-----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, Db/o6em3RfR/6kdkvZ9VbfbZiPPezuWfTmrJXR1nwafW2Xow4Gi2LL23bwYa7INP mux5KokZRq6NeR9aypFmig== 0001029869-97-000378.txt : 19970328 0001029869-97-000378.hdr.sgml : 19970328 ACCESSION NUMBER: 0001029869-97-000378 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19970327 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 19970327 SROS: NYSE FILER: COMPANY DATA: COMPANY CONFORMED NAME: BEACON PROPERTIES CORP CENTRAL INDEX KEY: 0000920114 STANDARD INDUSTRIAL CLASSIFICATION: REAL ESTATE INVESTMENT TRUSTS [6798] IRS NUMBER: 043224258 STATE OF INCORPORATION: MD FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-12926 FILM NUMBER: 97565360 BUSINESS ADDRESS: STREET 1: 50 ROWES WHARF CITY: BOSTON STATE: MA ZIP: 02110 BUSINESS PHONE: 6173301400 MAIL ADDRESS: STREET 1: 50 ROWES WHARF CITY: BOSTON STATE: MA ZIP: 02110 FORMER COMPANY: FORMER CONFORMED NAME: BEACON OFFICE PROPERTIES INC DATE OF NAME CHANGE: 19940311 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): March 27, 1997 BEACON PROPERTIES CORPORATION (Exact name of Registrant as specified in its Charter) Maryland (State of Incorporation) 1-12926 04-3224258 (Commission File Number) (IRS Employer Id. Number) 50 Rowes Wharf Boston, Massachusetts 02110 (Address of principal executive offices) (Zip Code) (617) 330-1400 (Registrant's telephone number, including area code) Item 5. Other Events Beacon Properties Corporation ("the Company") has entered into contracts to purchase three office properties. Westbrook Corporate Center: In March 1997, the Company entered into a contract to acquire a five-building office complex located in Westchester (suburban Chicago), Illinois (the "Westbrook Corporate Center"). The purchase price of the property is approximately $182.1 million, consisting of the expected assumption of approximately $106 million of mortgage debt presently being negotiated by the seller with their existing lender, the issuance of approximately $50 million of Units (estimated to be 1,428,571 units valued at $35.00 each) and approximately $26.1 million in cash. The sellers of this property are Westbrook Corporate Center Associates, Westbrook Corporate Center IV Associates Limited Partnership and Westbrook Corporate Center V Associates Limited Partnership, all of which are not related to the Company, its affiliates or directors. The mortgage lender is expected to be Aetna Life Insurance Company and the loan is expected to have a 10 year term with interest at approximately 8%. The Company estimates that the aggregate purchase price for the Westbrook Corporate Center is approximately 90% of replacement cost. In addition, the Company has an option to purchase, and the seller has a right to sell to the Company, a 10-acre parcel of land suitable for development which is contiguous to the Westbrook Corporate Center, for $3.5 million within twelve months of the acquisition. Westbrook Corporate Center consists of five 10-story office buildings comprising an aggregate of approximately 1.1 million square feet. The buildings each contain approximately 220,000 square feet and were developed between 1985 and 1996. Major tenants in the Westbrook Corporate Center include Navistar (approximately 100,000 square feet), Ameritech (approximately 70,000 square feet), Peoplesoft (approximately 50,000 square feet), Premier Health (approximately 45,000 square feet) and SAP America (approximately 45,000 square feet). The aggregate occupancy rate for the Westbrook Corporate Center as of December 31, 1996 was approximately 90%. Nearly all of the vacancy at the property is attributable to the newest building in the complex which opened in February 1996. 10880 Wilshire Boulevard: In March 1997, the Company entered into a contract to acquire the leasehold interest in 10880 Wilshire Boulevard located in Westwood, California from 10880 Property Corporation, which is not related to the Company, its affiliates or directors. In connection with the acquisition, the Company will also acquire the right to purchase the fee interest in the land at fair market value in 2001. The Company will acquire the leasehold interest in 10880 Wilshire Boulevard for aggregate consideration of approximately $102 million in cash, approximately 75% of replacement cost, after giving effect to the leasehold. Following the consummation of the acquisition, the Company intends to invest approximately $2.2 million in capital improvements in the property. 2 The 10880 Wilshire Boulevard property was built in 1970 and has undergone approximately $34 million of capital improvements since 1992. The property consists of approximately 531,000 square feet in a 23-story office building. This property is one of the largest buildings in the Westwood submarket of the West Los Angeles Office Market and given the current constraints on development, this property cannot be duplicated in its market. The property is located near Interstates 405 and 10 with easy access to other West Los Angeles markets, downtown, the San Fernando Valley and the Los Angeles airport. In addition, the property, which meets current earthquake construction codes, is located in a business district, adjacent to other Class A office buildings, Westwood Village, a retail area, and the UCLA campus. Major tenants in 10880 Wilshire Boulevard include Showtime/Viacom (approximately 68,000 square feet), Corporate Media (approximately 64,000 square feet), Oppenheimer (approximately 50,000 square feet) and Pardee Construction (approximately 33,000 square feet). The Company currently intends to retain the existing property manager of 10880 Wilshire Boulevard following the consummation of the acquisition to facilitate the leasing and management of the property. As of December 31, 1996, the occupancy rate for 10880 Wilshire Boulevard was approximately 85%. Centerpointe I and II: In March 1997, the Company entered into a contract to acquire two office properties located in Fairfax County, Virginia ("Centerpointe I and II") from Joshua Realty Corporation (a General Electric Company affiliate). Dale Frey, a Director of the Company since January 1997, is a former Director of General Electric Investment Corporation and Vice President of General Electric Company. The aggregate consideration is approximately $55 million consisting of $25 million in cash and the assumption of approximately $30 million of mortgage debt. The mortgage lender is CIGNA and the loan matures on February 28, 2001, with interest at 7.32% and principal amortization commencing on February 1, 1999 based on a 25 year amortization schedule. The Company estimates that the aggregate purchase price for Centerpointe I and II is approximately 75% of replacement cost. The Centerpointe property contains approximately 409,000 square feet and consists of (i) Centerpointe I, an 11-story office building built in 1988 and comprising approximately 204,500 square feet and (ii) Centerpointe II, an 11-story office building built in 1990 comprising approximately 204,500 square feet. The sole tenant at Centerpointe I is American Management Systems, which also occupies approximately 64,000 square feet in Centerpointe II. Other major tenants at Centerpointe II include Fujitsu (approximately 19,000 square feet) and Liberty Mutual Insurance Company (approximately 15,000 square feet). As of December 31, 1996, the aggregate occupancy rate for Centerpointe I and II was approximately 100%. In connection with the acquisition of Centerpointe I and II, the Company has also entered into a option/put arrangement with the sellers of Centerpointe I and II on an adjacent 7.8 acre parcel of land suitable for development. 3 Item 7. Financial Statements and Exhibits (a) Financial Statements Under Rule 3-14 of Regulation S-X Statement of Excess of Revenues over Specific Operating Expenses of 10880 Wilshire Boulevard for the year ended December 31, 1996 Statement of Excess of Revenues over Specific Operating Expenses of Centerpointe for the year ended December 31, 1996 Statement of Excess of Revenues over Specific Operating Expenses of Westbrook Corporate Center for the year ended December 31, 1996 (b) Pro Forma Financial Statements Pro Forma Condensed Consolidated Balance Sheet as of December 31, 1996 (Unaudited) Pro Forma Condensed Consolidated Statement of Operations for the Year Ended December 31, 1996 (Unaudited) (c) Exhibits 2.1 Agreement of Purchase and Sale and Joint Escrow Instructions between 10880 Property Corporation as seller and Beacon Properties, L.P. as buyer dated March 19, 1997 (a) 2.2 Agreement of Sale dated March 26, 1997 between Joshua Realty Corporation and Beacon Properties, L.P. 2.3 Contribution Agreement dated March 20, 1997 between Westbrook Corporate Center Associates, Westbrook Corporate Center IV Associates Limited Partnership and Westbrook Corporate Center V Associates Limited Partnership, Illinois limited partnerships which are, respectively, the sole beneficiaries of the land trusts which own title to the Real Property and Beacon Properties, L.P. 23.1 Consent of Coopers & Lybrand L.L.P., Independent Accountants. - ---------- (a) To be filed by amendment 4 BEACON PROPERTIES CORPORATION SIGNATURE 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. BEACON PROPERTIES CORPORATION /s/ Robert J. Perriello ----------------------------------- Robert J. Perriello, Senior Vice President, and Chief Financial Officer Date: March 27, 1997 5 10880 WILSHIRE BOULEVARD WESTWOOD, CALIFORNIA STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1996 F-1 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Beacon Properties Corporation: We have audited the accompanying statement of excess of revenues over specific operating expenses of 10880 Wilshire Boulevard in Westwood, California (the "Property") for the year ended December 31, 1996. This financial statement is the responsibility of the Property's management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of excess of revenues over specific operating expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note 2, this financial statement excludes certain income and expenses which would not be comparable with those resulting from the operations of the Property after acquisition by Beacon Properties Corporation. The accompanying financial statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and is not intended to be a complete presentation of the Property's revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the excess of revenues over specific operating expenses (exclusive of income and expenses described in Note 2) of 10880 Wilshire Boulevard in Westwood, California, for the year ended December 31, 1996 in conformity with generally accepted accounting principles. /s/ Coopers & Lybrand L.L.P. Boston, Massachusetts March 11, 1997 F-2 10880 WILSHIRE BOULEVARD WESTWOOD, CALIFORNIA STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES
For the Year Ended December 31, 1996 ----------------- Revenues: Base rent $ 8,687,295 Recoveries from tenants 80,246 Parking income, net of management fees 991,828 Other income 314,125 ----------- 10,073,494 ----------- Specific operating expenses (Note 2): Utilities 980,518 Janitorial and cleaning 92,112 Security 331,954 General and administrative 401,004 Management fee 319,183 Repairs and maintenance 1,271,907 Insurance 101,671 Property taxes 1,042,614 Landscaping 76,811 Ground lease 210,000 ----------- 4,827,774 ----------- Excess of revenues over specific operating expenses $ 5,245,720 ===========
The accompanying notes are an integral part of the financial statement. F-3 10880 WILSHIRE BOULEVARD WESTWOOD, CALIFORNIA NOTES TO STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES 1. Organization and Significant Accounting Policies: Description of Properties 10880 Wilshire Boulevard (the "Property") is located in Westwood, California and consists of one office building encompassing approximately 534,000 square feet. Beacon Properties Corporation intends to acquire the entire leasehold interest in the Property. Rental Revenues Rental income is recognized on the straight-line method over the terms of the related leases. The excess of recognized rentals over amounts due pursuant to lease terms is recorded as accrued rent. The impact of the straight-line rent adjustment increased revenues by approximately $1,750,000 for the year ended December 31, 1996. Risks and Uncertainties The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Basis of Accounting: The accompanying statement of excess of revenues over specific operating expenses is presented on the accrual basis. This statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired or to be acquired. Accordingly, the statement excludes certain historical income and expenses not comparable to the operations of the property after acquisition, such as interest income and amortization. Continued F-4 10880 WILSHIRE BOULEVARD WESTWOOD, CALIFORNIA NOTES TO STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES, CONTINUED 3. Description of Leasing Arrangements: The commercial and office space is leased to tenants under leases with terms that vary in length. Certain of the leases contain real estate tax reimbursement clauses, operating expense reimbursement clauses and renewal options. Minimum lease payments to be received during the next five years for noncancelable operating leases in effect at December 31, 1996 are approximately as follows: Year Ending December 31, 1997 $ 8,614,000 1998 11,333,000 1999 11,770,000 2000 11,288,000 2001 9,438,000 Thereafter 9,427,000 As of December 31, 1996, three tenants occupied approximately 34% of leasable square feet and represented 16% of total 1996 base revenues. 4. Ground Lease Commitment: The property is subject to a ground lease expiring in 2068. The lease provides for minimum rental payments of $210,000 per annum. At specified dates as provided for in the lease, annual rent payable is subject to adjustment at the greater of $210,000 or 7% of appraised market value of the property, as defined. The lessee has an option to buy out the lease on August 1, 2001 and pay the lessor for the land at an amount based on fair market value, as defined. The future minimum commitments under the ground lease are approximately as follows: 1997 $ 210,000 1998 210,000 1999 210,000 2000 210,000 2001 210,000 Thereafter 13,895,000 F-5 CENTERPOINTE FAIRFAX, VIRGINIA STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1996 F-6 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Beacon Properties Corporation: We have audited the accompanying statement of excess of revenues over specific operating expenses of Centerpointe in Fairfax, Virginia (the "Properties") for the year ended December 31, 1996. This financial statement is the responsibility of the Properties' management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of excess of revenues over specific operating expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note 2, this financial statement excludes certain income and expenses which would not be comparable with those resulting from the operations of the Properties after acquisition by Beacon Properties Corporation. The accompanying financial statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and is not intended to be a complete presentation of the Properties' revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the excess of revenues over specific operating expenses (exclusive of income and expenses described in Note 2) of Centerpointe in Fairfax, Virginia, for the year ended December 31, 1996 in conformity with generally accepted accounting principles. /s/ Coopers & Lybrand L.L.P. Boston, Massachusetts March 18, 1997 F-7 CENTERPOINTE FAIRFAX, VIRGINIA STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES
For the Year Ended December 31, 1996 ----------------- Revenues: Base rent $ 7,293,132 Recoveries from tenants 577,788 Other income 98,827 ----------- 7,969,747 ----------- Specific operating expenses (Note 2): Mortgage interest (Note 4) 1,914,230 Utilities 563,917 Janitorial and cleaning 466,366 Security 106,847 General and administrative 179,771 Repairs and maintenance 505,785 Insurance 37,906 Property taxes 497,166 Landscaping 59,255 ----------- 4,331,243 ----------- Excess of revenues over specific operating expenses $ 3,638,504 ===========
The accompanying notes are an integral part of the financial statement. F-8 CENTERPOINTE FAIRFAX, VIRGINIA NOTES TO STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES 1. Organization and Significant Accounting Policies: Description of Properties Centerpointe (the "Properties") is an office portfolio located in Fairfax, Virginia consisting of two office buildings and encompassing approximately 427,000 square feet. Beacon Properties Corporation intends to acquire the entire fee interest in the Properties. Rental Revenues Rental income is recognized on the straight-line method over the terms of the related leases. The excess of recognized rentals over amounts due pursuant to lease terms is recorded as accrued rent. The impact of the straight-line rent adjustment increased revenues by approximately $491,000 for the year ended December 31, 1996. Risks and Uncertainties The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Basis of Accounting: The accompanying statement of excess of revenues over specific operating expenses is presented on the accrual basis. This statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired or to be acquired. Accordingly, the statement excludes certain historical income and expenses not comparable to the operations of the property after acquisition, such as interest income, management fees, and amortization. Continued F-9 CENTERPOINTE FAIRFAX, VIRGINIA NOTES TO STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES, CONTINUED 3. Description of Leasing Arrangements: The commercial and office space is leased to tenants under leases with terms that vary in length. Certain of the leases contain real estate tax reimbursement clauses, operating expense reimbursement clauses and renewal options. Minimum lease payments to be received during the next five years for noncancelable operating leases in effect at December 31, 1996 are approximately as follows: Year Ending December 31, 1997 $ 5,881,000 1998 5,495,000 1999 5,256,000 2000 5,030,000 2001 5,033,000 Thereafter 29,413,000 As of December 31, 1996, one tenant occupied approximately 65% of leasable square feet and represented 61% of total 1996 base revenues. 4. Mortgage Note: The mortgage note in the amount of $30,000,000, requires interest only monthly payments of $183,000 through December 1, 1998. Beginning on January 1, 1999, the note requires monthly installments of principal and interest of $218,197. The note bears interest at 7.32% and is due on February 28, 2001. The note is collaterized by the property and assignment of leases. Principal payments due on the mortgage note during the next five years are approximately as follows: 1997 -0- 1998 -0- 1999 437,000 2000 470,000 2001 29,039,000 F-10 WESTBROOK CORPORATE CENTER WESTCHESTER, ILLINOIS STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES FOR THE YEAR ENDED DECEMBER 31, 1996 F-11 REPORT OF INDEPENDENT ACCOUNTANTS To the Board of Directors and Stockholders of Beacon Properties Corporation: We have audited the accompanying statement of excess of revenues over specific operating expenses of Westbrook Corporate Center in Westchester, Illinois (the "Properties") for the year ended December 31, 1996. This financial statement is the responsibility of the Properties' management. Our responsibility is to express an opinion on this financial statement based on our audit. We conducted our audit in accordance with generally accepted auditing standards. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the statement of excess of revenues over specific operating expenses is free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the statement. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides a reasonable basis for our opinion. As described in Note 2, this financial statement excludes certain income and expenses which would not be comparable with those resulting from the operations of the Properties after acquisition by Beacon Properties Corporation. The accompanying financial statement was prepared for the purpose of complying with the rules and regulations of the Securities and Exchange Commission and is not intended to be a complete presentation of the Properties' revenues and expenses. In our opinion, the financial statement referred to above presents fairly, in all material respects, the excess of revenues over specific operating expenses (exclusive of income and expenses described in Note 2) of Westbrook Corporate Center in Westchester, Illinois for the year ended December 31, 1996 in conformity with generally accepted accounting principles. /s/ Coopers & Lybrand L.L.P. Boston, Massachusetts March 21, 1997 F-12 WESTBROOK CORPORATE CENTER WESTCHESTER, ILLINOIS STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES For the Year Ended December 31, 1996 ----------------- Revenues: Base rent $21,029,383 Recoveries from tenants 1,805,660 Other income 135,933 -------------- 22,970,976 -------------- Specific operating expenses (Note 2): Utilities 1,351,852 Janitorial and cleaning 1,176,162 Security 219,080 General and administrative 207,959 Repairs and maintenance 1,306,547 Insurance 140,967 Property taxes 3,112,555 Landscaping 204,898 -------------- 7,720,020 -------------- Excess of revenues over specific operating expenses $15,250,956 ============== The accompanying notes are an integral part of the financial statement. F-13 WESTBROOK CORPORATE CENTER WESTCHESTER, ILLINOIS NOTES TO STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES 1. Organization and Significant Accounting Policies: ------------------------------------------------ Description of Properties Westbrook Corporate Center (the "Properties") is an office complex located in Westchester, Illinois consisting of five interconnected ten-story office towers encompassing approximately 1,102,000 square feet. Beacon Properties Corporation intends to acquire the entire fee interest in the Properties. Rental Revenues Rental income is recognized on the straight-line method over the terms of the related leases. The excess of recognized rentals over amounts due pursuant to lease terms is recorded as accrued rent. The impact of the straight-line rent adjustment decreased revenues by approximately $1,600,000 for the year ended December 31, 1996. Risks and Uncertainties The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. 2. Basis of Accounting: ------------------- The accompanying statement of excess of revenues over specific operating expenses is presented on the accrual basis. This statement has been prepared in accordance with the applicable rules and regulations of the Securities and Exchange Commission for real estate properties acquired or to be acquired. Accordingly, the statement excludes certain historical income and expenses not comparable to the operations of the property after acquisition, such as interest income, management fees, depreciation, amortization and interest expense. Continued F-14 WESTBROOK CORPORATE CENTER WESTCHESTER, ILLINOIS NOTES TO STATEMENT OF EXCESS OF REVENUES OVER SPECIFIC OPERATING EXPENSES, CONTINUED 3. Description of Leasing Arrangements: ----------------------------------- The commercial and office space is leased to tenants under leases with terms that vary in length. Certain of the leases contain real estate tax reimbursement clauses, operating expense reimbursement clauses and renewal options. Minimum lease payments to be received during the next five years for noncancelable operating leases in effect at December 31, 1996 are approximately as follows: Year Ending December 31, ------------------------ 1997 $ 23,329,000 1998 21,978,000 1999 19,607,000 2000 16,648,000 2001 9,246,000 Thereafter 13,883,000 As of December 31, 1996, one tenant occupied approximately 9% of leaseable square feet and represented 12% of total 1996 base revenues. F-15 BEACON PROPERTIES CORPORATION PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION The following unaudited pro forma Condensed Consolidated Balance Sheet of Beacon Properties Corporation (the "Company") as of December 31, 1996, is presented as if the 10880 Wilshire Boulevard, Centerpointe and Westbrook Corporate Center properties had been acquired as of December 31, 1996. Additionally, the Company's proposed, 7,000,000 share, common stock offering ($35.00 per share) and related repayment of the Credit Facility had occurred as of December 31, 1996. The pro forma Condensed Consolidated Statements of Operations for the year ended December 31, 1996 is presented as if the acquisition of the Properties acquired from January 1, 1996 to December 31, 1996 (as more fully described below), the closing of the MetLife Mortgage loan, the Company's common stock offerings from January 1, 1996 to December 31, 1996 (as more fully described below) and the Company's proposed common stock offering had occurred as of January 1, 1996. Furthermore, the Company qualified as a REIT, distributed all of its taxable income and, therefore, incurred no income tax expense during the period. In management's opinion, all adjustments necessary to reflect the above discussed transactions have been made. The unaudited pro forma Condensed Consolidated Balance Sheet and Statement of Operations are not necessarily indicative of what actual results of operations of the Company would have been for the period, nor does it purport to represent the Company's results of operations for future periods. Acquisitions included in pro forma:
Rentable Year Built/ Date of Property Name Location Sq Ft Renovated Acquisition - ----------------------------------------------------------------------------------------------------------------- 1996 Acquisitions Perimeter Center Atlanta, GA 3,302,000 1970-1989 02/15/96 New York Life Portfolio Chicago, IL and Washington, D.C. 1,012,000 1984-1986 08/16/96 Fairfax County Portfolio McLean, VA and Herndon, VA 550,000 1981-1988 09/05/96 Rosslyn Virginia Portfolio Rosslyn, VA 666,000 1974-1980 10/18/96 New England Executive Park Burlington, MA 817,000 1970-1985 11/15/96 245 First Street Cambridge, MA 263,000 1985-1986 11/21/96 10960 Wilshire Boulevard Westwood, CA 544,000 1971-1992 11/21/96 Shoreline Technology Park Mountain View, CA 727,000 1985-1991 12/20/96 Lake Marriott Business Park Santa Clara, CA 400,000 1981 12/20/96 Presidents Plaza Chicago, IL 791,000 1980-1982 12/27/96 1997 Pending Acquisitions 10880 Wilshire Boulevard Westwood, CA 531,000 1970 Pending Centerpointe Fairfax, VA 409,000 1986-1990 Pending Westbrook Corporate Center Westchester, IL 1,106,000 1985-1996 Pending
F-16
Purchase Price (in thousands) ---------------------------------------- Property Name Seller Cash Debt O.P.Units Total - ------------------------------------------------------------------------------------------------------------------------------------ 1996 Acquisitions Perimeter Center Metropolitan Life Insurance Company 322,200 $13,800(2) 336,000 New York Life Portfolio New York Life Insurance Company 150,000 150,000 Fairfax County Portfolio Greensboro Associates, John Marshall Associates Limited Partnership and Woodland-Northridge I Limited Partnership $55,400 21,600(2) 77,000 Rosslyn Virginia Portfolio LaSalle Fund II 99,050 99,050 New England Executive Park New England Executive Park Limited Partnership et al 75,000 75,000 245 First Street Riverview Building Combined Limited Partnership 45,000 45,000 10960 Wilshire Boulevard 10960 Property Corporation 133,000 133,000 Shoreline Technology Park Teachers Insurance and Annuity Association (TIAA) 139,080 139,080 Lake Marriott Business Park Teachers Insurance and Annuity Association (TIAA) 43,920 43,920 Presidents Plaza Metropolitan Life Insurance Company 38,000 39,000(2) 77,000 1997 Pending Acquisitions 10880 Wilshire Boulevard 10880 Property Corporation 102,000 102,000 Centerpointe Joshua Realty Corporation 25,000 30,000 55,000 Westbrook Corporate Center Westbrook Corporate Center Associates, 26,100 106,000 50,000(3) 182,100 Westbrook Corporate Center IV Associates Limited Partnership and Westbrook Corporate Center V Associates Limited Partnership
(1) The Company holds approximately 52% of the common stock of a private REIT which owns this property. The total purchase price was $156 million consisting of $66 million in cash and proceeds from a $90 million first mortgage loan. The Company accounts for this investment under the equity method of accounting. (2) The Company issued Operating Partnership Units in the amount of 540,059 for Perimeter Center ($25.55 per unit), 833,820 for the Fairfax County Portfolio ($25.90 per unit) and 1,171,500 for Presidents Plaza ($33.29 per unit). These Units were valued based on the average trading price of Beacon Properties Corporation's Common Stock for the applicable period (20 to 30 days) prior to closing as prescribed in the purchase and sale agreements. (3) The Company expects to issue approximately 1,428,571 Operating Partnership Units in connection with the purchase of Westbrook Corporate Center. The number of units was estimated based on a valuation of $35.00 per unit. The actual number of units will be based on the average price of Beacon Properties Corporation's common stock for the 10 days prior to 2 days preceding the closing of this property. Common Stock Offerings included in pro forma: Price Per Gross Net Year Month Shares Share Proceeds Proceeds - ---- ----- ------ ----- -------- -------- (in thousands) 1996 March 7,036,000 26.25 184,695 173,800 1996 August 5,750,000 25.75 148,063 139,400 1996 November 13,723,000 30.75 421,982 398,900 1996 December 1,132,400 33.47 37,896 37,800 1997 April(4) 7,000,000 35.00 245,000 230,300 (4) Proposed. F-17 BEACON PROPERTIES CORPORATION PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET December 31, 1996 (Unaudited)
Pro Forma Adjustments ------------------------------------------------------- Beacon Properties 10880 Westbrook Proposed Corporation Wilshire Corporate 1997 Pro Forma Historical Boulevard Centerpointe Center Stock Offering Consolidated ----------- --------- ------------ --------- -------------- ------------ (dollars in thousands) ASSETS Real estate, net $1,593,995 $102,000 $55,000 $182,100 $1,933,095 Deferred financing and leasing costs, net 17,321 17,321 Cash and cash equivalents 36,086 (102,000) (25,000) (26,100) $137,014 20,000 Mortgage notes receivable 51,491 51,491 Other assets 28,366 28,366 Investments in and advance to joint ventures and corporations 52,153 52,153 ---------- -------- ------- -------- -------- ---------- Total assets $1,779,412 $ -- $30,000 $156,000 $137,014 $2,102,426 ========== ======== ======= ======== ======== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Mortgage notes payable $452,212 $30,000(A) $106,000(B) $588,212 Note payable, Credit Facility 153,000 $(93,286)(D) 59,714 Other liabilities 41,764 41,764 Investment in joint venture 24,735 24,735 --------- -------- ------- -------- -------- ---------- Total liabilities 671,711 30,000 106,000 (93,286) 714,425 Minority interest in Operating Partnership 108,551 50,000(C) 158,551 Stockholders' equity 999,150 230,300(E) 1,229,450 --------- -------- ------- -------- -------- ---------- Total liabilities and stockholders' equity $1,779,412 $ -- $30,000 $156,000 $137,014 $2,102,426 ========== ======== ======= ======== ======== ==========
Notes: (A) Mortgage debt due on February 28, 2002 with interest only through December 1999 at 7.32% and principal amortized over a 25 year period thereafter. This mortgage will be assumed in connection with the purchase of Centerpointe. (B) Mortgage debt is expected to have a 10 year term with interest at 8.03% and principal amortized over a 26 year period and is expected to be assumed in connection with the purchase of Westbrook Corporate Center. (C) The seller of Westbrook will be issued $50,000,000 of Operating Partnership Units expected to consist of 1,428,571 units valued at $35.00 each. The valuation is based on the average trading price of Beacon Properties Corporation common stock for the 10 days prior to 2 days preceding the closing of the property. (D) Expected repayment of Credit Facility. (E) The Company expects to sell 7,000,000 shares of common stock at $35.00 per share. Proceeds of Offering $245,000 Expenses of Offering (6.0%) (14,700) -------- $230,300 ======== F-18 BEACON PROPERTIES CORPORATION PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the Year Ended December 31, 1996 (Unaudited)
Beacon October & Properties New York Life November Corporation Perimeter and Fairfax Va. 1996 Historical Center (A) Portfolios(B) Acquisitions(G) ----------- ---------- --------------- --------------- (dollars in thousands except per share amounts and shares outstanding) Revenue: Rental income $147,825 $6,420 $19,098 $38,886 Management fees 3,005 Recoveries from tenants 16,719 304 3,788 3,674 Mortgage interest income 4,970 Other income 11,272 208 845 3,012 -------- ------ ------ ------- Total revenue 183,791 6,932 23,731 45,572 -------- ------ ------ ------- Expenses: Property expenses 37,211 1,562 4,875 11,716 Real estate taxes 18,124 591 1,708 3,991 General and administrative 19,331 378 812 1,700 Mortgage interest expense 30,300 1,895(C) 2,954(F) Interest - amortization of financing costs 2,084 15(D) Depreciation and amortization 33,184 1,196(E) 4,374(E) 9,105(E) -------- ------ ------ ------- Total expenses 140,234 5,637 14,723 26,512 -------- ------ ------ ------- Income from operations 43,557 1,295 9,008 19,060 Equity in net income of joint ventures and corporation 4,989 -------- ------ ------ ------- Income from continuing operations 48,546 1,295 9,008 19,060 Discontinued operations - Construction Company: Loss from operations (2,609) Loss on sale (249) -------- ------ ------ ------- Income before minority interest 45,688 1,295 9,008 19,060 Minority interest in Operating Partnership (5,988) -------- ------ ------ ------- Net income before extraordinary items $39,700 $1,295 $9,008 $19,060 ======== ====== ====== ======= F-19 BEACON PROPERTIES CORPORATION PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the Year Ended December 31, 1996 (Unaudited) December 1996 Pending Pro Forma Pro Forma Acquisitions(H) Acquisitions(I) Adjustments Consolidated --------------- --------------- ----------- ------------ (dollars in thousands except per share amounts and shares outstanding) Revenue: Rental income 26,858 40,486 $279,573 Management fees 3,005 Recoveries from tenants 6,099 2,464 33,048 Mortgage interest income 611(K) 5,581 Other income 470 1,541 17,348 ------- ------ ------- -------- Total revenue 33,427 44,491 611 338,555 ------- ------ ------- -------- Expenses: Property expenses 4,509 9,206 69,078 Real estate taxes 5,036 4,653 34,103 General and administrative 1,250 1,108 250(L) 24,830 Mortgage interest expense 10,380(J) 1,634(M) 47,162 Interest - amortization of financing costs 2,099 Depreciation and amortization 6,555(E) 10,513(E) 64,927 ------- ------ ------- -------- Total expenses 17,350 35,860 1,884 242,199 ------- ------ ------- -------- Income from operations 16,077 8,631 (1,273) 96,356 Equity in net income of joint ventures and corporation 4,989(1) ------- ------ ------- -------- Income from continuing operations 16,077 8,631 (1,273) 101,345 Discontinued operations - Construction Company: Loss from operations (2,609) Loss on sale (249) ------- ------ ------- -------- Income before minority interest 16,077 8,631 (1,273) 98,487 Minority interest in Operating Partnership (6,038)(N) (12,026) ------- ------ ------- -------- Net income before extraordinary items $16,077 $8,631 ($7,311) $86,461(2) ======= ====== ======= ======== Common shares outstanding 55,116,480 Net income per common share $1.57 (1) Includes depreciation and amortization $4,033 (2) Company share of Operating Partnership is 87.79%
See accompanying notes to pro forma condensed consolidated statement of operations. F-20 BEACON PROPERTIES CORPORATION NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the Year Ended December 31, 1996 (Unaudited) (A) Results of operations of Perimeter Center for the period ended February 14, 1996. (B) Results of operations of the Fairfax County Portfolio and the New York Life Portfolio for the periods ended September 4, 1996 and August 15, 1996, respectively.
Fairfax New York County Life Portfolio Portfolio Total ------------------------------------------- Revenue: Rental income $7,661 $11,437 $19,098 Management fees Recoveries from tenants 542 3,247 3,788 Mortgage interest income Other income 72 773 845 ------------------------------------------- Total revenue 8,274 15,457 23,731 ------------------------------------------- Expenses: Property expenses 1,581 3,294 4,875 Real estate taxes 364 1,345 1,708 General and administrative 80 732 812 Mortgage interest expense (F) 2,954 2,954 Interest - amortization of financing costs Depreciation and amortization (E) 1,568 2,806 4,374 ------------------------------------------- Total expenses 6,546 8,177 14,723 ------------------------------------------- Income from operations $1,728 $ 7,280 $ 9,008 ===========================================
(C) Net interest expense associated with the MetLife Mortgage Loan in the amount of $218 million based on a 7.08% interest rate for the period ended prior to March 15, 1996. (D) Amortization of the costs of obtaining the permanent financing at $1.2 million over 10 years. F-21 BEACON PROPERTIES CORPORATION NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the Year Ended December 31, 1996 (Unaudited) (E) Detail of depreciation expense by property is presented as follows:
Basis Life Depreciation ----- ---- ------------ Perimeter Center $287,130 30 yrs $1,196 ====== Fairfax County Portfolio $69,300 30 yrs $1,568 The New York Life Portfolio 135,000 30 yrs 2,806 ------ $4,374 ====== October & November 1996 Acquisitions: ------------------------------------- Rosslyn, Virginia Portfolio 89,145 30 yrs $2,352 New England Executive Park 67,500 30 yrs 1,969 245 First Street 40,500 30 yrs 1,209 10960 Wilshire Boulevard 119,700 30 yrs 3,574 ------ $9,105 ====== December 1996 Acquisitions: --------------------------- Lake Marriott Business Park 31,110 30 yrs $1,008 Shoreline Technology Park 100,650 30 yrs 3,263 Presidents Plaza 69,250 30 yrs 2,284 ------ $6,555 ====== Pending Acquisitions: ---------------------- 10880 Wilshire Boulevard 102,000 30 yrs $3,400 Centerpointe 49,500 30 yrs 1,650 Westbrook Corporate Center 163,890 30 yrs 5,463 ------ $10,513 ======
(F)Fairfax County Portfolio interest expense on debt assumed for period prior to acquisition:
Principal Rate Expense --------- ---- ------- JOHN MARSHALL $21,068 8.38% $1,197 EJ RANDOLPH (1) 18,016 7.78% 951 NORTHRIDGE 16,306 7.28% 806 ------- ------ $55,390 $2,954 ======= ======
(1) Paid off by Credit Facility proceeds at closing. F-22 BEACON PROPERTIES CORPORATION NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the Year Ended December 31, 1996 (Unaudited) (G) Results of operations of the Rosslyn, Virginia Portfolio, New England Executive Park, 245 First Street and 10960 Wilshire Boulevard for the period prior acquisition.
Rosslyn New England 10960 Virginia Executive Wilshire Portfolio Park 245 First St. Blvd. Total --------------------------------------------------------------------- Revenue: Rental income $12,001 $12,049 $5,062 $9,774 $38,886 Management fees Recoveries from tenants $528 1,113 1,776 257 3,674 Mortgage interest income Other income $1,066 533 1,413 3,012 --------------------------------------------------------------------- Total revenue 13,595 13,162 7,371 11,444 45,572 --------------------------------------------------------------------- Expenses: Property expenses 2,611 4,958 1,020 3,126 11,716 Real estate taxes 747 1,421 913 910 3,991 General and administrative 575 471 81 572 1,700 Mortgage interest expense Interest - amortization of financing costs Depreciation and amortization (E) 2,352 1,969 1,209 3,574 9,105 --------------------------------------------------------------------- Total expenses 6,286 8,819 3,223 8,183 26,512 --------------------------------------------------------------------- Income from operations $ 7,308 $ 4,343 $4,148 $ 3,262 $19,060 =====================================================================
(H) Results of operations of Lake Marriott Business Park, Shoreline Technology Park and Presidents Plaza for the period prior to acquisition.
Shoreline Lake Marriott Technology Business Presidents Park Park Plaza Total -------------------------------------------------------- Revenue: Rental income $12,942 $4,061 $9,855 $26,858 Management fees Recoveries from tenants 1,068 996 4,035 6,099 Mortgage interest income Other income 470 470 -------------------------------------------------------- Total revenue 14,010 5,057 14,359 33,427 -------------------------------------------------------- Expenses: Property expenses 105 718 3,685 4,509 Real estate taxes 1,068 395 3,572 5,036 General and administrative 71 8 1,171 1,250 Mortgage interest expense Interest - amortization of financing costs Depreciation and amortization (E) 3,263 1,008 2,284 6,555 -------------------------------------------------------- Total expenses 4,508 2,130 10,712 17,350 -------------------------------------------------------- Income from operations $ 9,503 $2,927 $3,647 $16,077 ========================================================
F-23 BEACON PROPERTIES CORPORATION NOTES TO PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS For the Year Ended December 31, 1996 (Unaudited) (I)Results of operations of 10880 Wilshire Boulevard, Centerpointe and Westbrook Corporate Center for the year 1996.
10880 Westbrook Wilshire Corporate Boulevard Centerpointe Center Total ------------------------------------------------------- Revenue: Rental income $9,086 $7,593 $23,807 $40,486 Management fees Recoveries from tenants 80 578 1,806 2,464 Mortgage interest income Other income 1,306 99 136 1,541 ------------------------------------------------------- Total revenue 10,472 8,270 25,749 44,491 ------------------------------------------------------- Expenses: Property expenses 3,066 1,740 4,400 9,206 Real estate taxes 1,043 497 3,113 4,653 General and administrative 720 180 208 1,108 Mortgage interest expense 1,914(J) 8,466(J) 10,380 Interest - amortization of financing costs Depreciation and amortization (E) 3,400 1,650 5,463 10,513 ------------------------------------------------------- Total expenses 8,229 5,981 21,650 35,860 ------------------------------------------------------- Income from operations $2,243 $2,289 $ 4,099 $ 8,631 =======================================================
(J) Interest expense on mortgage debt assumed: Centerpointe - historical 1996 expense. Westbrook Corporate Center - based on a principal balance of $106,000 with interest calculated at 8.03%. (K) Interest income related to the acquisition of the Rowes Wharf mortgage. (L) Additional general and administrative expense attributable to acquisitions. (M) Credit Facility Interest expense: Pro Forma Credit Facility balance $59,714 Average Credit Facility rate through December 31, 1996 7.78% ------- Pro Forma Credit Facility interest expense full year 4,646 Less historical 1996 Credit Facility interest expense 3,294 ------- Pro Forma adjustment 1,352 -------- Mortgage Interest: Pro Forma Mortgage Interest on Centerpointe Full Year based on principal balance of $30,000 with interest at 7.32% 2,196 Less: Historical 1996 Expense 1,914 ------- 282 ------- Grand Total $1,634 ======= (N) Reflects decrease for minority interest (12.21%) in Operating Partnership. F-24 EX-2.2 2 AGREEMENT OF SALE AGREEMENT OF SALE by and between JOSHUA REALTY CORPORATION, as Seller and BEACON PROPERTIES, L.P., As Buyer Re: Centerpointe I and II Fairfax, Virginia Table of Contents Paragraph Caption Page 1. Sale and Purchase 1 2. Purchase Price 2 3. Closing 2 4. Condition of Title 2 5. Possession 4 6. Leases; Agreements 4 7. Closing Apportionments 5 8. Seller's Representations and Warranties 7 9. Buyer's Representations and Warranties 9 10. Conditions to Closing 9 11. Deliveries at Closing 11 12. Default 13 13. Notices 13 14. Fire or Other Casualty 15 15. Assignability 16 16. Inspection Period 17 17. Condemnation 18 18. Brokers 19 19. Condition of Premises 19 20. Survival of Provisions 21 21. ERISA 23 22. Escrow Provisions 23 23. Miscellaneous 24 Exhibits A Legal Description of Premises B List of Personal Property C List of Permitted Title Exceptions D List of Existing Leases E List of Existing Agreements F Form of Assignment and Assumption Agreement G Form of Centerpointe III Option Agreement H Form of Tenant Estoppel Certificate (i) I-1 Form of Special Warranty Deed I-2 Form of Bill of Sale J-1 Form of FIRPTA Certification J-2 Form of Seller's Title Affidavit K Form of Notice to Tenants L List of Excluded Personal Property M Seller's Closing Certificate N Buyer's Closing Certificate Schedules 7(a) Copies of Existing Loan Documents 7(C) Tenant Security Deposits 7(g) Leasing Commissions and Tenant Improvement Costs 8(a)(iv) Pending Litigation (ii) AGREEMENT OF SALE THIS AGREEMENT OF SALE (this "Agreement") made this 26 day of March, 1997 by and between JOSHUA REALTY CORPORATION, a Delaware corporation ("Seller") and Beacon Properties, L.P., a Delaware Partnership ("Buyer"). W I T N E S S E T H: 1. Sale and Purchase. Seller agrees to sell and convey to Buyer, and Buyer agrees to purchase from Seller, upon the terms and conditions set forth in this Agreement. (a) Real Property. All that certain lot or piece of ground situate in Fairfax, Virginia, which is more fully described by metes and bounds on Exhibit A to this Agreement, together with the two office buildings and other improvements containing approximately 408,111 square feet situate thereon (the "Premises"), together with all rights and appurtenances pertaining to the Premises, including any right, title and interest of Seller in and to adjacent streets and rights-of-way. (b) Tangible Personal Property. The fixtures, furnishings, equipment and other items of personal property owned by Seller and located on and used in connection with the operation of the Premises which are listed on Exhibit B to this Agreement (collectively, the "Tangible Personal Property"). (c) Intangible Personal Property. The intangible personal property listed below: (i) the interests of Seller in all available booklets, manuals and promotional and advertising materials concerning the Property and located at the Premises or at the offices of Lincoln Property Company, the manager of the Premises ("Manager"); (ii) Seller's interest in the name "Centerpointe," subject nevertheless to the right of Centerpointe III Limited Partnership ("CP III"), its successors and assigns, to utilize such name; (iii) the interest of Seller in all existing surveys, blueprints, drawings, plans and specifications (including, without limitation, structural HVAC, mechanical and plumbing plans and specifications) and other similar documentation for or with respect to the Premises or any part thereof (all to the extent assignable or transferable), to the extent in the possession of Seller or Manager; (iv) all warranties and guaranties issued in connection with the Property (all to the extent assignable or transferable); and 1 (v) the interests of Seller in all consents, authorizations, variances or waivers, licenses, permits and approvals from any governmental or quasi-governmental agency, department, board, commission, bureau or other instrumentality (all to the extent assignable or transferable) with respect to the Premises; (all of the foregoing, collectively, the "Intangible Personal Property). (d) Personal Property. The Tangible Personal Property and the Intangible Personal Property are sometimes collectively referred to in this Agreement as the "Personal Property." 2. Purchase Price. The purchase price to be paid by Buyer to Seller for the Premises and the Personal Property is the sum of Fifty-Five Million Dollars ($55,000,000) (the "Purchase Price"). The Purchase Price shall be paid as follows: (a) Deposit. The sum of One Million Dollars ($1,000,000) (the "Deposit") by the delivery of funds to Commonwealth Land Title Insurance Company (the "Escrowee"). The Deposit shall be held by Escrowee in accordance with the provisions of Paragraph 22 of this Agreement. (b) Loan Assumption. At Buyers's option, Thirty Million Dollars ($30,000,000) shall be paid at Closing by Buyer's assumption of and agreement to pay the loan (the "Existing Loan") evidenced by that certain promissory note (the "Existing Note") dated February 12, 1996 from Seller, as maker, to the Connecticut General Life Insurance Company, as payee ("Lender") in the stated principal amount of $30,000,000 and secured by, among other instruments, that certain Deed of Trust, Security Agreement and Assignment of Rents and Leases dated February 12, 1996 encumbering the Premises between Seller and Lender and recorded in the Office of the Clerk of the Circuit Court of Fairfax County, Virginia in Deed Book 9627 Page 54 (the "Existing Deed of Trust"). (c) Closing Payment. The balance of the Purchase Price shall be paid to Seller at Closing by wire transfer of immediate United States federal funds to Seller's account at a bank designated by Seller. 3. Closing. Closing shall commence at 10:00 a.m. on April 24, 1997 (the "Closing Date") at the offices of Wolf, Block, Schorr and Solis-Cohen, Twelfth Floor Packard Building, 15th and Chestnut Streets, Philadelphia, Pennsylvania 19102. 4. Condition of Title. (a) (i) Title to Premises. Fee simple title to the Premises shall be conveyed by Seller to Buyer at the completion of Closing by a deed (the "Deed") containing Seller's special warranty in substantially the form of Exhibit I-1 to this Agreement, excluding from such warranty the Permitted Exceptions (as defined below). Title to the Personal Property 2 shall be conveyed by Seller to Buyer at the completion of Closing by a bill of sale ("Bill of Sale") in substantially the form of Exhibit I-2 to this Agreement. Title to the Premises shall be such as will be insured as good and marketable by Escrowee pursuant to the standard stipulations and conditions of the most current form of ALTA Policy of Owner's Title Insurance then in use in the State in which the Premises is located, free and clear of all liens and encumbrances except for the Permitted Exceptions. Buyer will pay the premium for the owner's policy and the cost of any endorsements to such policy. The term "Permitted Exceptions" shall mean the Existing Leases (as defined below), the additional title exceptions set forth on Exhibit C to this Agreement and any title exceptions defined as such under clause (ii) below. Title to the Personal Property shall also be subject to the Permitted Exceptions. (ii) Title Defects. Not later than the expiration of the Inspection Period (as defined in Paragraph 16(a)), Buyer shall deliver to Seller a current title commitment for the Premises issued by Escrowee, together with a written notice ("Title Notice") specifying any alleged defects in or objections to the title to the Premises which do not constitute Permitted Exceptions. Buyer shall be deemed to have waived its right to object to any encumbrance or other title objection existing at the Closing Date unless Buyer shall have timely given to Seller the Title Notice which specifies Buyer's objection, unless such encumbrance or other title objection was not a matter of record on the effective date of such title commitment. Upon Buyer's failure to timely object, such encumbrance or other title objection shall be deemed a Permitted Exception. Seller shall have no obligation to cure any alleged defect or objection raised in the Title Notice. If Buyer delivers a Title Notice, Seller shall have five (5) days after receipt of the Title Notice in which to notify Buyer in writing as to which of the alleged defects or objections raised in the Title Notice Seller will undertake to cure and which Seller declines to cure. If Seller fails to timely give such responsive notice to Buyer, Seller will be deemed to have declined to cure any alleged defect or objection raised in the Title Notice. In any event, Seller agrees to cure (i) any liens and encumbrances securing the payment of money which were voluntarily created by Seller and which are identified in Buyer's Title Notice or which arise after the date of Buyer's title commitment and (ii) any mechanic's liens. If Seller does not commit to undertake to cure any alleged title defect raised in Buyer's Title Notice by April 7, 1997, Buyer shall have the right, exercisable by notice to Seller given on or before April 11, 1997, to terminate this Agreement. If Buyer so terminates this Agreement, Escrowee is authorized and directed to return the Deposit to Buyer, and upon the return of the Deposit to Buyer, neither party shall have any further rights or obligations under this Agreement (except for the indemnity and confidentiality obligations of Buyer to Seller set forth in Paragraph 16(a) and 16(f) of this Agreement which shall survive the termination of this Agreement). If Buyer does not so terminate this Agreement, those matters which Buyer objected to in the Title Notice and which Seller declined to cure shall be deemed Permitted Exceptions. If Seller fails to cure by Closing any alleged title defect or title objection which Seller notifies Buyer Seller will undertake to cure, Buyer shall have the rights set forth in Paragraph 4(b). (b) Failure of Title. If on the Closing Date title to the Premises is not insurable as set forth in Paragraph 4(a) above, Buyer may elect, as its sole right and remedy, either (i) to take such title to the Premises as Seller can convey without abatement of the 3 Purchase Price except for liens and encumbrances of an ascertainable amount which Seller has agreed to cure pursuant to Paragraph 4(a)(ii) or (ii) to terminate this Agreement by written notice to Seller and Escrowee and be paid the Deposit. Notwithstanding the foregoing provisions, Buyer agrees to accept title to the Premises and Personal Property subject to judgments against Seller if buyer's title insurer insures Buyer against loss by reason of such judgments. If Buyer so terminates this Agreement, Escrowee is authorized and directed to return the Deposit to Buyer, and upon the return of the Deposit to Buyer, neither party shall have any further rights or obligations under this Agreement (except for the indemnity and confidentiality obligations of Buyer to Seller set forth in Paragraph 16(a) and 16(f) of this Agreement which shall survive the termination of this Agreement). 5. Possession. Possession of the Premises and the Personal Property is to be given by Seller to Buyer at the completion of Closing by delivery of the Deed and the Bill of Sale and by assignment of the Existing Leases. 6. Leases; Agreements. (a) Existing Leases. If Seller intends, prior to Closing, to enter into new leases for portions of the Premises or to enter amendments of Existing Leases, Seller shall first submit to Buyer for Buyer's approval a term sheet (the "Leasing Term Sheet") identifying the tenant or proposed tenant and setting forth the material economic terms of such transaction. If Buyer does not disapprove such proposed lease transaction by written notice to Seller given within five (5) business days after Buyer's receipt of the Leasing Term Sheet, Buyer shall be deemed to have approved the proposed lease transaction which is the subject of such Leasing Term Sheet. Buyer acknowledges that it has approved the pending lease transactions described on Schedule 7(g) to this Agreement. Notwithstanding the foregoing, Seller shall not be required to obtain Buyer's consent to such amendments as Seller may be required to enter under the terms of an Existing Lease or which Seller may enter to confirm matters for which a tenant under an Existing Lease exercises an option (for example, an amendment to confirm the terms pursuant to which a tenant may lease expansion space following the exercise by such tenant of an expansion option). Seller shall promptly notify Buyer of any such amendments. Seller shall not enter any new lease or amend any Existing Lease, except as provided in this Paragraph. All existing leases listed on Exhibit D to this Agreement, together with lease amendments and new leases entered in accordance with this Paragraph, are collectively called the "Existing Leases." Without limiting the effect of any other condition to Closing contained in this Agreement, the termination of any of the Existing Leases prior to Closing by reason of the expiration of its term or by reason of the tenant's default or exercise of a termination right shall not excuse Buyer from its obligation to complete Closing and to pay the Purchase Price. At Closing, Buyer shall receive a credit on account of the Purchase Price equal to the amount of any lease termination or similar payment made by any tenant to Seller between the date of this Agreement and Closing. (b) Existing Agreements. Seller shall also assign to Buyer at the completion of Closing, to the extent assignable, Seller's interests under the existing agreements listed on Exhibit E to this Agreement (collectively, the "Existing Agreements"). Seller shall, 4 prior to Closing, have the right to enter into new service agreements, provided any such agreement shall be terminable without penalty on not more than thirty (30) days' notice. Seller shall promptly provide Buyer with a copy of any new service agreement. All such new service agreements shall also constitute Existing Agreements. The termination of any of the Existing Agreements prior to Closing by reason of the expiration of its term or by reason of a default thereunder shall not excuse Buyer from its obligation to complete Closing and to pay the full Purchase Price. Seller shall cause its existing management agreement with Manager to be terminated as of Closing. (c) Assignment and Assumption. At Closing, Seller and Buyer shall execute and acknowledge an assignment and assumption agreement (the "Assignment and Assumption Agreement") in the form of Exhibit F to this Agreement pertaining to the Existing Leases and the Existing Agreements. 7. Closing; Apportionments. (a) Items to be Apportioned. Personal property taxes, real estate taxes and annual municipal or special district assessments (on the basis of the actual fiscal years for which such taxes are assessed), sums paid to or payable by Seller under the Existing Agreements, prepaid fees for licenses and permits to remain in effect for Buyer's benefit after Closing, rent, parking fees and other sums paid to Seller under the Existing Leases shall be apportioned at Closing pro rata between Buyer and Seller on a per diem basis as of the Closing Date. (b) Tenant Pass-Throughs. If the apportionment of any "escalation" payments relating to operating expenses, real estate taxes and assessments or other additional rent payments under any of the Existing Leases on account of periods prior to Closing and on account of sums which are attributable to expenses incurred by the lessor for periods of time prior to Closing, cannot be precisely determined at the time of Closing, Seller and Buyer shall reasonably estimate the apportionment of such sums, and such estimated sums shall be apportioned pro-rata between Buyer and Seller on a per diem basis as of the Closing Date. A post Closing adjustment shall be made, if necessary, between Buyer and Seller for such apportioned items within thirty (30) days after such sums can be precisely determined. Seller shall provide Buyer after Closing a final accounting of all escalatable operating costs for the portion of 1997 falling within the period of Seller's ownership of the Property. (c) Tenant Security Deposits. At Closing, Seller shall credit against the Purchase Price the amount of all cash security deposits payable to tenants then held by or for Seller under the Existing Leases as set forth on Schedule 7(c), together with an amount equal to interest thereon as may be required by law or under the terms of an Existing Lease. At Closing, Seller shall deliver to Buyer a current schedule of tenants and such security deposits. Seller shall not apply any tenant security deposit on account of a default by a tenant under its Existing Lease occurring between the date of this Agreement and Closing. 5 (d) Utility Charges. Seller shall use reasonable efforts to obtain readings of a gas, water and electric meters on the Premises (other than meters measuring utility consumption whose charges are payable by tenants in accordance with the Existing Leases) to a date no sooner than two (2) days prior to the Closing Date. Seller shall pay all utility charges based upon such meter readings. However, if after reasonable efforts Seller is unable to obtain readings of any meters prior to Closing, Closing shall be completed without such readings and upon the obtaining thereof after Closing, Seller shall pay the charges incurred prior to Closing as determined based upon such readings. Seller shall not assign to Purchaser any deposits which Seller has with any utility service or company servicing the Premises. (e) Unpaid Real Estate Taxes. If, on the Closing Date, bills for real estate taxes imposed upon the Premises for any part of the tax fiscal years in which Closing occurs have been issued but shall not have been paid, such taxes shall be paid at the time of Closing. (f) Arrearages. (i) Rent Arrearages. At or before Closing, Seller shall identify those tenants in arrears in the payment of rent or any other amount due Seller, and the amount thereof. Any payments received by Buyer after the Closing Date from a tenant so identified under any of the Existing Leases on account of rentals or other sums which are applicable to periods prior to Closing, shall be apportioned by Buyer upon receipt and the portion thereof attributable to periods prior to Closing shall immediately be paid by Buyer to Seller; provided all payments by such tenants after Closing will be deemed as being applicable, first, as against current rental due, then, as against such arrearages which existed as of Closing. Seller shall be deemed to have retained all claims existing against tenants for arrearages under any of the Existing Leases as of Closing. (ii) Contract Arrearages. Any payments received by Buyer after the Closing Date under any of the Existing Agreements on account of payments which are applicable to periods prior to Closing shall be apportioned by Buyer upon receipt and the portion thereof attributable to periods prior to Closing shall immediately be paid by Buyer to Seller. (iii) Accounting. Until the earlier to occur of (A) such time as Seller shall have received in full all sums which are potentially payable to it on account of any of the Existing Leases or the Existing Agreements as provided in subparagraphs (i) and (ii) above or (B) twelve (12) months after Closing, Buyer shall provide to Seller after Closing a monthly statement of rent received by Buyer under any of the Existing Leases or other sums received by Buyer under any of the Existing Agreements for those tenants and vendors pursuant to which Seller might be entitled to payments as provided in said subparagraphs. (g) Leasing Commissions: Tenant Improvements. At Closing, Seller will either deliver to Buyer evidence of payment or provide a credit against the Purchase Price for those unpaid leasing commissions and tenant improvement allowance amounts shown on 6 Schedule 7(g) to this Agreement as being payable by Seller. Buyer shall assume the obligations of Seller to pay any leasing commission and perform any tenant improvement work for which Buyer receives a credit on account of the Purchase Price under this Paragraph 7(g). At Closing buyer shall reimburse Seller for all leasing commissions and tenant costs actually paid or payable by Seller (i) for lease transactions entered after the date of this Agreement in accordance with Paragraph 6(a) of this Agreement, (ii) for lease transactions shown on Schedule 7(g) to this Agreement as being payable by Buyer and (iii) as a result of the renewal or expansion of Existing Leases which occur between March 4, 1997 and the Closing Date which are effectuated pursuant to existing renewal or expansion options under Existing Leases. Seller shall provide Buyer with invoices and evidence of Seller's payment of such costs for which Buyer is to reimburse Seller. Buyer shall timely pay after the Closing Date all leasing commissions and tenant costs which become due and payable after the Closing Date. Tenant costs include tenant improvement costs and if the lease so provides moving costs, design costs and incurred by the tenant, lease buyout costs and tenant inducement costs. (h) Interest to Lender. Interest under the Note which is secured by the Existing Deed of Trust is payable monthly in arrears. Therefore, the interest portion of the monthly payment to be made to the holder of the Existing Note on the Closing Date, if Closing occurs on the day such payment is due and payable, or to be made on the next payment date if Closing does not occur on a date on which any payment is due and payable, shall be apportioned on a per diem basis for the monthly period preceding such payment, and Buyer shall be given a credit at Closing on account of the Purchase Price for the portion of such interest payment attributable to the period occurring prior to closing. (i) Escrows. At Closing, Seller shall assign to Buyer all sums (if any) then held in escrow by the holder of the Existing Deed of Trust on account of real estate taxes and insurance premiums, if any, and Buyer shall pay to Seller at Closing a sum equal to such escrowed funds assigned to Buyer. (j) Fees to Lender. Buyer will also pay the $150,000 assumption fee, if imposed by Lender, in connection with Buyer's assumption of the Existing Loan. If Buyer does not assume the Existing Loan and the Existing Loan is paid off at Closing, Buyer will also pay the prepayment fee or premium payable under the Existing Note. (k) Transfer Tax. Buyer shall pay the state and county realty transfer taxes imposed in connection with the Deed or transactions contemplated by this Agreement. Seller shall pay the grantor's tax imposed in connection with the Deed or transactions contemplated by this Agreement. 8. Seller's Representations and Warranties. (a) Seller represents and warrants to Buyer as follows: 7 (i) Organization. Seller is a corporation, duly organized and validly existing under the laws of the State of Delaware and has all requisite corporate power and authority to carry on its business as now conducted. (ii) Authorization. Seller has all requisite corporate power and authority to enter into and perform this Agreement, and Seller has duly authorized the execution and performance of this Agreement. No consent or approval from any third party is required in order to enable Seller to execute this Agreement and perform its obligations hereunder. (iii) No Condemnation. To Seller's knowledge, there are no existing or pending condemnation proceedings affecting the Premises, nor, to Seller's actual knowledge, have any such condemnation proceedings been overtly threatened. (iv) No Proceedings. Except as set forth on Schedule 8(a)(iv) to this Agreement, Seller has received no written notice of any pending actions, suits or proceedings against Seller or the Premises nor, to Seller's knowledge, is there any action, suit or proceeding against Seller or the Premises threatened which would prevent consummation by Seller of the sale of the Premises or materially and adversely affect the performance of any of Seller's other obligations to be performed under this Agreement. Seller has not received any written notice from any governmental authority claiming a violation or alleged violation of any law, rule, ordinance or code with respect to the Premises which remains uncured. (v) Existing Leases. The list of Existing Leases attached to this Agreement as Exhibit D-1 is, to Seller's knowledge, true, correct and complete in all material respects. To Seller's knowledge, all of the Existing Leases listed on Exhibit D-1 are, except as otherwise noted thereon, in full force and effect and Seller has received no notice of default from any of the tenants thereunder which remains uncured. To Seller's knowledge, except as otherwise noted on Exhibit D-1, none of the tenants is in default under its Existing Lease (except for rental obligations for the current month) in any material respect. Except as set forth on Exhibit D-1, Seller has received no prepayments of rent under any Existing Lease. Exhibit D-1 contains a schedule of deposits made by tenants as security for such tenants' obligations under their Existing Leases presently on deposit with Seller for the account of tenants. Except as set forth on Exhibit D-1 or Schedule 7(g), (A) Seller has paid in full all concessions, relocation payments and tenant allowances and has completed all tenant improvement obligations under the Existing Leases and (B) all leasing commissions and fees due with respect to the current demised premises and current unexpired term of each Existing Lease have been paid in full. The copies of the Existing Leases previously delivered by Seller to Buyer are true and complete copies of such Existing Leases and the same have not been further amended, modified or supplemented. (vi) Existing Agreements. Exhibit E is a true, correct and complete list of all Existing Agreements to which Seller is a party or by which Seller is bound for the provision of services to or management of the Premises. To Seller's knowledge, all of the Existing Agreements are in full force and effect and free from material default. The copies of 8 the Existing Agreements previously delivered by Seller to Buyer are true, correct and complete copies of such Existing Agreements and the same have not been further amended, modified or supplemented. (vii) Existing Loan. Attached as Schedule 7(a) to this Agreement are true and correct copies of the Existing Note, Existing Deed of Trust, the Assignment of Rents and Leases from Buyer in favor of Lender, Borrower's Certificate, the Environmental Indemnification Agreement between Seller and Lender, the Tax Deposit Agreement among Seller, Lender and Columbia National Real Estate Finance, Inc., the Collateral Assignment of Contracts, Licenses and Permits and UCC Financing Statements. Such documents constitute all of the material documents executed by Seller at closing on the Existing Loan and none of such documents has been materially amended. Seller has received no written notice from Lender asserting any default by Seller under the Existing Loan. (b) All references in this Paragraph 8 or elsewhere in this Agreement to "Seller's knowledge" shall refer solely to the actual knowledge of Stephen B. Hoover, Raymond L. Owens and Daniel Coughlan after having made inquiry of Terry Landers, Manager's on-site manager for the Premises, and shall not be construed to refer to the knowledge of any other employee, officer, director, shareholder or agent (including Manager) of Seller or any affiliate of Seller, and shall not include inputed or constructive knowledge. 9. Buyer's Representations and Warranties. Buyer hereby represents and warrants to Seller as follows: (a) Organization. Buyer is a limited partnership duly organized and validly existing under the laws of the State of Delaware and has all requisite partnership power and authority to carry on its business as now conducted. (b) Authorization. Buyer has all requisite partnership power and authority to enter into and perform this Agreement and Buyer has or prior to the end of the Inspection Period, will have duly authorized the execution and performance of this Agreement. Buyer has received all approvals (except any approvals to be obtained during the Inspection Period) necessary to consummate the transactions described herein. 10. Conditions to Closing. (a) Buyer shall not be obligated to complete Closing under this Agreement unless each of the following conditions shall be fulfilled on the Closing Date. (i) Title Policy. Escrowee or another title insurance company authorized to transact business in the State of Virginia reasonably acceptable to Buyer and Buyer's counsel shall commit in writing to Buyer to issue an owner's policy of title insurance as described in Paragraph 4(a). 9 (ii) Accuracy of Representations. The representations and warranties made by Seller in this Agreement shall be true and correct as of the Closing Date in all material respects. (iii) Seller's Performance. Seller shall have complied with and performed in all material respects all of its obligations under this Agreement. (iv) Tenant Estoppel Certificates. Seller shall have obtained and delivered to Buyer by Closing Tenant Estoppel Certificates (as defined below) from American Management Systems, Inc. ("AMS") and from other tenants occupying not less than seventy-five percent (75%) of the remaining rentable area of the Premises not occupied by AMS. Seller may satisfy this condition by executing and delivering to Buyer at Closing Tenant Estoppel Certificates ("Seller Estoppels") with respect to any one or more Existing Leases for which no Tenant Estoppel Certificate was obtained; provided, Seller may not satisfy this condition by delivering a Seller Estoppel for AMS, Fujitsu or Liberty Mutual. Each Seller Estoppel shall cease to be effective, and Seller's obligations thereunder will terminate, upon the earlier of receipt from the applicable tenant of a Tenant Estoppel Certificate consistent with the requirements of this Paragraph or twelve (12) months after Closing. Seller agrees to use its reasonable efforts to cause tenants under the Existing Leases to deliver to Buyer at Closing a written statement ("Tenant Estoppel Certificate") in substantially the form of the tenant estoppel certificate set forth on Exhibit H to this Agreement or in the form which any tenant is required to give under its lease. Buyer agrees not to object to any non-material qualifications or modifications, including any "knowledge" qualification as to defaults which a tenant may make to the form of Tenant Estoppel Certificate. If any tenant has a claim which would entitle it to set-off the amount of the claim against rent due under such tenant's lease and the amount of such claim is ascertainable, Seller shall have the right, at its sole option, to give Buyer a credit against the cash portion of the Purchase Price payable at Closing in the amount of the claim and, in such event, Buyer shall, subject to the provisions of this Agreement, complete Closing subject to such claim. (v) Centerpointe III Option. CP III shall have delivered to Buyer CP III's executive option agreement in the form of Exhibit G to this Agreement with respect to certain land located in Fairfax, Virginia and generally known as Centerpointe III (the "Option Agreement"). Prior to the end of the Inspection Period, Buyer will deliver to Seller a title commitment for the real property which is the subject of the Option Agreement. It shall be a condition of Buyer's obligation to close under this Agreement that, prior to Closing, Buyer and CP III shall agree upon the content of Exhibit B, List of Permitted Title Exceptions, to be inserted in such Option Agreement. (b) Seller shall not be obligated to complete Closing under this Agreement unless each of the following conditions shall be fulfilled on the Closing Date: 10 (i) Buyer's Performance. Buyer shall have paid the Purchase Price and shall have complied with and performed in all material respects all of its other obligations under this Agreement. (ii) Loan Assumption. If Buyer assumes the Existing Loan, Lender shall have agreed to release Seller from all liability under the Existing Loan accruing from and after Closing; provided, that this condition shall be deemed waived if Buyer elects to purchase the Premises without assuming the Existing Loan. (iii) Centerpointe III Option. Buyer and CP III shall have agreed prior to Closing upon the content of Exhibit B, List of Permitted Title Exceptions, to be inserted in the Option Agreement. 11. Deliveries at Closing. (a) Seller's Deliveries. On the Closing Date, Seller shall deliver to Buyer the following: (i) Deed. The Deed. (ii) Bill of Sale. The Bill of Sale. (iii) Assignment and Assumption Agreement. The Assignment and Assumption Agreement. (iv) Authority Documents. A resolution, to evidence Seller's authorization of performance of this Agreement and an incumbency certificate to evidence the capacity of the signatory for Seller. (v) FIRPTA Certification and Title Affidavit. A certificate in the form attached to this Agreement as Exhibit J-1 with respect to compliance with the Foreign Investment in Real Property Tax Act (Internal Revenue Code Section 1445, as amended, and the regulations issued thereunder) and an affidavit in the form of Exhibit J-2 in favor of the title insurer who will insure Buyer's title to the Premises (which affidavit shall in no event expand Seller's warranty contained in the Deed). (vi) Keys. All keys, codes and other security devices for the Property (to the extend in Seller's possession). (vii) Tenant Notices. Written notice from Seller to each tenant of the Property under the Existing Leases in substantially the form of Exhibit K to this Agreement. 11 (viii) Books and Records. Copies (to the extent in Seller's possession) of all books and records for the orderly transition of operation of the Premises (delivery of same being deemed made by making them available to buyer at the office of Seller's managing agent). (ix) Original Documents. The originals (to the extent in Seller's possession) of all Existing Leases, all Existing Agreements, warranties, guaranties, permits and approvals, plans and specifications and all other materials owned by Seller relating to the Intangible Personal Property, the maintenance and operation of the Property and which are currently in Seller's possession (delivery of same being deemed made by making them available to Buyer at the office of Seller's managing agent). (x) Seller's Closing Certificate. An executive original of the Seller's Closing Certificate in the form attached as Exhibit M. (xi) Termination of Management Agreement. Evidence of the Termination of the existing Management Agreement with Manager with respect to the Property. (xii) Closing Statement. An executive original Closing Statement setting forth the calculation of the Purchase Price and the prorations provided for hereunder. (xiii) Transfer Tax Forms. An executed original of any transfer tax forms required in connection with the Closing. (xiv) Other Documents. Any other documents which Seller is obligated to deliver pursuant to this Agreement. (b) Buyer's Deliveries. On the Closing Date, Buyer will deliver to Seller the following: (i) Assignment and Assumption Agreement. The Assignment and Assumption Agreement. (ii) Tenant Notices. Written notice from Buyer to each tenant of the Premises under the Existing Leases in substantially the form of Exhibit K to this Agreement. (iii) Authority Documents. A resolution, to evidence Buyer's authorization of performance of this Agreement, and an incumbency certificate to evidence the capacity of the signatory for Buyer. (iv) Purchase Price. That portion of the Purchase Price payable at Closing. 12 (v) Buyer's Closing Certificate. An executed original of Buyer's Closing Certificate in the form attached as Exhibit N. (vi) Transfer Tax Forms. An executed original of any transfer tax forms required in connection with the Closing. (vii) Other Documents. Any other documents which Buyer is obligated to deliver pursuant to this Agreement. 12. Default. (a) Buyer Default. If Buyer defaults under this Agreement at the Closing Date by failing to complete Closing in accordance with the terms of this Agreement, then on the Closing Date, Seller shall be entitled, as Seller's sole and exclusive remedy at law or in equity for such default by Buyer hereunder, to be paid the Deposit as liquidated damages and not as a penalty. Seller and Buyer agree that the actual damages to Seller in the event of such default are impractical to ascertain as of the date of this Agreement and that the amount of the Deposit is a reasonable estimate thereof. Nothing in this Paragraph, however, shall limit Seller's rights against Buyer by reason of any indemnity obligations of Buyer to Seller set forth in this Agreement, all of which shall survive the termination of this Agreement. (b) Seller Default. If Seller defaults under this Agreement at or prior to the Closing Date by failing to complete Closing in accordance with the terms of this Agreement, then on the earlier of the Closing Date or the date of Seller's default, Buyer shall be entitled, as Buyer's sole and exclusive remedy, to institute an action for specific performance of this Agreement. 13. Notices. (a) All notices given by either party to the other shall be in writing and shall be sent either (i) by United States Postal Service registered or certified mail, postage prepaid, return receipt requested, (ii) by nationally recognized overnight courier service for next business day delivery, addressed to the other party at the addresses listed below or (iii) via telecopier or facsimile transmission to the facsimile numbers listed below, provided, however, that if such communication is given via telecopier or facsimile transmission, an original counterpart of such communication shall concurrently be sent in the manner specified in clause (ii) above. Addresses and facsimile numbers of the parties are as follows: As to Seller: c/o GE Investments 3003 Summer Street P.O. Box 7900 Stamford, Connecticut 06905 13 Attention: Raymond L. Owens Fax: (203) 326-4169 With copies at the same time to: GE Investments 3003 Summer Street P.O. Box 7900 Stamford, Connecticut 06905 Attention: Michael J. Strone, Esquire Fax: (203) 326-2497 and Wolf, Block, Schorr and Solis-Cohen Twelfth Floor Packard Building 15th and Chestnut Streets Philadelphia, Pennsylvania 19102 Attention: James R. Williams, Esquire Fax: (215) 977-2346 As to Buyer: Beacon Properties, L.P. 50 Rowes Wharf Boston, Massachusetts 02110 Attention: Ms. Erin O'Boyle Fax: (617) 261-0152 with a copy at the same time to: Beacon Properties Corporation 50 Rowes Wharf Boston, Massachusetts 02110 Attention: William A. Bonn, Esquire, General Counsel Fax: (617) 261-0152 and to Goulston & Storrs 400 Atlantic Avenue Boston, Massachusetts 02210 14 Attention: Jordan P. Krasnow, Esquire Fax: (617) 574-4412 As to Escrowee: Commonwealth Land Title Insurance Company 50 Federal Street Boston, Massachusetts 02110 Attention: Haskell Shapiro Fax: (617) 542-0636 or to such other address as the respective parties may hereafter designate by notice in writing in the manner specified above. Any notice may be given on behalf of any party by its counsel. (b) Notices given in the manner aforesaid shall be deemed sufficiently served or given for all purposes under this Agreement upon the earlier of (i) actual receipt or refusal by the addressee or (ii) one day following the date such notices, demands or requests shall be deposited in any Post Office, or branch Post Office regularly maintained by the United States Government or delivered to the overnight courier service. 14. Fire or Other Casualty. (a) Casualty Insurance. Seller agrees to maintain in effect until the Closing Date the fire and extended coverage insurance policies now in effect for the Premises. (b) Casualty Damage. Subject to subparagraph (c) below, the obligations of the parties to complete Closing under this Agreement shall in no way be voided or impaired if the Premises or Personal Property, or any part thereof, shall be damaged or destroyed by fire or other casualty between the date of this Agreement and the Closing Date. If any such damage or destruction occurs after the date of this Agreement: (i) Seller shall provide Buyer with notice thereof, (ii) the cash proceeds of all fire and extended coverage insurance policies attributable to the Premises or the Personal Property received by Seller prior to the Closing Date and not used by Seller for the repair of the Premises and the Personal Property (and Buyer hereby authorizes Seller to use the proceeds for such purpose) shall be applied on account of the cash portion of the Purchase Price payable at Closing, (iii) the cash proceeds of such insurance proceeds retained by Lender on account of the Existing Loan shall be applied on account of that portion of the Purchase Price payable by Buyer's assumption of the Existing Loan or, if buyer does not assume the Existing Loan, shall be applied on account of the cash portion of the Purchase Price payable at Closing, (iv) all unpaid claims under such insurance policies attributable to the Premises and Personal Property shall be assigned by Seller to Buyer at the Closing and (v) at Closing Seller shall pay to Buyer an amount equal to Seller's deductible under such insurance policies attributable to the Premises and Personal Property. 15 (c) Right of Termination. Notwithstanding any of the preceding provisions of the Paragraph 14, if the cost to repair damage caused by fire or other casualty to the Premises exceeds One Million Dollars ($1,000,000), Buyer shall have the right to terminate this Agreement by written notice to Seller. Upon such termination, the Deposit shall be returned by Escrowee to Buyer and neither party shall have any further rights or obligations under this Agreement (except for the indemnity and confidentiality obligations of Buyer to Seller set forth in Paragraph 16(a) and 16(f) of this Agreement which shall survive the termination of this Agreement). If Buyer desires to terminate this Agreement pursuant to this subparagraph (c), Buyer, shall give a written notice of termination to Seller within ten (10) business days after Seller's notice to Buyer of the occurrence of the casualty. If Seller's notice pursuant to Paragraph 14(b)(i) is given to Buyer less than ten (10) business days prior to Closing, at Buyer's option Closing may be postponed to a date not earlier than ten (10) business days or later than thirty (30) days after Buyer's receipt of such notice. 15. Assignability. (a) Limited Assignment. Subject to the limitations set forth in subparagraph (b) below, this Agreement and all, but not part, of Buyer's rights under this Agreement may be assigned by Buyer, without the prior written consent of Seller, to an entity which is qualified to do business in the State in which the Premises is located and in which Buyer (and/or Beacon Properties Corporation ("BPC") and/or one or more entitled 100% owned and controlled by Buyer and/or BPC) owns for its own account not less than one hundred percent (100%) of the ownership interests therein and maintains control over the management and affairs of the entity; provided, however, that such assignment shall not release or relieve Buyer of an from any liability or obligation under this Agreement, and Buyer shall continue to be primarily liable to Seller under this Agreement. No such assignment shall be effective, however, unless and until Buyer shall have furnished to Seller both an executed copy of the assignment plus a written assumption agreement, in form satisfactory to Seller, by the assignee to assume, perform and be responsible, jointly and severally with the Buyer named herein, for the performance of all of the obligations of Buyer under this Agreement and to pay all additional transfer or documentary taxes imposed as a result of such assignment, and which contains a representation by the assignee that all of the representations and warranties made by Buyer in this Agreement are true and correct with respect to the assignee as of the date of the assumption agreement. Seller shall have the right to rely in good faith on the genuineness and validity of the notice from Buyer of an assignment and to convey the Premises to the assignee without liability to Buyer or any other person. (b) Prohibited Assignments. Notwithstanding the foregoing provisions of subparagraph (a), Buyer shall have no right to assign this Agreement to any entity owned or controlled by an employee benefit plan if Seller's sale of the Premises to such entity would, in the judgment of Seller or Seller's counsel, either create, otherwise cause, or raise a material question as to whether it would create or otherwise cause, a "prohibited transaction" under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). 16 (c) Successors and Assigns. Except as provided in subparagraph (a), Buyer may not assign or suffer an assignment of this Agreement and its rights under this Agreement. Subject to the foregoing limitations, this Agreement shall extend to, and shall bind, the respective heirs, executors, personal representatives, successors and assigns of Seller and Buyer. 16. Inspection Period. (a) Right to Inspect. Buyer, and Buyer's agents and representatives, shall have the right, from time to time, through 5:00 p.m., Eastern Standard Time on April 3, 1997 ("Inspection Period"), during normal business hours, to enter upon the Premises for the purpose of inspection of the physical condition of the Premises (including a Phase I environmental assessment report, soils report, structural engineering report), evaluation of title, survey of the Premises, testing of machinery and equipment, evaluation of plans and specifications and generally for the reasonable ascertainment of the physical condition of the Premises; provided, however, that Buyer shall (i) give Seller at least one (1) business day prior notice of the time and place of such entry and permit a representative of Seller to accompany Buyer; (ii) restore any damage to the Premises or any adjacent property caused by such actions; (iii) indemnify, defend and save Seller and, as the case may be, its partners, trustees, shareholders, directors, officers, employees and agents (each, an "Indemnified Party") harmless of and from any and all claims, costs and liabilities actually incurred by any Indemnified Party such entry and such activities; (iv) not enter into any tenant's leased premises or communicate with any tenant without Seller's prior consent, which consent will not be unreasonably withheld, and in all such events Seller shall be afforded the opportunity to accompany Buyer's representatives when exercising any rights under this cause (iv). All such inspection rights shall be subject to the right of tenants under the Existing Leases. The costs of all inspections and examinations so performed shall be borne by Buyer. (b) No Liens Permitted. Nothing contained in this Agreement shall be deemed or construed in any way as constituting the consent or request of Seller, express or implied by inference or otherwise, to any party for the performance of any labor or the furnishing of any materials to the Premises or any part thereof, nor as giving Buyer any right, power or authority to contract for or permit the rendering of any services or the furnishing of any materials that would give rise to the filing of any liens against the Premises or any part thereof. (c) Right of Termination. Buyer shall have the right to terminate this Agreement by giving Seller written notice ("Termination Notice") on or prior to the end of the Inspection Period, which right shall be exercisable by Buyer in its sole discretion. Without limiting the foregoing, Buyer may terminate this Agreement pursuant to this Paragraph 16(c) if Buyer has not received all necessary internal board approvals Buyer may require by the end of the Inspection Period. Upon giving the Termination Notice, this Agreement shall immediately terminate (except for the indemnity and confidentiality obligations of Buyer to Seller under Paragraph 16(a) and 16(f) of this Agreement which shall survive termination of this Agreement) and Escrowee is authorized and directed to return the Deposit to Buyer. Buyer's failure to 17 deliver the Termination Notice on or before the expiration of the Inspection Period shall be deemed a waiver of Buyer's right to terminate this Agreement under this Paragraph. (d) Deliveries. Seller has furnished or made available to Buyer, and Buyer acknowledges receipt or the availability of, the following: (i) Copies of plans and specifications for the Premises, to the extent currently in Seller's possession. (ii) The current books and records (excluding, however, internal memoranda, financial projections, appraisals and projected budgets) customarily prepared by or at Seller's request with respect to the Premises, including, without limitation, to the extent so prepared, all ledgers, records of income, expense, capital expenditures, utility bills and the most recent property tax bill. (iii) Copies of all service and maintenance contracts currently in force with respect to the Premises. (iv) Copies of all Existing Leases and other occupancy agreements currently in force with respect to the Premises. (e) NO WARRANTY. NOTWITHSTANDING THE PROVISIONS OF PARAGRAPH 16(d), BUYER ACKNOWLEDGES AND UNDERSTANDS THAT SOME OF THE MATERIALS DELIVERED BY SELLER HAVE BEEN PREPARED BY PARTIES OTHER THAN SELLER. SELLER MAKES NO REPRESENTATION OR WARRANTY WHATSOEVER, EXPRESS OR IMPLIED, AS TO THE COMPLETENESS, CONTENT OR ACCURACY OF THE DELIVERED MATERIALS WHICH WERE NOT PREPARED BY SELLER. (f) Buyer shall hold as confidential all information concerning Seller or the Premises obtained by Buyer in connection with the transactions contemplated by this Agreement. Buyer shall not, prior to completion of Closing, release any such information relating to Seller or the Premises without Seller's prior written consent, except pursuant to court order or as may otherwise be required by law. Seller hereby consents to Buyer's disclosure of information relating to Seller or the Premises to Buyer's prospective mortgage lenders and investors, consultants, officers, directors and attorneys, and pursuant to Paragraph 23(h). 17. Condemnation. (a) Immaterial Taking. If any part of the Premises shall be taken by exercise of the power of eminent domain after the date of this Agreement, this Agreement shall continue in full force and effect and there shall be no abatement of the Purchase Price. Seller shall be relieved, however, of its duty to convey title to the portion so taken, but Seller shall, on the Closing Date, assign to Buyer all rights and claims to any awards arising therefrom as well as 18 any money theretofore received by Seller on account thereof net of any expenses to Seller, including attorneys' fees of collecting the same. Seller shall promptly furnish Buyer with a copy of the declaration of taking promptly after Seller's receipt thereof. (b) Material Taking. If any such taking of a portion of the Premises materially interferes with the use of the Premises for the purposes for which it is currently used, either Seller or Buyer may terminate this Agreement by written notice to the other party. Upon such termination, the Deposit shall be returned by Escrowee to Buyer and neither party shall have any further rights or obligations hereunder (except for the indemnity and confidentiality obligations of Buyer to Seller set forth in Paragraph 16(a) and 16(f) of this Agreement which will survive termination of this Agreement). 18. Brokers. Each party represents and warrants to the other that it has dealt with no broker or other intermediary in connection with this transaction or the Premises other than Cushman & Wakefield (the "Disclosed Broker"), whose fees shall be payable by Seller pursuant to a separate agreement between Seller and Disclosed Broker, and Buyer shall have no liability or obligation in connection therewith. Each party shall indemnify, defend and save harmless the other of and from any claim for commission or compensation by any other broker or other intermediary claiming through the indemnifying party. The provisions of this Paragraph shall survive Closing. 19. CONDITION OF PREMISES. (A) ENTIRE AGREEMENT. THE ENTIRE AGREEMENT BETWEEN SELLER AND BUYER WITH RESPECT TO THE PREMISES AND THE PERSONAL PROPERTY AND THE SALE THEREOF IS EXPRESSLY SET FORTH IN THIS AGREEMENT. THE PARTIES ARE NOT BOUND BY ANY AGREEMENTS, UNDERSTANDINGS, PROVISIONS, CONDITIONS, REPRESENTATIONS OR WARRANTIES (WHETHER WRITTEN OR ORAL AND WHETHER MADE BY SELLER OR ANY AGENT, EMPLOYEE OR PRINCIPAL OF SELLER OR ANY OTHER PARTY) OTHER THAN AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT. WITHOUT IN ANY MANNER LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES THAT IT AND ITS REPRESENTATIVES HAVE FULLY INSPECTED THE PREMISES, THE PERSONAL PROPERTY, THE EXISTING LEASES AND EXISTING AGREEMENTS, OR WILL BE PROVIDED WITH AN ADEQUATE OPPORTUNITY TO DO SO, ARE OR WILL BE FULLY FAMILIAR WITH THE FINANCIAL AND PHYSICAL (INCLUDING WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION THEREOF, AND THAT THE PREMISES, THE PERSONAL PROPERTY, THE EXISTING LEASES AND EXISTING AGREEMENTS HAVE BEEN PURCHASED BY BUYER IN AN "AS IS" AND "WHERE IS" CONDITION AND WITH ALL EXISTING DEFECTS AS A RESULT OF SUCH INSPECTIONS AND INVESTIGATIONS AND NOT IN RELIANCE ON ANY AGREEMENT, UNDERSTANDING, CONDITION, WARRANTY (INCLUDING, WITHOUT LIMITATION, WARRANTIES OF HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR REPRESENTATION MADE BY SELLER OR ANY 19 AGENT, EMPLOYEE OR PRINCIPAL OF SELLER OR ANY OTHER PARTY AS TO THE FINANCIAL OR PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION OF THE PREMISES OR THE PERSONAL PROPERTY OR THE AREAS SURROUNDING THE PREMISES, AS TO ANY MATTER, INCLUDING WITHOUT LIMITATION AS TO ANY PERMITTED USE THEREOF, THE ZONING CLASSIFICATION THEREOF OR COMPLIANCE THEREOF WITH FEDERAL, STATE OR LOCAL LAWS, AS TO INCOME OR EXPENSES IN CONNECTION THEREWITH, OR AS TO ANY OTHER MATTER IN CONNECTION THEREWITH, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY INSTRUMENT TO BE DELIVERED TO BUYER BY SELLER AT CLOSING. BUYER ACKNOWLEDGES THAT NEITHER SELLER, NOR ANY AGENT OR EMPLOYEE OF SELLER NOR ANY OTHER PARTY ACTING ON BEHALF OF SELLER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY SUCH AGREEMENT, CONDITION, REPRESENTATION OR WARRANTY EITHER EXPRESSED OR IMPLIED, OTHER THAN AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY INSTRUMENT TO BE DELIVERED TO BUYER BY SELLER AT CLOSING. THIS PARAGRAPH SHALL SURVIVE CLOSING. (b) CHANGE OF CONDITIONS. BUYER SHALL ACCEPT THE PREMISES AND THE PERSONAL PROPERTY AT THE TIME OF CLOSING IN THE SAME CONDITION AS THE SAME ARE AS OF THE END OF THE INSPECTION PERIOD, AS SUCH CONDITION SHALL HAVE CHANGED BY REASON OF WEAR AND TEAR AND DAMAGE BY FIRE OR OTHER CASUALTY, SUBJECT NEVERTHELESS TO THE PROVISIONS OF PARAGRAPHS 14 AND 17. WITHOUT LIMITING THE GENERALITY OF THE FOREGOING, EXCEPT AS PROVIDED IN PARAGRAPHS 14 AND 17, BUYER SPECIFICALLY ACKNOWLEDGES THAT THE FACT THAT ANY PORTION OF THE PREMISES OR THE PERSONAL PROPERTY OR ANY EQUIPMENT OR MACHINERY THEREIN OR ANY PART THEREOF MAY NOT BE IN WORKING ORDER OR CONDITION AT THE CLOSING DATE BY REASON OF WEAR AND TEAR OR DAMAGE BY FIRE OR OTHER CASUALTY, OR BY REASON OF ITS PRESENT CONDITION, SHALL NOT RELIEVE BUYER OF ITS OBLIGATION TO COMPLETE CLOSING UNDER THIS AGREEMENT, EXCEPT AS PROVIDED IN SUBPARAGRAPH (c) BELOW, SELLER HAS NO OBLIGATION TO MAKE ANY REPAIRS OR REPLACEMENTS TO THE PREMISES. (c) Seller Repairs. Between the date of the execution of this Agreement and the Closing Date, Seller shall perform such repairs to the Premises and the Personal Property as Seller has customarily previously performed to maintain them in the same condition as they are as of the end of the Inspection Period, as said condition shall be changed by wear and tear and damage by fire or other casualty. (d) RELEASE. WITHOUT LIMITING THE PROVISION OF SUBPARAGRAPH (a) ABOVE AND NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, BUYER HEREBY RELEASES SELLER AND (AS THE CASE MAY BE) SELLER'S OFFICERS, DIRECTORS, SHAREHOLDERS, 20 TRUSTEES, PARTNERS, EMPLOYEES, MANAGERS AND AGENTS FROM ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTIONS, LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES WHETHER THE SUIT IS INSTITUTED OR NOT) WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR CONTINGENT (HEREINAFTER COLLECTIVELY CALLED THE "CLAIMS") ARISING FROM OR RELATING TO (i) ANY DEFECTS, ERRORS OR OMISSIONS IN THE DESIGN OR CONSTRUCTION OF THE PREMISES AND PERSONAL PROPERTY WHETHER THE SAME ARE THE RESULT OF NEGLIGENCE OR OTHERWISE, OR (ii) ANY OTHER CONDITIONS, INCLUDING ENVIRONMENTAL AND OTHER PHYSICAL CONDITIONS, AFFECTING THE PREMISES OR PERSONAL PROPERTY WHETHER THE SAME ARE A RESULT OF NEGLIGENCE OR OTHERWISE. THE RELEASE SET FORTH IN THIS SECTION SPECIFICALLY INCLUDES, WITHOUT LIMITATION, ANY CLAIMS (INCLUDING INDEMNITY AND CONTRIBUTION CLAIMS) ARISING UNDER ANY ENVIRONMENTAL LAWS OF THE UNITED STATES, THE STATE IN WHICH THE PREMISES IS LOCATED OR ANY POLITICAL SUBDIVISION THEREOF OR UNDER THE AMERICANS WITH DISABILITIES ACT OF 1990, AS ANY OF THOSE LAWS MAY BE AMENDED FROM TIME TO TIME AND ANY REGULATIONS, ORDERS, RULES OF PROCEDURES OR GUIDELINES PROMULGATED IN CONNECTION WITH SUCH LAWS, REGARDLESS OF WHETHER THEY ARE IN EXISTENCE ON THE DATE OF THIS AGREEMENT. (e) NOTHING IN SUBPARAGRAPH 19(d) SHALL CONSTITUTE A RELEASE OF SELLER FOR ANY CLAIM MADE BY A THIRD PARTY AGAINST BUYER ASSERTING INJURY OR DAMAGE TO SUCH THIRD PARTY ARISING DURING SELLER'S OWNERSHIP OF THE PREMISES, PROVIDED (i) BUYER DELIVERS WRITTEN NOTICE TO SELLER OF THE THIRD PARTY CLAIM WITHIN THIRTY (30) DAYS AFTER BUYER'S RECEIPT OF THE THIRD PARTY CLAIM, (ii) SELLER SHALL BE PERMITTED TO INTERVENE IN DEFENDING THE THIRD PARTY CLAIM AND (iii) BUYER DOES NOT SETTLE THE THIRD PARTY CLAIM WITHOUT THE WRITTEN CONSENT OF SELLER. A THIRD PARTY DOES NOT INCLUDE ANY DIRECT OR INDIRECT PRINCIPAL OR AFFILIATE OF BUYER. NOTWITHSTANDING ANYTHING CONTAINED IN THIS PARAGRAPH, BUYER AGREES THAT SELLER SHALL HAVE NO LIABILITY TO BUYER UNDER THIS PARAGRAPH (WHETHER BY REIMBURSEMENT OR CONTRIBUTION UNDER ENVIRONMENTAL LAWS OR OTHERWISE) FOR THE COST OF ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES, FOR THE COST OF ANY REPAIRS OR REPLACEMENTS TO THE PREMISES, OR FOR ANY OTHER COSTS OF REMEDIATING THE CONDITION GIVING RISE TO THE THIRD PARTY CLAIM (TOGETHER, "REMEDIATION COSTS") OR FOR BUYER'S LEGAL FEES AND COURT COSTS IN DEFENDING A THIRD PARTY CLAIM. BUYER SHALL PAY ALL REMEDIATION COSTS AND BUYER'S LEGAL FEES AND COURT COSTS. SELLER SHALL PAY ITS LEGAL FEES AND COURT COSTS. (f) Seller Reports. Buyer acknowledges that Seller makes no warranties or representations regarding the adequacy, accuracy or completeness of Seller's 21 environmental reports (collectively the "Reports") or other documents relating to the Reports, and Buyer shall have no claim against Seller based upon the "Reports or such other documents relating to the Reports. Buyer further acknowledges that Buyer has had full opportunity to perform such environmental, engineering, legal and financial investigations and evaluations of the Premises as Buyer deems appropriate prior to entering into this Agreement or shall have such opportunity during the Inspection Period, and Buyer has obtained or shall obtain its own environmental, engineering, legal and financial assessments of the Premises. (g) Effect of Disclaimers. Buyer acknowledges and agrees that the Purchase Price has been negotiated to take into account that the Premises and Personal Property are being sold subject to the provisions of this Paragraph 19 and that Seller would have charged a higher purchase price if the provisions in this Paragraph 19 were not agreed upon by Buyer. 20. Survival of Provisions. (a) Notwithstanding any provision to the contrary set forth in this Agreement, the agreements and obligations of Buyer under Paragraph 7, 16(a), 16(e), 16(f), 18, and 19, and 23(h) shall survive Closing, and the warranties and representations of Buyer set forth in Paragraph 9 shall survive Closing under this Agreement for a period of twelve (12) months. (b) (i) Notwithstanding any provision to the contrary set forth in this Agreement, the agreements and obligations of Seller under Paragraph 7, 18 and 23(h) shall survive Closing, and the warranties and representations of Seller set forth in Paragraph 8(a) (the "Surviving Warranties") shall survive Closing under this Agreement for a period of twelve (12) months, as the same may be extended pursuant to Paragraph 20(b)(iii). Notwithstanding the foregoing, the representations and warranties of Seller contained in Paragraph 8(a)(v) with respect to any Existing Lease shall not survive the delivery to Buyer of a Tenant Estoppel Certificate confirming matters represented and warranted by Seller with respect to such Existing Lease. For example, if Buyer receives a Tenant Estoppel Certificate from a tenant and such certificate confirms some but not all of Seller's representations and warranties with respect to such Existing Lease contained in Paragraph 8(a)(v), the representations and warranties of Seller with respect to the matters so confirmed shall not survive Closing and the representations and warranties of Seller with respect to the matters not so confirmed shall survive Closing as provided herein. (ii) If Buyer determines that any of the Surviving Warranties are breached prior to the Closing Date, Buyer's sole right and remedy shall be to terminate this Agreement by giving to Seller written notice of such termination on or prior to the Closing Date. If Buyer fails to timely give such written termination notice to Seller, Buyer shall be deemed to have waived any right or remedy (including, without limitation, any right under this Agreement to terminate this Agreement) against Seller by reason of the breach of such warranty. If Buyer terminates this Agreement pursuant to this Paragraph, Buyer shall be entitled to the return of the Deposit, and upon the return of the Deposit to Buyer, neither Buyer nor Seller shall have any 22 further rights nor obligations under this Agreement (except for the indemnity and confidentiality obligations of Buyer to Seller set forth in Paragraph 16(a) and 16(f) of this Agreement). (iii) Seller shall have no liability to Buyer by reason of a breach or default of any of the Surviving Warranties unless Buyer shall have given to Seller written notice ("Warranty Notice") of such breach or default within twelve (12) months of the Closing Date, and shall have given to Seller an opportunity to cure any such breach or default within a reasonable period of time after Buyer's learning of such breach of warranty. In no event shall Seller's liability to Buyer by reason of a breach or default of any or all of the Surviving Warranties exceed $2,000,000, and Seller shall have no liability to Buyer for breach of the Surviving Warranties except to the extent of the loss incurred by Buyer as a result thereof exceeds $50,000. Any litigation to enforce any Surviving Warranty must be commenced within three (3) months from the date of the Warranty Notice, and if not commenced within such time period, Buyer shall be deemed to have waived its claims for such breach or default. 21. ERISA. Seller and Buyer hereby agree that, if the transactions contemplated by this Agreement are non-exempt prohibited transactions under Section 406 of ERISA, Seller shall not be obligated to sell the Premises to Buyer and Buyer shall not be obligated to purchase the Premises from Seller. 22. Escrow Provisions. (a) Investment of Deposit. Escrowee shall invest the Deposit in such accounts, commercial paper, U.S. government securities, repurchase agreements or other instruments as Purchaser shall from time-to-time direct and Seller may approve. Escrowee shall promptly advise Seller and Buyer of the investment of the Deposit. All interest earned on the Deposit shall be added to the deemed part of the Deposit. (b) Payment at Closing. If the Closing is completed under this Agreement, Escrowee shall deliver the Deposit to Seller on the Closing Date on account of the Purchase Price. (c) Other Payment. Notwithstanding anything contained in this Agreement, upon receipt of any written notice from Seller or Buyer claiming the Deposit pursuant to the provisions of this Agreement, Escrowee shall promptly forward a copy thereof to the other party and, unless such other party within ten (10) days thereafter notifies Escrowee of any objection to such request for the disbursement of the Deposit, Escrowee shall disburse the Deposit to the party demanding the same and Escrowee shall thereupon be released and discharged from any further duty or obligation under this Agreement. (d) Stakeholder. Escrowee is acting as a stakeholder only with respect to the Deposit. If there is any dispute as to whether Escrowee is obligated to deliver the Deposit, or as to whom the Deposit is to be delivered, Escrowee may refuse to make any delivery and may continue to hold the Deposit until receipt by Escrowee of written authorization, signed by 23 both Seller and Buyer, directing the disposition of the Deposit or, in the absence of such joint written authorization, until final determination of the rights of the parties in appropriate judicial proceeding. Escrowee may also bring an appropriate action or proceeding for leave to deposit the Deposit in a court of competent jurisdiction located in Fairfax, Virginia and to interplead Seller and Buyer. Upon making delivery of the Deposit, Escrowee shall have no further liability with respect to the Deposit. Seller and Buyer agree that the duties of Escrowee in its capacity as escrow holder under this Agreement are ministerial in nature and that Escrowee shall incur no liability except for its willful misconduct or gross negligence so long as Escrowee acts in good faith. (e) Tax Information. The federal tax identification number of Buyer is 04-3224259. The federal tax identification number of Seller is 06-1184599. (f) Escrow Fees. Seller and Buyer shall each pay one-half of the fees and expenses, if any, due to Escrowee as compensation for its escrow services pursuant to this Agreement, and shall each reimburse Escrowee for one-half of the expenses incurred by Escrowee in discharging its duties and obligations as escrow holder under this Agreement. 23. Miscellaneous. (a) Captions or Headings; Interpretation. The captions or headings of the Paragraphs and subparagraphs of this Agreement are for convenience only, and shall not control or affect the meaning or construction of any of the terms or provisions of this Agreement. Wherever in this Agreement the singular number is used, the same shall include the plural and vice versa and the masculine gender shall include the feminine gender and vice versa as the context shall require. (b) Amendments and Waivers. No change, alteration, amendment, modification or waiver of any of the terms or provisions of this Agreement shall be valid, unless the same shall be in writing and signed by Buyer and Seller. (c) No Rule of Construction. This Agreement has been negotiated at arms length by both Seller and Buyer, and no rule of construction shall be invoked against either party with respect to the authorship thereof or of any of the documents to be delivered by the respective parties at the Closing. (d) Counterparts. This Contract may be executed in multiple counterparts each of which shall be deemed an original but together shall constitute one agreement. (e) Applicable Law. This Agreement shall be governed and construed according to the laws of the State in which the Premises is located. 24 (f) Right to Waive Conditions or Contingency. Either party may waive any of the terms and conditions of this Agreement made for its benefit provided such waiver is in writing and signed by the party waiving such term or condition. (g) Partial Invalidity. If any term, covenant, condition or provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable, at any time or to any extent, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby. Each term, covenant, condition and provision of this Agreement shall be valid and enforced to the fullest extent permitted by law. (h) Public Disclosure of Agreement. Seller acknowledges that Beacon Properties Corporation, the general partner of Buyer, is a publicly owned corporation subject to regulation by the Securities and Exchange Commission ("SEC"), and that the regulations of the SEC may require that Buyer disclose the existence of this Agreement and the contents of some or all of the documents and materials delivered by Seller. Accordingly, Seller expressly consents to the disclosure of the terms and conditions of this transaction, this Agreement itself, and terms of any document or materials which Buyer in good faith believes should be disclosed in connection with fulfillment of its disclosure requirements under SEC regulations. In addition, following Closing, Buyer shall have the right to issue press releases announcing this transaction. Seller shall be entitled to a prior review and approval of the press release. (i) Property Excluded. This sale does not include, and Seller shall remove the Premises prior to Closing, the items of personal property listed on Exhibit L to this Agreement. Prior to the Closing Date, Seller shall repair in a reasonable manner, all holes and other damage to the building directly resulting from the removal by Seller from the building of the items of property not included in this sale. (j) Agreement Not To Be Recorded. This Agreement shall not be filed of record by or on behalf of Buyer in any office or place of public record. If Buyer fails to comply with the terms hereof by recording or attempting to record this Agreement or a notice thereof, such act shall not operate to bind or cloud the title to the Premises. Seller shall, nevertheless, have the right forthwith to institute appropriate legal proceedings to have the same removed from record. If Buyer or any agent, broker or counsel acting for Buyer shall cause or permit this Agreement or a copy thereof to be filed in an office or place of public record, Seller, at its option, and in addition to Seller's other rights and remedies, may treat such act as a default of this Agreement on the part of Buyer. However, the filing of this Agreement in any lawsuit or other proceedings in which such document is relevant or material shall not be deemed to be a violation of this Paragraph. (k) Waiver of Tender of Deed and Purchase Monies. The tender of an executed Deed by Seller and the tender by Buyer of the portion of the Purchase Price payable at Closing are hereby mutually waived, but nothing herein contained shall be construed as a waiver 25 of Seller's obligation to deliver the Deed and/or of the concurrent obligation of Buyer to pay the Purchase Price. (l) Time of the Essence. Time, wherever specified herein for the performance by Seller or Buyer of any of their respective obligations hereunder (including, without limitation the time deadline for Buyer's delivery of a Termination Notice under Paragraph 16), is hereby made and declared to be of the essence of this Agreement. (m) Computation of Periods. If the final day of any period of time in any provision of this agreement falls upon a Saturday, Sunday or a holiday observed by federally insured banks in the State in which the Premises is located or by the United States Postal Service, then, the time of such period shall be extended to the next day which is not a Saturday, Sunday or holiday. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period is so computed is to be included, unless such last day is a Saturday, Sunday or holiday in which event the period shall run until the end of the next day which is neither a Saturday, Sunday or holiday. (n) Exhibits. All exhibits annexed to this Agreement are incorporated by reference into and made a part of this Agreement. (o) Right to Audit. Pursuant to Paragraph 16(d), Seller has furnished or made available to Buyer certain financial statements and balance sheets for the Property. In order to comply with SEC regulations, Buyer may need the right prior to or subsequent to Closing, to conduct an audit of Seller's books and records for the Property in conformity with Section 3.14 of SEC Regulation SX for 1994, 1995, 1996 and/or for Seller's period of ownership during the year in which the Closing occurs. Seller hereby agrees to permit Buyer and Buyer's accountants access to such books and records (including those maintained by Manager) and to cooperate with Buyer, and to cause Seller's accountants to cooperate with Buyer, at no cost to Seller, to enable such audit to be performed. Buyer agrees that no information disclosed in such audit will alter any obligation of Buyer. The provisions of this Paragraph 23(o) shall survive the Closing indefinitely. 26 IN WITNESS WHEREOF, the parties, intending legally to be bound, have executed this Agreement as of the date first above written. SELLER: JOSHUA REALTY CORPORATION By: /s/ Stephen B. Hoover ________________________________ Name: Stephen B. Hoover Title: Executive Vice President BUYER: BEACON PROPERTIES, L.P. By: Beacon Properties Corporation General Partner By: /s/ Charles H. Cremens ____________________________ Name: Charles H. Cremens Title: Senior Vice President 27 OPTION AGREEMENT THIS OPTION AGREEMENT (this "Agreement") made this ____ day of ___________________, 1997 by and between CENTERPOINTE III LIMITED PARTNERSHIP, a Delaware limited partnership ("Seller") and BEACON PROPERTIES, L.P., a Delaware limited partnership ("Buyer"). W I T N E S S E T H: In consideration of the covenants and provisions contained herein, the parties agree as follows: 1. Grant. (a) For and in consideration of the sum of _________________ Dollars ($____________) paid by Buyer on the signing of this Agreement, receipt of which is hereby acknowledged by Seller, and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Seller and Buyer grant to the other the right, privilege and option, exercisable on the terms set out below in Paragraph 2 (the "Option"), to effect the sale of that certain lot or piece of ground containing approximately 7.85 acres and situate in Fairfax, Virginia, which is more fully described by metes and bounds on Exhibit A to this Agreement (the "Real Property"), together with all rights and appurtenances pertaining to the Real Property, including any right, title and interest of Seller in and to adjacent streets and rights-of-way, and Seller's interests in the Intangible Personal Property (defined below). Seller and Buyer stipulate and agree that the Real Property has the potential for approximately 341,948 square feet of developable office space (the "Agreed Amount of Developable Office FAR"). (b) The Intangible Personal Property shall refer to the interests of Seller in all existing surveys, consents, authorizations, variances or waivers, licenses, permits and approvals from any governmental or quasi-governmental agency, department, board, commission, bureau or other instrumentality (all to the extent assignable or transferable) with respect to the Real Property. The Real Property and Intangible Personal Property are collectively referred to as the "Property." (c) Concurrently with the execution of this Agreement, the parties have executed a Memorandum of Option (the "Memorandum") which Buyer may, at its election, record with the Office of the Clerk of the Circuit Court of Fairfax County, Virginia (the "Recorder's Office"), and have also executed and delivered to Commonwealth Land Title Insurance Company (the "Escrowee") to be held in escrow a Termination of Memorandum of Option (the "Termination") pending termination of this Agreement or the completion of Closing. 2. Exercise. 1 (a) Subject to Paragraphs 2(c) and 2(d) below, the Option may be exercised by Buyer or Seller by written notice (the "Option Notice") given to the other party on or before the Option Expiration Date. The "Option Expiration Date" shall be the earlier to occur of (I______,2000 [insert day which is three (3) years from the date of this Agreement] or (ii) the date which is forty-five (45) days after the date Buyer receives written notice from Seller that Seller intends to begin development of the Real Property. In no event may Seller deliver the notice contemplated by clause (ii) of the immediately preceding sentence prior to the earlier of January 1, 1998 or the date of the Final Local Master Plan Amendment (as defined in Paragraph 14, below). The period from the date of this Agreement to the Option Expiration Date is called the "Term of the Option." If the Option is not exercised on or before the Option Expiration Date, this Agreement shall automatically terminate, neither party shall have any further obligations hereunder and Escrowee is authorized and directed to record the Termination in the Recorder's Office. If, however, the Option is exercised by Buyer or Seller on or before the Option Expiration Date, this Agreement, together with the Option Notice from the party exercising this Option, shall be deemed to be an Agreement of Sale and Purchase between Seller and Buyer with respect to the Property pursuant to the terms and provisions set forth below, without the necessity of any further act or agreement. (b) If not previously exercised by Seller, Buyer shall have the right to exercise the Option at any time during the Term of the Option. To be effective, Buyer's Option Notice must be accompanied by delivery of the sum of Two Hundred Fifty Thousand Dollars ($250,000) (the "Deposit") to Escrowee. The Deposit shall be held by Escsrowee in accordance with the provisions of Paragraph 22 of this Agreement. (c) If not previously exercised by Buyer, Seller shall have the right to exercise the Option during the period commencing sixty (60) days prior to the Option Expiration Date and expiring on the Option Expiration Date; provided, that prior to such exercise of the Option the Average Appraised Value (as defined below) of the Property shall have first been established and that the Average Appraised Value of the Property is equal to or greater than $3,419,480. Within thirty (30) days after receipt of a request from Seller ("Seller's Appraisal Request"), Buyer shall engage a Qualified Appraiser to prepare an MAI appraisal of the Property. A "Qualified Appraiser" is an appraiser having not less than five (5) years' appraisal experience in the Fairfax County, Virginia market area. Seller shall also engage a Qualified Appraiser to perform such an appraisal of the Property. In preparing such appraisals, the appraisers shall be instructed to assume that the Real Property has been zoned to permit an office use development of not less than the Agreed Amount of Developable Office FAR and to prepare the appraisal in accordance with the instructions set forth on Schedule 2(c) to this Agreement. The Qualified Appraisers so engaged shall deliver their appraisal reports within thirty (30) days after being so engaged. If the value of the Property reported by either appraisal is five percent (5%) or less than the value reported by the other, then the "Average Appraised Value" of the Property shall be the average of the two (2) appraisals. If the values are more than five percent (5%) apart, then within ten (10) days after submission of the last of the appraisals to be submitted to either Seller or Buyer, the two (2) Qualified Appraisers shall engage a third Qualified Appraiser to prepare such an appraisal of the Property and to deliver such appraisal 2 report to Seller and Buyer within thirty (30) days after being so engaged. In such event, the Average Appraised Value of the Property shall be equal to average of the two closest appraised values, unless one of the three appraised values is equidistant from the other two, in which case the Average Appraised Value shall equal such middle appraised value. If the Qualified Appraiser selected by either buyer or Seller does not submit its appraisal report within the time period specified above, the appraised value reported by the Qualified Appraiser which does timely submit its report shall constitute the Average Appraised Value of the Property. Each party shall pay the costs of any Qualified Appraiser selected by it, and shall pay one-half of the costs charged by the third Qualified Appraiser. (d) If not previously exercised by either party, Seller shall have the right to exercise the Option at any time during the Term of the Option if Seller executes a New AMS Lease. A "New AMS Lease" shall be a lease agreement (i) with American Management Systems, Inc. ("AMS") to lease space exceeding 200,000 rentable square feet within a new, build-to-suit office building to be built on the Real Property, (ii) which shall yield to Buyer a Stabilized Return (as defined in Schedule 2(d) of ten percent (10%) per annum (cash on bona fide third-party costs) on all Budgeted Development Costs (as defined in Schedule 2(d)), and (iii) which shall otherwise be substantially in the form of the existing AMS Lease for Centerpointe I and II, shall provide a reasonable, realistic time frame for the delivery of the leased space, and shall be for a term of not less than ten (10) years with no contingencies or termination rights prior to the tenth year of the term in favor of AMS (other than reasonable and customary termination rights for failure to timely complete construction or failure to rebuild following casualty or eminent domain). 3. Purchase Price. (a) The purchase price (the "Purchase Price") to be paid by Buyer to Seller for the Property shall be a sum calculated as follows: (i) If Buyer exercises the Option pursuant to Paragraph 2(b), the Purchase Price shall be the product of the Agreed Amount of Developable Office FAR multiplied by: (A) subject to the provisions of Paragraph 3(a)(i)(B), Eighteen Dollars and Thirty Five Cents ($18.35) if Buyer exercises the Option during the period from the date of this Agreement to and including the day immediately preceding the first anniversary of the date of this Agreement; (B) notwithstanding the provisions of Paragraph 3(a)(i)(A), Twenty Dollars ($20.00) if Buyer exercises the Option during the period beginning on the date Seller gives Buyer written notice that Seller has entered active negotiations with AMS for the New AMS Lease to and including the first anniversary of the date of this Agreement; provided, that if Seller fails to execute a New AMS Lease within four (4) months following the date of Buyer's exercise of the Option, this Paragraph 3(a)(i)(B) shall be of no 3 force or effect and the calculation of the Purchase Price shall be governed by Paragraph 3(a)(i)(A); (C) Twenty Dollars ($20.00) if Buyer exercises the Option during the period beginning on the first anniversary of the date of this Agreement to and including the day immediately preceding the second anniversary of the date of this Agreement; and (D) Twenty One Dollars and Eighty Cents ($21.80) if Buyer exercises the Option during the period beginning on the second anniversary of the date of this Agreement to and including the Option Expiration Date. (ii) If Seller exercises the Option pursuant to Paragraph 2(c), the Purchase Price shall equal the greater of (A) $4,428,226.60 (which amount equals the product obtained by multiplying the Agreed Amount of Developable Office FAR times $12.95) or (B) the Average Appraised Value. (iii) If Seller exercises the Option pursuant to Paragraph 2(d) prior to the second anniversary of the date of this Agreement, the Purchase Price shall equal $6,838,960 (which amount equals the product obtained by multiplying the Agreed Amount of Developable Office FAR times $20.00). (iv) If Seller exercises the Option pursuant to Paragraph 2(d) on or after the second anniversary of the date of this Agreement, the Purchase Price shall equal $7,454,466 (which amount equals the product obtained by multiplying the Agreed Amount of Developable Office FAR times $21.80). (b) Buyer shall pay the Purchase Price at Closing by wire transfer of immediate United States federal funds to Seller's account at a bank designated by Seller. 4. Closing. Closing shall commence at 10:00 a.m. on the date which is thirty (30) days after the date of the Option Exercise Notice (the "Closing Date") at the offices of Wolf, Block, Schorr and Solis-Cohen, Twelfth Floor Packard Building, 15th and Chestnut Streets, Philadelphia, Pennsylvania 19102; provided, if such thirtieth day is a Saturday, Sunday or a holiday observed by federally insured banks in the State in which the Real Property is located, the Closing Date shall be the next day which is not a Saturday, Sunday or holiday. 5. Condition of Title. (a) Title to Real Property. Fee simple title to the Real Property shall be conveyed by Seller to Buyer at the completion of Closing by a deed (the "Deed") containing Seller's special warranty in substantially the form of Exhibit C-1 to this Agreement, excluding from such warranty the Permitted Exceptions (as defined below). Title to the Intangible Personal Property shall be conveyed by Seller to Buyer at the completion of Closing by a bill of 4 sale ("Bill of Sale") in substantially the form of Exhibit C-2 to this Agreement. Title to the Property shall be such as will be insured as good and marketable by Escrowee pursuant to the standard stipulations and conditions of the most current form of ALTA Policy of Owner's Title Insurance then in use in the State in which the Real Property is located, free and clear of all liens and encumbrances except for the Permitted Exceptions. Buyer will pay the premium for the owner's policy and the cost of any endorsements to such policy. The term "Permitted Exceptions" shall mean the title exceptions set forth on Exhibit B to this Agreement.' (b) Failure of Title. If on the Closing Date title to the Property is not insurable as set forth in Paragraph 5(a) above, Buyer may elect, as its sole right and remedy, either (i) to take such title to the Property as Seller can convey without abatement of the Purchase Price except for liens and encumbrances securing the payment of money which were voluntarily created by Seller and mechanic's liens or (ii) to terminate this Agreement by written notice to Seller and Escrowee and be paid the Deposit. Notwithstanding the foregoing provisions, Buyer agrees to accept title to the Property subject to judgments against Seller if Buyer's title insurer insures Buyer against loss by reason of such judgments. 6. Possession. Possession of the Property is to be given by Seller to Buyer at the completion of Closing by delivery of the Deed. 7. Closing: Apportionments. (a) Items to be Apportioned. Personal property taxes, real estate taxes and annual municipal or special district assessments (on the basis of the actual fiscal years for which such taxes are assessed), prepaid fees for licenses and permits to remain in effect for Buyer's benefit after Closing shall be apportioned at Closing pro rata between Buyer and Seller on a per diem basis as of the Closing Date. (b) Unpaid Real Estate Taxes. If, on the Closing Date, bills for real estate taxes imposed upon the Property for any part of the tax fiscal years in which Closing occurs have been used but shall not have been paid, such taxes shall be paid at the time of Closing. (c) Transfer Tax. Buyer shall pay the state and county realty transfer taxes imposed in connection with the Deed or transactions contemplated by this Agreement. Seller shall pay the grantor's tax imposed in connection with the Deed or transactions contemplated by this Agreement. 8. Seller's Representations and Warranties. (a) Seller represents and warrants to Buyer as follows: 5 (i) Organization. Seller is a limited partnership, duly organized and validly subsisting under the laws of the State of Delaware and has all requisite partnership power and authority to carry on its business as now conducted. (ii) Authorization. Seller has all requisite partnership power and authority to enter into and perform this Agreement, and Seller has duly authorized the execution and performance of this Agreement. No consent or approval from any third party is required in order to enable Seller to execute this Agreement and perform its obligations hereunder. (iii) No Condemnation. To Seller's knowledge, there are no existing or pending condemnation proceedings affecting the Property, nor, to Seller's actual knowledge, have any such condemnation proceedings been overtly threatened. (iv) No Proceedings. Except as set forth on Schedule 8(a)(iv) to this Agreement, Seller has received no written notice of any pending actions, suits or proceedings against Seller or the Property nor, to Seller's knowledge, is there any action, suit or proceeding against Seller or the Property threatened which would prevent consummation by Seller of the sale of the Property or materially and adversely affect the performance of any of Seller's other obligations to be performed under this Agreement. Seller has not received any written notice from any governmental authority claiming a violation or alleged violation of any law, rule, ordinance or code with respect to the Property which remains uncured. (b) All references in this Paragraph 8 or elsewhere in this Agreement to "Seller's knowledge" shall refer solely to the actual knowledge of Stephen B. Hoover, Raymond L. Owens and Daniel Coughlan and shall not be construed to refer to the knowledge of any other employee, officer, director, shareholder or agent of Seller or any affiliate of Seller, and shall not include imputed or constructive knowledge. 9. Buyer's Representations and Warranties. Buyer hereby represents and warrants to Seller as follows: (a) Organization. Buyer is a limited partnership duly organized and validly existing under the laws of the State of Delaware and has all requisite partnership power and authority to carry on its business as now conducted. (b) Authorization. Buyer has all requisite partnership power and authority to enter into and perform this Agreement and Buyer has duly authorized the execution and performance of this Agreement. Buyer has received all approvals (except any approvals to be obtained during the Inspection Period) necessary to consummate the transactions described herein. 10. Conditions to Closing. 6 (a) Buyer shall not be obligated to complete Closing under this Agreement unless each of the following conditions shall be fulfilled on the Closing Date: (i) Title Policy. Escrowee or another title insurance company authorized to transact business in the State of Virginia reasonably acceptable to Buyer and Buyer's counsel shall commit in writing to Buyer to issue an owner's policy of title insurance as described in Paragraph 5(a). (ii) Accuracy of Representations. The representations and warranties made by Seller in this Agreement shall be true and correct as of the Closing Date in all material respects. (iii) Seller's Performance. Seller shall have complied with and performed in all material respects all of its obligations under this Agreement. (b) Seller shall not be obligated to complete Closing under this Agreement unless Buyer shall have paid the Purchase Price and shall have complied with and performed in all material respects all of its other obligations under this Agreement. 11. Deliveries at Closing. (a) Seller's Deliveries. On the Closing Date, Seller shall deliver to Buyer the following: (i) Transfer Documents. The Deed and Bill of Sale. (ii) Authority Documents. A resolution, to evidence Seller's authorization of performance of this Agreement and an incumbency certificate to evidence the capacity of the signatory for Seller. (iii) FIRPTA Certification and Title Affidavit. A certificate in the form attached to this Agreement as Exhibit D with respect to compliance with the Foreign Investment in Real Property Tax Act (Internal Revenue Code Section 1445, as amended, and the regulations issued thereunder) and an affidavit in the form of Exhibit E in favor of the title insurer who will insure Buyer's title to the Property (which affidavit shall in no event expand Seller's warranty contained in the Deed). (iv) Original Documents. The originals (to the extent in Seller's possession) of all Intangible Personal Property. (v) Seller's Closing Certificate. An executed original of the Seller's Closing Certificate in the form attached as Exhibit F. 7 (vi) Closing Statement. An executed original Closing Statement setting forth the calculation of the Purchase Price and the prorations provided for hereunder. (vii) Transfer Tax Forms. An executed original of any transfer tax forms required in connection with Closing. (viii) New AMS Lease. If the Closing is occurring as a result of an exercise of the Option by Seller under Paragraph 2(d), Seller shall also deliver an executed original of the New AMS Lease, an estoppel certificate from AMS and any security deposit being held by Seller thereunder. (ix) Other Documents. Any other documents which Seller is obligated to deliver pursuant to this Agreement. (b) Buyer's Deliveries. On the Closing Date, Buyer will deliver to Seller the following: (i) Authority Documents. A resolution, to evidence Buyer's authorization of performance of this Agreement, and an incumbency certificate to evidence the capacity of the signatory for Buyer. (ii) Purchase Price. That portion of the Purchase Price payable at Closing. (iii) Buyer's Closing Certificate. An executed original of the Buyer's Closing Certificate in the form attached as Exhibit G. (iv) Closing Statement. An executed original Closing Statement setting forth the calculation of the Purchase Price and the prorations provided for hereunder. (v) Transfer Tax Forms. An executed original of any transfer tax forms required in connection with Closing. (vi) Other Documents. Any other documents which Buyer is obligated to deliver pursuant to this Agreement. 12. Default (a) Buyer Default. If Buyer defaults under this Agreement at the Closing Date by failing to complete Closing in accordance with the terms of this Agreement, then, provided Buyer has posted the Deposit, on the Closing Date Seller shall be entitled, as Seller's sole and exclusive remedy at law or in equity for such default by Buyer hereunder, to be 8 paid the Deposit as liquidated damages and not as a penalty. In such event, Seller and Buyer agree that the actual damages to Seller in the event of such default are impractical to ascertain as of the date of this Agreement and that the amount of the Deposit is a reasonable estimate thereof. Nothing in this Paragraph, however, shall limit Seller's rights against Buyer by reason of any indemnity obligations of Buyer to Seller set forth in this Agreement, all of which shall survive the termination of this Agreement. Notwithstanding the foregoing, if Buyer has not posted a Deposit by reason of the Option having been exercised by Seller, and if Buyer defaults under this Agreement at the Closing Date by failing to complete Closing in accordance with the terms of this Agreement, then Seller shall be entitled to pursue all remedies available to Seller at law or in equity including, without limitation, the right to institute an action for specific performance of this Agreement. (b) Seller Default. If Seller defaults under this Agreement at or prior to the Closing Date by failing to complete Closing in accordance with the terms of this Agreement, then on the earlier of the Closing Date or the date of Seller's default, Buyer shall be entitled, as Buyer's sole and exclusive remedy, to institute an action for specific performance of this Agreement. 13. Notices. (a) All notices given by either party to the other shall be in writing and shall be sent either (i) by United States Postal Service registered or certified mail, postage prepaid, return receipt requested, (ii) by nationally recognized overnight courier service for next business day delivery, addressed to the other party at the addresses listed below or (iii) via telecopier or facsimile transmission to the facsimile numbers listed below, provided, however, that if such communication is given via telecopier or facsimile transmission, an original counterpart of such communication shall concurrently be sent in the manner specified in clause (ii) above. Addresses and facsimile numbers of the parties are as follows: As to Seller: c/o GE Investments 3003 Summer Street P.O. Box 7900 Stamford, Connecticut 06905 Attention: Raymond L. Owens Fax: (203) 326-4169 with copies at the same time to: Centerpointe III Limited Partnership c/o GE Investments 3003 Summer Street 9 P.O. Box 7900 Stamford, Connecticut 06905 Attention: Michael J. Strone, Esquire Fax: (203) 326-2497 and Wolf, Block, Schorr and Solis-Cohen Twelfth Floor Packard Building 15th and Chestnut Streets Philadelphia, Pennsylvania 19102 Attention: James R. Williams, Esquire Fax: (215) 977-2346 As to Buyer: Beacon Properties, L.P. 50 Rowes Wharf Boston, Massachusetts 02110 Attention: Ms. Erin O'Boyle Fax: (617) 261-0152 with a copy at the same time to: Beacon Properties Corporation 50 Rowes Wharf Boston, Massachusetts 02110 Attention: William A. Bonn, Esquire, General Counsel Fax: (617) 261-0152 and to Goulston & Storrs 400 Atlantic Avenue Boston, Massachusetts 02210 Attention: Jordan P. Krasnow, Esquire Fax: (617) 574-4112 As to Escrowee: Commonwealth Land Title Insurance Company 50 Federal Street Boston, Massachusetts 02110 10 Attention: Haskell Shapiro Fax: (617) 542-0636 or to such other address as the respective parties may hereafter designate by notice in writing in the manner specified above. Any notice may be given on behalf of any party by its counsel. (b) Notices given in the manner aforesaid shall be deemed sufficiently served or given for all purposes under this Agreement upon the earlier of (i) actual receipt or refusal by the addressee or (ii) one (1) day following the date such notices, demands or requests shall be deposited in any Post Office, or branch Post Office regularly maintained by the United States Government or delivered to the overnight courier service. 14. Operations Prior to Exercise and Closing. During the Term of the Option, Seller shall diligently pursue such amendments to the local master plan for the Real Property necessary to change approved use of the Real Property to office use and to permit the actual developable FAR to equal or exceed the Agreed Amount of Developable FAR, until such amendments have been approved and all appeal periods have expired without an appeal being granted (the "Final Local Master Plan Amendment"). Seller and Buyer shall share equally the bona fide third-party costs of Seller's efforts to obtain the Final Local Master Plan Amendment, including (without limitation) the costs of engineering, surveying and zoning counsel. During the Term of the Option, Buyer shall have the right to prepare and submit to Seller applications for rezoning the Real Property, which applications Seller in its sole discretion shall approve or disapprove for submission to the appropriate zoning authorities, such approval or disapproval to be based on the form of each such application and Seller's determination whether the timing of submission of each application would interfere with the pursuit of the Final Local Master Plan Amendment. If Seller approves the application, Seller shall submit the application to the appropriate zoning authority, and the bona fide third-party costs of such submission shall be Buyer's sole cost and expense. Following the exercise of the Option by either party, Buyer shall take over and thereafter control, at Buyer's sole cost and expense any procedures then pending for the amendment to such master plan and/or rezoning of the Real Property; provided, Buyer shall not be obligated to reimburse Seller for Seller's share of any such costs incurred by Seller prior to the exercise of the Option. Seller shall reasonably cooperate with Buyer in transitioning control of such pending matters to Buyer prior to Closing. During the Term of the Option, Seller shall also have the right to enter leases with tenants for space in one or more buildings to be constructed on the Real Property, provided that such leases contain provisions subordinating the leasehold to Buyer's rights under the Option. Seller shall from time to time keep Buyer reasonably well advised of all prospective lease transactions which Seller may elect to pursue, and shall provide Buyer with a copy of any such lease promptly after executing same. 15. Assignability. (a) Limited Assignment. Subject to the limitations set forth in subparagraph (b) below, this Agreement and all, but not part, of Buyer's rights under this Agreement may be assigned by Buyer, without the prior written consent of Seller, to an entity 11 which is qualified to do business in the State in which the Property is located and in which Buyer (and/or Beacon Properties Corporation ("BP"), and/or one or more entities 100% owned and controlled by Buyer and/or B.C.) owns for its own account not less than one hundred percent (100%) of the ownership interests therein and maintains control over the management and affairs of the entity; provided, however, that such assignment shall not release or relieve Buyer of and from any liability or obligation under this Agreement, and Buyer shall continue to be primarily liable to Seller under this Agreement. No such assignment shall be effective, however, unless and until Buyer shall have furnished to Seller both an executed copy of the assignment plus a written assumption agreement, in form satisfactory to Seller, by the assignee to assume, perform and be responsible, jointly and severally with the Buyer named herein, for the performance of all of the obligations of Buyer under this Agreement and to pay all additional transfer or documentary taxes imposed as a result of such assignment, and which contains a representation by the assignee that all of the representations and warranties made by Buyer in this Agreement are true and correct with respect to the assignee as of the date of the assumption agreement. Seller shall have the right to rely in good faith on the genuineness and validity of the notice from Buyer of an assignment and to convey the Property to the assignee without liability to Buyer or any other person. (b) Prohibited Assignments. Notwithstanding the foregoing provisions of subparagraph (a), Buyer shall have no right to assign this Agreement to any entity owned or controlled by an employee benefit plan if Seller's sale of the Property to such entity would, in the judgment of Seller's counsel, either create, otherwise cause, or raise a material question as to whether it would create or otherwise cause, a "prohibited transaction" under the Employee Retirement Income Security Act of 1974, as amended ("ERISA"). (c) Successors and Assigns. Except as provided in subparagraph (a), Buyer may not assign or suffer an assignment of this Agreement and its rights under this Agreement. Subject to the foregoing limitations, this Agreement shall extend to, and shall bind, the respective heirs, executors, personal representatives, successors and assigns of Seller and Buyer. 16. Intentionally Omitted. 17. Condemnation. (a) Immaterial Taking. If any part of the Property shall be taken by exercise of the power of eminent domain after the date of this Agreement, this Agreement shall continue in full force and effect and there shall be no abatement of the Purchase Price. Seller shall be relieved, however, of its duty to convey title to the portion so taken, but Seller shall, on the Closing Date, assign to Buyer all rights and claims to any awards arising therefrom as well as any money theretofore received by Seller on account thereof net of any expenses to Seller, including attorneys' fees of collecting the same. Seller shall promptly furnish Buyer with a copy of the declaration of taking promptly after Seller's receipt thereof. 12 (b) Material Taking. If any such taking of a portion of the Property materially interferes with the use of the Property for the purposes for which the Buyer intends, either Seller or Buyer may terminate this Agreement by written notice to the other party. Upon such termination, the Deposit shall be returned by Escrowee to Buyer and neither party shall have any further rights or obligations hereunder. 18. Brokers. Each party represents and warrants to the other that it has dealt with no broker or other intermediary in connection with this transaction or the Property other than Cushman & Wakefield (the "Disclosed Broker"), whose fees shall be payable by Seller pursuant to a separate agreement between Seller and Disclosed Broker, and Buyer shall have no liability or obligation in connection therewith. Each party shall indemnify, defend and save harmless the other of and from any claim for commission or compensation by any other broker or other intermediary claiming through the indemnifying party. The provisions of this Paragraph shall survive Closing. 19. CONDITION OF PROPERTY. (a) ENTIRE AGREEMENT. THE ENTIRE AGREEMENT BETWEEN SELLER AND BUYER WITH RESPECT TO THE PROPERTY AND THE SALE THEREOF IS EXPRESSLY SET FORTH IN THIS AGREEMENT. THE PARTIES ARE NOT BOUND BY ANY AGREEMENTS, UNDERSTANDINGS, PROVISIONS, CONDITIONS, REPRESENTATIONS OR WARRANTIES (WHETHER WRITTEN OR ORAL AND WHETHER MADE BY SELLER OR ANY AGENT, EMPLOYEE OR PRINCIPAL OF SELLER OR ANY OTHER PARTY) OTHER THAN AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT. WITHOUT IN ANY MANNER LIMITING THE GENERALITY OF THE FOREGOING, BUYER ACKNOWLEDGES THAT IT AND ITS REPRESENTATIVES HAVE FULLY INSPECTED THE PROPERTY OR HAVE BEEN PROVIDED WITH AN ADEQUATE OPPORTUNITY TO DO SO, ARE OR WILL BE FULLY FAMILIAR WITH THE FINANCIAL AND PHYSICAL (INCLUDING WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION THEREOF, AND THAT THE PROPERTY HAS BEEN PURCHASED BY BUYER IN AN "AS IS" AND "WHERE IS" CONDITION AND WITH ALL EXISTING DEFECTS AS A RESULT OF SUCH INSPECTIONS AND INVESTIGATIONS AND NOT IN RELIANCE ON ANY AGREEMENT, UNDERSTANDING, CONDITION, WARRANTY (INCLUDING, WITHOUT LIMITATION, WARRANTIES OF HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE) OR REPRESENTATION MADE BY SELLER OR ANY AGENT, EMPLOYEE OR PRINCIPAL OF SELLER OR ANY OTHER PARTY AS TO THE FINANCIAL OR PHYSICAL (INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL) CONDITION OF THE PROPERTY AS TO ANY MATTER, INCLUDING WITHOUT LIMITATION AS TO ANY PERMITTED USE THEREOF, THE ZONING CLASSIFICATION THEREOF OR COMPLIANCE THEREOF WITH FEDERAL, STATE OR LOCAL LAWS, AS TO INCOME OR EXPENSES IN CONNECTION THEREWITH, OR AS TO ANY OTHER MATTER IN CONNECTION THEREWITH, EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY INSTRUMENT 13 TO BE DELIVERED TO BUYER BY SELLER AT CLOSING. BUYER ACKNOWLEDGES THAT NEITHER SELLER, NOR ANY AGENT OR EMPLOYEE OF SELLER NOR ANY OTHER PARTY ACTING ON BEHALF OF SELLER HAS MADE OR SHALL BE DEEMED TO HAVE MADE ANY SUCH AGREEMENT, CONDITION, REPRESENTATION OR WARRANTY EITHER EXPRESSED OR IMPLIED, OTHER THAN AS ARE EXPRESSLY SET FORTH IN THIS AGREEMENT OR IN ANY INSTRUMENT TO BE DELIVERED TO BUYER BY SELLER AT CLOSING. THIS PARAGRAPH SHALL SURVIVE CLOSING. (b) RELEASE. WITHOUT LIMITING THE PROVISIONS OF SUBPARAGRAPH (a) ABOVE AND NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED IN THIS AGREEMENT, BUYER HEREBY RELEASES SELLER AND (AS THE CASE MAY BE) SELLER'S OFFICERS, DIRECTORS, SHAREHOLDERS, TRUSTEES, PARTNERS, EMPLOYEES, MANAGERS AND AGENTS FROM ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTIONS, LOSSES, DAMAGES, LIABILITIES, COSTS AND EXPENSES (INCLUDING ATTORNEYS' FEES WHETHER THE SUIT IS INSTITUTED OR NOT) WHETHER KNOWN OR UNKNOWN, LIQUIDATED OR CONTINGENT (HEREINAFTER COLLECTIVELY CALLED THE "CLAIMS") ARISING FROM OR RELATING TO (i) ANY DEFECTS IN THE PROPERTY WHETHER THE SAME ARE THE RESULT OF NEGLIGENCE OR OTHERWISE, OR (ii) ANY OTHER CONDITIONS, INCLUDING ENVIRONMENTAL AND OTHER PHYSICAL CONDITIONS, AFFECTING THE PROPERTY WHETHER THE SAME ARE A RESULT OF NEGLIGENCE OR OTHERWISE. THE RELEASE SET FORTH IN THIS SECTION SPECIFICALLY INCLUDES, WITHOUT LIMITATION, ANY CLAIMS (INCLUDING INDEMNITY AND CONTRIBUTION CLAIMS) ARISING UNDER ANY ENVIRONMENTAL LAWS OF THE UNITED STATES, THE STATE IN WHICH THE PROPERTY IS LOCATED OR ANY POLITICAL SUBDIVISION THEREOF OR UNDER THE AMERICANS WITH DISABILITIES ACT OF 1990, AS ANY OF THOSE LAWS MAY BE AMENDED FROM TIME TO TIME AND ANY REGULATIONS, ORDERS, RULES OF PROCEDURES OR GUIDELINES PROMULGATED IN CONNECTION WITH SUCH LAWS, REGARDLESS OF WHETHER THEY ARE IN EXISTENCE ON THE DATE OF THIS AGREEMENT. (c) NOTHING IN SUBPARAGRAPH 19(b) SHALL CONSTITUTE A RELEASE OF SELLER FOR ANY CLAIM MADE BY A THIRD PARTY AGAINST BUYER ASSERTING INJURY OR DAMAGE TO SUCH THIRD PARTY ARISING DURING SELLER'S OWNERSHIP OF THE PREMISES, PROVIDED (i) BUYER DELIVERS WRITTEN NOTICE TO SELLER OF THE THIRD PARTY CLAIM WITHIN THIRTY (30) DAYS AFTER BUYER'S RECEIPT OF THE THIRD PARTY CLAIM, (ii) SELLER SHALL BE PERMITTED TO INTERVENE IN DEFENDING THE THIRD PARTY CLAIM AND (iii) BUYER DOES NOT SETTLE THE THIRD PARTY CLAIM WITHOUT THE WRITTEN CONSENT OF SELLER. A THIRD PARTY DOES NOT INCLUDE ANY DIRECT OR INDIRECT PRINCIPAL OR AFFILIATE OF BUYER. NOTWITHSTANDING ANYTHING CONTAINED IN THIS PARAGRAPH, BUYER AGREES THAT SELLER SHALL HAVE NO LIABILITY TO BUYER UNDER THIS PARAGRAPH (WHETHER BY REIMBURSEMENT OR CONTRIBUTION UNDER ENVIRONMENTAL LAWS OR OTHERWISE) FOR THE 14 COST OF ANY CLEANUP, REMEDIATION OR REMOVAL OF HAZARDOUS SUBSTANCES, FOR THE COST OF ANY REPAIRS OR REPLACEMENTS TO THE PREMISES, OR FOR ANY OTHER COSTS OF REMEDIATING THE CONDITION GIVING RISE TO THE THIRD PARTY CLAIM (TOGETHER, "REMEDIATION COSTS") OR FOR BUYER'S LEGAL FEES AND COURT COSTS IN DEFENDING A THIRD PARTY CLAIM. BUYER SHALL PAY ALL REMEDIATION COSTS AND BUYER'S LEGAL FEES AND COURT COSTS. SELLER SHALL PAY ITS LEGAL FEES AND COURT COSTS. (d) Effect of Disclaimers. Buyer acknowledges and agrees that the Purchase Price has been negotiated to take into account that the Property is being sold subject to the provisions of this Paragraph 19 and that Seller would have charged a higher purchase price if the provisions in this Paragraph 19 were not agreed upon by Buyer. 20. Survival of Provisions. (a) Notwithstanding any provision to the contrary set forth in this Agreement, the agreements and obligations of Buyer under Paragraph 7, 16(a), 16(e), 16(f), 18, and 19 shall survive Closing, and the warranties and representations of Buyer set forth in Paragraph 9 shall survive Closing under this Agreement for a period of six (6) months. (b) (i) Notwithstanding any provision to the contrary set forth in this Agreement, the agreements and obligations of Seller under Paragraph 7 and 18 shall survive Closing, and the warranties and representations of Seller set forth in Paragraph 8(a) (the "Surviving Warranties") shall survive Closing under this Agreement for a period of six (6) months. (ii) If Buyer determines that any of the Surviving Warranties are breached prior to the Closing Date, Buyer's sole right and remedy shall be to terminate this Agreement by giving to Seller written notice of such termination on or prior to the Closing Date. If Buyer fails to timely given such written termination notice to Seller, Buyer shall be deemed to have waived any right or remedy (including, without limitation, any right under this Agreement to terminate this Agreement) against Seller by reason of the breach of such warranty. If Buyer terminates this Agreement pursuant to this Paragraph, Buyer shall be entitled to the return of the Deposit, and upon the return of the Deposit to Buyer, neither Buyer nor Seller shall have any further rights nor obligations under this Agreement. (iii) Seller shall have no liability to Buyer by reason or a breach or default of any of the Surviving Warranties unless Buyer shall have given to Seller written notice ("Warranty Notice") of such breach or default within six (6) months of the Closing Date, and shall have given to Seller an opportunity to cure any such breach or default within a reasonable period of time after Buyer's learning of such breach of warranty. In no event shall Seller's liability to Buyer by reason of a breach or default of any or all of the Surviving Warranties exceed $500,000, and Seller shall have no liability to Buyer for breach of the Surviving Warranties except to the extent of the loss incurred by Buyer as a result thereof 15 exceeds $500,000. Any litigation to enforce any Surviving Warranty must be commenced within three (3) months from the date of the Warranty Notice, and if not commenced within such time period, Buyer shall be deemed to have waived its claims for such breach or default. 21. ERISA. Seller and Buyer hereby agree that, if the transactions contemplated by this Agreement are non-exempt prohibited transactions under Section 406 of ERISA, Seller shall not be obligated to sell the Property to Buyer and Buyer shall not be obligated to purchase the Property from Seller. 22. Escrow Provisions. (a) Investment of Deposit. Escrowee shall invest the Deposit in such accounts, commercial paper, U.S. government securities, repurchase agreements or other instruments as Purchaser shall from time-to-time direct and Seller may approve. Escrowee shall promptly advise Seller and Buyer of the investment of the Deposit. All interest earned on the Deposit shall be added to and deemed part of the Deposit. (b) Payment at Closing. If the Closing is completed under this Agreement, Escrowee shall deliver the Deposit to Seller on the Closing Date. (c) Other Payment. Notwithstanding anything contained in this Agreement, upon receipt of any written notice from Seller or Buyer claiming the Deposit pursuant to the provisions of this Agreement, Escrowee shall promptly forward a copy thereof to the other party and, unless such other party within ten (10) days thereafter notifies Escrowee of any objection to such request for the disbursement of the Deposit, Escrowee shall disburse the Deposit to the party demanding the same and Escrowee shall thereupon be released and discharged from any further duty or obligation under this Agreement. (d) Stakeholder. Escrowee is acting as a stakeholder only with respect to the Deposit and Termination. If there is any dispute as to whether Escrowee is obligated to deliver the Deposit or Termination, or as to whom the Deposit or Termination is to be delivered, Escrowee may refuse to make any delivery and may continue to hold the Deposit or Termination until receipt by Escrowee of written authorization, signed by both Seller and Buyer, directing the disposition of the Deposit or Termination or, in the absence of such joint written authorization, until final determination of the rights of the parties in appropriate judicial proceeding. Escrowee may also bring an appropriate action or proceeding for leave to deposit the Deposit or Termination in a court of competent jurisdiction located in Fairfax, Virginia and to interplead Seller and Buyer. Upon making delivery of the Deposit of Termination, Escrowee shall have no further liability with respect to the Deposit or Termination so delivered. Seller and Buyer agree that the duties of Escrowee in its capacity as escrow holder under this Agreement are ministerial in nature and that Escrowee shall incur no liability except for its willful misconduct or gross negligence so long as Escrowee acts in good faith. 16 (e) Tax Information. The federal tax identification number of Buyer is 04-3224259. The federal tax identification number of Seller is ___________________. (f) Escrow Fees. Seller and Buyer shall each pay one-half of the fees and expenses, if any, due to Escrowee as compensation for its escrow services pursuant to this Agreement, and shall each reimburse Escrowee for one-half of the expenses incurred by Escrowee in discharging its duties and obligations as escrow holder under this Agreement. 23. Miscellaneous. (a) Captions or Headings: Interpretation. The captions or headings of the Paragraphs and subparagraphs of this Agreement are for convenience only, and shall not control or affect the meaning or construction of any of the terms or provisions of this Agreement. Wherever in this Agreement the singular number is used, the same shall include the plural and vice versa and the masculine gender shall include the feminine gender and vice versa as the context shall require. (b) Amendments and Waivers. No change, alteration, amendment, modification or waiver of any of the terms or provisions of this Agreement shall be valid, unless the same shall be in writing and signed by Buyer and Seller. (c) No Rule of Construction. This Agreement has been negotiated at arms length by both Seller and Buyer, and no rule of construction shall be invoked against either party with respect to the authorship thereof or of any of the documents to be delivered by the respective parties at the Closing. (d) Counterparts. This Contract may be executed in multiple counterparts each of which shall be deemed an original but together shall constitute one agreement. (e) Applicable Law. This Agreement shall be governed and construed according to the laws of the State in which the Property is located. (f) Right to Waive Conditions or Contingency. Either party may waive any of the terms and conditions of this Agreement made for its benefit provided such waiver is in writing and signed by the party waiving such term or condition. (g) Partial Invalidity. If any term, covenant, condition or provision of this Agreement or the application thereof to any person or circumstance shall be invalid or unenforceable, at any time or to any extent, the remainder of this Agreement, or the application of such term or provision to persons or circumstances other than those as to which it is held invalid or unenforceable, shall not be affected thereby. Each term, covenant, condition and provision of this Agreement shall be valid and enforced to the fullest permitted by law. 17 (h) Public Disclosure of Agreement. Seller acknowledges that Beacon Properties Corporation, the general partner of Buyer, is a publicly owned corporation subject to regulation by the Securities and Exchange Commission ("SEC"), and that the regulations of the SEC may require that Buyer disclose the existence of this Agreement and the contents of some or all of the documents and materials delivered by Seller. Accordingly, Seller expressly consents to the disclosure of the terms and conditions of this transaction, this Agreement itself, and terms of any document or materials which Buyer in good faith believes should be disclosed in connection with fulfillment of its disclosure requirements under SEC regulations. In addition, following Closing, Buyer shall have the right to issue press releases announcing this transaction. Seller shall be entitled to a prior review and approval of the press release. (i) Intentionally Omitted. (j) Waiver of Tender of Deed and Purchase Monies. The tender of an executed Deed by Seller and the tender by Buyer of the portion of the Purchase Price payable at Closing are hereby mutually waived, but nothing herein contained shall be construed as a waiver of Seller's obligation to deliver the Deed and/or of the concurrent obligation of Buyer to pay the Purchase Price. (k) Time of the Essence. Time, wherever specified herein for the performance by Seller or buyer of any of their respective obligations hereunder (including, without limitation the time deadline for delivery of an Option Notice), is hereby made and declared to be of the essence of this Agreement. (l) Computation of Periods. If the final day of any period of time in any provision of this Agreement falls upon a Saturday, Sunday or a holiday observed by federally insured banks in the State in which the Property is located or by the United States Postal Service, then, the time of such period shall be extended to the next day which is not a Saturday, Sunday or holiday. Unless otherwise specified, in computing any period of time described in this Agreement, the day of the act or event after which the designated period of time begins to run is not to be included and the last day of the period is so computed is to be included, unless such last day is a Saturday, Sunday or holiday in which event the period shall run until the end of the next day which is neither a Saturday, Sunday or holiday. (m) Exhibits and Schedules. All exhibits and schedules annexed to this Agreement are incorporated by reference into and made a part of this Agreement. 18 IN WITNESS WHEREOF, the parties, intending legally to be bound, have executed this Agreement as of the date first above written. SELLER: CENTERPOINTE III LIMITED PARTNERSHIP By: Pension Realty Holding Corporation, General Partner By: ______________________________________________ Name: Title: BUYER: BEACON PROPERTIES, L.P. By: Beacon Properties Corporation, General Partner By: _____________________________________________ Name: Title: 19 EX-2.3 3 WESTBROOK CONTRIBUTION AGREEMENT CONTRIBUTION AGREEMENT Owner: Westbrook Corporate Center Associates, Westbrook Corporate Center IV Associates Limited Partnership and Westbrook Corporate Center V Associates Limited Partnership, Illinois limited partnerships which are, respectively, the sole beneficiaries of the land trusts which own title to the Real Property. Operating Partnership: BEACON PROPERTIES, L.P. Dated as of: MARCH 20, 1997 Property: WESTBROOK CORPORATE CENTER, WESTCHESTER, ILLINOIS 60154 TABLE OF CONTENTS Section Page ------- ---- 1. Defined Terms 1 2. Contribution of Property; Agreed Value 5 3. Deposit 11 4. Delivery of Materials for Review 11 5. Contingencies 13 6. Title 14 7 Closing Requirements 14 8. Closing Deliveries 17 9. Closing Costs and Prorations 22 10. Notice to Tenants 24 11. Default 25 12. Owner's Representations and Warranties 25 13. Operating Partnership's Representations, Warranties and Covenants 29 14. Actions After the Effective Date 33 15. Use of Proceeds to Clear Title 35 16. Survival 36 17. Damage to Property 36 18. Brokerage Commission 37 19. Disclosure; Audit Right 37 20. Option 38 21. Successors and Assigns 38 22. Entire Agreement 38 23. Attorneys' Fees 38 24. Notices 38 25. Exhibits and Defined Terms 39 26. Time 39 27. Applicable Law 39 i 28. No Oral Modification or Waiver 39 29. No Recording 39 30. Counterparts 39 31. Books and Records 39 Exhibits Exhibit A Legal Description Exhibit B Schedule of Personal Property Exhibit C Schedule of Contributors Exhibit D Form of Lock-Up Agreement Exhibit E Registration Rights Agreement Exhibit F Prospective Subscription Questionnaire Exhibit G Foreign Persons Agreement Exhibit H Allocation of Value Exhibit I Schedule of Leases and Rent Roll Exhibit J Contracts Exhibit K Escrow Agreement Exhibit L-1 Form of Tenant Estoppel Certificate Exhibit L-2 Form of Owner Estoppel Certificate Exhibit M Mandatory Estoppels Exhibit N Lease Commissions Exhibit O Legal Proceedings Exhibit P Intentionally Deleted Exhibit Q New Leases ii Operating Partnership and Owner hereby enter into this Contribution Agreement (this "Agreement") as of the Effective Date. 1. Defined Terms. a. The terms listed below shall have the following meanings throughout this Agreement: Agreed Value: $180,500,000.00 minus (i) the principal balance of the Loans on the date of Closing, including the Redemption Notes, and plus or minus (ii) any closing costs and net prorations. Beneficiaries: Westbrook Corporate Center Associates, an Illinois limited partnership, as to the Parcel 1 Trust and the Parcel 3 Trust; Westbrook Corporate Center IV Associates Limited Partnership as to the Parcel 4 Trust; and Westbrook Corporate Center V Associates Limited Partnership as to the Parcel 5 Trust. Business Day: Any day on which banking institutions in Chicago, Illinois and Boston, Massachusetts, are open for the transaction of banking business. Closing Date: On or before April 15, 1997. Contracts: Contracts means agreements relating to all service, maintenance, supply, construction, utility, parking and management contracts affecting the construction, use, ownership, maintenance and/or operation of the Property (expressly excluding the Leases), except those agreements which as of the date hereof have been fully performed. Contract Rights: Any rights of Owner, as owner of the Property, in and to the Contracts. Contributors: Those Partners who become holders of Units in connection with the closing of the transaction contemplated hereby and the liquidation of the Beneficiaries. Deposit: Five Million and 00/100 Dollars ($5,000,000.00). Description of Five interconnected ten-story office buildings at Buildings: Wolf Road and 22nd Street, Westchester, Illinois collectively known as Westbrook Corporate Center. -1- Effective Date: The date all parties have executed this Agreement, and a fully executed copy has been delivered to each of Owner and Operating Partnership. Escrow Holder: The Title Company. Improvements: All Buildings and other improvements located on or affixed to the Land, including, without limitation, any and all utility, plumbing, electrical, heating, air-conditioning and ventilation lines, systems, and boilers. Intangible All intangible and mixed property used in connection Rights: with or relating to the Property, including without limitation all representations, warranties, guarantees, indemnities, bonds, approvals, licenses, applications, permits, plans, drawings, specifications, surveys, maps, engineering reports and other technical descriptions, environmental reports (including, without limitation, the Environmental Reports, as defined in Section 4.a below), the trade name "Westbrook Corporate Center", and right to insurance proceeds for any unrepaired losses as provided for herein and similar property, other than the Contract Rights and the Leases. The term Intangible Rights shall exclude all telephone numbers of Podolsky and Associates L.P., the right to delinquent rents due on or before Closing and the right to the bankruptcy claim regarding Demert and Dougherty, Inc. (a former tenant no longer in possession or having a right of possession). Land: That certain parcel of land in Westchester, Cook County, Illinois described on Exhibit A attached hereto and made a part hereof containing approximately 38.5 acres and more particularly described on Exhibit A, together with all rights and interests appurtenant thereto, including, without limitation, any water and mineral rights, development rights, air rights, easements and rights-of-way. Leasing Costs: Legal expenses, space planning and architectural fees, tenant improvement costs, moving allowances, and leasing commissions. Loans: (a) The Loan evidenced by a Promissory Note in favor of Aetna Life Insurance Company dated April 11, 1988, in the original principal sum of $55,000,000; and -2- (b) the Loan evidenced by a Promissory Note in favor of Aetna Life Insurance Company dated July 30, 1990, in the original principal sum of $29,000,000, (items (a) and (b) together being referred to herein as the "Aetna Loans"); (c) That certain loan from American National Bank and Trust Company of Chicago and the Northern Trust Company to Westbrook Corporate Center IV Associates L.P. dated as of March 31, 1995 in the original sum of $25,000,000; (d) That certain loan from American National Bank and Trust Company of Chicago and the Northern Trust Company to Westbrook Corporate Center V Associates L.P. dated as of June 27, 1996 in the original sum of $27,000,000; (e) That certain $1,520,000 second mortgage loan dated March 22, 1995 in favor of Westbrook Executive Suites LLC. (f) The Redemption Loans. Operating Beacon Properties, L.P., a Delaware limited Partnership: partnership of which Beacon Properties Corporation, a Maryland corporation, is the sole general partner. Operating c/o Beacon Properties Corporation Partnership's 50 Rowes Wharf Address: Boston, Massachusetts 02110 Attention: Charles H. Cremens, Senior Vice President Owner: Collectively, jointly and severally, the Beneficiaries of the Trusts. Owner's Address: c/o Podolsky and Associates L.P., Agent One Westbrook Corporate Center Suite 400 Westchester, Illinois 60154 Attn: Randy D. Podolsky, President Partners: Those individuals and entities who are general or limited partners in the Beneficiaries, as set forth on Exhibit C attached hereto and made a part hereof. Personal All tangible personal property interests of Owner Property: (but excluding office furniture, fixtures and equipment of Podolsky and Associates L.P.) in any way relating directly or indirectly to the -3- Real Property, including all furniture, fixtures, equipment, machinery, furnishings, carpets, drapes, blinds and mini-blinds, service and maintenance equipment, tools, signs, telephones and other communication equipment, intercom equipment and systems, construction inventory, vehicles and replacement parts set forth on Exhibit B attached hereto and made a part hereof and any replacements thereof and the Intangible Rights. Property: The Real Property, the Personal Property and the Contract Rights. Property Westbrook Corporate Center Location Westchester, Cook County, Illinois City, County and State) Real Property: The Land and the Improvements. Redemption Notes: Promissory notes issued by Owner to certain Partners pursuant to the Interest Purchase Securities Laws: Any federal or state securities, blue sky or similar law, rule or regulation or the interpretation thereof, which governs or is applicable to the prospective issuance of Units pursuant to this Agreement or to the conversion of such Units as contemplated by the Registration Rights Agreement. Title Company: Commonwealth Land Title Insurance Company 50 Federal Street Boston, Massachusetts 02109 Trusts: As to Parcels 1 and 2, LaSalle National Trust, N.A., not individually but as Successor Trustee under a Trust Agreement dated March 26, 1984 and known as Trust No. 107822 (the "Parcel 1 Trust"); as to Parcel 3, LaSalle National Trust, N.A., not individually but as Successor Trustee under a Trust Agreement dated March 14, 1988 and known as Trust No. 103063 (the "Parcel 3 Trust"); as to Parcel 4, LaSalle National Trust, N.A., not individually but as Successor Trustee under a Trust Agreement dated February 9, 1990 and known as Trust No. 115264 (the "Parcel 4 Trust"); and as to Parcel 5, LaSalle National Trust, N.A., not individually but as Successor Trustee under a Trust Agreement dated February 9, 1990 and known as Trust No. 115265 (the "Parcel 5 Trust"). -4- Units: Limited partner interests in the Operating Partnership. 2. Contribution of Property; Agreed Value. Owner desires to contribute the Property to Operating Partnership in exchange for Units and Operating Partnership desires to accept the Property from Owner, subject to all of the terms, covenants and conditions hereinafter set forth in this Agreement. Prior to the Closing Date, the Owner shall purchase from the Partners who are not Contributors such Partners' interests in the Beneficiaries for the Redemption Notes (the "Interest Purchase"). The Redemption Notes shall be issued to the Partners selling their interests pursuant to this section. At the Closing Date, the Operating Partnership shall satisfy the Redemption Notes provided the same does not result in the value of the Units to be issued being below $32,500,000.00. Owner acknowledges that the Partner Approval required by Section 5(d) of this Agreement shall be obtained subsequent to the Interest Purchase and further acknowledges that the Operating Partnership will offer to issue Units pursuant to this Agreement only to the Contributors. a. Agreed Value. Operating Partnership shall issue to the Partnerships at Closing the number of Units equal to the Agreed Value divided by the average closing sales price on the New York Stock Exchange ("NYSE") of Beacon Property Corporation's (the "Company") common stock $.01 par value (the "Common Stock") for the ten (10) consecutive trading days ending on the second business day immediately preceding the Closing Date (the "Average Stock Price"), provided that if the Closing occurs on or before April 15, 1997, the Agreed Value shall be divided by the lesser of (w) the Average Stock Price, (x) the said average closing sales price of the Common Stock for the twenty (20) consecutive trading days ending on the second business day immediately preceding Closing Date or (y) the offering price of Common Stock in any supplemental stock offering of the Company made between the date hereof and the Closing Date. In that connection the following provisions shall apply: (i) Redemption of Units. In addition to the Special Redemption Right described in subsection (vii) below, the Units, at any time after the first anniversary and in accordance with the terms of the Amended and Restated Agreement of Limited Partnership of the Operating Partnership, shall be redeemable for cash, or at the Company's option, on a one for one basis in exchange for shares of Common Stock. (ii) Restrictions: No Contributor shall sell, offer or contract to sell, grant any option to purchase, pledge, redeem (other than pursuant to the Special Redemption Right), convert, distribute or otherwise dispose of all or any portion of the Units issued hereunder for a period of one (1) year from the Closing Date. The foregoing -5- restriction shall not apply to involuntary transfers resulting from death, bankruptcy or the like, but shall continue to apply after any such involuntary transfer. This restriction shall not apply to shares of Common Stock currently held by the Contributors or acquired by the Contributors in the open market. At Closing, Owner shall execute a so-called "lock up" agreement containing the foregoing restrictions in the form of Exhibit D hereto and in connection with the distribution of the Units upon dissolution shall require each Contributor to agree to be bound thereby. (iii) Registration Rights: The Company will grant certain registration rights to the Contributors in accordance with terms of that certain Registration Rights Agreement attached as Exhibit E hereto. (iv) Units. Owner acknowledges that any Units offered hereby are being offered without registration under the Securities Act of 1933, as amended (the "Securities Act"), and the securities laws of certain states. The Units are being offered in reliance on an exemption from registration under Regulation D of the Securities Act ("Regulation D") and similar state law exemptions. Owner further acknowledges that, to satisfy the requirements of these exemptions, Operating Partnership must determine whether a prospective holder of Units meets the Regulation D and state law definitions of "accredited investor" before selling (or, in some states, offering) securities to such prospective holder. Owner shall deliver to Operating Partnership on or before April 3, 1997, subscriber questionnaires in the form set forth in Exhibit J attached hereto and incorporated herein completed and signed by each Contributor. Additionally, in the event of any change in any securities or related law or interpretation thereof after the date of this Agreement, Owner shall deliver to Operating Partnership, upon Operating Partnership's request, such other information, certificates and materials as Operating Partnership shall reasonably request. It shall be a condition precedent to Operating Partnership's and Owner's obligations under this Agreement that there shall have been no change in any securities or related law or interpretation thereof that would render consummation of conveyance of the Property as contemplated by this Agreement a violation of law or interpretation thereof. Within fifteen (15) days following the Effective Date hereof, Westbrook Corporate Center Associates, on behalf of all of the Beneficiaries, shall notify Operating Partnership in writing that: -6- (a) each of the Beneficiaries has adopted a Plan of Liquidation as required under the terms of this Agreement, to take effect if and when the Closing occurs; (b) the state of residence (or organization) of each Offeree, and such other information as Operating Partnership may request in order to assure compliance with the Securities Laws. (v) Partnership Agreement; Admission. Operating Partnership represents and warrants to Owner that a true and complete copy of the limited partnership agreement of Operating Partnership in effect as of the date of this Agreement (the "Partnership Agreement") has been delivered to Owner. Operating Partnership agrees that between the date hereof and Closing, it will not amend the Partnership Agreement without Owner's consent which shall not be unreasonably withheld or delayed. Upon liquidation of each Beneficiary, the general partner of Operating Partnership (i) shall consent to the admission of each Contributor as a limited partner in Operating Partnership and (ii) upon execution and delivery by each such Contributor of an amendment to the Partnership Agreement providing for (x) the acceptance of the Units to be delivered to it pursuant to the terms of this Agreement and containing an agreement to be bound by all terms and conditions of the Partnership Agreement, and (y) a Schedule showing the "Value" of each portion of the Property as the "704(c) Value" of such Property for purposes of the Partnership Agreement, in form and substance reasonably satisfactory to Operating Partnership (the "Amendment"), and shall add the name of each such Contributor as a limited partner to the books and records of Operating Partnership. Operating Partnership agrees that no other documentation shall be required to effect such admission pursuant to the Partnership Agreement unless required by any law, rule or regulation or interpretation thereof becoming effective after the date hereof, and Operating Partnership agrees to take the actions required of it pursuant to Section 4.4 of the Partnership Agreement in respect of the contribution to be made by Owner. In the event any partner of the Operating Partnership exercises its rights under Section 4.4, Operating Partnership shall immediately notify Owner, who shall have the right, within five (5) days of receipt of such notice to terminate this Agreement whereupon the Deposit shall be returned to Operating Partnership, this Agreement shall terminate and neither party shall have further rights or remedies hereunder. The Amendment shall also provide that Operating Partnership shall use any convention permitted by law and selected by the general -7- partner of Operating Partnership to make the allocations contemplated in Section 12.2(C) of the Partnership Agreement in respect of the issuance of Units to be made pursuant to this Agreement, except that capital gains and losses shall be allocated to all the holders of Units in accordance with their interests on the date of the transaction giving rise to the capital gain or loss, and Operating Partnership shall use the traditional method (specified in Regulation s.1.704-3(b)) to allocate book-tax differences with respect to the contribution of the Property to Operating Partnership. (vi) Special Redemption Right. Each Contributor shall have a one-time right (the "Special Redemption Right") to require the Operating Partnership to redeem for cash all or any portion of the Units issued to such Contributor upon liquidation of each Beneficiary. The Special Redemption Right shall be exercised by written notice given by Owner to the Operating Partnership on or before the date which is thirty (30) days following the Closing (each such Contributor being referred to herein as a "Redeeming Partner" and each such notice being referred to herein as a "Special Redemption Notice"). Each Special Redemption Notice shall specify the number of Units designated by the applicable Redeeming Partner to be redeemed. On or before the date which is forty-five (45) days following the Closing, the Operating Partnership shall redeem the designated portion of each Redeeming Partner's Units for cash based on the same price per Unit as was determined at Closing in accordance with the provisions of Section 2(a) (that is, without further adjustment based upon post-closing fluctuations in the share price of the Company). If the redemption of all of the Units which are the subject of Special Redemption Notices would result in there remaining outstanding Units issued to Contributors hereunder having a value of less than Thirty-Two Million Five Hundred Thousand Dollars ($32,500,000.00) (based on the Closing price per Unit, as aforesaid), then the Operating Partnership shall redeem an aggregate number of Units which, following such redemption, would leave remaining Units issued to Contributors hereunder having a value of Thirty-Two Million Five Hundred Thousand Dollars ($32,500,000.00), and the number of Units to be redeemed from each Redeeming Partner shall be prorated among the Redeeming Partners as follows: (X) first, Units shall be redeemed from each Redeeming Partner in an amount equal to the lesser of (i) the number of Units the Redeeming Partner offered for redemption and (ii) the number of Units received by the redeeming Partner from the Owner times a fraction the numerator of which is the maximum number of Units the Operating Partnership is -8- required to redeem pursuant to this provision and the denominator of which is the total Units issued to Owners and (Y) any remaining Units the Operating Partnership is required to redeem in excess of the number of Units to be redeemed pursuant to (X) (the "Remaining Redemption Units") shall be allocated to each Redeeming Partner in an amount equal to the number of Units the Redeeming Partner gave a Special Redemption Notice in regard to less the Units required to be redeemed from such Redeeming Partner pursuant to (X) above (the "Remaining Offered Units") times a fraction the numerator of which is the Remaining Redemption Units and the denominator of which is the Remaining Offered Units of all Redeeming Partners. The total number of Units to be redeemed from each Remaining Partner shall be rounded to the nearest whole number of Units (but in no event shall be in excess of the number of Units offered for Redemption). Each Redeeming Partner shall execute such documents as the Company may reasonably require in connection with the redemption of the Units. b. The Loans. It is the intention of the parties that the Contribution shall be made subject to the Loans provided the Aetna Loans can be renegotiated to terms which contain a "market" rate of interest, as determined by the Operating Partnership in its reasonable judgment. Prior to Closing, Operating Partnership and Owner shall endeavor to obtain the approval of the holders of the Loans to the transfer of the Property to the Operating Partnership subject to the Loans and to adjust the terms of the Aetna Loans to current market provisions and an increase in the principal thereof to $106,000,000. If Aetna refuses to grant such consent on terms satisfactory to Operating Partnership, either Owner or Operating Partnership shall be entitled to seek a commitment for refinancing of the Aetna Loans in an amount not less than $106,000,000 secured by the Property, containing non-recourse provisions similar to the Aetna Loans, and otherwise on terms mutually satisfactory to Owner and Operating Partnership. Any and all costs and expenses incurred in connection with the assumption of the Aetna Loans including any assumption fee or fee associated with a change in interest rates or increase in principal shall be borne by Owner. In the event such fee or any other fees imposed by Aetna exceeds $6,500,000 in the aggregate Owner may terminate this Agreement by written notice to Operating Partnership given prior to the Closing. In addition, Owner shall not be responsible for any other fees or commissions due third parties in connection with the Aetna loan. In the event approval for such assumptions is not obtained, or refinancing commitments not obtained, prior to the Closing, either party may terminate this Agreement whereupon the Deposit shall be returned to Operating Partnership and, except for covenants expressly stated to survive, this Agreement shall terminate without further recourse or remedy to either party hereto. -9- c. Real Property. Owner shall contribute the Real Property to Operating Partnership, and Operating Partnership shall accept the Real Property from Owner, on all of the mutual terms, covenants and conditions hereinafter set forth in this Agreement. Owner shall cause the fee title to the Real Property to be contributed to Operating Partnership by four (4) good and sufficient Trustee's Deeds (the "Deeds") from the Trustees of the Trusts in form and substance reasonably satisfactory to Operating Partnership and Owner. d. Leases. Owner shall assign to Operating Partnership all of its right, title and interest in and to all of the leases, occupancy agreements, or licenses of space in the Real Property, together with any amendments of any of the foregoing set forth on Exhibit I attached hereto as well as any New Leases, as hereinafter defined (collectively "Leases"), and Operating Partnership shall assume all obligations under the same, pursuant to an Assignment and Assumption Agreement (the "Lease Assignment") in form and substance reasonably satisfactory to Operating Partnership and Owner. e. Contract Rights. Attached hereto as Exhibit J is a complete list of the Contracts, full and complete copies of which have been delivered to the Operating Partnership. Those Contracts marked with an asterisk on Exhibit J are those Contracts which Operating Partnership desires to be terminated by Owner prior to Closing. Owner shall send notice of termination of such unapproved Contracts prior to Closing, it being agreed that in any event all management agreements and leasing agreements for the Real Property shall be terminated by the Closing Date. Owner shall assign to Operating Partnership Owner's interest in the Contract Rights which relate to those Contracts not being terminated (the Approved Contracts), and Operating Partnership shall assume the same pursuant to a Contract Rights Assignment (the "Contract Assignment") in form and substance reasonably satisfactory to Operating Partnership and Owner. f. Other Interests. All other interests of Owner in the Property (including, without limitation, the Personal Property) shall be contributed by Owner to Operating Partnership pursuant to a Bill of Sale and General Instrument of Transfer (the "General Instrument of Transfer") in form and substance reasonably satisfactory to Operating Partnership and Owner. 3. Deposit. On the second business day after the Effective Date, Operating Partnership shall deposit with the Escrow Holder, by wire transfer to Escrow Holder's account, the sum of Five Million and 00/100 Dollars ($5,000,000.00) as a deposit on account of the Agreed Value. The Escrow Holder shall hold the Deposit pursuant to the terms of an escrow agreement (the "Escrow Agreement") in the form attached hereto as Exhibit K. Interest earned on the Deposit shall become a part thereof and shall be payable to the party receiving the Deposit. The party receiving the interest on the Deposit shall bear the costs and -10- expenses, if any, charged by the Escrow Holder; provided, however, that in the event of any dispute between Operating Partnership and Owner involving the Escrow Holder, the losing party shall bear all the costs and expenses, if any, of the Escrow Holder in connection with the resolution of such dispute. If Operating Partnership shall fail to wire the Deposit to the Escrow Holder as herein required, this Agreement shall automatically terminate and be null and void, without recourse to the parties hereto. At Closing, the Deposit shall be returned to Operating Partnership. 4. Delivery of Materials for Review. In connection with Operating Partnership's investigation of the Property, Owner has delivered, the documents ("Documents") set forth below which are in Owner's possession or the possession of Owner's property manager or are reasonably obtainable by Owner: a. Environmental Reports. Copies of any and all soils, ground water and environmental reports concerning the Property ("Environmental Reports"), including, without limitation, the Environmental Reports prepared in connection with the any mortgage or similar encumbrance now encumbering all or any portion of the Property. b. Building Information. Copies of any and all architectural and engineering reports, as-built plans and specifications, the most recent as-built surveys, permits, licenses, applications, violation notices, certificates of occupancy, pending letters of intent for leasing space in the Real Property, a list of all current litigation and pending claims, inspection reports and/or approvals concerning the Property, all agreements with any abutters to the Property, including summaries of any existing agreements with said abutters that are oral rather than written. c. Leases. Copies of all Leases, including all summaries thereof, and copies of all material information contained in Owner's or Owner's property manager's leasing files with respect to the Leases or any prospective tenants. d. Contract Rights. Copies of the Contracts, including summaries of any Contracts that are oral rather than written. e. Approvals. Copies of all governmental licenses, permits, approvals, certificates and filings which have been obtained with respect to the Property ("Approvals") and, where applicable, certificates evidencing compliance therewith. The Approvals shall include, but not be limited to, environmental notification forms and impact reports, facade maintenance agreements, historic approvals, linkage agreements, licenses and permits required by any environmental laws, and certifications, rezonings, general plan amendments, parcel maps, development agreements, permits, licenses, and applications. f. Title Policies and Surveys. A copy of Owner's most recent owner's title policy on the Property, all endorsements to such policy, and (to the extent in Owner's -11- possession) copies of any lender's title policies issued to the holder of outstanding mortgage indebtedness on the Property. A copy of the most recent as built survey(s) covering the Property. g. Books and Records. Copies of the appropriate materials necessary to establish the operating history of the Property, including without limitation copies of property tax bills, utility bills, insurance policies, the most current rent roll, financial statements and balance sheets for calendar years 1993 through 1996, inclusive, and balance sheets audited if such audited statements exist and otherwise unaudited, and year to date statements and balance sheets for 1997 (all such financial statements and balance sheets collectively referred to as "Financial Statements"), monthly property operating and/or management reports for the 12 months preceding the Effective Date, and a list of all deposits, and similar records concerning the Property from 1993 through the present. h. Other Material Documents. Copies of all other materials and other information contained in Owner's or Owner's property manager's files, to the extent the same are requested from time to time in writing by Operating Partnership or its counsel and are reasonably material to Operating Partnership's due diligence investigation of the Property. i. Insurance Policies. Copies of all insurance policies, both liability and casualty, relating to the Property in currently in effect and a current loss report print-out with respect to such policies. j. Loans. True and complete copies of all documents evidencing the loans and security given therefor. 5. Contingencies. (a) Inspection. Operating Partnership acknowledges that it has conducted its own thorough investigation of the Property including, without limitation, an examination of all structural and mechanical aspects thereof, a review of any and all documentation with respect to the Property (including without limitation, its income and expenses, the Loans, real estate tax status, all Leases and tenant files, records of repairs and capital improvements, examination of the title to the Property), conducting of tests to determine the presence or absence of hazardous waste, asbestos, radon and other similar materials and substances, obtaining current "as built" surveys thereof, and determining the compliance of the Property with all applicable laws, rules, codes and regulations. Operating Partnership hereby confirms that it is satisfied with its investigation of the Property and accordingly, and except as otherwise set forth in this Agreement shall have no further claims against Owner, and the Contribution Agreement and Operating Partnership's obligations to close hereunder are not subject to any further review period contingency. Further, all corporate and partnership action necessary to authorize the -12- execution of this Agreement by the Operating Partnership and the performance of its obligations hereunder have been taken. (b) Property Availability. Owner shall continue to make the Property available to Operating Partnership and its agents, consultants and engineers during normal business hours to update the results of inspections and tests as Operating Partnership deems appropriate. Operating Partnership hereby agrees to indemnify, defend and hold Owner harmless from and against any and all loss, cost or damage to the Property arising out of actions taken by Operating Partnership or its agents, engineers or consultants. (c) Illinois Responsible Property Transfer Act. Owner hereby represents and warrants to Operating Partnership that neither the Property nor the transfer of the Property pursuant to this Agreement is subject to the Illinois Responsible Property Transfer Act ("RPTA"). On the Closing Date, Owner shall deliver to Operating Partnership an affidavit stating that as of the Closing Date neither the Property nor the transfer of the Property pursuant to this Agreement is subject to the RPTA. (d) Partner Approval. It shall be a condition of Owner's obligation hereunder that, (i) to the extent required by the respective partnership agreements of Owner, consent be obtained from the requisite number of Partners at or prior to Closing, and (ii) agreement be obtained from limited partners who are "unaccredited investors" to have their partnership interest redeemed by Owner. If such consent and agreement is not obtained, Owner shall notify Operating Partnership in writing whereupon the Deposit shall be returned to Operating Partnership and this Agreement will terminate and the parties shall be without further recourse or remedy, except as otherwise provided hereunder. Owner acknowledges that any consent required by this Section 5(d) shall be solicited subsequent to the Interest Purchase and further acknowledges that the Operating Partnership will offer to issue Units to Owner pursuant to this Agreement for distribution only to the Contributors. 6. Title. a. Title Commitment; Survey. Operating Partnership acknowledges that it has received title insurance commitments from the Title Company and surveys for the Property. Subject to Owner satisfying the standard requirements set forth in Schedule B-1 to said commitments, as previously forwarded to Owner's counsel, Operating Partnership shall close title subject to the exceptions set forth in said title commitments and the surveys. b. Later Changes Relating to Title. Operating Partnership shall have the right to approve or disapprove any exceptions to title that could have a material adverse effect on the value of the Property and that arise or occur during the period (the -13- "Interim Period") which begins after the date and time of the title commitment and ends at the time of recording the Deed from Owner to Operating Partnership in connection with the Closing hereunder. If Operating Partnership disapproves of any such exception to title, then Operating Partnership shall give to Owner a notice to such effect. Owner by written notice to Operating Partnership may elect to cure or not cure such matters within five (5) days of such notice from Operating Partnership. If Owner elects to cure such matters, it shall so advise Operating Partnership and the Closing shall be extended for a period not to exceed thirty (30) days. In the event Owner does not elect to cure such matter, Operating Partnership shall have the right to accept title subject to such matter without adjustment of the Purchase Price, or terminate the Agreement whereupon the Deposit shall be returned to Operating Partnership and neither party shall have further recourse hereunder. Notwithstanding the foregoing Owner hereby agrees that it shall remove, and shall not object to (i) a mortgage or related security documents or similar encumbrance given to secure indebtedness for money borrowed, or (ii) involuntary encumbrances which may be discharged by the payment of money, or bonding in lieu thereof (or, with respect to mechanics liens only, by obtaining affirmative coverage from the Title Company in form satisfactory to Operating Partnership), in the amount of $250,000 in the aggregate. 7. Closing Requirements. a. The Closing. On the Closing Date, all matters to be performed under this Agreement incident to the sale of the Property, and the payment of the Agreed Value (collectively, the "Closing") shall be performed at the offices of the Escrow Holder, 30 N. LaSalle Street, Chicago, Illinois, or other mutually acceptable location. The Closing shall commence on the day preceding the Closing Date at 10:00 a.m. All documents to be delivered at the Closing and all payments to be made shall be delivered to the Escrow Holder on the Closing Date, in escrow, pending the prompt recording of the Deed and other instruments as are required to be recorded to effect the transfer and conveyance of the Property, upon which recording, and confirmation from the Title Company that it is prepared to issue an owner's policy of title insurance in the form of the Specimen Title Policy, insuring the Operating Partnership's title to the Real Property in the amount of $180,500,000, all instruments and funds shall then be delivered out of escrow; provided, however, that the Deed shall not be recorded and such other instruments, funds, and other Closing deliveries shall be returned by the Escrow Holder to the party which delivered them in the event that on the Closing Date (i) Owner shall be unable to give title, or to make conveyance, or to deliver possession, all as herein provided, (ii) the Title Requirements shall not be satisfied to the satisfaction of the Title Company, (iii) Owner has not satisfied its obligations or is otherwise in default hereunder, or (iv) the Property does not conform to the provisions of Section 7.b. hereof, and the provisions of Section 7.c hereof shall then be applicable. It is acknowledged that time is of the essence of this Agreement. Owner and Operating Partnership agree (subject to lender approval) to cooperate in good faith to accomplish the Closing in the so-called "New York style" (that is, where the Owner's title policy, closing funds and Units are to -14- be released from escrow prior to recording of the Deed), but each acknowledges that a New York style closing shall not be required by this Agreement. b. Possession and Condition of the Property . Without limiting the generality of the foregoing, at Closing full possession of the Real Property free of all tenants and occupants, except for tenants and occupants under the Leases and the New Leases, is to be delivered, said Property to be then (i) in substantially the same condition as it is on the date hereof, reasonable use and wear thereof excepted and except as otherwise provided in Section 17, (ii) in substantially the same compliance with applicable laws and regulations as at February 1, 1987, and (iii) in compliance with the provisions of Section 6 hereof. Operating Partnership and/or Operating Partnership's agents shall be entitled to inspect the Property prior to the delivery of the Deed in order to determine whether the condition thereof complies with the terms hereof. c. Extension to Cure. If on the Closing Date Owner shall be unable to give title, or to make the contribution, or to deliver possession, all as herein provided, or if on the Closing Date the Property does not conform to the provisions of Section 7.b. for reasons beyond Owner's reasonable control, Owner, in its sole discretion, may give notice to Operating Partnership, on or before the Closing Date, that it elects to use reasonable efforts to cure all impediments which cause it to be unable to give title, make conveyance or deliver possession as aforesaid, all as herein provided. Operating Partnership shall thereupon have the option, to be exercised by notice to Owner given on or before the third (3rd) business day following receipt of such notice from Owner, (i) to terminate this Agreement, whereupon Escrow Holder shall return the Deposit to Operating Partnership and all obligations of the parties hereto shall cease without recourse to the parties hereto except as otherwise expressly set forth herein, (ii) to exercise its election under Section 7.e, or (iii) to extend the Closing Date for a period (the "Owner's Extension Period") of up to thirty (30) days to permit Owner to cure as aforesaid. In the event that Operating Partnership shall fail to timely give the aforesaid notice then Operating Partnership shall be deemed to have elected the option in the foregoing clause (i). d. Termination. If at the expiration of the Owner's Extension Period Owner shall have failed so to give title, make conveyance, deliver possession, or make the Property conform, as the case may be, all as herein provided, or if at any time during the period of this Agreement or any extension thereof, the holder of a mortgage on the Real Property shall refuse to permit insurance proceeds, if any, to be used for such purposes, then, subject to Operating Partnership's rights under Section 7.e, this Agreement shall terminate, whereupon Escrow Holder shall return the Deposit to Operating Partnership and all obligations of the parties hereto shall cease without recourse to the parties hereto except as otherwise specifically set forth herein. e. Operating Partnership's Election. Operating Partnership shall have the election, on the original or any extended Closing Date, to accept such title as Owner -15- can deliver to the Property in its then condition and to pay therefor the Agreed Value without deduction (except to the extent necessary to clear title of (i) any mortgages or related security documents given or similar encumbrance to secure indebtedness for money borrowed other than the Loans, (ii) any mechanic's lien not insured over, or (iii) involuntary liens encumbrances which may be discharged by the payment of a definite or ascertainable amount of money, or bonding in lieu thereof, in the amount of $250,000 in the aggregate), in which case Owner shall convey such title by delivering the Deed subject to the conditions contained in this Agreement. f. Accuracy of Representations and Warranties. It is a condition to Operating Partnership's obligations to proceed to Closing that all of the representations and warranties of the Owner hereunder are true and correct in all material respects as of the Closing Date (and subject to any update or modification thereof as hereinafter provided) and the Owner has performed all of its covenants hereunder. If any material condition to Operating Partnership's obligations hereunder is not fulfilled, Operating Partnership shall have no obligation to proceed to Closing. For purposes of this clause (f), a material condition shall include, without limitation, any condition(s) which cannot be cured by the payment of $250,000 in the aggregate. g. Securities Laws. It shall be a condition of Closing that there shall be no change in applicable securities laws, or any regulations or judicial decisions thereunder which would adversely affect the practical realization of the intended benefits of this Agreement by either party. h. Status of Contributors. It shall be a condition of Closing that there shall be no change in the status of any Contributor which would cause the issuance of any of the Units to be in violation of applicable Securities Laws. 8. Closing Deliveries. a. Owner's Deliveries. Owner shall deliver or cause to be delivered the following documents to Operating Partnership at Closing (the receipt of all the following by Operating Partnership shall be a precondition to Operating Partnership's obligation to complete the Closing): (1) The duly executed and acknowledged Deeds. (2) The original, signed Leases (or copies thereof if originals are not available) as well as Owner's tenant lease files, and the rent roll for the current month (showing no material adverse change from the rent roll attached hereto as Exhibit I, each certified by Owner as being true and correct as of the Closing. For purposes of this clause (2), a material adverse change shall include, without -16- limitation, any reduction in revenue of $250,000 or more, in the aggregate. (3) All tenant security deposits including any interest earned thereon to the extent required under any Lease. If any tenant security deposit is in the form of a letter of credit, Owner shall use reasonable efforts, after the Closing, to obtain and deliver an amendment thereto or a replacement letter of credit naming Operating Partnership as beneficiary. If any such letter of credit has not been so amended or replaced as of the Closing, at Closing Owner shall enter or shall cause Podolsky and Associates L.P. ("Manager") to enter into an agency agreement with Operating Partnership pursuant to which Owner (or Manager, as the case may be) will acknowledge that any such letter of credit is in the name of Owner (or Manager, as the case may be) as agent for Operating Partnership, and that Owner or Manager as the case may be will, as agent for Operating Partnership, present and draw upon such letter of credit upon demand by Operating Partnership provided Owner and Manager are indemnified for all actions taken at the request of Operating Partnership and are reimbursed for all costs in connection therewith. The obligations of Owner and Manager with respect to such letter of credit security deposits shall survive the Closing. (4) A certification duly executed by Owner under penalty of perjury stating that Owner is not a "foreign person" within the meaning of Section 1445 of the Internal Revenue Code of 1986, as amended. If Owner shall fail or be unable to deliver the same, then Operating Partnership shall have the right to withhold such portion of the Agreed Value as may be necessary, in the opinion of Operating Partnership or its counsel, to comply with said Section 1445. (5) Originals (or copies thereof if originals are not available) of all documents and materials assigned pursuant to the Contract Assignment. (6) Originals (if available) of all other Documents which will be binding upon the Operating Partnership following the Closing if not already provided, together with all updates and modifications thereof and additions thereto through the Closing, and all other books and records of Owner pertaining in a material way to the operation and management of the Property, all certified as being true, complete and correct by Owner. -17- (7) A certificate by Owner to Operating Partnership to the effect that all of the representations and warranties of Owner hereunder, as the same may be modified or updated as set forth herein, remain true and correct in all material respects as of the Closing. (8) Executed and acknowledged counterparts of the General Instrument of Transfer. (9) Such affidavits and indemnities, including a standard owner's affidavit, as the Title Company may reasonably require to provide extended coverage and in order to omit from any title insurance policy issued to Operating Partnership or Operating Partnership's mortgagee exceptions for (i) parties in possession (except for tenants under the Leases) and (ii) mechanic's liens created by or through Owner. (10) Any trust, corporate, partnership or other authorization documents necessary to record the Deed. (11) All necessary consents from the constituent partners in Owner to the extent such consents are required in connection with the consummation of the transactions contemplated by this Agreement. (12) Evidence of the authority of any individuals or constituent partners in Owner to execute any instruments executed and delivered by Owner at Closing. (13) Estoppel certificates from tenants of the Property dated no earlier than thirty (30) days prior to the Closing Date ("Tenant Estoppels") in the form attached as Exhibit L-1 hereto (containing no information which, in Operating Partnership's reasonable judgment, represents an adverse deviation from the status of the Lease previously disclosed to Operating Partnership as of February 1, 1997) from (i) all tenants identified on Exhibit M hereto as "Mandatory Estoppels" and (ii) sufficient additional Tenant Estoppels so as to represent, when added to the aggregate square footage demised to the Tenants from whom Tenant Estoppels are obtained as required by clauses (i) and (ii) of this paragraph, ninety percent (90%) of the space demised under the Leases. Owner shall use diligent efforts to obtain Tenant Estoppels from all tenants. Owner shall provide Operating Partnership with all executed Tenant Estoppels and a list of the missing Tenant Estoppels five (5) business days prior to the Closing Date. To the extent Tenant Estoppels are received for less than ninety percent (90%) of the space demised under the Leases, Owner shall provide, to the extent -18- factually true, Owner estoppel certificates in the form attached as Exhibit L-2 for tenants to the extent necessary to achieve the ninety percent (90%) threshold (but Owner shall not be required to provide estoppel certificates representing more than fifteen percent (15%) of the demised space). In no event shall Owner estoppel certificates be substituted for Mandatory Estoppels. If Owner is unable to deliver such Owner's estoppel letters because the required information is untrue (such as a tenant being in default), Operating Partnership shall have the right to terminate this Agreement, obtain a return of the Deposit and neither party shall have further rights or remedies, except as otherwise provided hereunder. (14) Evidence of the termination of Owner's property manager and any leasing agent for the Property. (15) Evidence satisfactory to Operating Partnership and Title Company that all real estate taxes, sewer and water rates and charges, special assessments and betterments, and any utility charges the non-payment of which could result in a lien upon the Property have been paid, to the extent the same are then due and payable (except for special assessments which may be paid in installments). (16) Any of the following which are requested by Operating Partnership and in the possession of or reasonably available to Owner: any and all keys, lock and safe combinations, training and instruction manuals relating to the maintenance, and operation of the Property, and copies of books and records. (17) Evidence reasonably satisfactory to Operating Partnership that Owner has sent notices of termination of all Contracts other than the Approved Contracts. (18) If the Approved Contracts include any contract for the construction of tenant improvements to be assigned by Owner to Operating Partnership, (i) subject to Operating Partnership's obligations set forth in Exhibit Q, evidence of payment by Owner of all amounts incurred thereunder through the Closing Date, including without limitation receipts and lien waivers from the general contractor and all subcontractors thereunder (or, to the extent lien waivers are not available, such indemnification and other documentation as shall be required by the Title Company in order to provide Operating Partnership and its Lender(s) with affirmative coverage under their respective title policies), and (ii) if the contract does not by its -19- terms permit assignment, that the contractor consents to such assignment. In addition, with respect to any such construction contract having an aggregate contract price of more than $25,000, Owner shall represent to Operating Partnership the amounts theretofore paid under such contract and, to the best of Owner's knowledge, that (i) the contract is free from default by such contractor or by Owner as "owner" thereunder; (ii) all amounts theretofore paid under such contract; (iii) the contractor has no claims against the Owner other than for quantified unpaid amounts; and (iv) the amount of the contract sum not then due and payable, which representation shall be treated for all purposes as a representation made in Section 12 hereof. (19) Any discharges, releases, other documents or other conditions required by the Title Company as Owner's Title Requirements under the Title Commitment are received or satisfied (and, in addition, it shall be a condition to Operating Partnership's obligation to purchase the Property that all of the other Title Requirements contained in the Title Commitment are satisfied, other than those Title Requirements which are personal to Operating Partnership), in each instance, to the reasonable satisfaction of Title Company so as to enable Title Company to issue the owner's title policy in the form of the Specimen Title Policy. (20) Subject to the limitations set forth in Section 2(b), payment of any fees or charges imposed in connection with the assumption of the Loans, prepayment of any of the Loans. (21) Payoff letters in form and substance acceptable to the Operating Partnership from the holders of the Loans (other than the Aetna Loans) being assumed. (22) A "lock up" agreement from each Contributor containing the restrictions set forth in Paragraph 2(a)(iii) above (which agreement may be incorporated in the form of assignments to be executed by the Owner in connection with the liquidation of the Beneficiaries, subject to the reasonable review and approval of Operating Partnership). (23) Documents required by Paragraph 2(a) hereof. (24) The RPTA Affidavit described in paragraph 5(e)(i) hereof. -21- (25) Such other instruments as Operating Partnership may reasonably request, provided the same are not inconsistent with the terms of this Agreement. If Owner shall be unable to deliver the originals of any of the Leases, Approved Contracts or other Documents, and if Operating Partnership shall have need to establish the authenticity of any such Leases, Approved Contracts or other Documents in connection with any dispute, or legal, administrative or other proceeding, Owner agrees that upon request by Operating Partnership at any time, Owner shall provide such affidavits with respect to the authenticity of any such Leases, Approved Contracts or other Documents as Operating Partnership shall request. Such obligation to provide affidavits as aforesaid shall survive the Closing. b. Mutual Deliveries. Operating Partnership and Owner shall deliver or cause to be delivered the following at the Closing: (1) Executed and acknowledged counterparts of the Contract Assignment. (2) Executed and acknowledged counterparts of the Lease Assignment. (3) A closing statement reflecting the adjustments made at the Closing and described in Section 9 hereof. (4) Agreements in the form and substance reasonably satisfactory to the parties between the Lenders, and Owner and Operating Partnership related to the acquisition of the Property "subject to the Loans. (5) Documents called for by Section 2(a) hereof. c. Operating Partnership's Deliveries. On the Closing Date, Operating Partnership shall deliver at the Closing in escrow with the Title Company: (1) All documents required of Operating Partnership or the Company called for by Section 2(a) hereof; and (2) Such other instruments as Owner may reasonably request. 9. Closing Costs and Prorations. At Closing, closing costs shall be paid and prorations made as follows: a. Closing Costs. Owner shall pay any state, county, or local transfer taxes. Operating Partnership shall pay any recording costs customarily paid by purchasers of commercial real estate in the Chicago metropolitan area, and the title insurance -21- premium for the owner's title insurance policy issued at Closing to Operating Partnership by the Title Company and the costs for the Survey. Operating Partnership and Owner shall each pay one half of any escrow fee charged by the Title Company. b. Prorations. The Agreed Value shall be subject to the following prorations which, at the election of Owner, shall be made in cash and shall not affect the number of Units issued to Owner: (1) Taxes. Real property taxes and general, and special assessments shall be prorated through the Closing Date on the basis of the fiscal year for such taxes and assessments. To the extent Owner has undertaken to obtain any real estate tax abatement, the amount of the net proceeds of such tax abatement shall be prorated through the Closing Date, if, as and when such proceeds are paid by the applicable governmental taxing authority (it being understood that to the extent any tenant leasing space in the Real Property shall be entitled to any portion of such tax abatement, that such portion shall be turned over to Operating Partnership to remit to such tenant and shall be deducted from any tax abatement proceeds in connection with calculating the net proceeds thereof). At Closing, Operating Partnership shall be deemed to have assumed the obligation of Owner to pay $100,000 in each of the years 1997 and 1998 to Hynes & Johnson for that firm's legal representation of Owner regarding real estate tax assessments for those years. (2) Rents. Prepaid rent, nondelinquent base rents, additional rents in the nature of operating expense recoveries and tax reimbursements under the Leases shall be prorated as of the Closing Date. Rents collected after the Closing Date from tenants whose rental was delinquent on the Closing Date, shall be deemed to apply first to current rental due at the time of payment and second to the rentals which were delinquent on the Closing Date. Unpaid and delinquent rents, to which Owner is entitled, shall be turned over promptly to Owner if collected by Operating Partnership after the Closing Date, less any reasonable collection costs actually incurred by Operating Partnership. Operating Partnership agrees to use good faith efforts to attempt to collect such rents but shall not be obligated to terminate any lease or initiate any legal proceedings. As of the Closing Date, Operating Partnership shall be entitled to a credit for any tenant security deposits and interest thereon, if any, and any other amounts due tenants' pursuant to such security deposits unless such security deposits are assigned pursuant to Section 8 or have been previously applied by Owner (an "Applied Security Deposit"). Owner hereby indemnifies Operating Partnership, effective from and after the Closing, for the amount of any Applied Security Deposit and interest, if any, payable thereon under the applicable Lease applied in violation of any -22- Lease, as to which the Tenant under the applicable Lease does not supply a Tenant Estoppel acknowledging that the security deposit has become an Applied Security Deposit. In the event that any additional rent or the calculation thereof is subject to adjustment pursuant to the terms and provisions of any Lease (e.g., year-end adjustments to escalation charges and the like), then after the amount of such additional rent is finally determined by Operating Partnership and Owner, the parties shall make the proper adjustments so that the proration of rents will be accurate based upon the actual amount of additional rent collected for the period in question, and payment shall be made promptly to Operating Partnership or Owner, whichever may be entitled to such payment, by the other party for the purpose of making such adjustment. (3) Utilities. Charges and assessments for sewer and water and other utilities, including charges for consumption of electricity, steam and gas shall be apportioned by Operating Partnership and Owner as of the Closing Date based on final readings therefor as of the Closing Date (or, if such final readings have not been obtained, based upon estimates of the amounts that will be due and payable on the next payment date). During the 60-day period following the Closing, to the extent not payable by Tenants, Owner and Operating Partnership shall recalculate the foregoing adjustments based upon actual final invoices. (4) Adjustment of Contracts. Payments required or received under all Approved Contracts (and unapproved Contracts, the termination of which is not effective until after Closing), shall be apportioned by Operating Partnership and Owner as of the Closing Date, provided, however, that Owner shall be entitled to reimbursement at Closing for all Leasing Costs incurred and paid pursuant to any New Lease. (5) The Loans. Interest due under the Loans shall be prorated as of the Closing Date. (6) Construction Inventory. Operating Partnership shall pay to Owner the sum of $123,160 for the construction inventory listed on Exhibit B attached hereto. c. Owner's Payment Obligation. Except as otherwise provided for herein, all expenses, taxes, fees, charges and assessment of every type relating to the Property and accruing for any period prior to the Closing shall be paid promptly by Owner except to the extent that Operating Partnership received credit therefor at the Closing. -23- d. Post Closing Cooperation. After the Closing Operating Partnership and Owner shall cooperate with each other, and shall cause their respective property managers for the Property to cooperate with each other, including without limitation making available books and records for the Property, in order to respond to any Tenant inquiry concerning, challenge to or audit of, any operating expense or similar additional rent or rent escalation item. The provisions of this Section 9 shall survive Closing. 10. Notice to Tenants. At Closing, Operating Partnership and Owner shall notify tenants under the Leases in writing of Operating Partnership's acquisition of the Property, which notices shall be in the form and substance reasonably satisfactory to Operating Partnership and Owner. 11. Default. a. Operating Partnership's Default. In the event that this Agreement does not close due to a default by Operating Partnership, Owner shall retain the Deposit as liquidated damages, and not as a penalty, and this shall be Owner's sole and exclusive remedy. The parties agree that Owner's actual damages would be difficult or impossible to determine if Operating Partnership defaults, and the Deposit is the best estimate of the amount of damages Owner would suffer. Owner and Operating Partnership agree that if the Deposit is so retained by Owner pursuant to this Section 11(a), it shall be paid 60% to Westbrook Corporate Center Associates, 20% to Westbrook Corporate Center IV Associates Limited Partnership and 20% to Westbrook Corporate Center V Associates Limited Partnership. b. Owner's Default. In the event that this Agreement does not close as a result of a default by Owner, Operating Partnership shall have the election (i) to terminate this Agreement, secure a refund of its Deposit and be reimbursed all costs incurred by Buyer in connection with this transaction, (ii) seek equitable relief, including specific performance of this Agreement, or (iii) waive the default and proceed to Closing. 12. Owner's Representations and Warranties. Owner hereby makes the following representations and warranties to Operating Partnership as of the Effective Date, which representations and warranties shall survive Closing for one (1) year: a. Delivery of Written Materials. All Documents and other written materials (including, without limitation, the Exhibits to this Agreement) which Owner has delivered or shall deliver to Operating Partnership pursuant this Agreement are and shall be complete in all material respects, and Owner shall deliver or cause to be delivered all such Documents and other written materials to Operating Partnership pursuant to Section 4 and Section 8 hereof. The copies of the Leases, the Contracts and the Financial -24- Statements now or hereafter delivered to Owner are true and accurate in all material respects. b. Other Agreements. On the Closing Date there will be no material contracts, agreements or understandings oral or written, with any person affecting the Property which have not been fully performed except the Approved Contracts, the Leases, the Approvals, the exceptions to title to the Property. c. Due Authorization. Subject to the consent and agreement referred to in paragraph 5(d), Owner has all necessary power and authority to own and use its properties and to transact the business in which it is engaged, and has full power and authority to enter into this Agreement, to execute and deliver the documents and instruments required of Owner herein, and to perform its obligations hereunder. Owner is duly authorized to execute and deliver, and perform this Agreement and all documents and instruments and transactions contemplated hereby or incidental hereto. d. Intentionally deleted. e. No Conflict. The execution and delivery of, and consummation of the transactions contemplated by this Agreement is not prohibited by, and will not conflict with, constitute grounds for termination of, or result in the breach of any of the Leases or the Contract Rights or any other agreement or instrument to which Owner is now a party or otherwise subject. f. Leases. (i) Attached hereto as Exhibit I is a full and complete list of the Leases and any amendments thereto or modifications thereof and of all other rental or occupancy agreement entered into by Owner with respect to or affecting the Property, (ii) a full and complete copy of each Lease and any and all amendments thereto and modifications thereof have been made available to Operating Partnership, (iii) there are no brokerage fees, commission or any other payments owed or payable by the Lessor under any of the Leases, now or in the future, to any parties in connection with any of the Leases, except for commissions that may become payable for future, unexercised renewals, extensions or expansions of Leases, a complete list of which is set forth on Exhibit N or Exhibit Q, the responsibility for which Operating Partnership shall assume, (iv) no rentals or other amounts due under the Leases have been paid more than one (1) month in advance (except for rent paid upon execution of Leases which have not yet commenced, as indicated on Exhibit I), (v) the transactions contemplated in this Agreement will not cause or constitute a breach or default under any of the Leases; (vi) except as set forth on Exhibit I, no security or other deposits of any type have been paid by any of the Tenants under any of the Leases; (vii) to Owner's knowledge the Leases are in full force and effect; (viii) except as set forth in Exhibit I to Owner's knowledge no tenant is delinquent in its obligation to pay rent or other charges under its Lease and no material breaches or defaults of any of the terms and provisions of any of the Leases by the Owner or the Tenant thereunder exists; (ix) except as set forth in Exhibit I or provided -25- in the Lease, there are no outstanding tenant improvement obligations, rent credits or lease concessions due tenants under the Leases, and (x) none of the tenants under the Leases has asserted any defenses, set-offs or claims in connection with any of the Leases; g. Contracts. There are no service or maintenance contracts or other Contracts of agreements now in force between Owner and any other party with respect to or affecting the Property, except for the Contracts set forth on Exhibit J attached hereto and made a part hereof and except for an either oral or written agreement from the owner of property across 22nd Street to contribute to the traffic light maintenance costs, and Owner has made available for Operating Partnership's inspection full and complete copies of all of the Contracts and all amendments thereto. There are no agreements with any abutters to the Property, oral or written, except as described on Part II of Exhibit J attached hereto. h. Notices. Owner has received no written notice or citation (a "Notice"): (1) From any federal, state, county or municipal authority alleging any fire, health, safety, building, pollution, environmental, zoning or other violation of any law, regulation, permit, order or directive in respect of the Property or any part thereof, which has not been entirely corrected; (2) From any insurance company or bonding company of any defects or inadequacies in the Property or any part thereof, which would adversely affect the insurability of the same or of any termination or threatened termination of any policy of insurance or bond. If any such Notice is received by Owner prior to Closing, Owner shall notify Operating Partnership promptly thereof and provide a copy of such Notice to Operating Partnership. i. Legal Proceedings. Except as set forth on Exhibit O hereto, there are no actions, suits or proceedings, pending, or, to Owner's knowledge, threatened before any court, commission, agency or other administrative authority against, or affecting Owner or the Property which are not covered by insurance maintained by Owner. j. No Employees. Owner does not directly employ any employees who work at the Property, or, if Owner does employ employees who work at the Property, the employment of all such employees shall be terminated at Closing. k. No Adverse Facts. Owner has no actual knowledge of any structural or material defects to the Property. -26- l. Union Contracts. There are no union contracts or collective bargaining agreements in force affecting Owner or the Property, except with regard to janitorial services. m. Hazardous Materials. Owner has delivered to Operating Partnership all reports in Owner's possession or control related to hazardous materials. Owner has never used, generated, processed, stored, released, discharged, transported, handled or disposed of any hazardous matter, hazardous waste or hazardous substance on, in or in connection with the Property except in compliance with all applicable laws, and, to Owner's actual knowledge, no prior owner or operator of the Property has used, generated, processed, stored, released, discharged, transported, handled or disposed of such waste or substance on or in the Property. To Owner's actual knowledge, no such hazardous matter, hazardous waste or hazardous substance is now or has ever been used, generated, processed, stored, released, discharged, transported, handled or disposed of on or in the Property except in compliance with all applicable laws. For the purposes of this paragraph, "hazardous matter", "hazardous waste" and "hazardous substance" shall mean any material which may be dangerous to health or to the environment, including without implied limitation all "hazardous matter", "hazardous materials," "hazardous substances," and "oil" as defined in any applicable federal, state or local law, rule, order or regulation relating to the protection of human health and the environment or hazardous or toxic substances or wastes, pollutants or contaminants, including all of the following statutes and their implementing regulations: (A) Comprehensive Environmental Response, Compensation and Liability Act of 1980, 42 U.S.C. s.9601 et seq; (B) Toxic Substances Control Act, 15 U.S.C. s.2601 et seq; (C) Federal Insecticide, Fungicide, and Rodenticide Act, 7 U.S.C. s.136; (D) Federal Water Pollution Control Act, 33 U.S.C. s.1251 et seq; (E) Federal Solid Waste Disposal Act, 42 U.S.C. s.6901 et seq; (F) Clean Air Act, 42 U.S.C. s.7401 et seq; (G) Applicable laws and regulations of the State of Illinois relating to hazardous matter, substances or wastes, waste oil, and air or water quality. n Assessments. There are no special assessments filed, pending or, to Owner's actual knowledge, proposed, against the Premises or any portion thereof, including, without limitation, any street improvement or special district assessments. -27- o [Intentionally Omitted] p. The Loans. True and complete copies of all documents evidencing the Loans have been delivered to Operating Partnership. The Loans are in full force and effect, and Owner is not in default thereunder. The outstanding principal balance of the Loans excluding the Redemption Notes as of this date is $126,458,603.69. Owner intends to draw an additional $6,500,000 under the Loan on Building IV (which sum is included in the calculation of Agreed Value). Other than with respect to the Aetna Loans there are no breakage costs, prepayment penalties or premiums, assumption fees or like charges which will be due or payable in connection with the transactions contemplated hereby, and the Loans (other than the Aetna Loans) may be prepaid at any time. q. Updating of Schedules, Exhibits, Representations and Warranties. Owner shall have the right to modify, update and supplement all representations, warranties, exhibits and schedules attached to or delivered in connection with this Agreement through the Closing Date, solely with respect to events occurring after the Effective Date which were not within the reasonable control of Owner or of which Owner first became aware after the Effective Date, to the extent required to make such representations, warranties, exhibits and schedules true, accurate and complete in light of such events; provided, however, that if any such modification, update or supplement has, in Operating Partnership's sole judgment, a material adverse effect on the condition or value of the Property, Operating Partnership shall have the right, as its sole remedy (unless the same otherwise constitutes or is caused by an intentional default by Owner hereunder), to terminate this Agreement by notifying Owner, in writing. For purposes of this clause (q), the term material adverse effect shall include, without limitation, any condition or state of facts the cost of which exceeds $250,000 in the aggregate. r. Village Inspection. Owner and Operating Partnership are aware that the Village of Westchester requires an inspection of the Property upon a sale and imposes a fee of $.05 per square foot of space inspected. The applicable ordinance has been determined to be unconstitutional by the Illinois Attorney General. Nevertheless, Owner hereby indemnifies and holds Operating Partnership harmless from any and all loss, cost, claim or damage, including without limitation the payments of such fee and the repair of any matters discovered in any subsequent inspection of the Property under such provision, and any and all fines imposed for failure to so comply. Owner shall not be required, however, to resolve the matter prior to Closing unless resolution is necessary to obtain documentary stamps or record the deed. 13. Operating Partnership's Representations, Warranties and Covenants. Operating Partnership hereby makes the following representations and warranties to Owner as of the Effective Date: -28- a. Due Authorization. Upon satisfaction of the Contingency described in Section 5(c), Operating Partnership has full power to execute, deliver and carry out the terms and provisions of this Agreement and has taken all necessary action to authorize the execution, delivery and performance of this Agreement, and the individual(s) executing this Agreement on behalf of Operating Partnership has the authority to bind Operating Partnership to the terms and conditions of this Agreement. b. Enforceability. Upon satisfaction of the Contingency described in Section 5(c), this Agreement and all documents required hereby to be executed by Operating Partnership, when so executed, shall be legal, valid, and binding obligations of Operating Partnership, enforceable against Operating Partnership in accordance with their respective terms. c. Deferral of Contributor's Gain. If Operating Partnership (i) fails to maintain for a period of ten (10) years from the Closing Date nonrecourse indebtedness ("Nonrecourse Debt") such that the amount of such indebtedness includable by each of the Contributors in each such Contributor's respective Federal income tax basis for its interest in Operating Partnership is at least equal to the respective amounts (the "Nonrecourse Built-in Gain") for such Contributor set forth in the NBG Schedule (as hereinafter defined and including adjustments thereto pursuant to the third sentence of the fifth paragraph of this Section 13.c.) (a "Basis Event"), or (ii) sells or otherwise transfers any portion of the Property prior to the tenth (10th) anniversary of the Closing Date in a taxable transaction or a non-taxable transaction with "boot" (a "Sale Event"), then Operating Partnership shall pay to each Contributor an amount equal to the Tax Payment, calculated in the manner provided below in this Section 13.c. Each of the events described in the preceding sentence is herein referred to as a "Gain Recognition Event". Subject to the remaining terms of this Section 13.c. below, Operating Partnership's obligation to maintain Nonrecourse Debt includable in a Contributor's Federal income tax basis for its interest in Operating Partnership shall cease with respect to each particular Contributor as to that portion of the Nonrecourse Built-in Gain attributable to the portion of any Property sold or otherwise transferred by Operating Partnership in a taxable transaction, or, as the case may be, if there is a non-taxable transaction with boot, as to that portion, if any, of the Nonrecourse Built-in Gain as to which gain was recognized. The Tax Payment payable by Operating Partnership to a Contributor affected by a Sale Event shall be an amount equal to the product of (i) the Applicable Percentage (as defined below) on the date of the Sale Event, and (ii) the tax (computed as provided below) on (A) the gain required to be allocated to the Contributor under Internal Revenue Code Section 704(c) as a result of the Sale Event minus (B) any passive loss carryforwards at the time of the Sale Event attributable to the Property which may be available to offset such gain. The "Applicable Percentage" for purposes of this paragraph shall be 100%, reducing by 10% on each anniversary of the Closing. Thus, if a Sale Event occurred between the fifth and sixth anniversaries of the Closing, Operating -29- Partnership would be required to pay fifty percent (50%) of the amount determined under clause (ii). The Tax Payment payable by the Operating Partnership to a Contributor affected by a Basis Event shall be an amount equal to the product of (i) the Applicable Percentage on the date of the Basis Event and (ii) the tax (computed as provided below) on (A) the gain recognized by the Contributor as a result of the deemed cash distribution to the Contributor due to the Basis Event minus (B) any passive loss carryforwards at the time of the Basis Event attributable to the Property which may be available to offset such gain. The "Applicable Percentage" for purposes of this paragraph shall be 100%. For purposes of the Applicable Percentage under this paragraph, a Basis Event shall be deemed to occur when the payment, repayment, refinancing or other event occurred which resulted in a reduction in Nonrecourse Debt basis allocable to the Contributor despite the fact that the occurrence of a Basis Event may not be determined until the end of Operating Partnership's tax year pursuant to the provisions of the applicable regulations promulgated pursuant to the Internal Revenue Code. Nothing in the preceding sentence shall be deemed to affect the fact that a failure to maintain adequate Nonrecourse Debt may in some instances be determined only as of the end of Operating Partnership's tax year. For purposes of computing the Tax Payment, the tax on the relevant amount of gain or income shall be computed on the basis of the highest stated marginal federal and state tax rates applicable to the type of gain or income resulting from the Sale or Basis Event regardless of the amount of tax actually paid or incurred by the Contributor, except that in determining such taxes a deduction shall be made for the tax benefit attributable to the deduction for federal income tax purposes of the assumed state income tax, with the tax benefit calculated based upon the highest stated marginal federal income tax rates. For the purposes hereof, the highest applicable stated marginal rate shall be the highest rate (based on the type of gain or income) stated as a number (i.e., a percentage), determined without regard to phase-outs, use of tax tables, and other matters which may affect or result in a different effective marginal rate. For example, for the above purposes, the highest stated marginal rate for an individual as of the date hereof (and, for purposes of this example, without regard to any retroactive changes which may be made in the applicable law after the date hereof) is 39.6% for ordinary income and 28% for capital gains. Within ten (10) days after the date hereof, Owner shall deliver to Operating Partnership a schedule of the Nonrecourse Built-in Gain (i.e., the "negative capital account") attributable to each Owner as of December 31, 1996. No later than September 30, 1997, Owner shall deliver to Operating Partnership a schedule (the "NBG Schedule") of the negative capital accounts for each Contributor in each Owner as of the Closing (but reflecting any cash distribution on liquidation of Owner) and the sum of these amounts as to all Owners shall be the Nonrecourse Built-in Gain as to each Contributor. The sum of the Nonrecourse Built-in Gain for all Contributors shall not -30- exceed $55,000,000 and, should the sum on the NBG Schedule exceed such amount, the Nonrecourse Built-in Gain of each Contributor shall be reduced proportionally (in proportion to their respective negative capital account(s)) to the extent necessary to make the total Nonrecourse Built-in Gain for purposes of the NBG Schedule no more than $55,000,000. Operating Partnership is relying on the information provided in Schedule NBG as to the amount of Nonrecourse Built-in Gain, and the occurrence of a Basis Event, and thus Operating Partnership's responsibility for Tax Payments with respect thereto, shall be limited based upon the amounts set forth in Schedule NBG (as adjusted pursuant to the immediately preceding sentence) notwithstanding that a Contributor's actual amount may be greater than the amounts set forth in Schedule NBG (as adjusted pursuant to the immediately preceding sentence); however, if the amount of any Contributor's actual negative capital account as of the Closing (as adjusted for any cash distribution on liquidation of the Owner) is less than that shown on Schedule NBG (as adjusted pursuant to the immediately preceding sentence) the occurrence of a Basis Event, and thus the requirement and amount of any Tax Payment, shall be based upon the actual amounts. Within ten (10) days after the date hereof the parties hereto shall agree on an Exhibit H to be attached hereto, which Exhibit H shall be the agreed value allocation to each Owner of the aggregate gross value of the Real Property. Each Contributor shall, upon request of Operating Partnership, provide it with copies of such tax returns, schedules and other information reasonably requested by Operating Partnership to enable it to make any necessary calculations hereunder, including, without limitation, copies of state and federal tax returns and schedules of passive loss carryforwards. In lieu of providing such information, a Contributor may instead provide a certification from a certified public accountant reasonably acceptable to Operating Partnership as to the Tax Payment due to such Contributor, such certification to include reasonable detail as to the calculation thereof and any assumptions and other material matters with respect thereto. Any Tax Payment hereunder shall be payable by Operating Partnership on or before the later of (i) March 15th of the calendar year following a Gain Recognition Event or (ii) twenty-five (25) days after the Contributor has provided the information required under the preceding provisions of this Section 13.c. as to the calculation of any Tax Payment, provided that if as a result of a Gain Recognition Event a Contributor is required to make estimated tax payments in excess of the estimated tax payments it would have had to make to qualify under the applicable safe harbor rules, then appropriate portions of the Tax Payment shall be made to Contributor in the amount of such excess on the later of (x) ten (10) days before each such estimated tax payment is due, and (y) ten (10) days after the Contributor has provided Operating Partnership with the amount of such excess then due, including reasonable detail as to the calculation thereof. Any Tax Payment not made when due hereunder shall bear interest and late payment penalties in the same amount as would be imposed by the Internal Revenue Service on a tax not paid -31- when due. The Contributor shall also be entitled to recover all costs of collection including reasonable attorneys' fees. The provisions of this Section 13.c. shall apply only to the circumstances specifically defined as either a Basis Event or a Sale Event and shall not apply to, and no Tax Payment shall be payable as a result of, any tax consequences arising from any other transaction or event or as a result of any transfer by, or any other act, action or omission of, any Contributor. Operating Partnership agrees that to the extent of any conflict between the terms of this Section 13.c. and Section 7.1D of the Partnership Agreement, Section 13 of this Agreement shall control. The provisions of this Section 13.c. shall survive the Closing and shall continue without regard to the limits set forth in Section 16 hereof. The payments required to be made to a Contributor pursuant to this Section 13.c. shall be the sole and exclusive remedy available to a Contributor in the event of a Gain Recognition Event. d. If the Closing shall occur, the provisions of Section 11 and 16 hereof shall not limit the liability of Operating Partnership for breach of the foregoing representations, warranties and covenants. 14. Actions After the Effective Date. The parties covenant to do the following through the Closing Date. a. Title. Owner shall not make any changes in the condition of title to the Property from and after the Effective Date which will not be released and removed at Closing, except with Operating Partnership's advance written consent, which consent shall not be unreasonably withheld or delayed. b. Maintenance and Operation of Property. Owner shall continue to operate, maintain and insure the Property consistent with the present business and operations thereof and in a first-class manner, and Owner shall maintain the Buildings, improvements, utilities, and systems that comprise or that are upon the Property in good condition and repair, normal wear and tear and casualty (subject to the provisions of Section 17 below) excepted, it being the intention of the parties hereto that the general operations of the Property shall not be changed between the date hereof and the date of Closing; and to the extent any of the building systems should break or otherwise become dysfunctional, Owner shall cause the same to be repaired and put in good working order prior to the Closing Date. Owner shall maintain all existing insurance property and casualty insurance coverages (or similar replacements thereof) and liability insurance in an amount of no less than $10,000,000 in full force and effect until the Closing. Owner shall not enter into any new Contract or equipment lease which will survive the Closing without the prior written consent of Operating Partnership, which consent shall not be unreasonably withheld with respect to any such proposed Contract or equipment lease -32- that may be terminated with thirty (30) days notice. Any such Contract or equipment lease approved by Operating Partnership shall be deemed an Approved Contract. Except as provided in Exhibit Q, Owner shall complete all tenant improvement work and pay all brokerage commissions with respect to any leases entered into prior to the date of this Agreement. c. Intentionally Deleted. d. Entry; Operating Partnership's Inspection. Operating Partnership and its agents, employees and contractors may enter the Property for purposes of inspection and survey and conducting soils, engineering and other tests. Operating Partnership shall perform any testing or inspection of the Property only after Operating Partnership has provided to Owner certificates of insurance or other evidence reasonably satisfactory to Owner that Operating Partnership and its consultant, agent or representative carries general liability insurance in an amount of at least Three Million Dollars ($3,000,000) together with evidence of adequate worker's compensation insurance. Operating Partnership shall perform the testing and inspection of the Property at such times and so as to cause no unreasonable disturbance of the operation of the Property and the possession thereof by the tenants. Owner shall have the right, at its option, to cause Owner's representative to be present at all inspections, reviews and examinations conducted on the Property by Operating Partnership. Operating Partnership shall give to Owner one (1) business day's advance notice of any such inspections, reviews or examinations. Operating Partnership shall repair any damage and indemnify, defend and hold Owner harmless from any cost, claim or expense arising from such entry by Operating Partnership or from the performance of any such tests by Operating Partnership, except that Operating Partnership's agreements as set forth in this sentence shall not extend to any pre-existing condition that is discovered by Operating Partnership to be present on, under or about the Property. The obligations of Operating Partnership set forth in the immediately preceding sentence shall survive the Closing or any earlier termination of this Agreement. Operating Partnership may also enter the Property for the purpose of conducting interviews with existing tenants under the Leases, but entry for such purpose shall be made only with prior appointment with Owner or Owner's management agent for the Property, and Owner shall have the right to have its representative accompany Operating Partnership on any such interview. e. Leasing. In order to provide for an efficient process for the approval of any New Lease (hereinafter defined), Owner shall meet with Operating Partnership from time to time to discuss leasing parameters and lease proposals. As any proposal for a New Lease is received by Owner, it shall notify Operating Partnership and afford Operating Partnership an opportunity to comment upon the proposal to Owner prior to Owner responding to such proposal. Owner, however, shall not be bound by the comments or suggestions of Operating Partnership. Owner, however, shall not enter into any new Lease or any amendment or modification to any Lease except as may be required pursuant to such Lease (any of the foregoing and those leases set forth in Exhibit Q -33- attached hereto a "New Lease") of the Property or any portion thereof, or any construction contract for the construction of tenant improvements in connection with any proposed Lease, except in compliance with this Section 14.e. A copy of each New Lease proposed to be entered into by Owner after the Effective Date will be submitted to Operating Partnership for its approval prior to execution by Owner, together with a reasonably detailed budget setting forth the Leasing Costs to be incurred in connection with such New Lease, and a copy of any proposed construction contract for the construction of tenant improvements in connection with such proposed New Lease, together with a full disclosure of any affiliation between Owner and the proposed tenant or contractor. Operating Partnership shall notify Owner in writing within five (5) business days after its receipt of each such proposed New Lease, budget, and construction contract, if applicable, either of its approval or disapproval thereof, including of the leasing costs to be incurred in connection therewith and of any such construction contract. In the event Operating Partnership informs Owner that Operating Partnership does not approve any such proposed New Lease, which approval shall not be unreasonably withheld or delayed, Owner shall not enter into such New Lease, or any such construction contract, as the case may be. In the event Operating Partnership fails to notify Owner in writing of its approval or disapproval of any such proposed New Lease or contract within the five-day time period for such purpose set forth above, such failure shall be deemed the approval by Operating Partnership of such New Lease, budget and contract. Upon the approval or deemed approval of any such construction contract, if the work under such contract is not complete as of the Closing Date, such contract shall be treated for all purposes as an Approved Contract. If Operating Partnership approves, or is deemed to have approved of, any New Lease, Leasing Costs incurred by Owner in connection therewith in an amount not to exceed the amount of such Leasing Costs approved or deemed approved by Operating Partnership as provided herein, shall, if a Closing shall occur, be the obligation of Operating Partnership, and to the extent that Owner has theretofore expended any sums for any of the foregoing, Operating Partnership shall, subject to such limitation, reimburse Owner at Closing for the amount of any such sums expended. In connection with the New Leases, Owner has an existing contract with Krusinski Construction Company for tenant improvement work at the Property. Owner shall terminate that contract at or prior to the Closing Date except with respect to work in process on the Closing Date and authorized in accordance with the prior paragraph. f. Subordination Non-Disturbance, and Attornment Agreements. To the extent required by Aetna, Owner shall seek Subordination, Non-Disturbance and Attornment Agreements from Tenants under Leases and New Leases, in such form as may be required by Aetna for execution and delivery by such Tenants on or before the Closing (or, if a Lease requires a particular form of SNDA, in the form required by such Lease). 15. Use of Proceeds to Clear Title. Any unpaid taxes, assessments, water charges and sewer rents, together with the interest and penalties thereon to Closing -34- Date, and any other liens and encumbrances which Owner is obligated to pay and discharge together with the cost of recording and filing any instruments necessary to discharge such liens and encumbrances of record, may be paid out of the proceeds of the monies payable on the Closing Date if Owner delivers to Operating Partnership on the Closing Date official bills for such taxes, assessments, water charges, sewer rents, interest and penalties and instruments in recordable form sufficient to discharge any other liens and encumbrances of record and Operating Partnership's title company agrees to insure against such liens or encumbrances. 16. Survival. Unless otherwise expressly stated to the contrary, the remedies for breach of representations and warranties of Owner contained in Section 12 hereof and the terms, covenants and indemnities contained in this Agreement required to be operative after delivery of the Deed shall survive delivery of the Deed for one (1) year after the Closing, and, to the extent notice of breach has been sent within such one (1) year period and an action has been commenced within ninety (90) days thereafter, until final unappealable adjudication thereof, and shall not be deemed to have been merged in the Deed. Owner agrees to indemnify and hold Operating Partnership harmless from and against any and all claim, loss, liability or expense (including reasonable counsel fees) incurred in connection with or arising out of the breach of any representation, warranty or agreement of Owner contained in this Agreement. The representations and warranties of the Owner which by the terms of this Agreement survive the Closing shall be enforceable against Podolsky Family Limited Partnership (PFLP). For the period set forth above, the PFLP shall not, by its act or omission, dispose of or encumber the Units delivered to it pursuant to this Agreement and the liquidation of the respective Owners in a manner which will reduce the unencumbered value of Units held by PFLP below $5,000,000.00. Unless otherwise expressly stated to the contrary, the representations and warranties of Operating Partnership contained in Section 13 hereof and the terms, covenants and indemnities contained in this Agreement required to be operative after delivery of the Deed shall survive for one (1) year after the Closing and shall not be deemed to have merged into the Deed. Operating Partnership agrees to indemnify and hold Owner harmless from and against any and all claims, loss, liability or expense (including reasonable counsel fees) incurred in connection with or arising out of breach of any representation, warranty, easement or agreement of Operating Partnership contained in this Agreement. 17. Damage to Property. If the Property or any part thereof (i) is damaged by casualty or (ii) is taken by exercise of the power of eminent domain prior to the Closing Date, and in the case of either such casualty or taking the damage to the Property exceeds $250,000, as reasonably determined by Operating Partnership, Operating Partnership may terminate by notice given to Owner within thirty (30) days of the date Owner gives notice to Operating Partnership of such casualty or taking. If Operating Partnership does not so terminate this Agreement or such damage does not exceed $250,000 the parties shall proceed to Closing without any reduction in the Agreed -35- Value except as specifically provided below. At the Closing, Owner shall assign to Operating Partnership all insurance proceeds arising from the casualty (to the extent not applied to any restoration relating thereto), together with a credit against the Agreed Value equal to the deductible amount under the applicable insurance policy, or pay over or assign to Operating Partnership all awards recovered or recoverable on account of such taking. 18. Brokerage Commission. Owner and Operating Partnership each warrant to the other party that its sole contact with the other party or the Property regarding this transaction has been directly with the other party other than Podolsky and Associates L.P. (the "Owner's Broker"). Owner shall be responsible for any fees or commissions payable to the Broker. Owner and Operating Partnership further warrant to each other that, except as set forth above, no broker or finder can properly claim a right to a commission or finder's fee based upon contacts between the claimant and the warranting party with respect to the other party or the Property. Owner and Operating Partnership shall indemnify, defend and hold the other party harmless from and against any loss, cost or expense, including, but not limited to, attorneys' fees and court costs, resulting from any claim for a fee or commission by any broker or finder in connection with the Property and this Agreement resulting from the indemnifying party's actions. The foregoing indemnities shall survive the Closing and shall not be subject to the general one (1) year limitation on survival of representations and warranties. 19. Disclosure; Audit Right. a. Public Disclosure of Agreement. Owner acknowledges that Beacon Properties Corporation, the general partner of Operating Partnership, is a publicly owned corporation subject to regulation by the Securities and Exchange Commission ("SEC"), and that the regulations of the SEC may require that Operating Partnership disclose the existence of this Agreement and the contents of some or all of the Documents delivered by Owner. Accordingly, Owner expressly consents to the disclosure of the terms and conditions of this transaction, this Agreement itself, and terms of any Document which Operating Partnership in good faith believes should be disclosed in connection with fulfillment of its disclosure requirements under SEC regulations. In addition, Operating Partnership and Owner shall have the right to issue press releases announcing this transaction at any time after the date hereof. Each shall be entitled to a prior review of the other's press release. b. Right to Audit. Pursuant to Section 4.g hereof, Owner is obligated to deliver to Operating Partnership certain financial statements and balance sheets for the Property. In order to comply with SEC regulations, Operating Partnership may need the right prior to or subsequent to Closing, to conduct an audit of Owner's books and records for the Property in conformity with Section 3.14 of SEC Regulation SX for 1994, 1995, 1996 and/or for Owner's period of ownership in 1997, at Operating Partnership's sole cost and expense. Owner hereby agrees to permit Operating Partnership and Operating -36- Partnership's accountants access to such books and records (including those maintained by Owner's management agent for the Property) and to cooperate with Operating Partnership, and to cause Owner's accountants to cooperate with Operating Partnership, at no cost to Owner, to enable such audit to be performed. Operating Partnership agrees that no information disclosed in such audit will alter any obligation of Owner. The provisions of this Section 19.b shall survive the Closing indefinitely. 20. Successors and Assigns. The terms, covenants and conditions herein contained shall be binding upon and inure to the benefit of the successors and assigns of the parties hereto. Operating Partnership may assign its rights and obligations hereunder to any affiliate of Beacon Properties Corporation or to any entity in which Operating Partnership, and/or any affiliate of Beacon Properties Corporation, have an economic interest. Except for the assignment permitted by the preceding sentence, Operating Partnership may not assign Operating Partnership's rights hereunder to any party without Owner's consent. No such assignment shall relieve Operating Partnership named herein of any liability to Owner. 21. Entire Agreement. This Agreement and the Confidentiality Agreement contain all of the covenants, conditions and agreements between the parties and shall supersede all prior correspondence, agreements and understandings, both verbal and written. The parties intend that this Agreement constitute the complete and exclusive statement of its terms and that no extrinsic evidence may be introduced in any proceeding involving this Agreement. 22. Attorneys' Fees. In the event of any litigation regarding the rights and obligations under this Agreement or in the Escrow Agreement, the prevailing party shall be entitled to reasonable attorneys' fees and court costs. Each party shall bear its own attorneys' fees in connection with the preparation of this Agreement and the consummation of the transactions contemplated hereunder. 23. Notices. All notices required to be given pursuant to the terms hereof shall be in writing and delivered by registered or certified mail (with postage prepaid and return receipt requested), or by overnight delivery service or private commercial courier which provides receipt of delivery (such as Federal Express) or via facsimile transmission (with confirmation copy sent by overnight delivery service), and any notice so delivered shall be deemed given upon receipt or refusal of delivery, whichever shall first occur, addressed to Owner at Owner's Address, with a courtesy copy to Sidney G. Saltz, Esq., Jenner & Block, One IBM Plaza, Chicago, Illinois 60611 and to Larry Blust, Esq. Jenner & Block, One IBM Plaza, Chicago, Illinois 60611; and to Operating Partnership at Operating Partnership's Address, with a courtesy copy to Jordan P. Krasnow, Esq., Goulston & Storrs, P.C., 400 Atlantic Avenue, Boston, Massachusetts 02110-3333 and to William A. Bonn, Esq. General Counsel, Beacon Properties Corporation, 50 Rowes Wharf, Boston, MA 02110. The foregoing addresses may be changed by written notice to the other party as provided herein. -37- 24. Exhibits and Defined Terms. All exhibits attached hereto are incorporated herein by reference thereto. All of the terms and definitions set forth in the Defined Terms section are incorporated in this Agreement by reference thereto. 25. Time. Time is of the essence of every provision herein contained. When the last day for the performance of any act permitted or required hereunder falls on any day which is not a business day in the Chicago, Illinois or Boston, Massachusetts, such act may be performed on the next business day in said city. 26. Applicable Law. This Agreement shall be governed by the laws of the State of Illinois. 27. No Oral Modification or Waiver. This Agreement may not be changed or amended orally, but only by an agreement in writing. No waiver shall be effective hereunder unless given in writing, and waiver shall not be inferred from any conduct of either party. 28. No Recording. Operating Partnership agrees that it shall not record this Agreement or any summary of the provisions thereof. Any such recording shall automatically render this Agreement null and void. 29. Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 30. Books and Records. From and after Closing, Owner shall have the right to inspect and otherwise have access to any books and records for the Property to the extent necessary for Owner to complete any tax returns or to reconcile any payments or credits for real estate taxes, common area expenses or other similar items. -38- THE FOLLOWING PAGES ARE THE SIGNATURE PAGES FOR THAT CERTAIN CONTRIBUTION AGREEMENT BETWEEN THE PARTIES DESCRIBED BELOW DATED AS OF MARCH __, 1997 IN WITNESS WHEREOF, the parties hereto have executed one or more copies of this Agreement under seal the day and year first above written. "Owner" WESTBROOK CORPORATE CENTER ASSOCIATES, an Illinois limited partnership By: Podolsky Family Limited Partnership, an Illinois limited partnership, its sole general partner By: The Milton Podolsky Revocable Trust under agreement dated May 26, 1978, General Partner By: _____________________________________ Milton Podolsky, Trustee WESTBROOK CORPORATE CENTER IV ASSOCIATES, an Illinois limited partnership By: Podolsky Family Limited Partnership, an Illinois limited partnership, its sole general partner By: The Milton Podolsky Revocable Trust under agreement dated May 26, 1978, General Partner By: _____________________________________ Milton Podolsky, Trustee THE FOLLOWING PAGES ARE THE SIGNATURE PAGES FOR THAT CERTAIN CONTRIBUTION AGREEMENT BETWEEN THE PARTIES DESCRIBED BELOW DATED AS OF MARCH __, 1997 WESTBROOK CORPORATE CENTER V ASSOCIATES, an Illinois limited partnership By: Podolsky Family Limited Partnership, an Illinois limited partnership, its sole general partner By: The Milton Podolsky Revocable Trust under agreement dated May 26, 1978, General Partner By: _____________________________________ Milton Podolsky, Trustee "Operating Partnership" BEACON PROPERTIES, L.P. By: Beacon Properties Corporation, General Partner By: ______________________________________________ Charles H. Cremens Senior Vice President EXHIBIT K ESCROW AGREEMENT To: Commonwealth Land Title Insurance Company Re: Contribution Agreement dated __________, 1997 (the "Agreement") by and between Westbrook Corporate Center Associates, Westbrook Corporate Center IV Associates Limited Partnership, and Westbrook Corporate Center V Associates Limited Partnership (collectively, "Owner"), and Beacon Properties, L.P., a Delaware limited partnership ("Operating Partnership"), with respect to the purchase and sale of Westbrook Corporate Center, Westchester, Illinois 60154 Date: ____________, 1997 Gentlemen: Commonwealth Land Title Insurance Company is hereby requested to act as escrow holder for the above referenced transaction pursuant to and in accordance with this Escrow Agreement (this "Agreement"). Capitalized terms used herein without definition which are defined in the Agreement, a copy of which is delivered herewith, shall have the meanings ascribed to them therein. Without limiting the generality of the foregoing, Commonwealth Land Title Insurance Company is hereby deemed to be the "Escrow Holder" within the meaning of the Purchase Agreement. 1. On or before ____, 1997 Operating Partnership shall deposit with Escrow Holder the sum of Five Million and 00/100 Dollars ($5,000,000.00) pursuant to the Agreement, which is to be held in an interest-bearing account with The First National Bank of Boston or other bank acceptable to Operating Partnership and Owner. Such cash deposit, together with all interest earned thereon, shall hereinafter be referred to as the "Deposit". 2. Operating Partnership's tax identification number is 04-3224259. Owner's tax identification numbers are Westbrook Corporate Center Associates 36-3313288; Westbrook Corporate Center IV Associates Limited Partnership 36-3980287; Westbrook Corporate Center V Associates Limited Partnership 36-3981444. Wiring instructions for each of Escrow Holder, Operating Partnership and Owner are attached hereto as Schedule A. 3. If Operating Partnership shall terminate the Purchase Agreement or the Purchase Agreement shall terminate in accordance with its terms, Operating Partnership may so notify Escrow Holder in writing (the "Operating Partnership's Deposit Notice"), with a copy of such notice to Owner. If within ten (10) days after the date of the Operating Partnership's Deposit Notice Owner has not given Escrow Holder a Dispute Notice in accordance with in Section 6 below, Escrow Holder shall pay over the Deposit to Operating Partnership, whereupon this Agreement shall terminate. 4. If Owner shall have a right to retain the Deposit pursuant to Section 11.a of the Purchase Agreement by reason of Operating Partnership's default, Owner may so notify Escrow Holder in writing (the "Owner's Deposit Notice"), with a copy of such notice to Operating Partnership. If within ten (10) days after the date of the Owner's Deposit Notice, Operating Partnership has not given Escrow Holder a Dispute Notice in accordance with Section 6 below, Escrow Holder shall pay over the Deposit to Owner, whereupon this Agreement shall terminate. 5. Upon the occurrence of the Closing, Operating Partnership and Owner shall jointly notify Escrow Holder thereof in writing, and Escrow Holder shall release the Deposit to Operating Partnership, whereupon this Agreement shall terminate. 6. If at any time hereafter either Operating Partnership or Owner (the "Notice Party") shall deliver to the other (the "Recipient") and to Escrow Holder a written notice (given in accordance with either Paragraph 3 or 4 hereof) asserting that the Notice Party is entitled to the Deposit (a "Demand Notice"), the Demand Notice shall include a copy of the notice to given to the Recipient pursuant to the Agreement and a statement, on which Escrow Holder may rely, that the Notice Party has notified the Recipient that the Notice Party is entitled to the Deposit. Escrow Holder shall, ten (10) days after receipt of a Demand Notice, deliver the Deposit in accordance with Section 3 or Section 4 hereof, as applicable, unless within said period of ten (10) days the Recipient shall give written notice to Escrow Holder and the Notice Party that it disputes the Notice Party's claim to the Deposit (a "Dispute Notice"), in which case Escrow Holder shall retain the Deposit until it receives written instructions executed by both Owner and Operating Partnership as to the disposition and disbursement of the Deposit, or until ordered by final court order, decree or judgment, which has not been appealed, to deliver the Deposit to a particular party, in which event the Deposit shall be delivered in accordance with such notice, instruction, order, decree or judgment. 7. The duties of the Escrow Holder shall be determined solely by the express provisions of this Agreement and are purely ministerial in nature. The Escrow Holder is not charging a fee for performing its services under this Agreement. If there is any dispute between the parties hereto as to whether or not the Escrow Holder is obligated to disburse or release the Deposit held under and pursuant to this Agreement, the Escrow Holder shall not be obligated to make such disbursement or delivery, but in such event shall hold the Deposit until receipt by the Escrow Holder of (i) an authorization in writing signed by all persons having an interest in said dispute, directing the disposition of the Deposit, or (ii) a final judgment regarding the rights of the parties in an appropriate legal proceeding. The Escrow Holder is authorized by Operating Partnership and Owner to interplead all interested parties in any court having jurisdiction and to deposit the Deposit with the clerk of any such court, and thereupon the Escrow Holder shall be fully relieved and discharged of any further responsibility under this Agreement. 8. Upon disbursement of the Deposit in accordance with this Agreement, all rights and obligations of the Escrow Holder shall be deemed to have been satisfied and Operating Partnership and Owner shall have no recourse against the Escrow Holder. 9. The Escrow Holder shall not be liable for any mistake of fact or error of judgment or any acts or omissions of any kind unless caused by its willful misconduct or gross negligence. The parties hereto each release the Escrow Holder from liability for any act done or omitted to be done by the Escrow Holder in good faith in the performance of its obligations and duties hereunder. The Escrow Holder shall be entitled to rely on any instrument or signature believed by it to be genuine and may assume that any person purporting to give any writing, notice, or instruction in connection with this Agreement is duly authorized to do so by the party on whose behalf of such writing, notice, or instruction is given. 10. The undersigned hereby jointly and severally indemnify, the Escrow Holder for and hold it harmless against any loss, liability, or expense incurred without negligence or bad faith on the part of the Escrow Holder arising out of or in connection with the acceptance of or the performance of its duties under this Agreement ("Indemnified Expenses"), as well as the costs and expenses, including reasonable attorneys' fees and disbursements, of defending against any claim or liability arising under this Agreement; provided, however, that if the Indemnified Expense is incurred because of the fault of either the Operating Partnership or Owner then the party at fault shall be responsible for the cost. 11. This Agreement shall be construed in accordance with the laws of State of Illinois. 12. This Agreement may be executed in any number of counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. 13. This Agreement may not be changed or modified except as agreed in a writing signed by each of the parties hereto. This Agreement shall be binding upon and inure to the benefit of the parties and their respective heirs, successors and assigns. 14. All notices required to be given pursuant to the terms hereof shall be in writing and delivered by registered or certified mail (with postage prepaid, return receipt requested) or by overnight delivery service or private commercial courier (such as Federal Express), addressed to Owner and Operating Partnership and to the parties entitled to copies as provided in the Agreement and to Escrow Holder at _______________________, Boston, Massachusetts, Attention: ______________, Esq. Any notice so given shall be deemed given upon receipt or refusal of delivery, whichever shall first occur. 15. As between the Operating Partnership and Owner, in the event of any inconsistency between the terms of this Agreement and the Purchase Agreement, the terms of the Purchase Agreement shall control. The foregoing is executed under seal as of the date first above written. THE OWNER: WESTBROOK CORPORATE CENTER ASSOCIATES, an Illinois limited partnership By their counsel Jenner & Block By:________________________ WESTBROOK CORPORATE CENTER IV ASSOCIATES, an Illinois limited partnership By their counsel Jenner & Block By:________________________ WESTBROOK CORPORATE CENTER V ASSOCIATES, an Illinois limited partnership By their counsel Jenner & Block By:________________________ "Operating Partnership" BEACON PROPERTIES, L.P. By: Beacon Properties Corporation, General Partner By:___________________________ Charles H. Cremens Senior Vice President The foregoing is agreed to as of this day of ____________, 1997. COMMONWEALTH LAND TITLE INSURANCE COMPANY By:__________________________________ Title: EX-23.1 4 CONSENT OF INDEPENDENT ACCOUNTANTS CONSENT OF INDEPENDENT ACCOUNTANTS We consent to the incorporation by reference in the Registration Statements of Beacon Properties Corporation on Form S-3 (File Nos. 333-05707, 333-21787 and 333-21769) and Form S-8 (File Nos. 33-88606 and 333-19603) of our audit report dated March 11, 1997 on our audit of the statement of excess of revenues over specific operating expenses of 10880 Wilshire Boulevard in Westwood, California for the year ended December 31, 1996, of our report dated March 18, 1997 on our audit of the statement of excess of revenues over specific operating expenses of Centerpointe in Fairfax, Virginia for the year ended December 31, 1996, and of our report dated March 21, 1997 on our audit of the statement of excess of revenues over specific operating expenses of Westbrook Corporate Center in Westchester, Illinois for the year ended December 31, 1996, which reports are included in this Form 8-K. /s/ COOPERS & LYBRAND L.L.P. Boston, Massachusetts March 26, 1997 -----END PRIVACY-ENHANCED MESSAGE-----