric charges) (the "Additional Rents") payable by Tenants, and the term "costs of collection" shall mean and include reasonable attorneys' fees and other costs incurred by Purchaser or Seller in collecting any Rents, but shall not include the regular fees payable to any managing agent of the Premises, the payroll cost of any of Purchaser's employees or any other internal costs or overhead of Purchaser. (i) Any Rents collected by Purchaser (which, for purposes of this Section 6.4.1, shall include Rents collected by any managing agent acting for Purchaser) subsequent to the Closing (whether due and payable prior to or 32 subsequent to the Adjustment Point) shall be adjusted as of the Adjustment Point, and any portion thereof properly allocable to periods prior to the Adjustment Point, net of costs of the collection properly allocable thereto, if any, shall be paid by Purchaser to Seller promptly after the collection thereof by Purchaser, but subject to the further provisions of this Section 6.4.1 in the case of Rents due prior to the Adjustment Point. Additional Rents shall be adjusted based on the calendar or fiscal year or other period for which the same are charged pursuant to each Lease. (ii) At the Closing Seller shall deliver to Purchaser a list of all Tenants which are delinquent in payment of Rents as at the Adjustment Point, which list shall set forth the amount of each such delinquency, the period to which each such delinquency relates and the nature of the amount due, itemizing separately fixed monthly rent, escalation charges, electric charges, charges for tenant services, charges for overtime services and other charges, if any. The first amounts collected by Purchaser from each delinquent Tenant, net of costs of collection, if any, shall be deemed to be in payment of Rents for the month in which the Closing occurs, next in payment of delinquent Rents (or the specific components of Rents) owed by such Tenant which are not more than one (1) month in arrears as of the first day of the month in which the Closing occurs, as set forth in such list, next in payment of Rents then due on account of any month after the month in which the Closing occurs and finally in payment of delinquent Rents (or the specific components of Rents) which are more than one (1) month in arrears as of the first day of the month in which the Closing occurs, as set forth on such list. Any amounts collected by Purchaser from 33 each delinquent Tenant which, in accordance with the preceding sentence, are allocable to the month in which the Closing occurs (as adjusted as of the Adjustment Point) or any prior month, net of costs of collection properly allocable thereto, if any, shall be paid promptly by Purchaser to Seller. Purchaser shall exert reasonable efforts to bill and collect any delinquencies and the amount thereof, as, when and to the extent collected by Purchaser, shall be remitted by Purchaser to Seller, net of costs of collection, if any, promptly after the collection thereof by Purchaser; provided that Purchaser shall be deemed to have met its obligation hereunder to bill and collect delinquencies if it shall have (i) billed such delinquencies and (ii) followed up such billings with a telephone call to each of the delinquent Tenants. 6.4.2 Taxes, vault charges and sewer rents, if any, on the basis of the New York City Fiscal Year for which assessed. Prior to the Closing Date, Seller is hereby authorized to continue any proceeding or proceedings now pending for the reduction of the assessed valuation of the Premises, which relate to the New York City Fiscal Year during which the Closing Date occurs, or any prior New York City Fiscal Year, and to try or settle the same in Seller's reasonable discretion, provided, however, that (i) any decision by Seller to settle any such proceeding relating to the New York City Fiscal Years 1992/93, 1993/94, 1994/95, 1996/97 and/or 1997/98 shall be subject to approval by Purchaser, in Purchaser's reasonable discretion, and (ii) that the net refund of taxes, if any, for any tax year for which Purchaser shall be entitled to share in the refund shall be divided between Seller and Purchaser in accordance with the apportionment of taxes pursuant to the provisions of this Section 6.4 after deducting 34 therefrom a pro rata share of all expenses, including counsel fees, necessarily incurred in obtaining such refund, the allocation of such expenses to be based upon the total refund obtained in such proceeding and in any other proceeding simultaneously involved in the trial or settlement. At the Closing, all of Seller's interest in any such proceeding for the New York City Fiscal Year following the year in which the Closing Date occurs shall be transferred to Purchaser, which shall be substituted for Seller as protesting party or plaintiff thereunder. Following the Closing Date, Purchaser may try or settle the aforementioned 1992/93, 1993/94, 1994/95, 1995/96, 1996/97 and 1997/98 proceedings in Purchaser's sole discretion, provided, however, that any decision to settle any such proceeding relating to the New York City Fiscal Years 1992/93, 1993/94, 1994/95, 1995/96, and 1996/97 shall be subject to Seller's approval, in Seller's reasonable discretion. Seller agrees to cooperate with Purchaser in a reasonable manner in any such proceedings following the Closing Date until such proceedings are settled or otherwise resolved. Each party shall deliver to the other, upon demand, receipted tax bills and cancelled checks used in payment of such taxes and shall execute any and all consents or other documents, and do any act or thing reasonably requested by the other party for the continuation of such proceedings and the collection of any refund by such party. In the event that following the Closing Date Purchaser receives any real estate tax refund on account of the applications previously filed by Seller for the New York City Fiscal Years 1992/93, 1993/94, 1994/95, 1995/96, 1996/97 and/or 1997/98, such refund amounts, if any, shall be promptly paid over by Purchaser to Purchaser's managing agent, and Seller and Purchaser shall direct 35 such person or entity to reimburse the appropriate Tenants their respective shares of any such amounts and apportion any remaining amounts to Seller and Purchaser in accordance with the provisions of Section 6.4 of this Agreement. Seller shall use reasonable efforts to cause any such refunds to be paid to Purchaser rather than Seller. If, notwithstanding such efforts, any such refund is paid to Seller, Seller shall reimburse the appropriate Tenants (or pay over to Purchaser or its managing agent, which shall promptly thereafter reimburse the appropriate Tenants) their respective shares of such refunds and apportion any remaining amounts to Seller and Purchaser in accordance with the provisions of Section 6.4 of this Agreement. The provisions of this Section 6.4.2 shall survive the Closing. 6.4.3 Utilities, including steam, electricity, water and gas, except those charges (if any) that Tenants are obligated to pay directly to the providers of such utilities. Seller shall endeavor to have meters for such utilities read the day preceding the Closing and agrees to cause the bills rendered to it on the basis of such readings to be paid. If Seller does not obtain such a meter reading for any such utility, the adjustment therefor shall be made on the basis of the most recently issued bill therefor. If there be water meters on the Premises, Seller shall furnish readings to a date not more than thirty days prior to the date of Closing, and the unfixed meter charges and the unfixed sewer rents, if any, based thereon for the intervening time, except those charges and rents that Tenants are obligated to pay directly to the utility or governmental authority in question, if any, shall be apportioned on the basis of such last readings. 36 6.4.4 Charges paid or payable under Contracts and assumed by Purchaser. 6.4.5 Fees for transferable governmental licenses and permits required for the operation and maintenance of the Premises. 6.4.6 Purchaser shall have the right, upon reasonable advance notice (which notice may be oral) within the 5 business day period immediately preceding the Closing, to inspect the supplies at the Property in order to determine whether the condition set forth in the immediately preceding sentence has been satisfied. Seller shall have the right to have its representative present during any such inspection. Seller agrees that substantially all of the materials and supplies (collectively, "supplies") listed on Exhibit S annexed hereto shall be located at the Property on the Closing Date and that title to such supplies shall be transferred to Purchaser on the Closing Date. Purchaser shall pay the sum of $25,000 to Seller at the Closing in full consideration for such supplies. In the event the supplies located at the Property at the Closing Date are substantially the same as those listed on Exhibit S, the aforesaid $25,000 amount shall be equitably redeemed at the Closing. 6.4.7 Deposits, if any, made by Seller with utility companies or governmental agencies in respect of the Premises which will inure to the benefit of Purchaser subsequent to the Closing. 6.4.8 Any other items which are customarily apportioned upon the sale of an office building similar to the Real Property in New York City. 37 6.4.9 All accrued wages and benefits (including, without limitation, accrued vacation pay) of the employee referred to in Section 5.1.2.5 hereof who will be employed by Seller shall be paid (or caused to be paid) by Seller at or prior to the Closing, or to the extent not so paid, all unpaid amounts shall be allowed to Purchaser as a credit at Closing, and Purchaser will be responsible for payment thereof to such employees. Notwithstanding anything to the contrary contained in this Section 6.4, Seller has given permission to Accessory Network to sublet all of the Premises demised to it under its Lease with Seller in return for a cash payment equal to $500,000. This amount is to be paid directly by Accessory Network to Seller notwithstanding the fact that this payment is not due and payable by Accessory Network until October, 1997, and if for any reason collected by Purchaser, shall be immediately remitted by Purchaser to Seller. The provisions of this Section 6.4 shall survive the Closing. Section 6.5 Closing Costs. 6.5.1 Seller agrees to pay and indemnify Purchaser in respect of the following expenses in respect to the transactions contemplated by this Agreement: (a) New York State and City transfer taxes payable in respect of this transaction; (b) Seller's legal fees; (c) the commission due Seller's Broker; and (d) one-half of any sales tax imposed with respect to the supplies referred to in Section 6.4.6. 6.5.2 Purchaser agrees to pay and indemnify Seller in respect of the following fees and expenses in respect to the transaction contemplated by this Agreement: (a) the cost of all engineering, environmental and other reports and 38 studies of the Premises ordered by Purchaser or its authorized representative; (b) Purchaser's legal fees; (c) sales tax, if any, payable by reason of the sale of the personal property (other than the supplies referred to in Section 6.4.6) included in this sale (the parties agreeing, however, that no portion of the Purchase Price is allocable to personal property); (d) one-half of any sales tax imposed with respect to the supplies referred to in Section 6.4.6; (e) survey costs; (f) the premium on the title insurance policy issued by the Title Company; and (g) all recording and filing fees or charges payable on account of the recording of the deed delivered in connection with this Agreement. 6.5.3 The provisions of this Section 6.5 shall survive the Closing or any termination of this Agreement. Section 6.6 Closing Deliveries. 6.6.1 Seller shall deliver at Closing the following documents ("Seller's Closing Documents"): 6.6.1.1 A bargain and sale deed without covenant against grantor's acts with respect to the Real Property in the form attached hereto as Exhibit F-4, together with a duly executed NYS Form TP-584, and such other completed transfer declarations, tax returns and affidavits with respect to such deed as may be required for recordation of the deed by state, county or local law, if any; 6.6.1.2 A bill of sale from Seller evidencing the sale of the Personal Property, if any, in the form of Exhibit F-1; 39 6.6.1.3 An assignment of the Contracts, Licenses, Utility Deposits and Intangible Property, if any, from Seller in the form of Exhibit F-2; 6.6.1.4 A certificate of Seller confirming the continued accuracy of the warranties and representations made by Seller in this Agreement as required by Section 5.2; 6.6.1.5 Estoppel letters, dated not earlier than thirty (30) days prior to the Closing Date, from all of the Tenants of the Building, such estoppel letters to be in substantially the form annexed hereto as Exhibit J; provided, however, that if any Lease provides for the form or content of an estoppel letter, Purchaser shall accept an estoppel letter as called for in such Lease. Seller will request, and use reasonable efforts to obtain, on or before the Closing Date, from the Tenants under the Leases, estoppel letters in substantially the form annexed hereto as Exhibit J; 6.6.1.6 A letter to Tenants advising them (i) of the change in ownership of the Property, (ii) the amount of their security deposit and any prepaid rent that has been delivered to Purchaser, and the name of the banking institution in which such deposits will be maintained following the Closing, (iii) directing them to pay rent to Purchaser or as Purchaser may direct, and (iv) directing them to deliver to Purchaser or as Purchaser may direct, an insurance certificate in the form required under such Tenant's Lease for the benefit of Purchaser; 40 6.6.1.7 A letter to all parties (other than Seller) to the Contracts advising them of the change in ownership of the Property. 6.6.1.8 Appropriate evidence of Seller's right, power and authority to sell the Property to Purchaser on the terms and conditions of this Agreement as Purchaser or the Title Insurer may reasonably require; 6.6.1.9 An affidavit executed on behalf of Seller providing Seller's taxpayer identification number and a statement that Seller is not a foreign person within the meaning of Section 1445(f)(3) of the Internal Revenue Code, as amended; 6.6.1.10 A complete set of all keys and magnetic pass cards to the Improvements, appropriately tagged for identification, to the extent in Seller's possession or control; 6.6.1.11 To the extent in Seller's or the Seller's managing agent's possession or control, and not already delivered, (a) the maintenance records for the Property, (b) all original licenses and permits, authorizations and approvals which are currently in force pertaining to the Real Property or the Personal Property, (c) the standard form of lease used in the building, together with a computer diskette therefor, if available, and (d) all guarantees and warranties which are currently in force and which Seller has received in connection with any work or services performed or equipment installed in and to Improvements; 41 6.6.1.12 True and complete originals of the Leases and all files with respect thereto, together with copies of Seller's abstracts and other data in Seller's or the Seller's managing agent's possession necessary for the preparation of bills for rent escalations and other Tenant charges; 6.6.1.13 An instrument duly executed and acknowledged by Seller, in which Seller assigns to Purchaser all of Seller's right, title and interest as landlord in, to and under the Leases in the form of Exhibit F-3; 6.6.1.14 To the extent in Seller's or the Seller's managing agent's possession or control, the originals of the Property Documents and in all other instances copies thereof; 6.6.1.15 The Tenant security deposits held by Seller pursuant to the Leases, including, without limitation, the Letters of Credit listed on Exhibit R. Seller will cooperate with Purchaser to cause such Letters of Credit to be transferred to Purchaser as soon as possible after the Closing, and as to any of such Letters of Credit which are not transferable to Purchaser as of right, Seller will take such steps as Purchaser may reasonably request to cause the transfer thereof to Purchaser and/or to make the proceeds thereof available to Purchaser following a default by the Tenant in question. Any transfer fees charged by the issuing banks shall be the responsibility of Purchaser. 6.6.1.16 Such other and further customary instruments and documents as Seller's counsel and Purchaser's counsel may reasonably 42 require to evidence and conclude the transaction contemplated by this Agreement; 6.6.1.17 A duly executed Closing Statement; 6.6.1.18 The amounts, if any, required to be paid to Purchaser pursuant to the Closing Statement; and 6.6.1.19 A counterpart of the agreement referred to in Section 6.6.2.8. 6.6.2 Purchaser shall deliver at Closing the following items: 6.6.2.1 The balance of the Purchase Price. 6.6.2.2 A duly executed Closing Statement; 6.6.2.3 Counterpart copies of any of Seller's Closing Documents which require execution by Purchaser; 6.6.2.4 A certificate confirming the continued accuracy of the warranties and representations made by Purchaser in this Agreement as required by Section 5.3; 6.6.2.5 A statement from Purchaser's counsel required by Section 6045 of the Internal Revenue Code, as amended, if required by law; 6.6.2.6 The amounts, if any, required to be paid to Seller pursuant to the Closing Statement; 6.6.2.7 Such other and further customary instruments and documents as Seller's counsel and Purchaser's counsel may reasonably 43 require to evidence and conclude the transaction contemplated by this Agreement; and 6.6.2.8 An agreement in form and substance reasonably satisfactory to Seller, permitting Seller, at no cost, to store files and other items in certain agreed upon storage space in the basement of the Property until November 1, 1997. Section 6.7 Access to Records. 6.7.1 Purchaser agrees that (i) all records and files delivered to Purchaser by Seller pursuant to this Agreement will be preserved by Purchaser, its successors and assigns, for a period of three (3) years subsequent to the Closing and (ii) Seller may have access to such records and files from time to time after the Closing during normal business hours and upon reasonable prior notice to Purchaser at the place in the continental United States where such records are maintained by Purchaser. 6.7.2 Seller agrees that (i) Seller, its successors and assigns, will preserve such records and files with respect to the Property that it is not required to deliver to Purchaser on the Closing Date for a period of three (3) years subsequent to the Closing at a location in the City of New York, State of New York and (ii) Purchaser may have access to such records and files from time to time after the Closing during normal business hours and upon reasonable prior notice to Seller. Section 6.8 Survival. The provisions of this Article 6 shall survive the Closing. 44 Article 7 Brokerage Each party represents and warrants to the other that, except for the Purchaser's Broker and the Seller's Broker, it has dealt with no broker or finder with respect to this Agreement. Each party hereby indemnifies and agrees to save, defend and hold the other party harmless from and against any loss, cost, damage, claim, liability or expense, including reasonable attorneys' fees and litigation costs, suffered or incurred as a result of its breach of the foregoing representation and warranty. Seller shall pay any commission, fee, or other charge for services due to Seller's Broker pursuant to a separate agreement and Seller shall hold Purchaser harmless from and against the payment of any such amount. Purchaser shall pay any commission, fee or other charge for services due to Purchaser's Broker pursuant to a separate agreement and Purchaser shall hold Seller harmless from and against the payment of any such amount. The provisions of this Article 7 will survive the termination of this Agreement or the Closing. Article 8 Casualty and Condemnation Section 8.1 Seller and Purchaser waive the provisions of all applicable laws relating to the occurrence of a casualty or condemnation between the date hereof and the Closing, and Seller and Purchaser agree that the provisions of this Article 8 shall govern in lieu thereof. 45 Section 8.2 If the Improvements shall hereafter be destroyed or damaged in whole or in part by fire or other cause, or if the Real Property be taken in whole or in part by right of eminent domain or by condemnation, the obligations of the parties hereunder shall continue unaffected by reason of any such damage, destruction or taking and the transaction contemplated by this Agreement shall be fully consummated in accordance with the terms hereof without any reduction or abatement in the Purchase Price or any credit or allowance against the same, except as expressly provided for in Section 8.3 and 8.4 herein. Seller covenants and agrees that it will give Purchaser prompt notice of any casualty, condemnation or threatened condemnation. Section 8.3 If prior to the Closing Date a Material Part (as defined below) of the Improvements is damaged or destroyed by fire or other cause or a Material Part of the Real Property is taken by right of eminent domain or condemnation, Purchaser may, by written notice given to Seller at or prior to the Closing, cancel this Agreement, whereupon this Agreement shall terminate, and neither party shall have any further rights or liabilities against or to the other except for those that specifically survive the termination hereof and the parties shall direct the Escrow Agent to return the Earnest Money Deposit to Purchaser. For the purposes of this Article 8, a "Material Part" shall mean (i) damage or destruction (A) the cost of repair of which shall exceed Two Million Dollars ($2,000,000), or (B) which would permit Tenants occupying five percent (5%) or more of the rentable space in the Improvements to cancel their Leases, or (ii) a taking of (A) five percent (5%) or more of the rentable square footage in the Improvements, or (B) a taking which would permit 46 Tenants occupying five percent (5%) or more of the rentable space in the Improvements to cancel their Leases, or (C) a permanent taking which would materially impede access to the Improvements. Section 8.4 If prior to the Closing Date (i) an immaterial part of the Improvements is damaged or destroyed in whole or in part by fire or other cause, (ii) an immaterial part of the Real Property is taken by right of eminent domain or by condemnation or eminent domain, (iii) a Material Part of the Improvements is damaged or destroyed in whole or in part by fire or other cause and Purchaser has not canceled this Agreement in accordance with the provisions of Section 8.3 above or (iv) a Material Part of the Real Property is taken by eminent domain or condemnation and Purchaser has not canceled this Agreement in accordance with Section 8.3 above, then Seller as its sole obligation shall (i) remit to Purchaser an amount equal to the net proceeds of any fire insurance and condemnation award actually received by Seller (the term "net proceeds" as used in this paragraph to mean such proceeds reduced by (a) the reasonable cost of collection and (b) the cost of any repairs effected by or on behalf of Seller with Purchaser's consent, which consent shall not be unreasonably withheld or delayed, or without Purchaser's consent (with respect to repairs of an emergency nature)) and (ii) if any such proceeds have not been received by Seller, transfer and assign to Purchaser, without recourse, all of Seller's right, title and interest in and to any insurance and condemnation proceeds payable to Seller, and there shall be no abatement or credit on account of the Purchase Price and no duty or obligation on Seller to repair or restore any damage or to make any repairs by reason of such fire, 47 casualty or taking, except that if the amount of any such proceeds is equal to less than the cost to repair or restore any damage by reason of any such fire, casualty or taking, as reasonably determined by Purchaser and Seller, then Purchaser shall receive at Closing a credit on account of the Purchase Price in an amount equal to any deductible(s) related thereto. If any such casualty results in a loss of rental income which continues after the Closing, Seller will use reasonable efforts to assign to Purchaser its rental value insurance covering such loss (and an adjustment shall be made between the parties to cover the premium for the period following the Closing); but Seller does not represent that its insurer will honor such assignment, or that the proceeds thereof for periods after the Closing will be paid by the insurer to Purchaser. Adjustment of any insurance or condemnation claim to be paid prior to the Closing shall be conducted jointly by Seller and Purchaser. In the event of an assignment of all insurance claims as provided for above, Purchaser shall receive at Closing a credit against the Purchase Price in an amount equal to any deductible(s) and uninsured amounts. Article 9 Defaults Section 9.1 Purchaser's Default. In the event that Purchaser defaults under this Agreement and the Closing does not occur as the result thereof, Seller shall, as its sole and exclusive remedy, retain the Earnest Money Deposit as liquidated and agreed damages for such default by Purchaser, whereupon neither party hereto shall have any further obligations to the other under this Agreement; provided, however, 48 that neither party shall be released from its obligations which specifically survive the termination of this Agreement. Section 9.2 Seller's Default. If Seller shall, as a result of circumstances beyond Seller's reasonable control, be unable to perform its obligations under this Agreement, Purchaser's sole remedy shall be to terminate this Agreement by notice to Seller, in which event Seller's sole responsibility shall be to cause the Escrow Agent to return to Purchaser the Earnest Money Deposit made by Purchaser upon the execution of this Agreement, together with the interest earned thereon, and thereupon, both parties shall be released of all obligations and liability under this Agreement, except for those matters that expressly survive any termination of this Agreement. The foregoing shall not be deemed to relieve Seller from the consequences of a default by Seller hereunder as a result of circumstances other than circumstances beyond Seller's reasonable control, in which event Purchaser shall be entitled to seek either (i) the return of the Earnest Money Deposit, together with the interest earned thereon, or (ii) specific performance of the obligations of Seller hereunder; provided that in no event shall Purchaser have the right to seek money damages for such claimed default by Seller. The rights granted Purchaser in this Section 9.2 shall be exclusive in the event of Seller's failure or inability to perform its obligations hereunder. Section 9.3 Delivery of Earnest Money Deposit in the Event of a Default. In any case where either party is entitled to receive the Earnest Money Deposit hereunder due to a default by the other party to this Agreement (or as otherwise provided in this Agreement), the parties agree to give the Escrow Agent 49 prompt written instructions to deliver the Earnest Money Deposit to the party entitled thereto. Article 10 Miscellaneous Section 10.1 Indemnification. 10.1.1 Seller agrees to indemnify, defend and hold harmless Purchaser, its successors and assigns from and against any and all claims, liabilities and expenses (including without limitation, reasonable attorneys' fees and disbursements) of any nature whatsoever suffered or incurred by Purchaser, its successors and assigns (except for amounts for which Purchaser received a proration credit under this Agreement) arising out of (i) any of Seller's obligations, duties or liabilities in connection with the Property prior to the Closing Date and (ii) a breach of any of the representations and warranties which survive the Closing pursuant to Section 5.2, provided that Purchaser gives Seller written notice of any such claimed breach within the period that such representation or warranty survives the Closing, as provided in Section 5.3. 10.1.2 Purchaser agrees to indemnify, defend and hold harmless Seller, its successors and assigns (except for amounts for which Seller received a proration credit under this Agreement) from and against any and all claims, liabilities and expenses (including without limitation, reasonable attorneys' fees and disbursements) of any nature whatsoever suffered or incurred by Seller, its successors or assigns arising out of (i) any obligations, duties or liabilities on the Purchaser's part 50 to be performed in connection with the Property on and subsequent to the Closing Date, and (ii) a breach of any representations and warranties which survive the Closing pursuant to Section 5.3, provided that Seller gives Purchaser written notice of any such claimed breach within the period that such representation or warranty survives the Closing, as provided in Section 5.2. Section 10.2 Assurances Of Cooperation. The parties hereby covenant and agree that they will at any time prior to and after the Closing and from time to time, execute, acknowledge and deliver, or will cause to be done, executed, acknowledged and delivered all such further acts, documents and instruments as may reasonably be required by the other party in order to carry out fully and effectuate the transactions herein contemplated in accordance with the provisions of this Agreement. Section 10.3 Successors And Assigns. This Agreement shall be binding in all respects on and shall inure to the benefit of the Seller and Purchaser and their respective successors and assigns. Seller may not assign its interests under this Agreement. Purchaser may assign its interests under this Agreement to an entity which controls, is controlled by, or is under common control with, Purchaser; provided that (i) Purchaser provides Seller with prior notice of any such assignment and evidence to Purchaser's reasonable satisfaction that the assignee is in fact an entity which controls, is controlled by, or is under common control with, Purchaser and (ii) that upon Purchaser's assignment the assignee assumes in writing, for Seller's benefit, all liabilities of Purchaser under this Agreement and reaffirms all of the representations and warranties contained in Section 5.3 hereof with respect to the assignee, except that the 51 representations and warranties may be appropriately modified in the event the assignee is a limited partnership, a limited liability company or corporation, and a counterpart of such assignment and assumption is delivered to Seller. Following any such assignment made with Seller's consent, Purchaser named herein shall be released of any further liability hereunder. This Agreement is made for the sole and exclusive benefit of the parties hereto and their respective successors and assigns; no third party is intended to have or shall have any rights under this Agreement. Section 10.4 Interpretation. 10.4.1 This Agreement represents the entire agreement between the parties hereto and shall not be modified or affected by any offer, proposal, statement or representation, oral or written, made by or for either party in connection with the negotiation of the terms hereof. No future modification, termination or amendment of this Agreement may be made, except by written agreement executed by the parties hereto. 10.4.2 No failure by the parties hereto to insist upon the strict performance of any covenant, duty, agreement or condition of this Agreement or to exercise any right or remedy upon a breach thereof shall constitute a waiver of any such right or remedy or any other covenant, agreement, term or condition. Any party to this Agreement may by written notice waive any of its rights or any conditions to its obligations hereunder, or any duty, obligation or covenant of any other party hereto. 10.4.3 If any provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable to any extent, 52 the remainder of this Agreement and the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the fullest extent permitted by law. 10.4.4 Use of the terms "include," "including," or "includes," followed by specific examples shall not be deemed to limit the object of the reference to the specific examples. 10.4.5 The masculine, feminine or neuter pronouns used herein shall be interpreted without regard to gender, and the use of the singular or plural shall be deemed to include the other whenever the context so requires. The headings in this Agreement are inserted for convenience of reference only and shall not be a part of or control or affect the meaning of this Agreement. 10.4.6 The validity, construction and enforceability of this Agreement shall be governed in all respects by the laws of the State of New York, without regard to its conflict of laws rules. 10.4.7 All provisions of this Agreement which are expressly stated to survive the Closing, shall not merge with, be extinguished or otherwise affected by any of the closing documents. Section 10.5 Joint Cooperation. Upon obtaining knowledge of any event which could give rise to a claim of indemnity under this Agreement, the party seeking indemnification shall promptly notify the other party of that event. If such claim or demand relates to a claim or demand asserted by a third party, the indemnifying party shall have the right, at its expense, to employ counsel reasonably 53 acceptable to the indemnified party, except that in the case of a claim covered by insurance, maintained by the indemnifying party, counsel designated by the insurance company of the indemnifying party shall be deemed acceptable, and the indemnified party shall have the right, but not the obligation, to participate in the defense of any such claim or demand. So long as the indemnifying party is defending such claim or demand in good faith, the indemnified party will pay its own attorney fees for participating in such defense and will not settle such claim or demand without the indemnifying party's consent. The indemnified party shall make available to the indemnifying party all records and other materials reasonably required by it in contesting a claim or demand asserted by a third party against the indemnified party and shall cooperate in the defense thereof. The parties shall make their records avail able to each other to the extent required to comply with any audit or other review of a party's records or tax returns by a governmental agency. Section 10.6 Publicity. Neither Purchaser nor Seller shall announce or disclose publicly the terms or provisions hereof without the prior written approval of the other party, except as such disclosure may be required by law and except that this provision shall not prohibit either party from disclosing such terms or provisions to its attorneys, accountants, lenders, bankers, financial advisors, investors or any other advisor or consultant. Neither Seller nor Purchaser shall record this Agreement or any evidence thereof in the public records of the county in which the Real Property is located. Simultaneously with the execution of this Agreement, Seller shall deliver a letter to Seller's Broker and Purchaser shall deliver a letter to Purchaser's Broker 54 requesting that each such Broker not announce or disclose the terms or provisions hereof without the prior written approval of Seller and Purchaser and shall use reasonable efforts to obtain such agreement from each of their Brokers. Section 10.7 Notices. All elections, notices and other communications to be given hereunder by either party to the other shall be in writing and sent by personal delivery, reliable overnight courier with evidence of receipt, or by facsimile transmission (commonly known as "fax") (with confirmation by one of the other methods of notice), addressed: If to Seller: 7 West Associates LLC c/o Devon Properties One Penn Plaza - 40th Floor New York, NY 10119 Attention: Joseph R. Wenk Fax No.: (212) 971-9283 with a copy to Seller's Counsel: Joseph E. Browdy, Esq. Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Fax No.: (212) 373-2042 If to Purchaser: Health and Retirement Properties Trust 400 Centre Street Newton, MA 02158 Attention: David J. Hegarty Fax No.: (617) 332-2261 with a copy to Purchaser's Counsel: Jennifer B. Clark, Esq. Sullivan & Worcester LLP One Post Office Square Boston, MA 02109 Fax No.: (617) 338-2880 55 If to Escrow Agent: Paul, Weiss, Rifkind, Wharton & Garrison 1285 Avenue of the Americas New York, NY 10019-6064 Attention: Joseph E. Browdy, Esq. Fax No.: (212) 373-2042 or at such other addresses as the parties may designate to the other by written notice in the manner herein provided. Any such notices or elections may be given by Seller's or Purchaser's counsel and shall be effective upon receipt or refusal thereof. Section 10.8 Exculpations. 10.8.1 The obligations of Seller under or with respect to this Agreement and any instruments executed pursuant hereto shall not constitute personal obligations of Seller or its members or their respective directors, officers, employees or agents, and shall not create or involve any claim against, or personal liability on the part of, any of them, and Purchaser, and anyone claiming by, through or under Purchaser, agrees to look solely to Seller's interest in the Property and/or any proceeds arising therefrom (including all payments made with respect to the proceeds from the Purchase Price) for satisfaction of any liability of Seller under or in respect of this Agreement or any such instruments and will not seek recourse against such parties, or any of them, or any of their personal assets for such satisfaction. The foregoing shall not be deemed to prohibit the remedy of specific performance where expressly provided for in this Agreement. 10.8.2 The Declaration of Trust of Purchaser, a copy of which is duly filed with the Department of Assessments and Taxation of the State of Maryland, provides that the name "Health and Retirement Properties Trust" refers to 56 the trustees under such Declaration of Trust collectively as trustees, but not individually or personally, and that no trustee, officer, shareholder, employee or agent of Purchaser shall be held to any personal liability, jointly or severally, for any obligation of, or claim against, Purchaser. All persons dealing with Purchaser in any way shall look only to the assets of Purchaser for the payment of any sum or the performance of any obligation. 10.8.3 The provisions of this Section 10.8 shall survive the Closing or any termination of this Agreement. Section 10.9 Attorney's Fees. In the event of any litigation between the parties hereto with respect to their rights and obligations hereunder, the reasonable attorneys' fees and costs of the party successful in such action will be borne by the party which is the losing party in such litigation. Section 10.10 Counterparts. This Agreement may be executed and delivered in counterpart copies, all of which together will constitute one executed original agreement. 57 IN WITNESS WHEREOF, Seller and Purchaser have executed this Agreement as of the day and year first above written. SELLER: 7 WEST ASSOCIATES LLC By Orchid Properties, Inc., its sole member By: /s/ Robert H. Rodgers, Jr. Name: Robert H. Rodgers, Jr. Title: Vice President PURCHASER: HEALTH AND RETIREMENT PROPERTIES TRUST By: /s/ Ajay Saini Name: Ajay Saini Title: Treasurer and C.F.O. THE UNDERSIGNED IS SIGNING SOLELY TO EVIDENCE ITS CONSENT TO ACT AS ESCROW AGENT UPON AND SUBJECT TO THE TERMS OF SECTION 6.3 OF THIS AGREEMENT: PAUL, WEISS, RIFKIND, WHARTON & GARRISON By: /s/ Mitchell J. Berg Mitchell J. Berg Partner The schedules to this agreement have been omitted pursuant to Regulation S-K, Item 601(b)(2). The contents of such schedules are identified on the List of Exhibits which is a part of the agreement. The Company undertakes to provide such schedules to the Securities and Exchange Commission upon request. EX-2.2 3 Exhibit 2.2 CONTRIBUTION AGREEMENT (and Escrow Instructions) THIS CONTRIBUTION AGREEMENT is made and entered into as of April 20, 1997, by and between MEDICAL OFFICE BUILDINGS, LTD., a Washington limited partnership ("Seller"), and HEALTH AND RETIREMENT PROPERTIES TRUST, a Maryland real estate investment trust ("Buyer"). R E C I T A L S A. CARLYLE REAL ESTATE LIMITED PARTNERSHIP IX, an Illinois limited partnership ("Carlyle"), and Seller are the sole partners in WRIGHT-CARLYLE PARTNERS, a California general partnership ("WCP"), which is governed by those certain Articles of Partnership of Wright-Carlyle Partnership dated as of December 27, 1979 (the "WCP Partnership Agreement") between Carlyle and Seller. B. WCP is the tenant under that certain Lease dated as of February 1, 1977 between Howard S. Wright Development Co., a Washington corporation ("Wright"), as landlord, and Seller, as tenant, as amended by (1) that certain First Amendment of Lease dated as of July 16, 1979 by and between The Prudential Insurance Company of America, a New Jersey corporation ("Prudential"), as assignee of Wright, as landlord, and Seller, as tenant; (2) that certain Second Amendment of Lease dated as of December 19, 1985 between Prudential, as landlord, and WCP, as assignee of Seller, as tenant; and (3) that certain Third Amendment to Lease dated as of October 1, 1996 between Prudential, as landlord, and WCP, as tenant (such ground lease and all amendments thereto being hereinafter individually and collectively called "Ground Lease"). C. Prudential is the present owner of the fee interest in the real property which is encumbered by the Ground Lease, which real property is more particularly described on Exhibit "A" attached hereto and made a part hereof (the "Land"). D. WCP is the owner of an option to purchase the fee interest of Prudential in the Land pursuant to that certain Option Agreement dated as of October 1, 1996 (the "Land Option Agreement") between Prudential and WCP. The Option Agreement requires the execution of a Purchase and Sale Agreement in the form attached thereto as Exhibit "B" (the "Land Purchase Agreement") in order to consummate the purchase of the Land. E. On or about March 20, 1997, WCP and Arden Realty Limited Partnership, a Maryland limited partnership, entered into a Purchase Agreement and Joint Escrow Instructions (the "WCP/Arden Agreement") pursuant to which WCP agreed to sell the Property for cash. On or about the date hereof, Seller exercised its right of first opportunity under Section 6.2D of the WCP Partnership Agreement and, in accordance therewith, Seller will acquire Carlyle's partnership interest in WCP (the "Partnership Interest") which acquisition Seller intends to consummate substantially on the terms of the proposed Purchase Agreement (the "MOBL/Carlyle Agreement"), a copy of which has previously been delivered to Buyer. As a consequence of the exercise of such right of first opportunity, the WCP/Arden Agreement terminates by its terms. F. WCP owns certain Property (as defined below). G. Seller and Buyer desire, simultaneously upon acquisition of the Partnership Interest by Seller or its nominee, to form a Delaware limited partnership ("New Partnership"), in which Buyer or its nominee shall hold a 1% general partner interest and a 98% limited partner interest and Seller shall hold a 1% limited partner interest, to which partnership Seller shall contribute the Property and certain obligations and Buyer shall contribute cash, all subject to and upon the terms and conditions hereinafter set forth. NOW, THEREFORE, in consideration of the mutual undertakings of the parties hereto, it is hereby agreed as follows: 1. Acquisition of the Partnership Interest. Seller shall acquire or cause its nominee to acquire the Partnership Interest subject to the Prudential Loan from Carlyle in accordance with the MOBL/Carlyle Agreement, for the purpose of contributing the Property to New Partnership as contemplated by this Agreement. Seller's purchase of the Partnership Interest shall shall be funded by Buyer as provided in Section 2 below. 1.1 Transfer of Property. Seller, immediately following acquisition of the Partnership Interest, shall cause WCP to contribute to New Partnership, and New Partnership shall acquire from Seller, subject to all the terms and conditions hereof, all of the following described property (collectively, the "Property"): (a) Leasehold Estate. All of WCP's right, title and interest in the Ground Lease; (b) Land. All of WCP's right, title and interest in the Land Option Agreement; (c) Improvements. All buildings, structures, improvements and fixtures on the Land belonging to WCP (collectively, the "Improvements"); 2 DBLA-179348L.6 (d) Easements. All easements, interests in roadways, strips and rights appurtenant to the Land; (e) Leases. All leases and agreements demising space in or providing for the use or occupancy of the Improvements (collectively, the "Leases"); (f) Licenses. To the extent assignable, all of WCP's right, title and interest in and to all licenses, permits, rights, contracts, water rights, mineral rights, privileges and appurtenances pertaining to any of the foregoing; (g) Personal Property. All of WCP's right, title and interest in and to all furniture, equipment, supplies, tools and machinery set forth on Exhibit "B" attached hereto and made a part hereof, together with all of WCP's right, title and interest in and to any plans, permits or drawings located on or pertaining to the Land or Improvements and belonging to WCP (collectively, the "Personal Property"); and (h) Miscellaneous Rights. All of WCP's right, title and interest in and to any building tradenames used in connection with the Land or Improvements (but only to the extent that the same are not trademarks or trade names of WCP, any of its partners or any of its or their affiliated or related entities), warranties (including those related to construction or fabrication of the Improvements), telephone exchange numbers, advertising materials, plans and specifications, governmental approvals and development rights related to the Land or Improvements. 1.2 Treatment as Contribution. Buyer and Seller intend that the contribution by Seller to New Partnership shall shall be governed by Section 721(a) of the Internal Revenue Code of 1986, as amended (the "Code"). 2. Consideration. As consideration for the foregoing, Buyer shall (a) contribute to New Partnership, on the Closing Date (as hereinafter defined), an amount, in cash, equal to $47,000,000 and (b) cause Buyer or one of its affiliates to make a first mortgage loan (the "HRPT Loan") to New Partnership in an amount equal to $59,000,000. The HRPT Loan shall be for a term of not less than 10 years, payable interest only at 10% per annum in monthly installments. Concurrently, MOBL and some of its constituant partners shall execute a guaranty of the payment by New Partnership of the HRPT Loan, which guaranty shall be in the form of Exhibit "C" attached hereto (the "Guaranty"). The HRPT Loan shall prohibit prepayment of any portion of the principal thereof to an amount below $22,000,000, except to the extent New 3 DBLA-179348L.6 Partnership obtains replacement financing of not less than $22,000,000, repayment of which can be guaranteed by the Guarantees or in connection with a sale of the Property. The sums contributed to New Partnership by Buyer as described above (the "New Partnership Funds") shall be used to pay (i) the outstanding balance of principal, interest and any other sums accrued or payable on the Closing Date under the Prudential Loan (the "Prudential Payoff Amount"); (ii) the Purchase Price and the brokerage fee payable by Seller under the MOBL/Carlyle Agreement; (iii) the Purchase Price, as such term is used in the Land Option Agreement (the "Land Option Purchase Price"), (iv) the closing costs and (v) all prorations charged to Buyer or New Partnership hereunder; provided, however, that it is expressly understood and agreed that in no event shall the aggregate amount advanced by Buyer pursuant to clauses (i), (ii), and (iii) and closing costs payable by New Partnership pursuant to Section 5.6 exceed $106,000,000 and Seller shall contribute any amounts in excess thereof required to consummate the transactions contemplated hereby. 3. Deposit. Upon the "Opening of Escrow" (as hereinafter defined), Buyer shall deliver by wire transfer of immediately available federal funds an amount equal to $1,500,000 (which amount, together with all interest earned thereon, is herein called the "Escrow Deposit") to Chicago Title Company/Escrow Division, at its offices at 700 South Flower Street, Ninth Floor, Los Angeles, California, Attention: Ms. Rose Martinez which company, in its capacity as escrow holder hereunder, is called "Escrow Holder." Such amount shall be held by Escrow Holder as a deposit in accordance with the terms and provisions of this Agreement. The Escrow Deposit shall be invested by Escrow Holder in the following investments ("Approved Investments"): (i) United States Treasury obligations, (ii) United States Treasury-backed repurchase agreements issued by a major national money center banking institution reasonably acceptable to the Company, or (iii) such other manner as may be reasonably agreed to by Seller and Buyer. The Escrow Deposit shall be disposed of by Escrow Holder only as provided in this Agreement. 4. Conditions Precedent. The obligations and liabilities of the parties hereunder are subject to satisfaction of each of the following conditions precedent (any of which may be waived in writing by the party in whose favor such condition exists) on or before the applicable date specified for satisfaction of the applicable condition. If any of such conditions are not satisfied (or waived) pursuant to the terms of this Agreement, then this Agreement shall terminate 4 DBLA-179348L.6 and, in connection with any such termination made in accordance with this paragraph, Seller and Buyer shall be released from further obligation or liability hereunder (except for those obligations and liabilities which, pursuant to the terms of this Agreement, survive such termination), and Buyer shall be entitled to a return of the Escrow Deposit. Close of Escrow (as defined below) shall constitute approval by each party of all matters to which such party has a right of approval and a waiver of all conditions. 4.1 Title Matters. 4.1.1 Title Report. A Pro forma title policy no. 6144435 X59 dated February 10, 1997 ("Pro Forma") covering the Property issued by Chicago Title Insurance Company (such company, in its capacity as title insurer hereunder, is herein called the "Title Company") has been delivered to Buyer and is attached hereto as Exhibit "D". In addition, Seller has delivered an updated ALTA survey dated as of November 26, 1996 ("Updated Survey") of the Property from Psomas and Associates. Buyer has approved the Title Report and the Updated Survey with the changes noted in Exhibit "D" attached hereto. Approval by Buyer of any additional exceptions to title or survey matters which may be disclosed after the date of this Agreement shall be a further condition precedent to Buyer's obligation to purchase the Rights. If any such additional exceptions to title or survey matters are disclosed, Seller shall give Buyer prompt written notice thereof. Unless Buyer gives written notice that it disapproves such additional exceptions to title or survey matters, stating the additional exceptions or survey matters so disapproved, on or before the earlier to occur of the Closing Date (provided Seller has given Buyer 2 business days prior written notice thereof) or 10 days after receipt of Seller's written notice of such additional exceptions or survey matters (together with copies of the underlying documents evidencing the same), Buyer shall be deemed to have approved said additional exceptions or survey matters. If, for any reason, on or before the Closing Date (as defined below) Seller does not cause any exceptions to title or survey matters which Buyer disapproves (to the extent Buyer is permitted hereunder to so disapprove) to be removed at no cost or expense to Buyer (Seller having the right but not the obligation to do so), then, at Buyer's option (exercised by giving written notice thereof on or before the Closing Date), this Agreement shall terminate. Notwithstanding anything to the contrary contained herein, Seller shall be obligated to remove (or cause the Title Company to insure over) (i) any mechanics' liens for work performed by or on behalf of WCP at the Property prior to the Closing and (ii) any tax or judgment liens against WCP or Seller and any other encumbrances which may be satisfied 5 DBLA-179348L.6 by the payment of a liquidated sum other than the Prudential Loan. 4.1.2 Title Policy. It shall be a condition to Buyer's obligations to close hereunder that on the Closing Date the Title Company shall agree to issue to New Partnership an ALTA extended coverage (Form 1970) owner's title insurance policy ("Owner's Policy") in the form (and with the endorsements) of the Pro Forma with amendments provided in Exhibit "D" and with liability in an amount reasonably determined by Buyer, and that the updated survey be certified to New Partnership. 4.2 Due Diligence Matters 4.2.1 Completed Due Diligence. Buyer acknowledges that it has reviewed and inspected all matters respecting the Property, including such environmental and engineering tests and reports (including a Phase I environmental audit and a structural and curtain wall engineering report) and other inspections of the Property and review of applicable federal, state and local laws, ordinances, rules, regulations, permits, licenses, appraisals, financing documents, approvals and orders and any other matters as Buyer deemed necessary or appropriate in its sole discretion, in order to determine whether the Property is suitable for Buyer's intended use and purpose. By executing this Agreement, Buyer hereby acknowledges that Buyer has approved its due diligence examinations, reviews and inspections and has elected to proceed with the acquisition of the Property in accordance with the terms of this Agreement. Without limitation on the foregoing, Buyer acknowledges that the consideration given by Buyer hereunder has been agreed upon after the completion, and fully reflective of, Buyer's due diligence reviews, examinations and inspections. 4.2.2 Conduct of Due Diligence Reviews. All due diligence examinations, reviews and inspections conducted by Buyer have been and shall be at Buyer's sole cost and expense (including, without limitation, those related to appraisers, inspectors, auditors and environmental and engineering consultants). Buyer has at all times conducted its due diligence and environmental reviews, inspections and examinations in a manner so as to not cause damage, loss, cost or expense to Seller, WCP or the Property, and Buyer will indemnify, defend and hold Seller, WCP and the Property harmless from and against any such damage, loss, cost or expense. The foregoing indemnification obligation shall survive the closing of the transactions contemplated herein or the earlier termination of this Agreement until the expiration of the Survival Period (as hereinafter defined), 6 DBLA-179348L.6 at which time such obligations (and any cause of action not then in litigation) shall terminate. Buyer shall promptly deliver to Seller true, accurate and complete copies of any written reports relating to the Property prepared for or on behalf of Buyer by any third party and, in the event of termination hereunder, shall return all documents and other materials furnished by Seller hereunder. Buyer shall keep all information or data received or discovered in connection with any of the inspections, reviews or examinations strictly confidential. 4.3 Tenant Estoppel Certificates. Receipt of estoppel certificates ("Tenant Estoppel Certificates") from (i) each tenant occupying 3,000 or more rentable square feet identified on Exhibit "F" attached hereto and made a part hereof ("Required Tenants"), and (ii) a sufficient number of other tenants at the Property such that estoppel certificates shall have been received pursuant to clauses (i) and (ii) hereof with respect to not less than 80% of the total net rentable square footage of the Property covered by Leases in effect as of the Closing Date, shall be a condition precedent to Buyer's obligations hereunder. Each Tenant Estoppel Certificate shall be substantially in the form previously delivered to Buyer (or if Seller, after using commercially reasonable efforts to obtain certificates in such form, is unable to obtain the same, then in the form, if any, prescribed in the applicable Lease or other operative document). Seller's sole obligation hereunder shall be to utilize commercially reasonable efforts to obtain such Tenant Estoppel Certificates from each tenant (not including any obligation to institute legal proceedings or to expend any monies therefor). If on or before the Closing Date such condition is not satisfied (or waived), then this Agreement shall terminate. Without limitation on the foregoing, if any Tenant Estoppel Certificate discloses material adverse matters which are not cured or satisfied by Seller on or before the Closing Date, then Buyer shall have the right to terminate this Agreement on or before the Closing Date. All such estoppel certificates shall be addressed to Buyer or shall permit reliance thereon by unidentified purchasers and lenders with respect to the Property. 4.4 Existing Loans. On the Closing Date, the Prudential Loan shall be concurrently prepaid and satisfied in full. 4.5 Land Purchase. On the Closing Date, concurrently with the Closing hereunder, New Partnership shall have acquired fee title to the Land pursuant to the Land Option Agreement. 4.6 Guarantees. Buyer shall have received Guarantees substantially in the form of Exhibit "C" attached hereto (the "Guarantees") executed by Seller and those of Seller's constituent partners who elect, in their sole and absolute discretion, to execute the Guarantees by which the signatories 7 DBLA-179348L.6 thereto shall agree to guaranty the HRP Loan, on terms and conditions set forth more fully therein. 4.7 New Partnership. Buyer and Seller shall have formed New Partnership substantially on the terms set forth in Exhibit "E" hereto, such partnership to be otherwise on terms and conditions reasonably satisfactory to Seller and Buyer. New Partnership shall execute supplementary escrow instructions to authorize the actions to be taken by New Partnership hereunder. 4.8 Partnership Elections. Seller shall cause WCP to make the election contemplated by Section 754 of the Code. 5. Escrow. On the first business day after execution of this Agreement, the parties shall deposit an executed copy of this Agreement (or a fully executed copy in counterparts) with Escrow Holder and Buyer shall, on the terms and conditions of Section 3, place the Escrow Deposit with Escrow Holder. Escrow Holder shall promptly execute this Agreement upon receipt of this Agreement (and the Escrow Deposit) and thereupon escrow hereunder (the "Escrow") shall be established (the foregoing being herein called the "Opening of Escrow"). This Agreement shall serve as the instructions to Escrow Holder to consummate the purchase and sale contemplated hereunder. Seller and Buyer agree to execute such additional and supplementary escrow instructions as may be reasonably appropriate to enable Escrow Holder to comply with the terms of this Agreement. If there is any conflict between the provisions of this Agreement and any such additional or supplementary escrow instructions, then, unless such additional or supplementary escrow instructions are executed by both Seller and Buyer, the terms of this Agreement shall control. The transactions contemplated herein shall be consummated through the Escrow. "Close of Escrow" shall occur on the Closing Date. The "Closing Date" shall be May 30, 1997 or such earlier date as shall be agreed upon by Seller and Buyer. The parties hereto shall make reasonable best efforts to cause a pre-closing into Escrow to occur on the business day prior to the Closing Date. The Closing Date shall occur concurrently with the acquisiton by Seller, or its nominee, from Carlyle of the Partnership Interest pursuant to the MOBL/Carlyle Agreement, the contribution of the Property to New Partnership by WCP at the request of Seller, the acquisition by New Partnership from Prudential of the Land pursuant to the Land Option Agreement, the payment in full by New Partnership of the Prudential Loan and the making by Buyer or its affiliate of the HRP Loan to New Partnership. 5.1 Deliveries to Escrow by Seller. Prior to the Closing Date, Seller shall deliver or cause to be delivered to Escrow Holder the following: 8 DBLA-179348L.6 5.1.1 Two original assignment and assumption agreements in respect of the Ground Lease ("Leasehold Assignment"), duly executed and acknowledged by WCP, in the form of Exhibit "I-1" attached hereto and made a part hereof; 5.1.2 Two original assignment and assumption agreements in respect of the Land Option Agreement ("Land Option Assignment"), duly executed by WCP, in a form approved by Seller and Buyer and fully executed "Hazardous Materials Indemnity Agreements", as defined in the Land Option Agreement, executed by Seller and Carlyle for delivery to Prudential; 5.1.3 Two bill of sale, assignment and assumption agreements ("General Assignment"), duly executed by WCP, in the form of Exhibit "I-2" attached hereto and made a part hereof; 5.1.4 A duly executed and acknowledged certificate regarding the "non-foreign" status of WCP and MOBL satisfying the requirements of Section 1445 of the Internal Revenue Code of 1986, as amended, and the regulations thereunder; 5.1.5 A duly executed "Withholding Exemption Certificate, Form 590" or a certificate issued by the California Franchise Tax Board, pursuant to the Revenue and Taxation Code Sections 18805 and 26131, stating either the amount of withholding required from WCP's or MOBL's proceeds or that WCP and MOBL are exempt from such withholding requirement; 5.1.6 Evidence reasonably satisfactory to Escrow Holder respecting the due organization of Seller and WCP and the due authorization and execution of this Agreement and the documents required to be delivered hereunder; 5.1.7 Original Guarantees duly executed by Seller and those of Seller's constituent partners who elect, in their sole and absolute discretion, to execute the Guaranty Agreement; 5.1.8 Security Deposits attributable to the leases (the "Security Deposits") held by WCP; 5.1.9 Seller's share of the closing costs described in paragraph 5.6 9 DBLA-179348L.6 hereof and prorations made hereunder; 5.1.10 Such additional documents as may be reasonably required by Escrow Holder or Buyer in order to consummate the transactions hereunder (provided the same do not materially increase the costs to, or liability or obligations of, Seller in a manner not otherwise provided for herein). 5.2 Deliveries to Escrow by Buyer. Prior to the Closing Date, Buyer shall deliver or cause to be delivered to Escrow Holder the following: 5.2.1 Buyer's contribution to New Partnership and the proceeds of the HRPT Loan described in Section 2 hereof; 5.2.2 Two original Leasehold Assignments, duly executed and acknowledged by New Partnership; 5.2.3 Two original Land Option Assignments, duly executed by New Partnership; 5.2.4 One original of the Note evidencing the HRPT Loan, duly executed by New Partnership and a Deed of Trust securing the HRPT Note (the "HRPT Deed of Trust"), duly executed and acknowledged by New Partnership; 5.2.5 Two original General Assignment and Assumption Agreements, duly executed by New Partnership; 5.2.6 Evidence reasonably satisfactory to Escrow Holder respecting the due organization of Buyer and the due authorization and execution of this Agreement and the documents required to be delivered hereunder; 5.2.7 Buyer's share of the closing costs described in paragraph 5.6 hereof and prorations made hereunder; 5.2.8 Such additional documents as may be reasonably required by Escrow Holder in or to consummate the transactions hereunder (provided the same do not materially increase the costs to, or liability or obligations of, Buyer in a manner not otherwise provided for herein). 10 DBLA-179348L.6 5.3 Deliveries to Buyer by Seller. On or before the Closing Date, Seller shall deliver or cause to be delivered to Buyer the following: 5.3.1 A certificate updating the representations and warranties of Seller contained in paragraph 7.1.2 hereof as of the Closing Date (with any changes thereto being noted on such certificate); 5.3.2 Evidence reasonably satisfactory to Buyer respecting the due organization of Seller and WCP and the due authorization and execution of this Agreement and the documents required to be delivered hereunder and UCC searches confirming that there are no outstanding security interests affecting the Property; 5.3.3 Such additional documents as may be reasonably required by Buyer in order to consummate the transactions hereunder (provided the same do not materially increase the costs to, or liability or obligations of, Seller in a manner not otherwise provided for herein). 5.4 Deliveries to Seller by Buyer. On or before the Closing Date, Buyer shall deliver or cause to be delivered to Seller the following: 5.4.1 A Certificate updating the representations and warranties of Buyer contained in paragraph 7.2 hereof as of the Closing Date (with any changes thereto being noted on such certificate); 5.4.2 Evidence reasonably satisfactory to Seller respecting the due organization of Buyer and the due authorization and execution of this Agreement and the documents required to be delivered hereunder; and 5.4.3 Such additional documents as may be reasonably required by Seller in order to consummate the transactions hereunder (provided the same do not materially increase the costs to, or liability or obligations of, Buyer in a manner not otherwise provided for herein). 5.5 The Closing. Escrow Holder shall close the Escrow on the Closing Date by (i) causing the Leasehold Assignment to be recorded in the office of the County Recorder of Los Angeles County, (ii) delivering the HRPT Note to Buyer, (iii) delivering an amount equal to the sum of (y) the Prudential Payoff Amount and (z) the Land Option Purchase Price to Prudential pursuant to Prudential escrow instructions, (iv) delivering the Purchase Price under the MOBL/Carlyle Agreement to Carlyle, (v) delivering the brokerage fee payable under the MOBL/Carlyle Agreement to Richard Ellis, LLC as directed by Seller and Buyer, (vi) 11 DBLA-179348L.6 delivering the Security Deposits to New Partnership, (vi) delivering the Deposit to Buyer and (vi) causing the HRPT Deed of Trust to be recorded in the office of the County Recorder of Los Angeles County WHEN AND ONLY WHEN each of the following conditions has been satisfied: 5.5.1 All documents described in paragraphs 5.1 and 5.2 hereof have been delivered to Escrow Holder; 5.5.2 Title Company is prepared to deliver to New Partnership the Owner's Policy in the form (and with the endorsements) of the Pro Forma; 5.5.3 All conditions to the acquisition by New Partnership of fee title to the Land pursuant to the Land Option Agreement have been satisfied; and 5.5.4 All conditions to the pay-off and release of the Prudential Loan have been satisfied. 5.6 Closing Costs. Seller shall pay one-half of the escrow fees, as well as one-half of any escrow termination fees of Escrow Holder. Buyer shall pay (i) one-half of the escrow fees, as well as one-half of any escrow termination fees of Escrow Holder and (ii) all other costs and expenses related to Buyer's due diligence examinations, reviews and inspections (including, without limitation, those related to any engineering reports). Subject to the limitations set forth in Section 2, New Partnership shall pay (x) the transfer tax payable on recordation of the Leasehold Assignment and (y) the title insurance premium attributable to the Owner's Policy. Each party shall pay its own legal and accounting fees. 5.7 Prorations. The following prorations shall be made as of the Closing Date (on the basis of the actual number of days elapsed over the applicable period): (i) All real estate and personal property taxes and assessments on the Property for the current year. In no event shall Seller be charged with or be responsible for any increase in the taxes on the Property resulting from the sale of the Property or from any improvements made or leases entered into on or after the Closing Date. (ii) All fixed and additional rentals under the Leases, and other tenant charges. Seller shall deliver or provide a credit in an amount equal to all prepaid rentals for periods after the Closing Date and the Security Deposits held by WCP (to the extent not applied or forfeited prior to the Closing Date or delivered into Escrow) to New Partnership on the Closing Date. If any security deposits are in the form of certificates of deposit, letters of credit or the like, such instruments shall 12 DBLA-179348L.6 be assigned to New Partnership (and Seller and New Partnership shall reasonably cooperate in causing the transfer of the same). Rents which are delinquent as of the Closing Date shall not be prorated on the Closing Date. New Partnership shall include such delinquencies in its normal billing and shall use commercially reasonable efforts to collect the same after the Closing Date (but New Partnership shall not be required to litigate or declare a default in any Lease). To the extent New Partnership receives rents (other than "Additional Amounts", as hereinafter defined) on or after the Closing Date, such payments shall be applied first toward the reasonable third party costs of collection paid by New Partnership with respect thereto, next toward then current rent owed to New Partnership in connection with the applicable Lease for which such payments are received, and finally toward any excess monies received shall be applied toward the payment of any delinquent rents, with Seller's share thereof being promptly delivered to Seller. New Partnership may not waive any delinquent rents nor modify a Lease so as to reduce or otherwise affect amounts owed thereunder for any period in which Seller is entitled to receive a share of charges or amounts without first obtaining Seller's written consent. Common area charges, taxes, operating expense and other similar expense reimbursement obligations of the tenants under the Leases, as well as any percentage payable thereunder (collectively, "Additional Amounts") shall be prorated effective as of the Closing Date. The parties will finalize such Additional Amounts prorations on the Closing Date or as soon as practicable thereafter (but in any event not later than three (3) months after the Closing Date). Proration of expense items contained in the calculation of the Additional Amounts shall be made on the basis that Seller shall be entitled to reimbursement of the applicable expenses incurred by Seller (annualized or otherwise appropriately apportioned) prior to the Closing Date. To the extent that, based on such determinations, Seller has received amounts in excess of the amount due Seller, then Seller shall deliver such excess amount to Buyer on the Closing Date (or if determined thereafter then within 15 days of such determination). To the extent that Seller has received an amount less than the amount so due, Buyer shall deliver such shortfall amount to Seller on the Closing Date (or if determined thereafter, then within 15 days of such determination). The amount of percentage rent to be allocated to Seller with respect to each Tenant Lease for the lease year ("the "Current Lease Year") in which the Closing Date occurs shall be that amount equal to (i) the amount by which (A) the tenant's gross receipts (to the extent taken into account in determining percentage rent under such Tenant Lease) for that portion of such Current Lease Year occurring prior to the Closing Date exceed (B) the "Allocable Base Amount", multiplied by (ii) the percentage specified in such Tenant Lease to be used in determining such tenant's percentage rent for such Current Lease Year. The "Allocable Base Amount" means that portion of the "Base Amount" for such Current Lease Year determined by multiplying such Base 13 DBLA-179348L.6 Amount for the entire Current Lease Year by a fraction, the numerator of which is the number of days in such Current Lease Year occurring prior to the Closing Date and the denominator of which is the number of days of such Current Lease Year. "Base Amount" is the amount specified in each Tenant Lease for such Current Lease Year that must be exceeded by the sales of the tenant during such Current Lease Year before such tenant shall be obligated thereunder to pay percentage rent for such Current Lease Year. Buyer shall not be obligated to pay or credit Seller any sum on account of the proration of percentage rent as aforesaid unless and until the percentage rent to be prorated as aforesaid shall be received by Buyer. Buyer shall reasonably cooperate with Seller in any collection efforts hereunder (but shall not be required to litigate or declare a default in any Lease). Buyer shall notify Seller of its collection efforts from time to time and shall not trade or exchange any such delinquent amount for any consideration. With respect to delinquent rents, Additional Amounts and any other amounts or other rights of any kind respecting tenants who are no longer tenants of the Property as of the Closing Date, Seller shall retain all rights relating thereto. (iii) All customary operating expenses incurred in the ordinary course of management and operation of the Property. (iv) It is acknowledged and agreed by Buyer that Buyer shall be responsible for all tenant improvement costs and leasing commissions attributable to (i) Leases identified as post 3/20/97 Leases on Exhibit "O", to the extent that such costs (or the obligation to pay the same) have been incurred and (ii) all other Leases executed prior to the Closing Date which have been approved by Buyer. (v) Any interest credit between April 28, 1997 and the Close of Escrow on the Prudential Loan shall be credited to Seller. (1) Calculation. The prorations and payments shall be made on the basis of a written statement submitted by Seller to Buyer and Escrow Holder two (2) days prior to the Close of Escrow and shall be subject to Buyer and Seller (which statement shall include a list of delinquent rental amounts as of the Closing Date). In the event any prorations or apportionments made under this subsection 8.7.2 shall prove to be incorrect for any reason, then any party shall be entitled to an adjustment to correct the same. Any item which cannot be finally prorated because of the unavailability of information shall be tentatively prorated on the basis of the best data then available and reprorated when the information is available. 14 DBLA-179348L.6 6. Condemnation or Destruction of the Property. In the event that, after the date hereof but prior to the Closing Date, (i) any material portion of the Property is taken pursuant to eminent domain proceedings or (ii) any of the Improvements are materially damaged or destroyed by any casualty, Buyer may, by written notice to Seller, terminate this Agreement; provided, however, that in the event this Agreement shall not be so terminated, all insurance proceeds and/or awards paid or payable on account thereof shall be credited to Buyer. If any casualty occurs as to which an insurance deductible applies or as to which the proceeds of insurance are insufficient, in Buyer's reasonable determination, to restore, repair and/or rebuild the Property, Buyer may terminate this Agreement. 7. Representations and Warranties. 7.1 Representations and Warranties of Seller. 7.1.1 General Disclaimer. Except as specifically set forth in paragraph 7.1.2 hereof or elsewhere in this Agreement, the transfer of the Property hereunder is and will be made on an "as is" basis, without representations and warranties of any kind or nature, express, implied or otherwise, including, but not limited to, any representation or warranty concerning title to the Property, the physical condition of the Property (including, but not limited to, the condition of the soil or the Property), the environmental condition of the Property (including, but not limited to, the presence or absence of hazardous substances on or respecting the Property), the compliance of the Property with applicable laws and regulations (including, but not limited to, zoning and building codes or the status of development or use rights respecting the Property), the financial condition of WCP or any other representation or warranty respecting any income, expenses, charges, liens or encumbrances, rights or claims on, affecting or pertaining to the Property or any part thereof. Buyer acknowledges that Buyer has examined, reviewed and inspected all matters which in Buyer's judgment bear upon the Property and its value and suitability for Buyer's purposes. Except as to matters specifically set forth in paragraph 7.1.2 hereof or elsewhere in this Agreement, Buyer will acquire the Property solely on the basis of its own physical and financial examinations, reviews and inspections and the title insurance protection afforded by the Owner's Policy. 7.1.2 Limited Representations and Warranties of Seller. Subject to the provisions of paragraph 7.1.1 above, Seller hereby represents and warrants to Buyer as follows: 15 DBLA-179348L.6 (a) Organization Etc. of Seller. Seller is a limited partnership duly formed and validly existing under the laws of the State of Washington and has all requisite power and authority to own and lease its properties and to carry on its business as presently conducted. The general partner of Seller is a limited partnership duly formed and validly existing under the laws of the State of Washington and has all requisite power and authority to own and lease its properties and to carry on its business as presently conducted. (b) Organization Etc. of WCP. WCP is a general partnership duly formed and validly existing under the laws of the State of California and has all requisite power and authority to own and lease it properties and to carry on its business as presently conducted. (b) Authorization. Seller and its general partner has all requisite power and authority to execute and deliver this Agreement and the other agreements and instruments to be executed and delivered by it hereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Seller of this Agreement and such other agreements and instruments has been duly and validly authorized by the general partner of Seller, and no other action or authorization on behalf of Seller is required in connection therewith. (c) Validity and Enforceability. This Agreement has been duly authorized, executed and delivered by Seller and constitutes and the other agreements and instruments to be executed and delivered hereunder by Seller, when executed and delivered by Seller, will constitute, legal, valid and binding obligations of Seller enforceable against Seller in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting the enforcement of creditors' rights generally or by general equitable principles. (d) No Conflict. Neither the execution and delivery of this Agreement by Seller nor the execution and delivery by Seller of the other agreements and instruments to be executed and delivered by it here under, nor the consummation of the transactions contemplated hereunder or thereunder, will (i) conflict with or result in a breach or violation of, or constitute a default under, or result in the creation of any lien, charge or encumbrance upon, any of the properties or assets of Seller pursuant to the WCP 16 DBLA-179348L.6 Partnership Agreement or any indenture, mortgage, lease, loan agreement or other agreement or instrument to which Seller is a party or by which it is bound or to which any of its properties or assets is subject or (ii) violate any law, statute, rule, regulation, judgment or decree applicable to Seller. Since the Ground Lease will terminate upon acquisition of the Land by New Partnership, no third party consents are required by the terms of any indenture, mortgage, lease, loan agreement or other agreement or instrument to which Seller is a party or by which it is bound or to which any of its properties or assets is subject for the execution and delivery of this Agreement or any other agreement or instrument to be executed and delivered by Seller hereunder or the consummation of the transactions provided for herein or therein. (e) No Governmental Consent or Approval Required. No consent, approval or authorization of, or declaration to or filing with, any governmental or regulatory authority is required for the valid execution and delivery by Seller of this Agreement or any other agreement or instrument to be executed and delivered by Seller hereunder or the consummation of the transactions provided for herein or therein. (f) Leases. (1) There are no leases, occupancy rights, licenses, amendments or agreements, oral or written, now in effect with respect to occupancy at the Property, except those listed on the lease summary attached as Exhibit "K" and made a part hereof (collectively, the "Leases"). WCP is not in default of any landlord obligations under any Leases and, except as disclosed on Exhibit "J", WCP has completed all tenant improvement work required under the Leases or any work letter executed by WCP in connection therewith. (2) As of the Closing Date, there shall be no commissions or costs for tenant improvements owing on or with respect to any Leases in effect as of the Closing Date, except for extensions, options or renewals of existing Leases (provided that said commissions are set forth in the applicable Lease or in Exhibit "K" attached hereto) or in connection with new Leases which are approved by Buyer. (3) All of the Leases are in full force and effect and none of them has been modified or amended except as set forth in Exhibit "K"; the rents set forth 17 DBLA-179348L.6 in Exhibit "K" are being collected on a current basis and there are no rent arrearages exceeding one month except as set forth in Exhibit "K" attached hereto; and there are no security deposits except as set forth in Exhibit "K". (4) Neither WCP nor Seller has sent written notice to any tenant claiming that such tenant is in default, which default remains uncured, and no action or proceeding instituted against WCP or Seller by any tenant of the Property is presently pending in any court. (5) Notwithstanding anything to the contrary contained herein, Seller shall have no obligation or liability to Buyer with respect to any of the foregoing matters which shall be confirmed as correct in any Tenant Estoppel Certificate delivered hereunder. (g) Prudential Matters. WCP is not in monetary default or, to Seller's knowledge, material non-monetary default under the Prudential Loan or the Land Option Agreement. (h) Litigation. There is no pending (nor, to Seller's knowledge, has WCP or Seller received any written notice of any threatened) action, litigation, condemnation or other proceeding against the Property or against WCP or Seller with respect to the Partnership Interest. (i) Compliance. Neither WCP nor Seller has received any written notice from any governmental authority having jurisdiction over the Property to the effect that the Property is not in compliance with applicable laws and ordinances. (j) Service Agreements. Other than those which are cancelable on 30 days' notice, neither WCP nor Seller has entered into any service agreements or contracts ("Service Agreements") or other agreements, oral or written (other than as set forth in this Agreement) relating to the Property which will be in force on the Closing Date, except as described in Exhibit "L" attached hereto, and neither WCP nor Seller has received any written notice of any material default thereunder that remains uncured. (k) Hazardous Substances. Except as otherwise disclosed in writing to Buyer, neither WCP nor Seller has received any written notice from any governmental agency or third party professional consultants that the 18 DBLA-179348L.6 Property contains any Hazardous Material which would, as of the date this representation is made, give rise to an "Environmental Claim" or "Environmental Compliance Obligation" (as hereinafter defined). In addition, except as otherwise disclosed in writing to Buyer, the Property does not contain asbestos, PCB or other materials known to Seller to have, as of the date of this Agreement, to have been determined to be hazardous by any Governmental Agency (other than any Excluded Items) nor does the Property contain, to Seller's knowledge, any underground storage tank which has not been disclosed in writing to Buyer. The term "Hazardous Material" means: (I) asbestos, PCB, urea formaldehyde, any chemicals, flammable substances or explosive, any radioactive materials (including radon), any hazardous wastes or substances, any toxic wastes or substances, or any other materials or pollutants which have, as of the date of this Agreement, been determined to be hazardous by any applicable Federal, state, or local law or by regulations of the U.S. Environmental Protection Agency, the U.S. Department of Energy, the U.S. Department of Labor, the U.S. Department of Transportation, and/or any instrumentality authorized to regulate materials and substances in the environment which has jurisdiction over the Property ("Environmental Agency"), or (II) any oil, petroleum or petroleum or petroleum derived substance, any drilling fluids, produced waters and other wastes associated with the exploration, development, or production of crude oil, which materials listed under items (I) and (II) above cause the Property to be in material violation of any applicable environmental laws or the regulations of any Environmental Agency. The term "Hazardous Material" does not include (1) motor oil and gasoline contained in vehicles not used primarily for the transport of motor oil or gasoline, or (2) materials which are stored or used in the ordinary course of a tenant's occupancy at (or Seller or Seller's managing agents' operation of) the Property, or which are stored, used, held, or disposed of in compliance with all applicable laws or ordinance, or (3) any other materials, items and matters which are present in connection with, or which otherwise result from, the use or occupancy of the Property for medical purposes (it being understood and agreed that Seller makes no representations or warranties of any kind or nature respecting the presence of any such medical-related materials, items or matters). The term "Environmental Claim" means any third-party claim for personal injury, death and/or property damage (other than property damage to the Property themselves) made, asserted or prosecuted by or on behalf of any person or 19 DBLA-179348L.6 entity, including, without limitation, any governmental entity, or any present or former tenant, and arising or allegedly arising out of any Hazardous Material which was present or released in, on, under, or about the Property (or any part). The term "Environmental Compliance Obligation" means any requirement imposed by an Environmental Agency to bring the Property into compliance with applicable Federal, state, and local laws and regulations directly relating to the existence in, on, under or about the Property of any Hazardous Material. (l) Insurance. Attached hereto as Exhibit "M" is a summary of the insurance currently carried by WCP with respect to the Property. (m) Tax Bills. Attached hereto as Exhibit "N" are copies of current tax bills with respect to the Property. (n) Compliance with Law. To Seller's knowledge, the Property and the use and operation thereof does not violate any material federal, state, municipal and other governmental statutes, ordinances, by-laws, rules, regulations or any other legal requirements, including, without limitation, those relating to construction, occupancy, zoning, adequacy of parking, environmental protection, occupational health and safety and fire safety applicable thereto; and there are presently in effect all material licenses, permits and other authorizations necessary for the current use, occupancy and operation thereof. Neither Seller nor WCP has received written notice of any threatened request, application, proceeding, plan, study or effort which would materially adversely affect the present use or zoning of the Property or which would modify or realign any adjacent street or highway. (o) Seller's Knowledge. As used herein, the terms "Seller's knowledge", "known to Seller" or other similar phrases means the present actual knowledge of Douglas Norberg and Ronald Blake (which individuals Seller represents and warrants are or have been sufficiently involved and reasonably familiar with WCP). Such individuals shall not have any personal liability in connection herewith. 7.2 Representations and Warranties of Buyer. Buyer hereby represents and warrants to Seller as follows: 20 DBLA-179348L.6 7.2.1 Organization, Etc. Buyer is a real estate investment trust duly organized, validly existing and in good standing under the laws of the State of Maryland and has all requisite power and authority to own and lease its properties and to carry on its business as presently conducted. 7.2.2 Authorization. Buyer has all requisite power and authority to execute and deliver this Agreement and the other agreements and instruments to be executed and delivered by it hereunder and to consummate the transactions contemplated hereby and thereby. The execution, delivery and performance by Buyer of this Agreement and such other agreements and instruments has been duly and validly authorized by the trustees of Buyer, and no other action or authorization on behalf of Buyer is required in connection therewith. 7.2.3 Validity and Enforceability. This Agreement has been duly authorized, executed and delivered by Buyer and constitutes and the other agreements and instruments to be executed and delivered hereunder by Buyer, when executed and delivered by Buyer, will constitute, legal, valid and binding obligations of Buyer enforceable against Buyer in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or other laws relating to or affecting the enforcement of creditors' rights generally or by general equitable principles. 7.2.4 No Conflict. Neither the execution and delivery of this Agreement by Buyer nor the execution and delivery by Buyer of the other agreements and instruments to be executed and delivered by it hereunder, nor the consummation of the transactions contemplated hereunder or thereunder, will (i) conflict with or result in a breach or violation of, or constitute a default under, or result in the creation of any material lien, charge or encumbrance upon, any of the properties or assets of Buyer or the Declaration of Trust of Buyer or any material indenture, mortgage, lease, loan agreement or other agreement or instrument to which Buyer is a party or by which it is bound or to which any of its material properties or assets is subject or (ii) violate any material law, statute, rule, regulation, judgment or decree applicable to Buyer. No third party consents are required by the terms of any indenture, mortgage, lease, loan agreement or other agreement or instrument to which Buyer is a party or by which any of them is bound or to which any of their respective properties or assets is subject for the execution and delivery of this Agreement or any other agreement or instrument to be executed and delivered by Buyer hereunder 21 DBLA-179348L.6 or the consummation of the transactions provided for herein or therein which will not be obtained prior to Closing. 7.2.5 No Governmental Consent or Approval Required. No consent, approval or authorization of, or declaration to or filing with, any governmental or regulatory authority is required for the valid execution and delivery by Buyer of this Agreement or any other agreement or instrument to be executed and delivered by Buyer hereunder or the consummation of the transactions provided for herein or therein. 7.3 Survival. Any cause of action of a party for a breach of the foregoing representations and warranties shall survive until December 1, 1997, at which time such representations and warranties (and any cause of action resulting from a breach thereof not then asserted in writing or in litigation) shall terminate (such period ending on December 1, 1997 being herein called the "Survival Period"). Notwithstanding the foregoing, if Buyer shall have knowledge as of the Closing Date that any of the representations or warranties of Seller contained herein are false or inaccurate or that Seller is in breach or default of any of its obligations under this Agreement, and Buyer nonetheless closes the transactions hereunder and acquires the Property, then Seller shall have no liability or obligation respecting such false or inaccurate representations or warranties or other breach or default (and any cause of action resulting therefrom shall terminate upon such closing hereunder). 7.4 Limitation of Liability. 7.4.1 Notwithstanding anything to the contrary contained herein, if the closing of the transactions hereunder shall have occurred (and Buyer shall not have waived, relinquished or released any applicable rights in further limitation), the aggregate liability of Seller (and any direct or indirect partner in Seller) arising pursuant to or in connection with the representations, warranties, indemnifications, covenants or other obligations (whether express or implied) of Seller under this Agreement (or any document executed or delivered in connection herewith) shall not exceed $500,000.00 (plus up to $50,000.00 in the aggregate for legal fees and costs to the extent payable pursuant to Section 10.10 hereof). 7.4.2 No constituent partner in, or agent of Seller, nor any advisor, trustee, director, officer, employee, beneficiary, shareholder, participant, representative or agent of any corporation or trust that is, or becomes, a constituent partner in Seller and Wright Runstad Associates Limited Partnership, a Washington limited partnership ["WRALP"] shall have any personal liability, directly or indirectly, under or in connection with this Agreement or any agreement made or entered 22 DBLA-179348L.6 into under or pursuant to the provisions of this Agreement, or any amendment or amendments to any of the foregoing made at any time or times, heretofore or hereafter, and Buyer and its successors and assigns and, without limitation, all other persons and entities, shall look solely to the assets of Seller for the payment of any claim or for any performance, and Buyer, on behalf of itself and its successors and assigns, hereby waives any and all such personal liability. Notwithstanding anything to the contrary contained in this Agreement, neither the negative capital account of any constituent partner in Seller (or in any other constituent partner of Seller), nor any obligation of any constituent partner in WCP (or in any other constituent partner of Seller) to restore a negative capital account or to contribute capital to MOBL (or to any other constituent partner of Seller), shall at any time be deemed to be the property or an asset of Seller or any such other constituent partner (and neither Buyer nor any of its successors or assigns shall have any right to collect, enforce or proceed against or with respect to any such negative capital account of partner's obligation to restore or contribute). 8. Covenants. 8.1 Interim Covenants of Buyer. Until the Closing Date or the sooner termination of this Agreement: 8.1.1 Representations. Buyer covenants and agrees that it will not take any action or enter into any transaction which would cause any representation contained in paragraph 7.2 of this Agreement to be inaccurate in any material respect if remade immediately after the occurrence of such action or transaction. 8.2 Interim Covenants of Seller. Until the Closing Date or the sooner termination of this Agreement: 8.2.1 Representations. Seller covenants and agrees that it will not take any action or enter into any transaction which would cause any representation contained in paragraph 7.1.2 of this Agreement to be inaccurate in any material respect if remade immediately after the occurrence of such action or transaction. 8.2.2 Additional Actions. Seller will use diligent efforts to take, or cause to be taken, all action, and to do, or cause to be done, all things necessary, proper or advisable to consummate the transactions contemplated by this Agreement and, in connection therewith, shall exercise all rights and remedies at law and in equity against any third party to the extent available and necessary to cause the Closing to occur, provided that Buyer shall agree to reimburse Seller the costs thereof. Seller and Buyer shall 23 DBLA-179348L.6 consult with respect to the exercise of any such rights and remedies. 8.2.3 Compliance with Laws, Etc.. Seller shall comply, and cause WCP to comply, in all material respects, with (i) all laws, regulations and other requirements from time to time applicable of every governmental body having jurisdiction of the Property or the use or occupancy of the Improvements located thereon and (ii) all terms, covenants and conditions of all leases, all instruments of record and any other agreements affecting the Property. 8.2.4 Approval of Agreements. Seller shall not permit WCP to and shall not enter into, modify, amend or terminate any lease or any other agreement with respect to the Property which would encumber or be binding upon the Property or WCP from and after the Closing Date without in each instance obtaining the prior written consent of the Buyer. 8.2.5 Notice of Material Changes or Untrue Representations. Upon learning of any material change in any condition with respect to the Property or of any event or circumstance which makes any representation or warranty of Seller to Buyer under this Agreement untrue or misleading, Seller shall promptly to notify Buyer thereof (Buyer agreeing, on learning of any such fact or condition, promptly to notify Seller thereof). 8.2.6 Operation of Property. Seller shall continue to operate and cause WCP to continue to operate the Property in a good and businesslike fashion consistent with their past practices and to cause the Property to be maintained in good working order and condition in a manner consistent with past practice. 9. Indemnification. 9.1 By Buyer. Buyer shall hold harmless, indemnify and defend Seller from and against: (1) any claims, losses, damages, liabilities and expenses (including reasonable attorneys' fees), imposed upon or incurred in connection with any breach of a representation and warranty of Buyer contained in this Agreement; (2) any and all loss, damage or third party claims in any way arising from Buyer's inspections or examinations of the Property prior to the Closing Date; and (3) all costs and expenses, including reasonable attorneys' fees, incurred by Seller as a result of the foregoing. 9.2 By Seller. Seller shall hold harmless, indemnify and defend Buyer from and against: (1) any claims, losses, damages, liabilities and expenses (including reasonable attorneys' fees), 24 DBLA-179348L.6 imposed upon or incurred in connection with any breach of a representation and warranty of Seller contained in this Agreement; and (2) all costs and expenses, including reasonable attorneys' fees, incurred by Buyer as a result of such claims. The foregoing indemnity shall not cover any matters relating to title or marketability of the Property (Buyer relying exclusively upon the coverage provided by the Owner's Policy as to such matters). 9.3 General Provisions. The indemnification obligations under this Agreement shall be subject to the limitations set forth in Section 11.4, shall survive the Closing and shall be subject to the following provisions: 9.3.1 Procedure. The party seeking indemnification ("Indemnitee") shall notify the other party ("Indemnitor") of any Claim against Indemnitee within fifteen (15) business days after it has notice of such Claim, but failure to notify Indemnitor shall in no case prejudice the rights of Indemnitee under this Agreement unless Indemnitor shall be prejudiced by such failure and then only to the extent of such prejudice. Should Indemnitor fail to discharge or undertake to defend Indemnitee against such liability (with counsel approved by Indemnitee), within ten (10) days after Indemnitee gives Indemnitor written notice of the same, then Indemnitee may settle such Claim, and Indemnitor's liability to Indemnitee shall be conclusively established by such settlement, the amount of such liability to include both the settlement consideration and the reasonable costs and expenses, including attorneys' fees, incurred by Indemnitee in effecting such settlement. Indemnitee shall have the right to employ its own counsel in any such case, but the fees and expenses of such counsel shall be at the expense of Indemnitee unless: (a) the employment of such counsel shall have been authorized in writing by Indemnitor in connection with the defense of such action, (b) Indemnitor shall not have employed counsel to direct the defense of such action, or (c) Indemnitee shall have reasonably concluded that there may be defenses available to it which are different from or additional to those available to Indemnitor (in which case Indemnitor shall not have the right to direct the defense of such action or of Indemnitee), in any of which events such fees and expenses shall be borne by Indemnitor. 9.3.2 Beneficiaries. The indemnification obligations under this Agreement shall also extend to any present or future advisor, trustee, director, officer, partner, member, employee, beneficiary, shareholder, participant or agent of or in Indemnitee or any entity now or hereafter having a direct or indirect ownership interest in Indemnitee. 25 DBLA-179348L.6 10. Miscellaneous. 10.1 Brokers. Other than the engagement of Smith Barney by Seller whose fees shall be paid by Seller out of escrow and a brokerage fee payable to Richard Ellis, LLP (which is to be paid through escrow by New Partnership), Seller represents and warrants to Buyer, and Buyer represents and warrants to Seller that no broker or finder has been engaged by it, respectively, in connection with any of the transactions contemplated by this Agreement or to its knowledge is in any way connected with any of such transactions. In the event of a claim for broker's or finder's fee or commissions in connection herewith, then Seller shall indemnify and defend Buyer from the same if it shall be based upon any statement or agreement alleged to have been made by Seller; and Buyer shall defend and indemnify Seller from the same if it shall be based upon any statement or agreement alleged to have been made by Buyer. 10.2 Entire Agreement. This Agreement contains the entire agreement between the parties respecting the matters herein set forth and supersedes all prior agreements between the parties hereto respecting such matters. This Agreement may not be modified or amended except by written agreement signed by both parties. 10.3 Time of the Essence. Time is of the essence of this Agreement. 10.4 Interpretation. Paragraph headings shall not be used in construing this Agreement. Each party acknowledges that such party and its counsel, after negotiation and consultation, have reviewed and revised this Agreement. As such, the terms of this Agreement shall be fairly construed and the usual rule of construction, to the effect that any ambiguities herein should be resolved against the drafting party, shall not be employed in the interpretation of this Agreement or any amendments, modifications or exhibits hereto or thereto. 10.5 Governing Law. Except for matters regarding the internal affairs of Buyer and issues of or limitations on any personal liability of the shareholders and trustees of Buyer for obligations of Buyer, as to which the laws of the State of Maryland shall govern, this Agreement shall be construed and enforced in accordance with the laws of the State of California. 10.6 Successors and Assigns. Buyer may not assign or transfer its rights or obligations under this Agreement without the prior written consent of Seller (in which event such transferee shall assume in writing all of the transferor's obligations hereunder, but such transferor shall not be released from its obligations hereunder) which shall not be unreasonably withheld and shall not be required for assignments or transfers 26 DBLA-179348L.6 to affiliates of Buyer. No consent given by Seller to any transfer or assignment of Buyer's rights or obligations hereunder shall be construed as a consent to any other transfer or assignment of Buyer's rights or obligations hereunder. No transfer or assignment in violation of the provisions hereof shall be valid or enforceable. Subject to the foregoing, this Agreement and the terms and provisions hereof shall inure to the benefit of and be binding upon the successors and assigns of the parties. 10.7 Notices. Any notice which a party is required or may desire to give the other shall be in writing and shall be sent by personal delivery or by mail either (i) by United States registered or certified mail, return receipt requested, postage prepaid, (ii) by facsimile transmission (followed by overnight delivery pursuant to clause (iii) hereafter), or (iii) by Federal Express or similar generally recognized overnight carrier regularly providing proof of delivery, addressed as follows (subject to the right of a party to designate a different address for itself by notice similarly given): To Buyer: To Escrow Holder: Health and Retirement Properties Chicago Title Company/ Trust Escrow Division 400 Centre Street 700 South Flower Street Newton, MA 02158 9th Floor Attention: David J. Hegarty, Los Angeles, California 90017 President Attention: Mr. Rose Martinez Telephone: (617) 332-3990 Telephone: (213) 488-4300 Facsimile: (617) 332-2261 Facsimile: (213) 488-3287 With Copy To: Sullivan & Worcester LLP One Post Office Square Boston, MA 02109 Attn: Jennifer B. Clark, Esq. Telephone (617) 338-2406 Facsimile: (617) 338-2880 27 DBLA-179348L.6 To Seller: Medical Office Buildings, Ltd. c/o Wright Runstad & Co. 1191 Second Avenue, Suite 2000 Seattle, Washington 98101-2933 Attention: Mr. H. Jon Runstad Telephone: (206) 223-8791 Facsimile: (206) 447-9000 With Copy To: Dewey Ballantine 333 South Hope Street, Suite 3000 Los Angeles, California 90071 Attention: Alan Wayte, Esq. Telephone: (213) 617-6501 Facsimile: (213) 625-0562 Any notice so given by mail shall be deemed to have been given as of the date of delivery (whether accepted or refused) established by U.S. Post Office return receipt or the overnight carrier's proof of delivery, as the case may be. Any such notice not so given shall be deemed given upon receipt of the same by the party to whom the same is to be given. 10.8 Third Parties. Nothing in this Agreement, whether expressed or implied, is intended to confer any rights or remedies under or by reason of this Agreement on any other person other than the parties hereto and their respective successors and assigns, nor is anything in this Agreement intended to relieve or discharge the obligation or liability of any third persons to any party to this Agreement, nor shall any provision hereof give any third parties any right of subrogation or action over or against any party to this Agreement. This Agreement is not intended to and does not create any third party beneficiary rights whatsoever. 10.9 ARBITRATION OF CERTAIN DISPUTES. ANY CONTROVERSY OR CLAIM ARISING UNDER OR RELATING TO THE TERMS OF THIS AGREEMENT OR ANY OF THE EXHIBITS ATTACHED TO IT, AND ANY PROCEEDINGS TO ENFORCE THIS AGREEMENT OR RIGHTS UNDER THIS AGREEMENT AND ITS EXHIBITS OTHER THAN THE "EXCLUDED MATTERS" (AS HEREINAFTER DEFINED) SHALL BE SETTLED BY ARBITRATION IN THE CITY OF LOS ANGELES, IN ACCORDANCE WITH THE EXISTING RULES ("RULES") OF PRACTICES AND PROCEDURE OF THE JUDICIAL ARBITRATION & MEDIATION SERVICES ("JAMS"). EACH PARTY SHALL SELECT AN ARBITRATOR FROM THE APPROVED LIST PROVIDED BY JAMS, SUCH SELECTION TO BE MADE BY NOTIFICATION TO THE OTHER PARTY GIVEN IN WRITING WITHIN FIFTEEN (15) DAYS OF THE SUBMISSION OF THE DISPUTE TO ARBITRATION HEREUNDER. FAILURE OF A PARTY TO GIVE NOTICE OF ITS SELECTION SHALL CAUSE THE SINGLE ARBITRATOR SELECTED BY THE OTHER PARTY TO 28 DBLA-179348L.6 BE THE SOLE ARBITRATOR IN CONNECTION WITH THE APPLICABLE DISPUTE HEREUNDER. IF EACH PARTY DESIGNATES AN ARBITRATOR, THEN WITHIN FIFTEEN (15) DAYS AFTER BOTH ARBITRATORS HAVE BEEN SO DESIGNATED, SUCH ARBITRATORS SHALL DESIGNATE A THIRD ARBITRATOR FROM A JAMS-APPROVED LIST. THE DECISION OF A MAJORITY OF THE ARBITRATORS HEREUNDER SHALL BE CONCLUSIVE. AS SOON AS PRACTICABLE AFTER SELECTION OF THE ARBITRATOR(S), THE ARBITRATOR(S) SHALL DETERMINE A REASONABLE ESTIMATE OF THE ANTICIPATED FEES AND COSTS OF THE ARBITRATOR(S), AND SHALL RENDER A STATEMENT TO EACH PARTY SETTING FORTH SAID FEES AND COSTS. THEREAFTER EACH PARTY SHALL, WITHIN TEN (10) DAYS OF RECEIPT OF SAID STATEMENT, DEPOSIT ONE-HALF OF SAID SUM WITH THE ARBITRATOR(S) TO BE APPLIED AGAINST SUCH FEES AND COSTS (SUBJECT TO THE PROVISIONS OF THIS AGREEMENT). FAILURE OF ANY PARTY TO MAKE SUCH DEPOSIT SHALL RESULT IN A FORFEITURE BY THE NON-DEPOSITING PARTY OF THE RIGHT TO PROSECUTE OR DEFEND THE CLAIM WHICH IS THE SUBJECT OF THE ARBITRATION, BUT SHALL NOT OTHERWISE SERVE TO ABATE, STAY OR SUSPEND THE ARBITRATION PROCEEDINGS. THE ARBITRATOR(S) SHALL HAVE THE RIGHT TO DETERMINE THE SCOPE OF THEIR JURISDICTION, THE EXTENT OF DISCOVERY AND TO GRANT EQUITABLE RELIEF, INCLUDING, WITHOUT LIMITATION, THE RIGHT TO ORDER THE EXPUNGEMENT OF ANY LIS PENDENS WHICH THE ARBITRATOR(S) DEEM IMPROPER. THE PREVAILING PARTY SHALL BE ENTITLED TO REASONABLE ATTORNEYS' FEES AND OTHER REASONABLE COSTS INCURRED IN CONNECTION WITH THE ARBITRATION OR ANY OTHER LITIGATION PLUS INTEREST ON THE AMOUNT OF ANY AWARD. JUDGMENT UPON THE AWARD RENDERED BY THE ARBITRATOR(S) MAY BE ENTERED IN ANY COURT HAVING JURISDICTION THEREOF. THIS PARAGRAPH MUST BE INITIALED BELOW IN ORDER FOR THIS PARAGRAPH OF THE AGREEMENT TO BE BINDING. NOTICE: BY INITIALLING IN THE SPACE BELOW, YOU ARE AGREEING TO HAVE ANY DISPUTE ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW, AND YOU ARE GIVING UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR BEFORE A JURY. BY INITIALLING IN THE SPACE BELOW, YOU ARE GIVING UP YOUR JUDICIAL RIGHTS TO DISCOVERY AND APPEAL, UNLESS SUCH RIGHTS ARE SPECIFICALLY INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS ARBITRATION PROVISION IS VOLUNTARY. WE HAVE READ AND UNDERSTAND THE FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE "ARBITRATION OF DISPUTES" PROVISION TO NEUTRAL ARBITRATION. BUYER'S INITIALS: SELLER'S INITIALS: As used herein, "Excluded Matters" means any controversy, claim or proceeding with respect to or otherwise related to a breach or default of any representation or warranty contained in this 29 DBLA-179348L.6 Agreement (which matters shall not be subject to the arbitration provisions contained herein). 10.10 Legal Costs. The parties hereto agree that they shall pay directly any and all legal costs which they have incurred on their own behalf in the preparation of this Agreement and all deeds and other agreements pertaining to this transaction and that such legal costs shall not be part of the closing costs. In addition, if either Buyer or Seller brings any suit or other proceeding with respect to the subject matter or the enforcement of this Agreement, the prevailing party (as determined by the court, agency or other authority before which such suit or proceeding is commenced), in addition to such other relief as may be awarded, shall be entitled to recover reasonable attorneys' fees, expenses and costs of investigation actually incurred. The foregoing includes, but is not limited to, attorneys' fees, expenses and costs of investigation (including, without limitation, those incurred in appellate proceedings), costs incurred in establishing the right to indemnification, or in any action or participation in, or in connection with, any case or proceeding under Chapter 7, 11 or 13 of the Bankruptcy Code (11 United States Code Sections 101 et seq.), or any successor statutes. 10.11 Further Instruments. Each party will, whenever (whether before or after Closing) and as often as it shall be reasonably requested so to do by the other, cause to be executed, acknowledged or delivered any and all such further instruments and documents as may be necessary or proper, in the reasonable opinion of the requesting party, in order to carry out the intent and purpose of this Agreement (provided, however, the same do not materially increase the costs to, or liability or obligations of, a party in a manner not otherwise provided for herein). In connection therewith, at Buyer's request, upon prior arrangement with Seller, at any time during reasonable business hours within two (2) years after the Closing, Seller shall, at Buyer's cost and expense, provide to Buyer's designated independent auditor, reasonable access to appropriate books and records of Seller relating solely to the Property regarding the period for which Buyer is required by applicable rules or regulations of the Securities Exchange Commission to have audited financial statements prepared with respect to the Property, but only to the extent that such books and records are then in the Seller's possession or control, relate to the period during which WCP or Seller owned the Property and are not confidential, proprietary or privileged. Seller shall not make or be deemed to make any representations or warranties of any kind regarding such books and records (including, without limitation, the accuracy or thoroughness thereof), nor shall Seller have any liability of any kind or nature with respect thereto. 30 DBLA-179348L.6 10.12 Tax Matters. Seller has obtained or will obtain independent advice on all tax matters and agrees to hold Buyer and its partners and their officers, directors and employees free and harmless from any tax consequences whatsoever as a result of the acquisition of the Property and further acknowledges that Buyer has not made any representations or warranties express or implied about any tax consequences relating to this transaction. 10.13 Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which shall constitute one and the same agreement. 11. DEFAULT 11.1 Default by Seller. If Seller shall have made any representation of warranty herein which shall be untrue or misleading in any material respect, or if Seller shall fail to perform any of the material covenants and agreements contained herein to be performed by them and such failure continues for a period of ten (10) days after notice thereof from Buyer, Buyer may terminate this Agreement and/or Buyer may pursue any and all remedies available to it at law or in equity, including, but not limited to, a suit for specific performance or other equitable relief. 11.2 Default by Buyer. If Buyer shall have made any representation or warranty herein which shall be untrue or misleading in any material respect, or if Buyer shall fail to perform any of the covenants and agreements contained herein to be performed by it and such failure shall continue for a period of ten (10) days after notice thereof from Seller, Seller may, as its sole remedy at law and in equity, terminate this Agreement and receive the liquidated damages provided in Section 11.4 hereof. 11.3 Nonliability of Trustees. THE DECLARATION OF TRUST ESTABLISHING THE BUYER, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE "DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HEALTH AND RETIREMENT PROPERTIES TRUST" REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE OR AGENT OF THE PURCHASER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE BUYER. ALL PERSONS DEALING WITH THE BUYER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE BUYER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION. 11.4 Certain Remedies. 31 DBLA-179348L.6 LIQUIDATED DAMAGES AND DISPOSITION OF ESCROW DEPOSIT. IF THE TRANSACTION HEREIN PROVIDED SHALL NOT BE CLOSED BY REASON OF SELLER'S DEFAULT UNDER THIS AGREEMENT OR THE FAILURE OF SATISFACTION OF THE CONDITIONS DESCRIBED IN PARAGRAPH 4 HEREOF OR THE TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH PARAGRAPH 6 HEREOF, AND BUYER SHALL NOT HAVE DEFAULTED UNDER THIS AGREEMENT, THEN THE ESCROW DEPOSIT SHALL BE RETURNED TO BUYER, AND NEITHER PARTY SHALL HAVE ANY FURTHER OBLIGATION OR LIABILITY TO THE OTHER; PROVIDED, HOWEVER, IF THE TRANSACTIONS HEREUNDER SHALL FAIL TO CLOSE BY REASON OF SELLER'S DEFAULT, AND BUYER SHALL HAVE FULLY PERFORMED ITS OBLIGATIONS HEREUNDER AND SHALL BE READY, WILLING AND ABLE TO CLOSE, THEN BUYER SHALL BE ENTITLED TO SPECIFICALLY ENFORCE THIS AGREEMENT (BUT NO OTHER ACTION, FOR DAMAGES OR OTHERWISE, SHALL BE PERMITTED). IN THE EVENT THE TRANSACTION HEREIN PROVIDED SHALL NOT CLOSE FOR ANY REASON OTHER THAN THE FAILURE OF SATISFACTION OF THE CONDITIONS DESCRIBED IN PARAGRAPH 4 HEREOF OR THE TERMINATION OF THIS AGREEMENT IN ACCORDANCE WITH PARAGRAPH 6 HEREOF OR THE DEFAULT OF SELLER, THEN THE SUM OF $5,000,000 IS HEREBY AGREED TO BE FULL COMPENSATION AND LIQUIDATED DAMAGES PAYABLE TO SELLER UNDER AND IN CONNECTION WITH THIS AGREEMENT AND THE DEPOSIT SHALL BE PAID TO SELLER AS PARTIAL PAYMENT OF SUCH SUM. IN CONNECTION WITH THE FOREGOING, THE PARTIES RECOGNIZE THAT SELLER WILL INCUR EXPENSE IN CONNECTION WITH THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT AND THAT THE PROPERTY WILL BE REMOVED FROM THE MARKET AND SELLER WILL BE EXPOSED TO DAMAGES TO THIRD PARTIES. FURTHER, THAT IT IS EXTREMELY DIFFICULT AND IMPRACTICABLE TO ASCERTAIN THE EXTENT OF DETRIMENT TO SELLER CAUSED BY THE BREACH BY BUYER UNDER THIS AGREEMENT AND THE FAILURE OR THE CONSUMMATION OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT OR THE AMOUNT OF COMPENSATION SELLER SHOULD RECEIVE AS A RESULT OF BUYER'S BREACH OR DEFAULT. IN THE EVENT THE SALE OF THE PROPERTY SHALL NOT BE CONSUMMATED ON ACCOUNT OF BUYER'S DEFAULT, THEN THE SUM OF $5,000,000, INCLUDING THE ESCROW DEPOSIT, SHALL BE SELLER'S SOLE AND EXCLUSIVE DAMAGES UNDER THIS AGREEMENT BY REASON OF SUCH DEFAULT. Seller's Initials Buyer's Initials 11.5 Confidentiality. No partner, principal, employee, partner or affiliate of Seller or WCP shall trade in the shares of Buyer until public announcement of this transaction has been made. Seller shall not make any public announcement of the transactions contemplated by this Agreement or otherwise disclose this transaction to any third party without the prior written consent of Buyer. 32 DBLA-179348L.6 IN WITNESS WHEREOF, the parties hereto have executed this Contribution Agreement as of the date first above written. SELLER: MEDICAL OFFICES BUILDINGS, LTD., a Washington limited partnership BY: WRIGHT RUNSTAD ASSOCIATES LIMITED PARTNERSHIP, a Washington limited partnership Its General Partner BY: WRIGHT RUNSTAD & COMPANY, a Washington corporation Its General Partner By: /s/ H.J. Runstad Name: H.J. Runstad Title: Chairman and C.E.O. BUYER: HEALTH AND RETIREMENT PROPERTIES TRUST, a Maryland real estate investment trust By: /s/ Ajay Saini Name: Ajay Saini Title: Treasurer and C.F.O. 33 DBLA-179348L.6 ESCROW HOLDER'S ACKNOWLEDGEMENT The undersigned hereby executes this Exchange Agreement to evidence is agreement to act as Escrow Holder in accordance with the terms of this Agreement. Date: ____________, 1997 CHICAGO TITLE INSURANCE COMPANY, a Missouri corporation By:_______________________________ Name:_____________________________ Title:____________________________ 34 DBLA-179348L.6 EXHIBIT LIST "A" - Property Description "B" - List of Personal Property "C" - Form of Guaranty "D" - Pro Forma Title Policy "E" - Memorandum Regarding New Partnership Agreement "F" - Required Tenants List "G" - Intentionally Deleted "H" - Intentionally Deleted "I-1" - Leasehold Assignment "I-2" - General Assignment "J" - Exception List to Seller's Representations "K" - List of Leases "L" - Service Agreements "M" - Current Insurance "N" - Tax Bills "O" - Lease Commissions and Tenant Improvement Costs 35 DBLA-179348L.6 The schedules to this agreement have been omitted pursuant to Regulation S-K, Item 601(b)(2). The contents of such schedules are identified on the List of Exhibits which is a part of the agreement. The Company undertakes to provide such schedules to the Securities and Exchange Commission upon request. -----END PRIVACY-ENHANCED MESSAGE-----