Exhibit 10.38

 

CONTRIBUTION AGREEMENT

 

MINNETONKA MEDICAL BUILDING, LLC

 

UNITED PROPERTIES INVESTMENT, LLC

 

(CONTRIBUTOR)

 

&

 

DOC-15450 STATE HIGHWAY 7 MOB, LLC (ACQUIRER)

 

PROPERTY:                     15450 STATE HIGHWAY 7, MINNETONKA, MN

 

EFFECTIVE DATE:                          February 5, 2015

 

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TABLE OF CONTENTS

 

CONTENTS

 

PAGE

 

 

 

1.

Contribution of Property

1

2.

Consideration; Deposit; Payment

2

3.

Preferred OPU Issuance; Closing Statement

4

4.

Title

4

5.

Closing

5

6.

Representations and Warranties

8

7.

Delivery of Disclosure Materials; Due Diligence Period

17

8.

Operations Prior to Closing; Conditions to Closing

22

9.

Prorations and Charges

24

10.

Condemnation; Rezoning; Historic Designation

26

11.

Default by Acquirer

26

12.

Default by Contributor

27

13.

Risk of Loss

27

14.

Brokerage

28

15.

Notice

28

16.

Indemnification

29

17.

Tax Treatment of Transaction

30

18.

Disclosure

31

19.

Cooperation with S-X 3-14 Audit

32

20.

Miscellaneous

32

 

EXHIBIT A

-

LEGAL DESCRIPTION

EXHIBIT B

-

ESCROW AGREEMENT

EXHIBIT C

-

LEASES, RENTS AND SECURITY DEPOSITS

EXHIBIT D

-

FINANCIAL STATEMENTS

EXHIBIT E

-

TENANT ESTOPPEL CERTIFICATE

EXHIBIT F

-

LIST OF ANCILLARY DOCUMENTS

EXHIBIT G

-

FORM OF ASSIGNMENT

EXHIBIT H

-

NON-FOREIGN PERSON CERTIFICATION

EXHIBIT I

-

REPRESENTATION LETTER

EXHIBIT J

-

AUDIT INQUIRY LETTER

Schedule 1.1(d)

-

Leases

Schedule 1.1(e)

-

List of Contract Rights

Schedule 7.1

-

Disclosure Materials

 

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CONTRIBUTION AGREEMENT

 

THIS CONTRIBUTION AGREEMENT (this “Agreement”) is made by and between United
Properties Investment, LLC, a Minnesota limited liability company, (“UPI”),
Minnetonka Medical Building, LLC, a Minnesota limited liability company, (“Mtka
Medical,” and, in the aggregate with UPI, “Contributor”), and DOC-15450 STATE
HIGHWAY 7 MOB, LLC, a Wisconsin limited liability company (“Acquirer”).  This
Agreement is to be effective as of the Effective Date specified in Section 20.2
below.  Defined terms used in this Agreement shall have the meanings given in
Section 20.14 hereof.

 

RECITALS:

 

A.                                    MMB Medical Partners, LLC (the “Company”)
is the owner of the Property (as hereinafter defined).

 

B.                                    Contributor is the record and beneficial
owners of one hundred percent (100%) of the limited liability company membership
interests in the Company.

 

C.                                    Contributor desires to contribute up to
one hundred percent (100%) of the limited liability company membership interests
in the Company (the “Acquired Assets”) to Acquirer, and Acquirer desires to
accept the Acquired Assets from Contributor, on the terms and conditions
hereinafter set forth.

 

NOW, THEREFORE, in consideration of the covenants and provisions contained
herein, and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, the parties hereby agree as follows:

 

1.                                      The Property; Contribution of the
Acquired Assets.

 

1.1                               Description of Property.  For purposes of this
Agreement, “Property” shall mean and include the following:

 

(a)                                 That certain improved parcel of land legally
described in Exhibit A hereto, together with all rights and appurtenances (the
“Land”);

 

(b)                                 The improvements on the Land, consisting of
an approximately 63,500 rentable square foot single-tenant medical office and
clinic building, and all fixtures, including, without limitation, the
sprinkling, plumbing, heating, cooling, ventilating, air conditioning,
electrical, lighting and other systems (the “Improvements”), (the Land and
Improvements are referred to collectively, as the “Real Property”);

 

(c)                                  All of the Company’s right, title and
interest in and to all of the personal property attached to or located on or
used in connection with the operation of the Real Property, including, without
limitation, furniture, furnishings, fittings, appliances, machinery and
equipment, building materials, operating inventories and supplies (collectively,
the “Personal Property”);

 

(d)                                 All of the Company’s right, title and
interest in and to all tenant

 

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leases in the Real Property, including leases executed after the date hereof in
accordance with the terms of this Agreement (the “Leases”), all of which
existing Leases are listed on Schedule 1.1(d) hereto;

 

(e)                                  All of the Company’s right, title and
interest in and to all contracts and other agreements incident to the operation
of the business conducted on the Real Property, including, without limitation,
management contracts, on-site maintenance contracts, janitorial contracts, and
leasing commission agreements, all of which are listed on Schedule 1.1(e) hereto
(collectively, the “Contract Rights”), except to the extent Acquirer elects to
exclude any such item, pursuant to Section 7.2(b) of this Agreement;

 

(f)                                   All of the Company’s right, title and
interest in and to all financial and other books and records maintained by the
Company in connection with the operation of the Real Property, all preliminary,
final and proposed building plans and specifications in the possession of
Contributor or the Company and relating to the Real Property, and all surveys,
structural reviews, grading plans, topographical maps, architectural drawings
and engineering, soils, seismic, geologic, environmental, and architectural
reports, studies, certificates, and similar documents in the possession of
Contributor or the Company and relating to the Real Property (collectively, the
“Records and Plans”). Contributor shall be entitled to retain copies of the
Records and Plans;

 

(g)                                  All of the Company’s right, title and
interest in and to all guarantees and warranties relating to the Property and
the fixtures and equipment located therein (collectively, the “Warranties”); and

 

(h)                                 All of the Company’s right, title and
interest in and to all trade names, licenses, permits, certificates of
occupancy, approvals, dedications, subdivision maps, and entitlements issued,
approved or granted by governmental or quasi-governmental entities or otherwise
relating to the Real Property, and any and all development rights and other
intangible rights, titles, interests, privileges, and appurtenances owned by
Contributor and relating exclusively to or used exclusively in connection with
the Real Property and/or the operation of the business conducted on the Real
Property (collectively, the “Licenses and Permits”).

 

1.2                               Contribution and Acceptance.  Contributor
agrees to contribute and transfer the Acquired Assets to Acquirer, and Acquirer
agrees to accept the Acquired Assets from Contributor, pursuant to the terms and
conditions set forth in this Agreement.  Notwithstanding the foregoing, Mark A.
Davis shall have the right to purchase a thirty-eight one-hundredths percent
(0.38%) limited liability company membership interest in the Company at Closing
for One Hundred Thousand and 00/100 Dollars ($100,000.00), which shall be paid
by Mark A. Davis within five (5) business days after the Closing Date.

 

2.                                      Consideration; Deposit; Payment.

 

(a)                                 Aggregate Consideration.  The aggregate
consideration (the “Consideration”) for which Contributor agrees to contribute
the Acquired Assets to Acquirer, and which Acquirer agrees to pay or deliver to
Contributor, subject to the terms of this Agreement, is Twenty Six Million and
00/100 Dollars ($26,000,000.00).

 

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(b)                                 Earnest Money Deposit.  Acquirer shall pay
Five Hundred Thousand and 00/100 Dollars ($500,000.00) (the “Deposit”) by wire
transfer payable to First American Title Insurance Company — Milwaukee Office,
Attn: Tammy Mervin, 648 North Plankinton Avenue, Suite 140, Milwaukee, Wisconsin
53203(“Escrow Agent”), within three (3) business days following the Effective
Date.  The Deposit shall be held in an interest bearing, federally insured
account, by Escrow Agent in accordance with the Escrow Agreement attached hereto
as Exhibit B (the “Escrow Agreement”) and this Agreement pending consummation of
this transaction.  By executing this Agreement, each Contributor authorizes Mark
A. Davis to execute the Escrow Agreement on its behalf thereby binding each
Contributor to the terms and conditions stated in the Escrow Agreement.  Any
interest earned on the Deposit shall be paid to Acquirer unless Contributor
shall be entitled to the Deposit pursuant to the terms of this Agreement or the
Escrow Agreement, in which case such interest shall be paid to Contributor. 
Upon expiration of the Due Diligence Period, if Acquirer has not terminated this
Agreement as provided herein, the Deposit shall become nonrefundable except in
the event of a Contributor default.  At the Closing, the Deposit shall be paid
to Contributor.

 

(c)                                  Payment of Consideration.  At Closing,
Acquirer shall be entitled to credit (or such amounts shall be charged to
Contributor) the following against the Consideration due to Contributor:

 

(i)                                     the Deposit, to the extent paid to
Contributor by the Title Company;

 

(ii)                                  amounts paid by or on behalf of
Contributor to satisfy any monetary liens, and all prorations and adjustments
due from Contributor pursuant to Section 9;

 

(iii)                               to the extent unpaid as of the Closing, the
brokerage fee to be paid by Contributor to DRESG pursuant to Section 14 hereof
(the Consideration as adjusted pursuant to Sections 1.2 and 2(d) (to adjust for
Mtka Medical retaining an interest in the Company as permitted) and 2(c)(i),
(ii) and (iii), the “Net Consideration”);

 

(iv)                              an amount of cash to be distributed to
Contributor at Closing and to be mutually determined by Acquirer and Contributor
no later than three (3) business days prior to Closing (the “Pre-Formation
Expenditure Reimbursement”), provided that the sum of (A) the amount of
Pre-Formation Expenditure Reimbursement and (B) the total net amount of cash
payable by Acquirer pursuant to Sections 2(b)(i), (ii) and (iii) shall not
exceed the lower of (x) the amount of capital expenditures incurred by the
Company with respect to the Property within the two-year period ending on the
Closing Date, within the meaning of Section 1.707-4(d)(1) of the regulations
(the “Treasury Regulations”) promulgated under the the Internal Revenue Code of
1986, as amended (the “Code”) and (y) Five Million Two Hundred Thousand and
00/100 Dollars ($5,200,000) (the lower of (x) and (y), “Pre-Formation
Expenditure Reimbursement Limit”); and

 

(v)                                 the Preferred OPU Value which shall be paid
in the manner stated in Section 3, below.

 

The Net Consideration shall be allocated between and paid (in cash or Preferred
OPU Value) to each Contributor in the Ownership Percentages.  The Ownership
Percentages set forth

 

3

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below beneath each Contributor’s signature are referred to herein, as to each
Contributor, as such Contributor’s “Ownership Percentage.”

 

3.                                      Preferred OPU Issuance; Closing
Statement.

 

(a)                                 Preferred OPU Issuance.  Each Contributor
shall receive its share of the excess of the Net Consideration over the
Pre-Formation Expenditure Reimbursement (the “Preferred OPU Value”) in the form
of Partnership Units to be designated in accordance with Section 8(b)(iii) as
Series A Preferred Units (“Preferred OPUs”) of Physicians Realty L.P. (the
“Operating Partnership”), a Delaware limited partnership, which is the operating
partnership of Physicians Realty Trust, a Maryland real estate investment trust
(“DOC”).

 

(b)                                 Closing Statement.  No later than three
(3) business days prior to Closing, Contributor shall have delivered to Acquirer
a Closing Statement calculated in accordance with Section 2(c) (the “Closing
Statement”) in mutually agreed form accurately setting forth the financial terms
of this transaction and a summary of (i) the Consideration, (ii) the Net
Consideration, (iii) the Pre-Formation Expenditure Reimbursement, and (iv) the
Preferred OPU Value, including each Contributor’s share of each of these amounts
in accordance with their Ownership Percentages.

 

(c)                                  Valuation of Preferred OPUs.  In accordance
with the provisions of this Agreement, at the Closing, the Operating Partnership
will issue to each Contributor, a number of Preferred OPUs determined by
dividing (i) the Contributor’s share of the Preferred OPU Value in accordance
with their Ownership Percentage by (ii) $200 plus the DOC Trading Price (rounded
to the nearest whole Preferred OPU).  The “DOC Trading Price” means the average
per share closing price, rounded to two decimal points, of DOC common stock on
the New York Stock Exchange (as reported by the Wall Street Journal website,
http://quotes.wsj.com/DOC/historical-prices, or its successor) for the period of
three (3) consecutive trading days ending on the last full trading day prior to
the Closing Date.

 

4.                                      Title.

 

(a)                                 Title Commitment.  Acquirer has obtained a
title insurance commitment prepared in accordance with all of the terms and
conditions of this Agreement (the “Title Commitment”) and with the current ALTA
Form, issued by First American Title Insurance Company — Milwaukee Office (the
“Title Company”), agreeing to issue an ALTA owner’s title insurance policy to
Acquirer. in the amount of the Consideration insuring title to the Real Property
to be in the condition called for by this Agreement and containing a “fifty-year
chain-of-title search,” a zoning endorsement on ALTA Form 3.1 (with parking), a
survey endorsement insuring that the survey accurately depicts the Real Property
(including boundaries, improvements, easements and encroachments), a contiguity
endorsement, an access endorsement, an endorsement for “gap coverage,” a
location endorsement and an owner’s comprehensive endorsement, a utility
facilities endorsement, and a tax parcel endorsement.  Acquirer shall cause the
Title Company at or prior to Closing to down date the Title Commitment to the
date and time of the recording of the Deed and provide a “title mark-up” showing
the final form of the title insurance policy (including the above referenced
endorsements) to be issued, which mark-up shall obligate the Title Company to
issue the final title insurance policy (“Title Policy”) in such form.  The title
mark-up and final title insurance

 

4

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policy shall be free from the standard requirements and exceptions and shall be
subject only to liens, encumbrances or exceptions specifically approved by
Acquirer (the “Permitted Exceptions”).  A written statement of the obligee of
the amount of any lien or encumbrance to be discharged by Contributor shall be
provided by Contributor prior to closing.  The premium for the title policy and
any fees for endorsements or other services provided by the Title Company shall
be paid by Acquirer on or before Closing.

 

(b)                                 Title Objections.  On or before the
January 28, 2015, Acquirer shall object in writing to any condition of title not
satisfactory to Acquirer, in Acquirer’s sole discretion (hereinafter referred to
as a “Title Defect”) and any matters of title not timely objected to by Acquirer
shall be deemed Permitted Exceptions. If Acquirer so objects, Closing shall be
postponed for up to 10 business days (the “Correction Period”) pending
correction of Title Objections. Except as expressly stated in this paragraph,
Contributor shall not be obligated to correct such Title Defects or to expend
any funds in connection therewith, provided, however, Contributor shall be
obligated to cure any and all Title Defects constituting voluntary liens of
Contributor or the Company by payment thereof at the time of Closing.  If any
Title Defect cannot be corrected within the Correction Period , Acquirer may, at
its option, (a) declare this Agreement null and void and as a result the Escrow
Agent shall return the Deposit together with all accrued interest forthwith to
Acquirer or (b) elect to accept such title as Contributor is able to convey and
proceed to Closing.  If Acquirer fails to notify Contributor that Acquirer is
terminating this Agreement pursuant to this Section within two (2)business days
of the expiration of the Correction Period, Acquirer shall be deemed to have
selected option (b) in the previous sentence and the Parties shall immediately
proceed to Closing.

 

(c)                                  Personal Property.  At Closing, the
Personal Property shall be free of all liens and encumbrances.

 

5.                                      Closing.

 

(a)                                 Time and Place.  Closing shall be held on
January 29, 2015,  (the “Closing Date”). Closing shall be an escrow closing with
the Title Company (as defined below) acting as the closing escrow agent
(“Closing”).  It is agreed that the time of Closing and the obligation of
Contributor to deliver the Acquired Assets to Acquirer at Closing are of the
essence of this Agreement.

 

(b)                                 Contributor’s Actions at Closing.  At
Closing, Contributor and the Company, as applicable, shall deliver to Acquirer
duly executed originals of the following:

 

(i)                                     Assignments from each Contributor in the
form attached hereto as Exhibit G granting and conveying to Acquirer good and
indefeasible title to the Acquired Assets, free and clear of all liens and
encumbrances, duly executed by each Contributor.

 

(ii)                                  A certificate that consents of the parties
to the Contract Rights, Licenses and Permits are not required to complete the
transactions contemplated under this Agreement.

 

(iii)                               A Non-foreign Person Certification in the
form attached hereto as Exhibit H, as required under Section 1445 of the Code.

 

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(iv)                              A certificate certifying that the
representations and warranties of Contributor, as set forth in this Agreement,
are true and correct in all respects as of the Closing, provided each such
certificate shall be limited to those representations and warranties that are
specifically applicable to each Contributor.

 

(v)                                 A resignation letter executed by each of the
officers and managers of the Company, in form reasonably acceptable to Acquirer;

 

(vi)                              a Preferred Stock Pledge (the “Pledge”) and
Promissory Note (“Note”) in forms reasonably acceptable to each Contributor and
Acquirer, executed by each Contributor;

 

(vii)                           Notwithstanding anything to the contrary in this
Agreement, the Company shall provide Acquirer original and complete waivers of
any and all existing rights of first refusal or rights of first offer that are
triggered by the transaction described in this Agreement, options to purchase or
any other similar rights (including, but not limited to, any and all consents),
executed by the necessary parties, so that Contributor is able to freely
transfer the Acquired Assets and the Property to Acquirer unencumbered by such
rights.

 

(viii)                        Originals of the following instruments, documents
and other items (or copies if originals are unavailable):

 

(1)                                 all certificates of occupancy (and any
required governmental approvals in connection with the transfer of the
Property), licenses, plans, permits, authorizations and approvals required by
law and issued by all governmental authorities having jurisdiction over the
Property;

 

(2)                                 the Leases and the Guarantees;

 

(3)                                 the Estoppel Certificates;

 

(4)                                 the Ancillary Documents executed by
Contributor;

 

(5)                                 the Property Management Agreement and the
Asset Management Agreement;

 

(6)                                 all building records in Contributor’s
possession or control with respect to the Property;

 

(7)                                 each bill of current real estate taxes,
sewer charges and assessments, water charges and other utilities, together with
proof of payment thereof (to the extent same have been paid);

 

(8)                                 the Warranties;

 

(9)                                 all keys and combinations to locks at the
Property, all plans, specifications, site plans, equipment manuals, technical
data and other documentation

 

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relating to the building systems, equipment and any other personal property
forming part of the Property or any portion thereof in the possession of the
Company or any property manager(s);

 

(10)                          an affidavit of title in favor of Acquirer and
Acquirer’s title insurer, together with such other affidavits as are reasonably
required by Acquirer’s title insurer, in the forms used by such title insurance
company;

 

(11)                          the Closing Statement, including each
Contributor’s Ownership Percentage of the Acquired Assets, with the amount
payable to Mtka Medical properly adjusted if Mtka Medical exercises its election
to retain up to four percent (4%) of the Acquired Assets; and

 

(12)                          such other documents as may be reasonably required
by Acquirer or the Escrow Agent to consummate this transaction in accordance
with this Agreement.

 

(ix)                              Prior to the Closing, Contributor shall have
executed and delivered to Acquirer, the documents listed on Exhibit F hereto
(the “Ancillary Documents”).

 

(x)                                 Evidence of capacity and/or authority of
Contributor to enter into and consummate the transaction contemplated under this
Agreement, and the authority of the person executing documents on behalf of
Contributor, in a form reasonably satisfactory to Acquirer and the Title
Company.

 

(xi)                              Any disclosures and reports required by
applicable state law in connection with the transfer of the Property pursuant to
this Agreement.

 

(c)                                  Acquirer’s Actions at Closing.  At the
Closing, Acquirer shall deliver the following to Contributor:

 

(i)                                     the Net Consideration, consisting of the
Pre-Formation Expenditure Reimbursement in cash and the Preferred OPU Value in
Preferred OPUs, as specified in Sections 2 and 3 hereof;

 

(ii)                                  a certificate from Acquirer certifying
that the representations and warranties of Acquirer, as set forth in this
Agreement, are true and correct in all respects as of closing;

 

(iii)                               the Ancillary Documents, executed by
Acquirer;

 

(iv)                              evidence of capacity and/or authority of
Acquirer and the authority of the person executing documents on behalf of
Acquirer reasonably satisfactory to Contributor and the Title Company;

 

(v)                                 any disclosures and reports required by
applicable state law in connection with the acceptance of the transfer of the
Property;

 

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(vi)                              Payment, in cash, of the principal amount of
the Note and the Pledge executed by Physicians Realty, LP. in form reasonably
acceptable to Acquirer and Contributor, and

 

(vii)                           any additional documents that Contributor or the
Title Company may reasonably require for the proper consummation of the subject
transaction.

 

(d)                                 Possession.  Possession of the Property
shall be given to Acquirer at Closing unoccupied and free of any encumbrances
other than the Permitted Exceptions, and in the case of the Leases, subject only
to any tenants’ rights under the Leases.

 

(e)                                  Further Assurances.  In addition to the
acts and deeds recited herein and contemplated to be performed, executed and/or
delivered by the parties at the Closing, each of the parties agrees to perform,
execute and/or deliver or cause to be performed, executed and/or delivered, but
without any obligation to incur any additional liability or expense, on or after
such Closing any and all further acts, deeds and assurances as may be reasonably
necessary to consummate the transactions contemplated hereby and/or to further
perfect and deliver to the other party the benefits conferred by this Agreement
on such other party.

 

6.                                      Representations and Warranties.

 

(a)                                 Contributor’s Representations and
Warranties.  Each Contributor represents and warrants that all each of
Contributor’s representations and warranties set forth in this Section 6(a) are
true, correct and complete as of the Effective Date of this Agreement and shall
be deemed reaffirmed as true, correct and complete as of Closing, subject to
matters first occurring after the Effective Date that are disclosed to Acquirer
by each Contributor.  Each Contributor acknowledges that the representations and
warranties made in this Section 6(a) by such Contributor are a material
inducement to Acquirer’s entering into this Agreement and purchasing the
Acquired Assets and that Acquirer is entitled to rely upon these representations
and warranties despite any and all investigation undertaken by Acquirer.  All of
each Contributor’s representations and warranties set forth in this
Section 6(a) shall survive the Closing of the transactions contemplated herein
for a period of twelve (12) months, after which they will terminate and be of no
further force or effect.  Any claim for breach of either Contributor’s
representations, warranties or covenants, including the indemnities stated
below, must be brought by Acquirer within such twelve (12) month period or it is
waived.  Notwithstanding anything to the contrary contained in this Agreement:
(i) the amount which may be recovered by Acquirer for breach of the
representations and warranties of each Contributor or the Company as stated in
subparagraphs (xii)—(xxi), inclusive, (xxiii) and (xxvii)-(xxx), inclusive,
below, shall not exceed $500,000.00 in the aggregate; (ii) and Acquirer is
deemed to waive all claims with respect to such representations and warranties
except to the extent such claims exceed $25,000.00 in the aggregate; provided,
however, the $500,000 cap set forth in the preceding subsection (i) shall not
apply to claims for fraud, intentional misrepresentation, and breaches of
representations and warranties with respect to environmental matters.  Acquirer
is purchasing the Acquired Assets and acquiring the Property based upon
Acquirer’s own investigation and inquiry and, except for the express
representations, warranties and covenants of each Contributor stated in this
Agreement and the documents delivered by each Contributor at Closing, is not
relying on any representation or warranty of either Contributor, each

 

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Contributor’s agents or other persons for whom either Contributor is legally
responsible and is purchasing the Acquired Assets and the Property “As Is and
Where Is.”  Notwithstanding the foregoing, Acquirer shall have no claim against
either Contributor with respect to the representations and warranties set forth
in this Section 6(a) if Acquirer had actual knowledge that a representation or
warranty was or may be untrue and inaccurate or incorrect as of the time of
Closing and Acquirer nevertheless chose to proceed with Closing hereunder.

 

Whenever in this Agreement a representation or warranty of Contributor or the
Company is based on the “Contributor’s knowledge” or words of similar import or
is made solely by the company, such reference shall be deemed to be to the
actual knowledge of Mark A. Davis, without investigation or inquiry of any
kind.  Contributor hereby represents and warrants that Mark A. Davis is the
Chief Manager of Mtka Medical and the President of the Company, and is in a
position to know about, and has the most knowledge of, the subject matter of the
representations and warranties made by Contributor in this Agreement.  There
shall be no personal liability to Mark A. Davis arising out of said
representations or warranties.  No knowledge of parties affiliated with,
employed by, or related by agency to Contributor or the Company other than those
persons specifically named above, shall be imputed to Contributor or to the
above-named persons.  Each of the undersigned Contributors makes the
representations and warranties in this Agreement solely as to itself and not as
to any other Contributor; and the liability of each Contributor for breach of
the representations and warranties in this Agreement is limited to such
Contributor’s Ownership Percentage of the total liabilities or damages
recoverable by Acquirer for the breach of such representations or warranties.

 

Contributor hereby represents and warrants to Acquirer:

 

(i)            Each Contributor is duly formed and validly existing as a limited
liability company in good standing in the State of Minnesota, with the requisite
limited liability company power and authority to own, lease and operate its
assets, conduct its businesses, and perform its obligations under this
Agreement.  Each Contributor is duly qualified to transact business and is in
good standing under the laws of the jurisdiction in which it  owns or leases
assets, or conducts any business, to the extent that such qualification is
required under the laws of such jurisdiction.

 

(ii)           Each Contributor has the requisite limited liability company
power and authority to enter into this Agreement and to consummate the
transactions contemplated by this Agreement.  The execution and delivery of this
Agreement by Contributor and the consummation by  Contributor of the
transactions contemplated by this Agreement has been duly authorized by all
necessary action on the part of the Company and its  members.  This Agreement
has been duly executed and delivered by Contributor and constitutes the legal,
valid and binding agreement of Contributor, enforceable against Contributor in
accordance with its terms.  Neither Contributor nor the Company is or shall be
required to give notice to, or obtain consent from, any person or entity in
connection with the execution and delivery of this Agreement or the consummation
or performance of the Contemplated Transaction.

 

(iii)          Neither the execution and delivery of this Agreement, nor
compliance with the terms and conditions of this Agreement by Contributor, nor
the consummation of the sale of the Acquired Assets to Acquirer (the
“Contemplated

 

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Transaction”), will, directly or indirectly (with or without notice or lapse of
time), constitute:  (i) a violation or breach of the operating or member control
agreement of Contributor, as the same may have been amended from time to time,
or, to Contributor’s knowledge, of any agreement, instrument, mortgage,
indenture, lien agreement, note, contract, permit, judgment, decree, order,
restrictive covenant, statute, rule, or regulation applicable to Contributor,
the Acquired Assets, the Company, or the Property; (ii) contravene, conflict
with, or violate any of the Company’s Organizational Documents; (iii) to
Contributor’s knowledge, contravene, conflict with, violate, or give any
governmental agency or body the right to challenge the Contemplated Transaction,
or to exercise any remedy or obtain any relief under, any applicable law,
regulation, code or other legal requirement or any court or other governmental
order (collectively, “Legal Requirement”) to which Contributor or the Company,
or any assets owned or used by the Company could be subject; (iv) to
Contributor’s knowledge, contravene, conflict with, violate, result in the loss
of any benefit to which the Company is entitled under, or give any governmental
agency or body the right to revoke, suspend, cancel, terminate, or modify, any
authorization, license or permit held by the Company or that otherwise relates
to the business of, or any assets owned or used by, the Company; (v) to
Contributor’s knowledge, cause Acquirer or the Company to become subject to, or
to become liable for payment of, any tax; (vi) to Contributor’s knowledge, cause
any assets owned or used by the Company to be reassessed or revalued by any
governmental agency or body; (vii) to Contributor’s knowledge, breach, or give
any person the right to declare a default or exercise any remedy or to obtain
any additional rights under, or to accelerate the maturity or performance of, or
payment under, or cancel, terminate, or modify, any Contract Right assumed by
Acquirer; or (vii) result in the imposition or creation of any encumbrance upon,
or with respect to, any assets owned or used by the Company.

 

(iv)          The Company is duly formed and validly existing as a limited
liability company in good standing in the State of Delaware, with the requisite
limited liability company power and authority to own, lease and operate its
assets and conduct its business.  The Company is duly qualified to transact
business and is in good standing under the laws of the jurisdiction in which it
owns or leases assets, or conducts any business, to the extent that such
qualification is required under the laws of such jurisdiction.  The Company has
delivered to Acquirer true and accurate copies of the Articles of Organization
and Limited Liability Company Agreement of the Company, each as amended to date
(the “Organizational Documents”).  The Company is not in default under or in
violation of any of its Organizational Documents and has performed all of its
obligations under it Organizational Documents.  The Company has not conducted
business under or otherwise used, for any purpose or in any jurisdiction, any
fictitious, assumed, or trade.  The Acquired Assets are not certificated and are
represented solely by the provisions of the Organizational Documents.

 

(v)           The Real Property constitutes all of the real property owned or
leased by the Company since its inception.

 

(vi)          As of the Closing, the Acquired Assets shall constitute one
hundred percent (100%) of the issued and outstanding membership interests in the
Company, except to the extent that Mtka Medical elects to retain up to four
percent (4%) of the Acquired Assets pursuant to Section 1.2 of this Agreement,
and Acquirer shall be the owner of the Acquired Assets, free and clear of all
liens and encumbrances.  There are no obligations, contingent or otherwise, to
issue, repurchase, redeem or otherwise acquire, as applicable, any

 

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membership interests in the Company.  The Acquired Assets have been duly
authorized and validly issued, and are fully paid and non-assessable.  There are
no buy/sell agreements or other contracts or agreements relating to the Acquired
Assets, including the sale, voting, or transfer thereof other than the Limited
Liability Company Agreement of the Company. To Contributor’s knowledge, none of
the Acquired Assets were issued in violation of the Securities Act of 1933, as
amended, or, to Contributor’s knowledge, any other Legal Requirement.  There are
no outstanding subscriptions, options, warrants, calls or exchange rights,
convertible securities, or other obligations in effect giving any person or
entity the right to acquire (whether by preemptive rights or otherwise) any
ownership, voting, or other equity interest of the Company.  At Closing,
Contributor shall transfer the Acquired Assets to Acquirer, free and clear of
all liens and encumbrances, other than arising from Acquirer’s acts.

 

(vii)         Each Contributor acknowledges that: (i) the Operating Partnership
and Acquirer intend the offer and issuance of Preferred OPUs to be exempt from
registration under the Securities Act, and applicable state securities laws by
virtue of the status of each Contributor being an “accredited investor” as that
term is defined in Rule 501(a) of Regulation D, and acquiring the Preferred OPUs
in a transaction exempt from registration pursuant to Rule 506 of Regulation D;
and (ii) in issuing any Preferred OPUs pursuant to the terms of this Agreement,
the Operating Partnership and Acquirer are relying on the representations made
herein by each Contributor.

 

(viii)        In receiving Preferred OPUs and engaging in the transactions
contemplated by this Agreement, each Contributor will not rely upon any
representations made to it by Acquirer or the Operating Partnership, or any of
their respective partners, members, officers, directors, employees, or agents as
to tax matters or otherwise that are not contained herein.  Each Contributor has
obtained from its own counsel advice regarding the transactions contemplated by
this Agreement, including, without limitation, the tax consequences of: (i) the
transfer of the Acquired Assets owned by each Contributor to Acquirer and the
receipt of Preferred OPUs as consideration therefor; and (ii) each Contributor’s
admission as a limited partner of the Operating Partnership.

 

(ix)          Each Contributor is aware of the risks involved in investing in
the Preferred OPUs.  Each Contributor acknowledges that it has had an
opportunity to ask questions of and to receive answers from Acquirer and the
Operating Partnership, or a person or persons authorized to act on their behalf,
concerning the terms and conditions of the Preferred OPUs and the financial
condition, affairs, and business of Acquirer, the Operating Partnership, and
DOC. Each Contributor confirms that Acquirer and/or the Operating Partnership
has provided copies of any documents, records, and information pertaining to the
Preferred OPUs that each Contributor deemed necessary to determine whether to
enter into this Agreement and contribute the Acquired Assets owned by each
Contributor to Acquirer in exchange for the Preferred OPUs.

 

(x)           Each Contributor understands that the Preferred OPUs will not be
registered under the Securities Act or any state securities laws and are instead
being offered and sold in reliance on an exemption from such registration
requirements.  Any Preferred OPUs issued to either Contributor are being
acquired solely for such Contributor’s own account, for investment, and are not
being acquired with a view to, or for resale in connection with, any
distribution, subdivision, or fractionalization thereof, in violation of such
laws, and no

 

11

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Contributor has any present intention to enter into any contract, undertaking,
agreement, or arrangement with respect to any such resale.

 

(xi)          Each Contributor is and as of the Closing Date will be an
“Accredited Investor”, as that term is defined in Rule 501(a) of Regulation D. 
Each Contributor is not and as of the Closing Date will not be, deemed an
“Underwriter” under Section 2(a)(11) of the Securities Act of 1933, as amended.
If requested by Acquirer, each Contributor covenants and agrees to provide to
Acquirer and the Operating Partnership prior to the Closing a completed and
executed accredited investor questionnaire with such accredited investor
questionnaire confirming that such Contributor is an accredited investor, as
that term is defined in Rule 501(a) of Regulation D.

 

(xii)         The Company owns fee simple title to the Real Property and good
title to the Personal Property, free and clear of all liens and encumbrances,
except for the Permitted Exceptions. With the exception of the Right of First
Offer to Purchase stated in Article 39 of the North Memorial Lease (“ROFO”), the
Property is not subject to any option to purchase or right of first refusal, nor
are there any agreements or understandings between Contributor and any other
person or entity with respect to the disposition of the same.

 

(xiii)        As of the Effective Date, there is no litigation or proceeding,
either judicial or administrative, pending or, to Contributor’s knowledge,
threatened, affecting Contributor or Contributor’s ability to consummate the
transactions contemplated hereby.  As of the Effective Date, to Contributor’s
knowledge there is no outstanding order, writ, injunction or decree of any
court, government, governmental entity or authority or arbitration against or
affecting  Contributor or the Property.

 

(xiv)        There are no management, employment, service, equipment, supply, or
maintenance agreements with respect to or affecting the Property which will
burden the Property or Acquirer after Closing in any manner whatsoever, except
for instruments of record, Contract Rights and other agreements assumed or
entered into by Acquirer.

 

(xv)         Contributor has no knowledge of, and has received no notice from,
any governmental authority requiring any work, repairs, construction,
alterations or installations on or in connection with the Property, with the
exception of the demolition of the building located at 15306 State Highway 7 and
completion of parking lot and landscaping improvements, required by the City of
Minnetonka, Minnesota, as described in Section 21 of this Agreement,  which work
is subject to the obligations of Contributor stated in Section 21, or asserting
any violation of any federal, state, county or municipal laws, ordinances,
codes, orders, regulations or requirements affecting any portion of the
Property, including, without limitation, the Americans with Disabilities Act and
any applicable environmental laws or regulations.  There is no action, suit or
proceeding pending or, to the knowledge of Contributor, threatened against or
affecting Contributor or the Property or any portion thereof or relating to or
arising out of the ownership of the Property, in any court or before or by any
federal, state, county or municipal department, commission, board, bureau or
agency or other governmental instrumentality.

 

(xvi)        Contributor has no knowledge of any plans for improvements by any
governmental or quasi-governmental authority which might result in a special
assessment against the Property.

 

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(xvii)       To Contributor’s knowledge, all certificates of occupancy and
licenses necessary for operation of the Property, as presently conducted, have
been issued by all authorities having jurisdiction thereof; and all such
certificates of occupancy and licenses are in full force and effect.  The
Company has not received any written notice of suspension or cancellation of any
certificates of occupancy or licenses.

 

(xviii)      Contributor warrants, represents and covenants that, to
Contributor’s knowledge and subject to any matters disclosed in the existing
Phase I environmental reports and other information made available to Acquirer
by Contributor or the Company or disclosed in the Phase I or Limited Phase II
Environmental Assessments obtained by Acquirer in connection with Acquirer’s due
diligence review:  (i)  the Property and the Company are not in violation of any
Environmental Laws (as defined below); and (ii)the Company has received no
notice from any governmental agency that the Property is not in compliance with
all Environmental Laws.

 

In the event Acquirer shall discover such Hazardous Substances and/or violations
of Environmental Laws, tanks that are in violation of Environmental Laws, other
“recognized environmental condition” (as that phrase is defined by the most
recent American Society for Testing and Materials practice standards) or other
unsatisfactory environmental conditions (in Acquirer’s sole discretion) on the
Property at any time prior to  Closing, Acquirer shall have the right to
terminate this Agreement upon written notice thereof to Contributor, whereupon
Escrow Agent shall return the Deposit to Acquirer together with all interest
thereon; and thereafter this Agreement shall be deemed void and neither party
shall have any further rights or obligations hereunder; provided, however, that,
if Contributor had knowledge of such environmental condition and failed to
disclose the same to Acquirer in breach of this Agreement, Contributor or the
Company shall immediately reimburse Acquirer for all Acquirer’s costs and
expenses incurred in connection with the transaction contemplated by this
Agreement not to exceed ten thousand dollars ($10,000). Delivery by Contributor
or the Company to Acquirer of Phase I environmental site assessments and other
environmental studies and assessments of the Property shall constitute proper
disclosure of all matters identified therein.  The foregoing reimbursement
obligation of Contributor or the Company shall survive any termination of this
Agreement by Acquirer or Contributor.

 

For purposes of this Agreement, the term “Environmental Law(s)” shall mean all
federal, state and local laws including statutes, regulations, codes and other
governmental standards, restrictions, rulings, judgments, orders and
requirements in effect now or at any time in the future or past relating to the
use, storage, disposal, release, emission, dispersal, spilling, leaking, burial,
migration, seepage, movement, discharge, management, investigation, remediation,
monitoring, regulation relating to air pollutants, water pollutants, process
wastewater, solid or hazardous waste, chemicals, gases, vapors, water
pollutants, groundwater, effluents, stormwater runoff, surface water runoff, the
environment, Hazardous Substances or employee health and safety, including, but
not limited to, the Federal Solid Waste Disposal Act, the Federal Clean Air Act,
the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act
of 1976, the Federal Comprehensive Environmental Response, Compensation and
Liability Act of 1980, the Federal Hazardous Materials Transportation Act, the
Toxic Substance Control Act, the Occupational Safety and Health Act of 1970 (all
as the same may have been amended), regulations of the Environmental Protection
Agency, regulations

 

13

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of the Nuclear Regulatory Agency, and regulations of any state department of
natural resources or state environmental protection agency.

 

For purposes of this Agreement, the term “Hazardous Substance(s)” shall mean all
hazardous, toxic, flammable, explosive or radioactive substances, wastes and
materials; any pollutants or contaminants (including, but not limited to,
petroleum products, asbestos, raw materials and natural substances that include
hazardous constituents); and any other similar substances or materials that are
regulated under Environmental Laws

 

(xix)        There are no existing leases, whether oral or written, agreements
of sale, options, rights of first refusal, rights of first offer (except for the
ROFO), tenancies, licenses or any other claims to possession or use affecting
the Property, except as listed in Exhibit C attached hereto.  Exhibit C lists
all:  (i) leases and subleases for any portion of the Property and all
assignments (other than assignments of Contributor’s interest in such Leases
given as security for any existing mortgage), amendments and any other writings
related thereto in effect on the Effective Date (the “Leases”); and
(ii) guarantees with respect to the Leases in effect on the Effective Date (the
“Guarantees”).  None of the Leases or Guarantees have been further amended,
modified or supplemented; and to Contributor’s knowledge, the tenant thereunder
is in actual possession in the normal course and the tenant is not in default
thereunder.  No tenant has asserted any claim of which Contributor or the
Company has knowledge which would in any material way affect the collection of
rent from such tenant, and no written notice of default or breach on the part of
the landlord under any of the Leases has been received by Contributor or the
Company or any of their respective agents from the tenant thereunder.  To
Contributor’s knowledge, all painting, repairs, alterations and other work
required to be performed thereunder, have been or will, prior to Closing, be
fully performed and paid for in full by Contributor or the Company, with the
exception of the remaining “Tenant’s Work” and unpaid balance of the “Tenant
Improvement Allowance” payable under the Lease, as described in Section 21 of
this Agreement, which shall be subject to Contributor’s obligations under
Section 21.

 

(xx)         The rents set forth in Exhibit C are the actual rents, income and
charges presently being collected by the Company.  No tenant under any of the
Leases is entitled to any concessions, allowances, rebates or refunds or has
prepaid any rents or other charges for more than the current month, with the
exception of the unpaid balance of the “Tenant Improvement Allowance” payable
under the North Memorial Lease, as described in Section 21 of this Agreement,
which shall be subject to Contributors’ obligations under Section 21.  None of
the Leases and none of the rents or other amounts payable thereunder have been
assigned, pledged or encumbered, except to the extent, if any, that Contributor
or the Company has made collateral assignments of rents and leases to the holder
of a mortgage on the Property.  No security deposits have been paid by any
tenants which have not heretofore been returned, except as set forth in
Exhibit C hereto, if any.

 

(xxi)        No brokerage or leasing commissions or other compensation is or
will be due or payable to any person, firm, corporation or other entity with
respect to or on account of the current terms of the Leases (or any expansions
or renewals thereof).

 

(xxii)       Attached as Exhibit D hereto are true, complete, and correct copies
of the balance sheets of the Company as of December 31, 2014 and as of
December 31, 2013,

 

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and related statements of income for each of the fiscal years ended on such
dates (collectively, the “Financial Statements”).  The Financial Statements
fairly present the consolidated financial condition and the results of
operations of the Company as at the respective dates of, and for the periods
referred to in, the Financial Statements.  The Financial Statements were
prepared from, and are consistent with, the accounting records of the Company. 
The Company does have any liability or obligation of any nature (whether known
or unknown and whether absolute, accrued, contingent, or otherwise) other than
the obligation to complete the demolition of the building located at 15306 State
Highway 7 and construct the parking lot and landscaping improvements, required
by the City of Minnetonka, Minnesota, as described in Section 21 of this
Agreement (which work shall be subject to Contributors’ obligations under
Section 21), liabilities or obligations to the extent shown on the Financial
Statements and current liabilities incurred in the ordinary course of business
of a type and in amounts consistent with the Company’s historical experience. 
As of the Closing, there will not be any liabilities, contracts or agreements
(other than the Limited Liability Company Agreement of the Company) between the
Company and Contributor (or any other affiliate or related person).  Since the
date of the Company’s formation, it has conducted no activities other than
activities related to the acquisition, development, operation and ownership of
the Property.

 

(xxiii)      To Contributor’s knowledge, the books of account and other records
of the Company, all of which have been made available to Acquirer, are complete
and correct, represent actual, bona fide transactions, and have been maintained
in accordance with sound business practices.  At the Closing, all of such books
of account and other records of the Company will be delivered to Acquirer,
provided Contributor shall be entitled to retain copies thereof.  The Company
does not have (and has never had) any direct or indirect ownership interest in
any other entity.

 

(xxiv)     The Company has filed or caused to be filed on a timely basis all tax
returns that were required to be filed by or with respect to it pursuant to
applicable legal requirements.  The Company has not requested any extension of
time within which to file any tax return, except as to a tax return that has
since been timely filed.  All tax returns filed by (or that include on a
consolidated basis) the Company are, to Contributor’s knowledge, complete and
correct and comply with applicable legal requirements.  The Company has paid, or
made provision for the payment of, all taxes that have or could have become due
for all periods covered by any tax return or otherwise, including pursuant to
any assessment received by the Company.  The Company has withheld or collected
and paid to the proper governmental agency or body or other person or entity all
taxes required to be withheld, collected, or paid by it.  No claim has ever been
made by any governmental agency or body in a jurisdiction where the Company does
not file tax returns that it is or could be subject to taxation by that
jurisdiction, nor is there any reasonable basis for such a claim.

 

(xxv)      The Company has delivered copies of any reports, statements of
deficiencies, or similar items with respect to any audits of the Company.  To
Contributor’s knowledge, no governmental agency or body will assess any
additional taxes for any period for which tax returns have been filed.  There
are no threatened proceedings of which Contributor has knowledge for or relating
to taxes, and there are no matters under discussion with the IRS or other
governmental agency or body with respect to taxes.  No issues relating to taxes
have been raised in writing by the IRS or other governmental agency or body
during any pending audit, and

 

15

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no issues relating to taxes have been raised in writing by the IRS or other
governmental agency or body in any audit that could recur in a later taxable
period.  There is no proposed tax assessment against the Company, and no
proceedings are pending before the IRS or other governmental agency or body with
respect to the taxes of the Company.

 

(xxvi)     The Company does not and has never sponsored any employee benefit
plans.  The Company does not, and has never had, employees.

 

(xxvii)    There are no pending or to Contributor’s knowledge, threatened
condemnation or eminent domain proceedings affecting the Property or any portion
thereof, and to Contributor’s knowledge, there are no proposed actions by any
governmental agencies or authorities which have or may create a lien upon the
Property or any portion thereof.

 

(xxviii)   To Contributor’s knowledge, the Property is in full compliance with
all federal, state, county, municipal or other government standards, laws,
ordinances, statutes, regulations and requirements.  To Contributor’s knowledge,
the Property is in full compliance with all applicable private restrictions,
covenants, rules, standards and requirements.

 

(xxix)     To Contributor’s knowledge, all licenses, permits, and other
governmental approvals required to be obtained by the Company for the operation
of the Property have been obtained, are currently in force, and will be
maintained in full force and effect by the Company until Closing.

 

(xxx)      All amounts currently due and payable for work performed or materials
furnished to the Property have been fully paid for or will be fully paid for at
Closing with the exception of tenant improvement work in progress and the unpaid
balance of the “Tenant Improvement Allowance” payable under the North Memorial
Lease, as described in Section 21 of this Agreement, which work shall be subject
to Contributor’s obligations under Section 21.  Contributor shall deliver an
affidavit to that effect to the Title Company at Closing and Contributor shall
provide Acquirer with appropriate, full and complete lien waivers from any and
all contractors, sub-contractors, laborers or materialmen furnishing labor or
material for the improvement of the Real Property during the six months (or
other applicable period for the filing of liens) preceding the date of Closing
or other evidence of lien free completion acceptable to the Title Company.

 

(xxxi)     The Property constitutes all of the trade or business assets of the
Company, with the exception of the Company’s bank accounts and cash assets,
which are not part of the Property and shall be retained by and distributed to
Contributor’s Members prior to Closing.

 

(b)           Acquirer’s Representations and Warranties.

 

Acquirer makes the following representations and warranties and agrees that
Contributor’s obligations under this Agreement are conditioned upon the truth
and accuracy of such representations and warranties, both as of the Effective
Date and as of the Closing Date:

 

(i)            Acquirer has the full right and capacity to enter into this
Agreement, consummate or cause to be consummated the sale and purchase, execute
all other

 

16

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instruments contemplated herein, and make or cause to be made the transfers and
assignments contemplated herein.  The person signing this Agreement on behalf of
Acquirer is authorized to do so.

 

(ii)           There is no agreement to which Acquirer is a party or to
Acquirer’s knowledge binding on Acquirer which is in conflict with this
Agreement.

 

(c)           Survival of Representations, Warranties and Covenants.  The
representations and warranties contained in this Sections 6 and the provisions
of this Agreement that contemplate performance after the Closing shall, to the
extent not actually known by the warrantee to be inaccurate as of the Closing,
survive the Closing for a period of twelve (12) months and shall not be deemed
to be merged into or waived by the instruments of such Closing, but shall be
subject to all of the conditions and limitations stated in this Section 6.

 

7.             Delivery of Disclosure Materials; Due Diligence Period; Companion
Agreements.

 

(a)           Delivery of Disclosure Materials.  Within five (5) business days
of the Effective Date, the Company shall either (A) deliver via e-mail to
Acquirer, attention Mr. Mark Theine at mdt@docreit.com, (B) make available via
data room access to Mr. Mark Theine, or (C) make available to Acquirer at the
Company’s office, the items listed on Schedule 7.1 attached hereto and
incorporated by reference herein that are in Contributor’s possession or control
(the “Disclosure Materials”).

 

(b)           Due Diligence Period.  For the purposes of this Agreement the term
“Due Diligence Period” shall mean the period ending on January 28, 2015.  The
obligation of Acquirer under this Agreement to accept the Acquired Assets from
Contributor is contingent on the satisfaction of the following conditions within
each condition’s respective time-period (any one of which may be waived in whole
or in part by Acquirer within each condition’s time period):

 

(i)            Within the Due Diligence Period, Acquirer reviewing and verifying
that the Leases are in every respect acceptable to Acquirer, including, without
limitation, that the Leases are net leases and that the net income from the
Property, will be at least $1,516,100.00 for the 365 day period beginning on the
Closing Date, taking into account the credit to be received by Acquirer under
the last sentence of Section 9 (b).  Additionally, Contributor shall deliver to
Acquirer, within the Due Diligence Period, a duly executed original of a
certificate from the tenant under the North Memorial Lease in the form attached
hereto as Exhibit E (“Estoppel Certificate”).  If the North Memorial Lease  is
not acceptable to Acquirer, or if the Estoppel Certificates have not been
delivered to Acquirer in the required form or in a form otherwise acceptable to
Acquirer within the aforesaid time period, then Acquirer, at its option, may
terminate this Agreement by delivering notice of such termination to
Contributor; and in such event the Deposit and all accrued interest shall be
returned to Acquirer and this Agreement thereupon shall become void and there
shall be no further obligations or liability on any of the parties hereto.

 

(ii)           Prior to Closing, Acquirer and Mark A. Davis shall have agreed
upon the terms and conditions of an amended and restated operating agreement for
the Company (the “A/R Operating Agreement”).  Acquirer shall be the manager of
the Company, with full

 

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authority to transact the Company’s business.  Mark A. Davis shall have limited
governance rights and no responsibility for the operations of the Company or the
Property.  Mark A. Davis shall be entitled to quarterly distributions of net
cash flow from the Company.  Mark A. Davis shall have the right to require the
redemption of its limited liability company membership interests in the Company
in increments of value of at least $100,000 (or the remainder of its limited
liability company membership interests if valued at less than $100,000), on a
semi-annual basis (January 1 and July 1 of each year) upon written notice to the
Company at least sixty (60) days prior to the applicable redemption date.  The
purchase price for such redemption shall be the “Fair Value” of the redeemed
limited liability company membership interests in the Company as of the
applicable redemption date, which shall be determined by using the then-current
fair market value of the Property owned by the Company minus then-outstanding
principal balance of all debt encumbering the Property.  The fair market value
of the Company shall be determined using the then-applicable forward-looking
twelve (12) month net operating income of each Property, adjusted for vacancy
and other customary factors (e.g., leases with less than 5 years remaining in
the term), and applying a market capitalization rate based on the then-current
10-Year U.S. Treasury Rate plus 450 basis points, or such other objective
benchmark for Class A medical office buildings, but not applying minority
discounts to such limited liability company membership interests. 
Alternatively, “Fair Value” of the limited liability company membership
interests in the Company as of the applicable redemption date may be determined
by a qualified third party appraiser based generally on the foregoing
principles, which appraisal would apply for all redemptions until the next
annual appraisal is obtained.

 

(iii)          Within the Due Diligence Period, Acquirer and Davis Real Estate
Services Group, LLC, (“DRESG”) shall have agreed upon the terms and conditions
of a property management agreement (the “Property Management Agreement”),
pursuant to which DRESG will provide property management and leasing services
for the Property to the same extent currently provided by DRESG.  The terms and
conditions of the Property Management Agreement shall be consistent with the
terms and conditions of the Company’s current property management agreement with
DRESG, including property management fees, through the in-place Leases and
leases subsequently approved by Acquirer and the Company during the term of the
Property Management Agreement.  The Property Management Agreement shall include
such other terms and conditions as are customary in the market where the
Property is located, the right to terminate the Property Management Agreement
for cause, and audit rights for Sarbanes-Oxley compliance, as reasonably
necessary for Acquirer’s publicly traded company reporting requirements.  DRESG
will be entitled to leasing commissions for new and renewal leases, pursuant to
an agreed upon leasing commission schedule to be included in the Property
Management Agreement, and otherwise consistent with leasing commissions payable
in the market where the Property is located, less any third party leasing
commissions payable in connection with such new leases and Lease renewals. 
Notwithstanding the foregoing, Acquirer shall assume and have responsibility for
cash management and accounting asset management services for the Property
pursuant to a separate asset management agreement (the “Asset Management
Agreement”), with the responsibilities of DRESG under the Property Management
Agreement and the responsibilities of Acquirer under the Asset Management
Agreement allocated as set forth in the Commercial Property Management and
Leasing Agreement between the Operating Partnership and DRESG dated January 22,
2015.  As compensation and reimbursement for Acquirer’s cash management and
accounting asset management services, Acquirer shall be entitled to retain (and
the Company shall pay to or

 

18

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reimburse Acquirer) twenty percent (20%) of the property management fees payable
to DRESG under the Property Management Agreement.  The initial terms of the
Property Management Agreement and Asset Management Agreement shall be five
(5) years each and shall be co-terminous, provided the terms of each such
Agreement shall be extended upon the terms and conditions stated in the Letter
of Intent between DOC and DRESG dated December 18, 2014.

 

(iv)                              No later than three (3) business days prior to
the Closing, each Contributor shall have executed and delivered to the Operating
Partnership, the documents listed on Exhibit “F” attached hereto (the “Ancillary
Documents”).

 

(v)                                 Within the Due Diligence Period, Acquirer
verifying that the Property (including the Contract Rights, Records and Plans,
Warranties and Licenses and Permits) and all information provided to Acquirer by
Contributor or the Company pursuant to this Agreement and all information that
is available to Acquirer relating to the Property and the transactions
contemplated herein, including, but not limited to, the Disclosure Materials (as
defined below) is in every respect acceptable to Acquirer based on an
investigation and review by Acquirer, its agents and contractors of the
Property.  If any Contract Rights are unacceptable to Acquirer, Acquirer may
elect to exclude any such items from the Property to be transferred hereunder by
delivering written notice thereof to Contributor no later than the expiration of
the Due Diligence Period, and the Company shall terminate any such items, as
applicable, with respect to the Property as of the Closing to the extent the
same may be terminated pursuant to the terms thereof.  This contingency shall
also include, without limitation, Acquirer obtaining, at Acquirer’s expense
before expiration of the Due Diligence Period, a physical inspection of the
Property, which discloses no “Defects,” as that term is defined herein.  For
purposes of this Agreement, a “Defect” is defined as a condition or conditions,
or evidence of a condition or conditions, that has the potential to: (i) impair
the health or safety of occupants of the Property; (ii) result in the violation
of any applicable public or private law, standard or covenant; or (iii) cost, in
the aggregate, an amount in excess of $5,000 to repair, correct, or remediate.

 

(vi)                              Within the Due Diligence Period, Acquirer
obtaining, at Acquirer’s expense, written environmental assessments and/or
evaluations of the Property (including “Phase I” assessments and, if Acquirer
deems necessary, and with Contributor’s prior written consent, “Phase II”
assessments, including laboratory testing of soil, water and other substances)
from qualified environmental consultants of Acquirer’s choice, confirming that:
(i) the Property complies with all Environmental Laws; (ii) there are no
liabilities (potential, contingent or otherwise) affecting the Property arising
under any Environmental Laws; (iii) there are no underground or aboveground
storage tanks, associated pipes or equipment located on or at the Real Property;
(iv) there are no Hazardous Substances on, under, at, in or migrating to or from
the Real Property in violation of Environmental Laws; (v) no portion of the Real
Property has been designated as wetland, shoreland, floodplain or conservancy
land in a location or manner unacceptable to Acquirer; (vi) no portion of the
Real Property has been filled, except in compliance with applicable law and
specifications for the improvements located thereon; and (viii) the Property is
not affected in any manner or degree by a “recognized environmental condition”
(as that phrase is defined by the most recent American Society for Testing and
Materials practice standards).

 

(vii)                           Within the Due Diligence Period, Acquirer
verifying to Acquirer’s satisfaction that all applicable public and private
laws, rules, standards, covenants and

 

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requirements, including, without limitation, all zoning, subdivision, building
and use restrictions and all easements and matters of record, allow the
conveyance of the Acquired Assets from Contributor to Acquirer, and are
consistent with Acquirer’s Intended Use; Acquirer obtaining, or Acquirer
verifying to Acquirer’s satisfaction that Acquirer will be able to obtain, all
public and private permits, certificates and other approvals, consents and all
variances, exemptions, waivers, zoning changes and land divisions required for
the conveyance of the Acquired Assets from Contributor to Acquirer, and
Acquirer’s Intended Use. The term “Acquirer’s Intended Use” shall mean and
include, without limitation, medical and other healthcare related uses.

 

(viii)                        Within the Due Diligence Period, Acquirer
obtaining a current ALTA survey of the Property (the “Survey”) at Acquirer’s
expense, that: (aa) is satisfactory to Acquirer in all respects (in Acquirer’s
sole discretion); (bb) is prepared by a licensed, insured and qualified surveyor
selected by Acquirer; (cc) is certified to Acquirer, Acquirer’s lender(s) (if
any) and the applicable title company; (dd) includes all Table A requirements,
except Item 5 of Table A; (ee) shows and discloses no encroachments onto the
Property or over the boundaries of the Property, and no easements or other
matters that would affect Acquirer’s intended use of the Property; and (ff) is
sufficient to remove the standard title exceptions relating to surveys without
adding any new exceptions.  In addition, the Survey shall locate all public
utilities, water courses, drains, sewers and roads (including vacated streets
and alleys) crossing or adjacent to the Property, and contain an acceptable
certification by the surveyor.  Acquirer acknowledges it has ordered the Survey
as of the Effective Date.

 

(c)                                  Termination Right; Return of Deposit.  If
any of the foregoing conditions contained in this Section 7 are not satisfied
and completed within each condition’s applicable time period, or if no time
period is specified, prior to or at Closing, Acquirer, at its election (in its
sole discretion), may, within the time period specified for said condition,
either:  (i)  terminate this Agreement and have the Deposit refunded together
with accrued interest; or (ii) waive in writing the satisfaction of any such
condition or conditions, in which event this Agreement shall be read as if such
condition or conditions no longer existed (which condition shall be deemed
waived by Acquirer if Acquirer does not timely elect to terminate with respect
to said condition per clause (i) of this sentence).  Notwithstanding anything to
the contrary contained in this Agreement, Acquirer shall have the right to
terminate this Agreement for any reason or no reason whatsoever, in Acquirer’s
sole and absolute discretion, upon written notice to Contributor on or before
the expiration of the Due Diligence Period, and thereupon this Agreement shall
terminate, the Deposit together with accrued interest shall be refunded to
Acquirer and neither party shall have any further rights or obligations
hereunder, except as expressly provided herein.  In the event no such notice of
termination is timely received by Contributor on or before the expiration of the
time period set forth herein, then the Deposit, together with all accrued
interest thereon, shall become non-refundable and Contributor and Acquirer shall
proceed to Closing in accordance with the terms and conditions hereof and the
termination rights described in this paragraph shall be deemed waived by
Acquirer

 

(d)                                 Covenants of Acquirer.  In connection with
Acquirer’s inspection of the Property, Acquirer covenants and agrees that:

 

(I)                                               All inspection fees,
engineering fees, or other expenses of any kind incurred by Acquirer relating to
the inspection of the Property will be at Acquirer’s sole cost and expense;

 

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(II)                                          Acquirer will advise Contributor
at least two (2) business days in advance of the dates of all inspections and
will schedule all tests and inspections during normal business hours whenever
feasible unless otherwise requested by Contributor;

 

(III)                                     Contributor will have the right to
have one or more representatives of Contributor accompany Acquirer and
Acquirer’s representatives, agents or designees while they are on the Property;

 

(IV)                                      Any entry by Acquirer, its
representatives, agents or designees will not unreasonably interfere with
Contributor’s use of the Property or with the operations of any tenant;

 

(V)                                           Acquirer, its representatives,
agents or designees will not perform any invasive testing without the prior
written consent of Contributor, which consent may be granted or withheld in
Contributors’ sole discretion;

 

(VI)                                      Acquirer will restore any damage
caused to the Property by Acquirer’s entry on the Property for inspection
purposes at Acquirer’s sole cost and expenses if this transaction does not
close; and

 

(VII)                                 In making any inspection hereunder,
Acquirer will treat and will cause any representative of Acquirer to treat all
information obtained by Acquirer pursuant to the terms of this Agreement as
strictly confidential in accordance with Section 21 below.

 

(VIII)                            If during the Due Diligence Period Acquirer
elects to perform a Phase 2 Environmental Audit:

 

(i)                         The Phase 2 Environmental Audit shall be conducted
pursuant to applicable industry standards.  Without limitation, intrusive
sampling or testing of soil or subsurface conditions are at all times prior to
the Closing subject to Contributor’s prior written approval, which may be
granted or withheld by Contributor in its sole and absolute discretion.

 

(ii)                      If the Closing fails to occur for any reason other
than a default by Contributor, then if requested by Contributor, Acquirer will
deliver all copies of the draft report to, and they will become the property of,
the Company, and in any event Acquirer will not disclose to any party the
contents of the draft report except pursuant to valid legal process or with the
written consent of the Company.

 

(iii)                   Any ground water, soil or other samples taken from the
Property will be properly disposed of by Acquirer at Acquirer’s sole cost and in
accordance with all applicable laws.

 

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The Covenants of Acquirer contained in this paragraph shall survive the Closing
or any earlier termination of this Agreement for a period of twelve (12) months.

 

8.                                      Operations Prior to Closing; Conditions
to Closing.

 

(a)                                 Operations Prior to Closing.  Prior to
Closing:

 

(i)                                     The Company shall operate, manage and
maintain the Property in a reasonable, professional and prudent manner, and keep
the same in good condition at all times.  Without expense to Acquirer, the
Company shall make all repairs and replacements (structural and non-structural,
ordinary and extraordinary) so that the Property is maintained in its present
condition, reasonable wear and tear excepted.

 

(ii)                                  Upon reasonable notice and subject to the
rights of tenants and the other provisions of this Agreement, Acquirer, its
accountants, architects, attorneys, engineers, contractors and other
representatives shall be afforded access to:  (A)  the Property to inspect,
measure, appraise, test and make surveys of the Property, including, but not
limited to, all activities necessary to satisfy the contingencies set forth in
this Section 8 and elsewhere in this Agreement; and (B) property management
records and files relating to the Property.  Acquirer shall have the right, at
Acquirer’s expense, to make copies of all such books and records, including,
without limitation, all books and records relating to increases in real estate
taxes, building and operations maintenance costs; provided, however, that
Acquirer shall return all copies of such books and records if Closing does not
occur under this Agreement.  Acquirer shall not interfere unreasonably with the
operation of the Property, shall restore any area on the Property disturbed in
the course of Acquirer’s testing to the conditions existing prior to any tests
conducted by Acquirer.

 

(iii)                               The Company shall comply with all of the
obligations of landlord under the Leases and all other agreements and
contractual arrangements affecting the Property by which Contributor is bound.

 

(iv)                              Contributor shall promptly notify Acquirer of
the Company’s receipt of any notice from any person alleging that the Company is
in default of its obligations under any of the Leases or any permit or agreement
affecting the Property, or any portion or portions thereof.

 

(v)                                 No contract for or on behalf of or affecting
the Property shall be negotiated or entered into by the Company which cannot be
terminated by the Company prior to Closing without charge, cost, penalty or
premium.

 

(vi)                              The Company shall not enter into any new
leases (herein referred to singly as a “New Lease”) for any portion of the
Property without Acquirer’s prior written approval.  The Company shall deliver a
copy of any proposed New Lease to Acquirer for approval and Acquirer shall
notify Contributor and the Company within 3 business days thereafter of
Acquirer’s approval or disapproval, stating the reasons for any such
disapproval.  If Acquirer fails to notify Contributor and the Company within
such 3 business day period, Acquirer shall conclusively be deemed to have
approved such New Lease.  All leasing commissions and tenant improvement costs
with respect to any such New Lease shall be the

 

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obligation of Acquirer; provided, however, that if the term of such New Lease
commences prior to the Closing Date, then such leasing commissions and tenant
improvement costs shall be prorated between Contributor and Acquirer based on
said extended term or term, as the case may be, with Contributor being
responsible for the number of days of said extended term or term occurring prior
to the Closing Date and Acquirer being responsible for the number of days
thereof attributable to periods from and after the Closing Date.

 

(vii)                           From the Effective Date until Closing, the
Company shall take all action on its part to maintain the Contract Rights,
Records and Plans, Warranties, and Licenses and Permits in full force and effect
as applicable and shall not terminate, modify or waive any provision thereof.
the Company shall not enter into any new contracts or agreements relating to the
Property without Acquirer’s prior written consent, which shall not be
unreasonably withheld or delayed.

 

(viii)                        From the Effective Date until the Closing, the
Company will not take any action outside of the ordinary course related to the
management of the Property and will not incur any liabilities, other than
liabilities arising under preexisting agreements disclosed to Acquirer, in
excess of $10,000 which are not subject to proration pursuant to Section 9.

 

(b)                                 Conditions to the Parties’ Obligations to
Close.  The obligation of Contributor, on the one hand, and Acquirer, on the
other hand, to consummate the transactions contemplated hereunder shall be
contingent upon the following:

 

(i)                                     The other party’s representations and
warranties contained herein shall be true and correct in all material respects
as of the Effective Date and the Closing Date.

 

(ii)                                  The other party shall have delivered, or
caused to be delivered, and shall have performed, each of the items and
obligations required to be delivered or performed by it hereunder.

 

(iii)                               The Operating Partnership shall have
(A) adopted the Second Amended and Restated Agreement of Limited Partnership of
Physicians Realty L.P. in form reasonably acceptable to each Contributor and
(B) secured all required consents and approvals for the adoption of the Second
Amended and Restated Agreement of Limited Partnership of Physicians Realty L.P.
The rights of each Preferred OPU will include (A) a 5% annual preferred return
on the $200 stated value of each Preferred Unit, (B) distributions equal to the
distributions that would be received by the holder of one common unit of limited
partnership interest of the Operating Partnership to be distributed in priority
to distributions to holder of such common units, (C) redemption and transfer
rights and limitations similar to those applicable to such common units
(adjusted to account for the above preferred return) and (D) such other rights
as customarily accrue to an equity security senior in priority to the common
units. For the avoidance of doubt, the Preferred OPUs will have no consent
rights with respect to future issuances by the operating partnership of other
Preferred OPUs or any securities senior or equal in priority to the Preferred
OPUs.

 

(c)                                  Failure of Condition.  So long as a party
is not in default hereunder, if any condition to such party’s obligation to
proceed with the Closing hereunder has not expired or

 

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been waived or satisfied as of the Closing Date, such party may, in its sole
discretion, terminate this Agreement by delivering written notice to the other
party.  Upon such termination, the Deposit shall be promptly refunded to
Acquirer together with all accrued interest, and thereafter neither party shall
have any further rights or obligations hereunder except for obligations which,
by the express terms of this Agreement, survive its termination (“Surviving
Obligations”).

 

9.                                      Prorations and Charges.

 

(a)                                 Taxes.  All general real estate and personal
property taxes (including installments of special assessment payable therewith
and interest thereon) shall be prorated through the day before the Closing based
on the taxes due and payable in the year that the Closing is in, if known,
otherwise on the prior year’s due and payable taxes.  Contributor shall be
responsible for all such real estate taxes (including installments of special
assessments payable therewith and interest thereon) through the day prior to the
Closing.  In the event taxes are prorated on the prior year’s taxes, the parties
agree to reprorate taxes when the taxes for the current year are known, and the
parties agree to make such payment between themselves to effectuate such
reproration.  Assessments (general, special or otherwise) levied or to be
levied, if any, for work completed on site (by either a private individual or
entity or a governmental entity) prior to Closing, including installments
thereof not yet due and payable, shall be paid by Contributor at or prior to
Closing, provided Contributor shall not be required to pay, and Acquirer or the
Company shall assume, any such assessments (including unpaid installments
thereof not yet due and payable) that are payable by tenants of the Property
pursuant to the Leases.  All other assessments shall be paid by Acquirer if this
transaction is consummated.

 

(b)                                 Rents and Utilities.  the following items
shall be prorated through the day before Closing and shown as credits to
Acquirer on the Closing Statement, as applicable: all rents and other payments
paid to the Company under the Leases ; all utility charges (as applicable),
including, but not limited to, sewer, water, electricity, gas, telephone and
other private and municipal charges (collectively “Utility Charges”). The
Company or Contributor shall be responsible for obtaining all necessary billing
information for the Utility Charges in order to accurately reflect the same on
the Closing Statement.  Acquirer agrees to use commercially reasonable efforts
to collect delinquent rents due Contributor after the Closing provided that
Acquirer shall not be required to bring any action or proceeding against any
tenant on account of such delinquent rents and Acquirer may apply all amounts
recovered to all delinquent rents and other amounts owed to Acquirer prior to
paying any amounts to Contributor.  Notwithstanding the foregoing, Contributor
shall have the right to pursue the collection of delinquent rents due
Contributor without prejudice to Contributor’s rights or Acquirer’s obligations
hereunder and Acquirer and the Company shall cooperate with Contributor in such
collection, provided, however, Contributor shall have no right to pursue any
action for eviction of any tenant from the Property, and Contributor shall
defend, indemnify and hold Acquirer and the Company harmless in connection with
any such actions pursued by Contributor.  Income derived from the Property that
is earned as of the day of Closing shall accrue to the benefit of Acquirer. 
Contributor and Acquirer agree to mutually cooperate with each other in
connection with ongoing tax reduction proceedings relating to prior tax years,
if any, and any ongoing or future proceedings relating to the tax year in which
the Closing occurs, if any, and any refund resulting therefrom (to the extent
not refundable to the tenants under the Leases) shall be prorated between
Contributor and Acquirer based on the Closing Date, after

 

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deducting therefrom the reasonable out-of-pocket expenses incurred by the
parties.  This provision shall survive the Closing. At Closing, Acquirer shall
receive a credit in the amount of $70,300.00, which Contributor has agreed to
pay Acquirer to make up for Base Rent and Additional Rent not payable pursuant
to the North Memorial Lease during calendar year 2015.

 

(c)                                  Insurance, CAM Charges and Security
Deposits Collected from Tenants.  At Closing, Acquirer and the Company shall
retain any and all funds paid to the Company by the tenants in the Property on
account of security deposits and Contributor shall pay any additional rent items
or CAM charges not yet due and payable by the Company and attributable to time
periods before closing. Contributor shall make such payment in the form of a
credit against the Consideration in favor of Acquirer.

 

(d)                                 Transfer Taxes; Other Obligations. 
Contributor shall pay all transfer taxes associated with the conveyance of the
Property and the Acquired Assets, and all recording fees customarily paid by
Contributor in the locality where the Property is located.  Acquirer shall be
responsible for the payment of title fees and premiums associated with the Title
Policy.  All other closing expenses shall be allocated between the parties in
the customary manner for sales of real property and asset purchases in the
locality where the Property is located.  Each party is responsible for paying
its own respective attorneys’ fees incurred in negotiating, preparing and
closing the transaction contemplated by this Agreement.  All obligations,
expenses and costs relating to the assignment and transfer of the Contract
Rights, Records and Plans, Warranties and Licenses and Permits shall be assumed
by the Company and Acquirer at Closing. At Closing, Acquirer shall reimburse
Contributor $250,000.00 as and for the termination fee and other expenses
incurred by the Company and Contributor in connection with the cancellation of
the mortgage loan Commitment between Thrivent Financial and the Company, which
the Company cancelled at the request of Acquirer.

 

(e)                                  Other Operating Costs.  Any and all other
normal, on-going operating expenses attributable to the Property, except to the
extent any of the same relate to the Contract Rights excluded from the Property
pursuant to Section 7(b) (v) of this Agreement, shall be prorated between the
parties through the day before Closing.

 

(f)                                   Reconciliation.  Within ninety (90) days
after the Closing, Acquirer and Contributor shall reconcile all of the foregoing
payments and prorations based on actual bills or invoices received after the
Closing, but only if the prorations or payments were based on an estimate and
not actual current bills or invoices.  In the event that any item of income,
charge, or expense cannot be reconciled accurately within such 90-day period,
the Acquirer and Contributor hereby agree to delay such reconciliation until a
date when it can be accurately completed.  Any party owing to the other party
any amount ascertained by the required reconciliations shall promptly, but in no
event later than fifteen (15) business days after the date of the applicable
reconciliation, pay the other party such amount.  The obligations set forth in
this Section 9(f) shall survive Closing.

 

(g)                                  Time of Proration.  As applicable, all of
the foregoing items set forth in this Section 9, unless otherwise expressly
stated, shall be prorated between the parties as of 11:59 p.m. of the day before
Closing.

 

 

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10.                               Condemnation; Rezoning, Historic Designation.

 

(a)                                 Condemnation.  If prior to Closing any
eminent domain or condemnation proceeding is commenced or any change is made, or
proposed to be made to: (i) a Material Part (as defined below) of the Property;
(ii) the current means of ingress and egress to the Property; or (iii) to the
roads or driveways adjoining the Property, Contributor agrees immediately to
notify Acquirer in writing thereof.  Acquirer then shall have the right, at
Acquirer’s option, to terminate this Agreement by giving written notice to
Contributor prior to Closing.  If Acquirer elects to terminate this Agreement
pursuant to the terms set forth in this Section 10, then the Deposit shall be
immediately returned to Acquirer together with all accrued interest, Acquirer
and Contributor shall be released from any further liability hereunder and this
Agreement shall be null and void.  If Acquirer does not so terminate this
Agreement, or if the proposed condemnation or taking under clause (i) of the
first sentence of this paragraph is to less than a Material Part of the
Property, Acquirer shall proceed to Closing hereunder as if no such proceeding
had commenced and will pay Contributor the full Consideration in accordance with
this Agreement, and Contributor shall assign to Acquirer or the Company shall
retain all of its right, title and interest in and to any compensation for such
condemnation.  Contributor shall not negotiate or settle any claims for
compensation prior to Closing, and Acquirer shall have the sole right (in the
name of Acquirer or the Company or both) to negotiate for, to agree to, and to
contest all offers and awards.  A “Material Part” of the Property shall mean:
(i)  a taking which would exceed twenty percent (20%) or more of the
Consideration for the Acquired Assets, as determined by a licensed appraiser
approved by Contributor and Acquirer; (ii) the taking of any access to public
roads; or (iii) the taking of any parking areas or spaces located on the
Property which results in the failure to comply with the minimum parking
requirements for the Property under the applicable zoning code, even if such
condition is permitted to exist as a legal non-conforming use.

 

(b)                                 Historic Designation/Rezoning.  If, prior to
closing, there is a designation of the Real Property (and/or any improvement
located thereon) or any portion thereof as a historic structure or other
historic designation, or is threatened, commenced or finalized, or there is a
threatened, commenced or finalized rezoning of the Real Property, Contributor
shall promptly notify Acquirer, and Acquirer may elect to terminate this
Agreement prior to Closing, in which event the Deposit and all accrued interest
thereon shall be returned forthwith to Acquirer, Acquirer and Contributor shall
be released from any further liability hereunder and this Agreement shall be
null and void. If Acquirer does not elect to terminate this Agreement, this
Agreement shall remain in full force and effect and at Closing Contributor shall
assign to Acquirer or the Company all of the Company’s right, title and interest
in and to any dollars paid by the governmental authority (if any) in connection
with the rezoning of the Real Property or historic designation.

 

11.                               Default by Acquirer.  If Acquirer, without the
right to do so and in default of its obligations hereunder, fails to complete
Closing as to the Acquired Assets, the Deposit and all accrued interest shall be
paid to Contributor in proportion to each Contributor’s Ownership Percentage.
Such payment of the Deposit and all accrued interest to Contributor shall be
deemed to be liquidated damages for Acquirer’s default and the receipt of same
shall be Contributor’s exclusive and sole remedy; and Contributor hereby waives
any right to recover the balance of the Consideration, or any part thereof, and
the right to pursue any other remedy permitted at law or in equity against
Acquirer.  The parties agree that it would be impracticable and extremely
difficult to ascertain the actual damages suffered by Contributor as a result of
Acquirer’s failure to complete the purchase of the Acquired Assets pursuant to
this Agreement, and that under the

 

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circumstances existing as of the date of this Agreement, the liquidated damages
provided for in this Section represent a reasonable estimate of the damages
which Contributor will incur as a result of such failure.  The parties
acknowledge that the payment of such liquidated damages is not intended as a
forfeiture or penalty under any legal or equitable theory, but is intended to
constitute liquidated damages to Contributor.

 

12.                               Default by Contributor.  If Contributor
defaults in the performance of any of its material obligations under this
Agreement or, without the right to do so and in default of its obligations
hereunder, fails to complete Closing and such default remains uncured for thirty
(30) days after notice from Acquirer of such default, Acquirer may terminate
this Agreement upon 30 days written notice to Contributor whereupon, if such
default remains uncured, the Deposit and all accrued interest shall be returned
to Acquirer, each Contributor, in proportion to its Ownership Percentage shall
reimburse Acquirer for all of Acquirer’s reasonable, documented third party
costs incurred in connection with the transaction contemplated by this Agreement
not to exceed twenty five thousand dollars ($25,000), this Agreement shall be
null and void and Contributor shall have no further liability hereunder.  If
Acquirer does not terminate this Agreement as provided in the previous sentence,
Acquirer may exercise any remedies available to it at law or in equity,
including, but not limited to, specific performance.  Contributor waives the
right to assert the defense of lack of mutuality in any action for specific
performance instituted by Acquirer.

 

13.                               Risk of Loss.  Contributor shall bear the risk
of all loss or damage to the Property from all causes until Closing. 
Contributor represents that the Company has, and will maintain pending Closing,
a policy of fire and extended coverage insurance in at least the full amount of
the replacement cost of all buildings and improvements located on the Property. 
If at any time prior to Closing any portion of the Property is destroyed or
damaged as a result of fire or any other casualty whatsoever, Contributor shall
promptly give written notice thereof to Acquirer and Acquirer shall have the
right:  (i) to terminate this Agreement by written notice to Contributor,
whereupon Escrow Agent shall return the Deposit (with any accrued interest) to
Acquirer, and thereafter this Agreement shall be void and neither party shall
have any further rights or obligations hereunder; provided Acquirer shall not be
entitled to terminate this Agreement if the estimated cost of restoration is
$250,000 or less, in which case clause (ii) will apply, or (ii) to proceed with
this Agreement and to notify Contributor that, at Acquirer’s sole option,
Contributor or the Company shall either:  (A) use any available insurance
proceeds to restore the Property prior to Closing to its condition as of the
Effective Date, and if there are any excess insurance proceeds after completion
of such restoration, Contributor shall promptly deposit same in escrow with
Escrow Agent and such funds, together with any interest thereon, shall be
disbursed to Acquirer at Closing; or (B) in lieu of restoration, prior to
Closing, clear the site of debris and deposit all remaining insurance proceeds
in escrow with Escrow Agent and such funds, together with interest thereon,
shall be disbursed to Acquirer at Closing.  All unpaid claims and rights in
connection with any such losses shall be assigned to Acquirer or retained by the
Company at Closing without in any manner affecting the Consideration.  In the
event Acquirer elects to proceed under clause (ii)(A) or (ii)(B) above,
Contributor shall either expend the deductible amount provided for in such
insurance coverage in making such restoration or clearing the Property, as the
case may be, or give Acquirer a credit therefore against the Consideration.

 

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14.                               Brokerage.  Acquirer represents to Contributor
that Acquirer has engaged the consulting services of Eastern Consolidated
(“Broker”) pursuant to a separate written agreement.  Acquirer shall be solely
responsible for all other fees, costs, commissions and other amounts that may be
due and payable to Broker, which shall be paid to Broker on or before Closing. 
Contributor represents to Acquirer that it has engaged DRESG as its real estate
agent in this transaction and that Contributor shall be solely responsible for
any commissions payable to DRESG.  Each party represents and warrants to the
other that, except for Broker and DRESG, neither has dealt with any broker,
agent, finder or other intermediary in connection with this sale and purchase. 
Contributor agrees to indemnify, defend and hold Acquirer harmless from and
against the claims of any and all brokers, except for Broker arising from breach
by Contributor of Contributor’s representation and warranty in this Section 14. 
Acquirer agrees to indemnify, defend and hold Contributor harmless from and
against any broker’s claim, including Broker, arising from any breach by
Acquirer of Acquirer’s representation and warranty in this Section 14.

 

15.                               Notice.  All notices, requests and other
communications under this Agreement shall be in writing and shall be delivered:
(i) in person; or (ii) by registered or certified mail, return receipt
requested; or (iii) by recognized overnight delivery service providing positive
tracking of items (for example, Federal Express); or (iv) by electronic
transmission (so long as one of methods (i), (ii) or (iii) are simultaneously
utilized) addressed as follows or at such other address of which Contributor or
Acquirer shall have given notice as herein provided:

 

If intended for Mtka Medical:

Mark A. Davis

222 So. 9th Street, Suite 3255

Minneapolis, MN, 55402

Email: mdavis@davisrealestatemn.com

 

With a copy to:

 

Jeremy Steiner Hoff, Barry & Kozar, P A

775 Prairie Center Drive, Suite 160

Eden Prairie, MN, 55344

Email: jsteiner@hbklaw.com

 

If intended for UPI:

 

United Properties Investment, LLC

3600 American Boulevard West-Suite 750

Minneapolis, MN, 55431

Attn: William P. Katter, Executive V P

Email: bill.katter@uproperties.com

 

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With a copy to:

 

Lloyd Kepple, Esq.

Oppenheimer, Wolff and Donnelly

Campbell Mithun Tower-Suite 2000

222 South 9th Street

Minneapolis, MN, 55402-3338

Email: lkepple@oppenheimer.com

 

If intended for Acquirer:

 

Physicians Realty L.P.

735 North Water Street, Suite 1000

Milwaukee, WI 53202

Attention: John W. Sweet, Chief Investment Officer

Email: jws@docreit.com

 

With a copy to:

 

Davis & Kuelthau, s.c.

111 East Kilbourn Avenue, Suite 1400

Milwaukee, Wisconsin 53202

Attention: Bradley D. Page, Esq.

Email: bpage@dkattorneys.com

 

All such notices, requests and other communications shall be deemed to have been
sufficiently given for all purposes hereof only upon receipt by the party to
whom such notice is sent.  Notices by the parties may be given on their behalf
by their respective attorneys.

 

16.                               Indemnification.

 

(a)                                 By Contributor.  Contributor agrees to
indemnify and hold harmless Acquirer and its officers, agents and employees from
and against, and to reimburse Acquirer with respect to any and all claims,
demands, causes of action, losses, damages, liabilities, costs and expenses
(including attorneys’ fees and court costs) asserted against or incurred by
Acquirer or the Company by reason of or arising out of: (i) a breach of any
representation or warranty of Contributor set forth in this Agreement, provided
Contributor’s liability under this clause (i) is subject to all of the
limitations, conditions and qualifications of Contributor’s liability stated in
Section 6 or elsewhere in this Agreement; (ii) the failure of Contributor to
perform any obligation required by this Agreement to be performed by it; and
(iii) the ownership, maintenance, operation, management and use of the Property,
the Acquired Assets, and/or the Company prior to Closing. The liability of each
Contributor under this paragraph (a) is limited to each such Contributor’s
Ownership Percentage of the total of all liabilities or amounts recoverable by
Acquirer hereunder.

 

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(b)                                 By Acquirer.  Acquirer agrees to indemnify
and hold harmless each Contributor and their respective officers, agents,
employees, and tenants from and against, and to reimburse Contributor with
respect to any and all claims, demands, causes of action, losses, damages,
liabilities, costs and expenses (including attorneys’ fees and court costs)
asserted against or incurred by Contributor by reason of or arising out of:
(a) a breach of any representation or warranty of Acquirer set forth in this
Agreement; (b) the failure of Acquirer to perform any obligation required by
this Agreement to be performed by it; (c) the ownership, maintenance, operation,
management and use of the Property, the Acquired Assets, and/or the Company
after Closing; and (d) Acquirer’s access to the Property for the purpose of
making such investigations, inspections, tests, assessments, surveys and the
like in accordance with Section 7 of this Agreement.

 

17.                               Tax Treatment of Transaction.  (a)Contributor
and Acquirer hereby acknowledge and agree that the transactions contemplated by
this Agreement will, for United States federal income tax purposes, be treated
as a non-taxable contribution by Contributor of the Acquired Assets to the
Operating Partnership in exchange for Preferred OPUs pursuant to Section 721 of
the Code.  The portion of of the Consideration which is paid to Contributor by
Acquirer in cash, including the Pre-Formation Expenditure Reimbursement and the
net amount of cash payable by Acquirer pursuant to Sections 2(b)(i), (ii) and
(iii) shall, to the extent possible, be treated by the Operating Partnership and
Contributor as payments made to reimburse Contributor for capital expenditures
incurred with respect to the property contributed by Contributor to the
Operating Partnership pursuant to Section 1.707-4(d) of the Treasury
Regulations, and not as part of a sale of any portion of such property by
Contributor to the Operating Partnership.  Contributor, Acquirer and the
Operating Partnership will file their tax return on a basis consistent with the
foregoing.

 

(b)                                 The Company has timely filed all tax
returns, including, but not limited to, tax returns relating to the Property,
that it was required to file in accordance with applicable laws (taking into
account any valid extensions of time for filing), and each such tax return is
accurate and complete in all material respects.  The Company has timely paid all
taxes due with respect to the taxable periods covered by such tax returns and
all other taxes, including, but not limited to, taxes arising in connection with
or relating to the Property, whether or not shown on any tax return.  The
Company has not requested any extension of time within which to file any tax
return, including, but not limited to, any tax return relating to the Property,
which has not since been filed.  The Company does not and will not have
additional liability for taxes with respect to any tax return which was required
by applicable laws to be filed on or before the Closing Date.  There are no
liens on any of the assets of the Company that arose in connection with any
failure or alleged failure (whether or not in writing) to pay any tax.  All
taxes, including, but not limited to, taxes arising in connection with or
relating to the Property, that the Company is required by law to withhold or
collect (including sales and use taxes and amounts required to be withheld or
collected in connection with any amount paid or owing to any employee,
independent contractor, creditor or other person) have been duly withheld or
collected and, to the extent required by applicable law, have been paid over to
the proper taxing authority.  No tax audits or other tax proceedings, including,
but not limited to tax audits and tax proceedings with respect to taxes arising
in connection with or relating to the Property, are pending or being conducted,
nor has the Company received any notice from any governmental authority that any
such audit or other tax proceeding is pending, threatened or contemplated. 
There is no claim or assessment pending or

 

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threatened against the Company for any alleged deficiency in taxes, including,
but not limited to, any alleged deficiency in taxes arising in connection with
or relating to the Property.  The Company does not have any tax liabilities
(whether due or to become due) with respect to the Property, its operations or
the Acquired Assets, that will be required under local laws or otherwise to be
assumed by Acquirer.  The Company has not waived any statute of limitations with
respect to taxes, including, but not limited to, taxes arising in connection
with or relating to the Property, or agreed to an extension of time with respect
to any tax assessment or deficiency.  The Company is not a party to, or bound
by, any tax allocation or sharing agreement, tax indemnity obligation or similar
contract or practice with respect to taxes.  The Company has not made any
election to be excluded from the provisions of subchapter K of the Code or to be
taxable as a corporation.  The Company has not entered into any “reportable
transaction” within the meaning of Section 6011 of the Code.

 

18.                               Disclosure.

 

18.1                        Contributor and Acquirer hereby covenant and agree
that, at all times after the date of execution hereof and prior to the Closing,
unless consented to in writing by the other party, no press release or other
public disclosure concerning this transaction shall be made, and each party
agrees to use best efforts to prevent disclosure of this transaction, other than
(i) to directors and officers and members of the parties, and employees,
prospective mortgage lenders of Acquirer, attorneys, accountants, agents and
affiliates of the parties who are involved in the ordinary course of business
with this transaction, all of which shall be instructed to comply with the
confidentiality provisions hereof; (ii) in response to lawful process or
subpoena or other valid or enforceable order of a court of competent
jurisdiction; (iii) in compliance with any filings required by the Securities
Exchange Commission or other federal or state agency; (iv) any state or
regulatory authority having jurisdiction over Contributor or Acquirer, as the
case may be, or (v) in connection with the enforcement by the disclosing party
of its rights hereunder.

 

18.2                        Notwithstanding anything to the contrary contained
elsewhere herein, Acquirer hereby acknowledges that all information furnished by
Contributor to Acquirer or obtained by Acquirer in the course of Acquirer’s
investigation of the Property, or in any way arising from or relating to any and
all studies or entries upon the Property by Acquirer, its agents or
representatives, including without limitation the Due Diligence Documents, shall
be treated as confidential information (“Confidential Information”), and
further, that if any Confidential Information is disclosed to third parties
prior to the Closing, Contributor may suffer damages and irreparable harm.  In
connection therewith, Acquirer hereby expressly understands, acknowledges and
agrees (i) that Acquirer will not disclose any Confidential Information,
including the contents or information contained in or obtained as a result of
any reports or studies made in connection with a Acquirer’s investigation of the
Property, in any form whatsoever (including, but not limited to, any oral
information received by Acquirer during the course of Acquirer’s inspection of
the Property), to any party prior to the Closing other than (a) the Contributor,
Contributor’s employees, agents or representatives, or Acquirer’s agents,
employees, representatives, attorneys, consultants or potential institutional
lenders, without the prior express written consent of Contributor (which consent
shall not be unreasonably withheld), (b) in response to lawful process or
subpoena or other valid and or enforceable order of a court of competent
jurisdiction and (c) as required by the SEC or other federal or state agency;
(ii) that in making any disclosure of Confidential Information as permitted
hereunder, Acquirer will advise said parties of the confidentiality of such
information and the potential of damage to Contributor

 

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as a result of any disclosure of such information by said third party, and
(iii) that Contributor is relying on Acquirer’s covenant not to disclose any
Confidential Information.  In the event either Acquirer or Acquirer’s agents,
employees, representatives, attorneys, consultants or potential institutional
lenders causes a breach of Acquirer’s duty of confidentiality hereunder,
Acquirer shall be liable to Contributor for damages and Contributor may pursue
all of its remedies afforded it under this Agreement.  Acquirer also hereby
indemnifies and holds any tenant harmless from and against any and all claims,
causes of action, damages, liabilities and expenses which such tenant may suffer
or incur due to Acquirer’s breach of its obligation under Section 21 to maintain
the confidential nature of any Disclosure Materials or other information
relative to such tenant.

 

19.                               Cooperation with S-X 3-14 Audit.  The
Contributor acknowledges that that it is Acquirer’s intention that the ultimate
acquirer of the Property will be affiliated with a publicly registered company
(“Registered Company”).  The Contributor acknowledges that it has been advised
that if such acquirer is affiliated with a Registered Company, such Registered
Company (and such acquirer) are required to make certain filings with the
Securities and Exchange Commission (the “SEC Filings”) that relate to the most
recent pre-acquisition fiscal year (the “Audited Year”) and the current fiscal
year through the date of acquisition (the “Stub Period”) for the Property.  To
assist Acquirer and Registered Company in preparing the SEC Filings, the
Contributor agrees no later than thirty (30) days after the Closing Date,
Contributor shall provide Acquirer and the Registered Company with the following
information at Acquirer’s expense (to the extent such items are not duplicative
of items contained in the Disclosure Materials): (i) access to bank statements
for the Audited Year and Stub Period; (ii) rent roll as of the end of the
Audited Year and Stub Period; (iii) operating statements for the Audited Year
and Stub Period; (iv) access to the general ledger for the Audited Year and Stub
Period; (v) cash receipts schedule for each month in the Audited Year and Stub
Period; (vi) access to invoice for expenses and capital improvements in the
Audited Year and Stub Period; (vii) accounts payable ledger and accrued expense
reconciliations; (viii) check register for the 3-months following the Audited
Year and Stub Period; (ix) all leases and 5-year lease schedules; (x) copies of
all insurance documentation for the Audited Year and Stub Period and (xi) copies
of accounts receivable aging as of the end of the Audited Year and Stub Period
along with an explanation for all accounts over 30 days past due as of the end
of the Audited Year and Stub Period.  In addition, no later than thirty (30)
days after the Closing Date, Mark A. Davis, on behalf of Contributor, shall
provide to Acquirer, at Acquirer’s expense: (1) signed representation letter in
substantially the form attached hereto as Exhibit “I” and incorporating the same
limitations of Contributor’s liability as stated in Section 6 of this Agreement
(with such modifications as may be required to render such letter accurate and
complete); (2) a signed audit request letter substantially in the form attached
hereto as Exhibit “J”; and (3) a signed audit response letter from Contributor’s
attorney in customary form.

 

20.                               Miscellaneous.

 

20.1                        Survival.  All of the representations and warranties
contained in this Agreement, all covenants, agreements and indemnities made
herein, and all obligations to be performed under the provisions of this
Agreement shall survive Closing for a period of twelve (12) months after which
they shall terminate and be of no further force or effect..

 

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20.2                        Execution of Agreement; Effective Date.  This
Agreement shall be void and of no force or effect if not executed by Contributor
and delivered to Acquirer or Acquirer’s attorney within seven (7) business days
after execution by Acquirer and delivery to Contributor.  The “Effective Date”
of this Agreement shall be the date that it is last executed by both Acquirer
and Contributor.

 

20.3                        Captions.  The “captions” or “headings” in this
Agreement are inserted for convenience of reference only and in no way define,
describe or limit the scope or intent of this Agreement or any of the provisions
hereof.

 

20.4                        Assignment.  Acquirer shall not assign this
Agreement without the prior written consent of Contributor.  Contributor shall
not assign this Agreement without the prior written consent of Acquirer.  Any
assignment of this Agreement without said required prior written consent shall
be null and void, and of no force or effect.

 

20.5                        Binding Effect.  This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, legal representatives, successors and
permitted assigns.

 

20.6                        Entire Agreement.  This Agreement, including the
exhibits attached hereto, contains the entire agreement as to the Property
between Contributor and Acquirer; and there are no other terms, obligations,
covenants, representations, statements or conditions, oral or otherwise, of any
kind whatsoever concerning this sale and purchase.  This Agreement shall not be
altered, amended, changed or modified except in writing executed by the parties
hereto.

 

20.7                        Choice of Law.  This Agreement shall be construed in
accordance with the internal laws of the State of Minnesota, without giving
effect to its conflicts of laws provisions.

 

20.8                        Construction.  All parties to this Agreement having
participated fully and equally in the negotiation and preparation hereof, this
Agreement shall not be more strictly construed, or any ambiguities within this
Agreement resolved, against either party hereto.  It is the intent of Acquirer
and Contributor that this Agreement be binding on both parties and not illusory.
Thus, wherever this Agreement grants Acquirer or Contributor discretion, which
might otherwise make this Agreement illusory, the party exercising its
discretion must act reasonably according to commercial standards.

 

20.9                        Time of the Essence.  Time is of the essence of this
Agreement and Acquirer and Contributor hereby agree that the times provided for
in this contract are reasonable times for each party to complete its respective
obligations. If any of the times provided for in this Agreement fall on a
Saturday, Sunday or legal holiday, said times shall automatically extend to the
next full business day.

 

20.10                 Counterparts.  This Agreement may be executed or amended
in counterparts, all of which taken together shall constitute one and the same
instrument. Delivery of a duly executed counterpart of this Agreement by any
party to all of the other parties by email to the email addresses set forth in
Section 15 shall be deemed due and proper delivery for all purposes.

 

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20.11                 Invalidity.  If any of the terms or conditions contained
herein shall be declared to be invalid or unenforceable by a court of competent
jurisdiction, then the remaining provisions and conditions of this Agreement, or
the application of such to persons or circumstances other than those to which it
is declared invalid or unenforceable, shall not be affected thereby and shall
remain in full force and effect and shall be valid and enforceable to the full
extent permitted by law.

 

20.12                 Post-Closing Matters.  After the Closing, at the request
of Acquirer and at Acquirer’s expense, Contributor shall make available to
Acquirer the historical financial information in Contributor’s possession
regarding the operation of the Property to the extent required by Acquirer in
order to prepare stand-alone audited financial statements for such operations in
accordance with generally accepted accounting principles, and to cooperate (at
Acquirer’s expense) with Acquirer and any auditor engaged by Acquirer for such
purpose.

 

20.13                 Form of Exhibits and Closing Documents.  In the event that
any of the exhibits referenced in this Agreement are not attached as of the
Effective Date, then the parties agree to negotiate in good faith during the Due
Diligence Period to finalize such exhibits in form and substance mutually
satisfactory to the parties.  Furthermore, during the Due Diligence Period the
parties will negotiate in good faith to reach agreement on the final form of all
documents to be executed at the Closing, including, without limitation, the
Ancillary Documents (collectively the “Closing Documents”).  If the final form
of the exhibits and Closing Documents have not been agreed upon and finalized by
the parties on or before the expiration of the Due Diligence Period, then either
Contributor or Acquirer may terminate this Agreement upon written notice to the
other given within ten (10) days of the expiration of the Due Diligence Period,
in which event the Deposit shall be promptly returned to Acquirer together with
all accrued interest, and thereafter, neither party shall have any further
rights or obligations hereunder except for the Surviving Obligations.

 

20.14                 Definitions and Index of Capitalized Terms.  Defined terms
used in this Agreement and not otherwise defined shall have the meanings
specified or referenced below.

 

“Acquirer” shall have the meaning set forth in the first paragraph herein.

 

“Acquirer’s Intended Use” shall have the meaning set forth in
Section 7.2(b) (vii) herein.

 

“Affiliates” means, when used with reference to a specified person, (i) any
person that directly or indirectly controls or is controlled by or is under
common control with the specified person, or (ii) any person that is an employee
of, an officer of, a general partner in or a trustee of, or serves in a similar
capacity with respect to, the specified person or any person described in clause
(i).  In the case of a person who is an individual, Affiliate shall include
(x) any member of the immediate family of such person, including the spouse,
siblings and lineal descendants and their spouses, of such immediate family
member, (y) any trust whose principal beneficiary is such person or one or more
members of such immediate family, and (z) any person or entity controlled by
such individual’s immediate family or any such trust.  For purposes of this
definition, “control” when used with respect to any specified person or entity
means the power to direct the management and policies of such person or entity,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise.

 

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“Agreement” shall have the meaning set forth in the first paragraph herein.

 

“Ancillary Documents” shall have the meaning set forth in
Section 5.2(b) (ix) herein.

 

“Audited Year” shall have the meaning set forth in Section 19 herein.

 

“Broker” shall have the meaning set forth in Section 14 herein.

 

“Closing” shall have the meaning set forth in Section 5 (a) herein.

 

“Closing Date” shall have the meaning set forth in Section 5 (a) herein.

 

“Closing Documents” shall have the meaning set forth in Section 20.13 herein.

 

“Closing Statement” shall have the meaning set forth in Section 3(b) herein.

 

“Code” shall have the meaning set forth in Section 2(c)(iv) herein.

 

“Consideration” shall have the meaning set forth in Section 2 (a) herein.

 

“Contract Rights” shall have the meaning set forth in Section 1.1(e) herein.

 

“Contributor” shall have the meaning set forth in the first paragraph herein.

 

“Deposit” shall have the meaning set forth in Section 2 (b) herein.

 

“Disclosure Materials” shall have the meaning set forth in Section 7 (a) herein.

 

“DOC” shall have the meaning set forth in Section 3(a) herein.

 

“DOC Trading Price” shall have the meaning set forth in Section 3(c) herein.

 

“Due Diligence Period” shall have the meaning set forth in Section 7 (b) herein.

 

“Effective Date” shall have the meaning set forth in Section 20.2 herein.

 

“Environmental Law(s)” shall mean all federal, state and local laws including
statutes, regulations, codes and other governmental standards, restrictions,
rulings, judgments, orders and requirements in effect relating to the use,
storage, disposal, release, emission, dispersal, spilling, leaking, burial,
migration, seepage, movement, discharge, management, investigation, remediation,
monitoring, regulation relating to air pollutants, water pollutants, process
wastewater, solid or hazardous waste, chemicals, gases, vapors, water
pollutants, groundwater, effluents, stormwater runoff, surface water runoff, the
environment, Hazardous Substances or employee health and safety, including, but
not limited to, the Federal Solid Waste Disposal Act, the Federal Clean Air Act,
the Federal Clean Water Act, the Federal Resource Conservation and Recovery Act
of 1976, the Federal Comprehensive Environmental Response, Compensation and

 

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Liability Act of 1980, the Federal Hazardous Materials Transportation Act, the
Toxic Substance Control Act, the Occupational Safety and Health Act of 1970 (all
as the same may have been amended), regulations of the Environmental Protection
Agency, regulations of the Nuclear Regulatory Agency, and regulations of any
state department of natural resources or state environmental protection agency.

 

“Escrow Agent” shall have the meaning set forth in Section 2 (b) herein.

 

“Escrow Agreement” shall have the meaning set forth in Section 2 (b) herein.

 

“Estoppel Certificate” shall have the meaning set forth in Section 7
(b) (i) herein.

 

“Guarantees” shall have the meaning set forth in Section 6 (a) (xix) herein.

 

“Hazardous Substance(s)” shall mean all hazardous, toxic, flammable, explosive
or radioactive substances, wastes and materials; any pollutants or contaminants
(including, but not limited to, petroleum products, asbestos, raw materials and
natural substances that include hazardous constituents); and any other similar
substances or materials that are regulated under Environmental Laws.

 

“Improvements” shall have the meaning set forth in Section 1.1(b) herein.

 

“Land” shall have the meaning set forth in Section 1.1(a) herein.

 

“Leases” shall have the meaning set forth in Section 1.1(d) herein.

 

“Licenses and Permits” shall have the meaning set forth in
Section 1.1(h) herein.

 

“Net Consideration” shall have the meaning set forth in
Section 2(c)(iii) herein.

 

“North Memorial Lease” shall mean and refer to that certain Office Lease between
the Company and North Memorial Health Care, dated May 3, 2013, as amended by
Amendments thereto dated September 17, 2013, March 19, 2014, and October 15,
2014.

 

“Operating Partnership” shall have the meaning set forth in Section 3(a) herein.

 

“Ownership Percentage” shall have the meaning set forth in
Section 2(c)(v) herein.

 

“Permitted Exceptions” shall have the meaning set forth in Section 4 (a) herein.

 

“Person”, whether or not capitalized, means any individual, partnership, limited
liability company, corporation, association, business trust, government or
political subdivision thereof, governmental agency or other entity.

 

“Personal Property” shall have the meaning set forth in Section 1.1(c) herein.

 

“Pledge” shall have the meaning set forth in Section 5 (b) (vi) herein.

 

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“Preferred OPUs” shall have the meaning set forth in Section 3(a) herein.

 

“Preferred OPU Value” shall have the meaning stated in Section 3(a) herein.

 

“Pre-Formation Expenditure Reimbursement” shall have the meaning set forth in
Section 2(c)(iv) herein.

 

“Pre-Formation Expenditure Reimbursement Limit” shall have the meaning set forth
in Section 2(c)(iv) herein.

 

“Property” shall have the meaning set forth in Section 1.1 herein.

 

“Real Property” shall have the meaning set forth in Section 1.1(b) herein.

 

“Records and Plans” shall have the meaning set forth in Section 1.1(f) herein.

 

“Registered Company” shall have the meaning set forth in Section 19 herein.

 

“SEC Filings” shall have the meaning set forth in Section 19 herein.

 

“Stub Period” shall have the meaning set forth in Section 19 herein.

 

“Survey” shall have the meaning set forth in Section 7 (b) (viii) herein.

 

“Title Commitment” shall have the meaning set forth in Section 4 (a) herein.

 

“Title Company” shall have the meaning set forth in Section 4 (a) herein.

 

“Title Policy” shall have the meaning set forth in Section 4 (a) herein.

 

“Treasury Regulations” shall have the meaning set forth in
Section 2(c)(iv) herein.

 

“Utility Charges” shall have the meaning set forth in Section 9 (b) herein.

 

“Warranties” shall have the meaning set forth in Section 1.1(g) herein.

 

21.                               Demolition of 15306 Building, Cancellation of
Commers Lease, Completion of Work, Escrows, Letter of Credit, Retention of Title
to Property.(1)

 

21.1                        At Closing, Contributor shall deposit the sum of
$1,669,334.30 (the “TI Allowance Escrow”) in Escrow with the Title Company to
pay the remaining balance of the Tenant Improvement Allowance payable to North
Memorial Health Care (“North Memorial”) pursuant to the North Memorial Lease.
The Company shall retain the obligation to pay the balance of the Tenant
Improvement Allowance to North Memorial and Acquirer shall use such

 

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escrow deposit for that purpose. The terms and conditions of the Escrow
Agreement (“Escrow Agreement”) for such escrow deposit shall be mutually
acceptable to Acquirer, Contributor and the Title Company. Contributor
represents to Acquirer that the TI Allowance Escrow is equal to the entire
unpaid balance due North Memorial as and for the Tenant Improvement Allowance
payable by the Company under the North Memorial Lease and acknowledges such
representation is subject to Contributors’ indemnification obligations under
Section 16 (a) of this Agreement.

 

21.2                        Reference is made to that certain Lease Agreement
between the Company and Commers Conditioned Water Southwest, Inc., (“Commers”)
dated May 24, 2001, as amended (the “Commers Lease”) by which Commers has leased
a portion of the building located at 15306 State Highway 7 (“the “15306
Building”) for a term ending July 31, 2017. The 15306 Building is located on the
Real Property and is to be demolished by Contributor, at Contributor’s sole cost
and expense, to make room for construction of additional parking at such time as
the Commers Lease has been cancelled and Commers has been relocated. 
Contributor and DRESG (as property manager under the Property Management
Agreement”) agree that, on behalf of Acquirer and the Company, they shall obtain
an agreement for the cancellation of the Commers Lease and relocate Commers at
the earliest possible date.  The parties agree to fully cooperate with one
another to that end, and Contributor hereby designates Mark Davis as its agent
to negotiate the early cancellation of such Lease and relocation of such tenant.
Contributor shall pay all costs and expenses related to the early termination of
the Commers Lease and/or and relocation of Commers, including, without
limitation, any termination fee and relocation fees or expenses that may be
payable to Commers, with each Contributor being obligated to pay its Ownership
Percentage thereof. Contributor  acknowledges that Contributors’ agreement to
pay such termination fee and related costs is to subject to Contributors’
indemnification obligations under Section 16 (a) of this Agreement.

 

21.3                        The Company has previously entered into fixed price
Agreements with Timco Construction Inc., (“Timco”) and Mickman Brothers
(“Mickman”) (collectively, the “Timco/Mickman Agreements”) by which Timco is to
demolish the 15306 Building and complete the easterly parking area and Mickman
is to complete the landscaping improvements to be installed north of such
parking area at such time as the Commers Lease is terminated and Commers is
relocated, all in accordance with the plans, specifications and scopes of work
set forth in such Agreements, for a cumulative cost of $204,067.50. Contributor
represents and warrants that the Timco/Mickman Agreements (including the plans,
specifications and scopes of work set forth therein) and the cumulative cost of
$204,067.50 are sufficient to fully perform and complete the demolition of the
15306 Building, the construction of the easterly parking area, and the
landscaping improvements on the north side of such parking area, all of which
shall be performed and completed in accordance with the terms and conditions of
the Timco/Mickman Agreements.  In the event that Timco and/or Mickman fail to
perform their obligations under the Timco/Mickman Agreements and/or complete the
work required to be performed thereunder   in accordance with the terms and
conditions of the Timco/Mickman Agreements, Contributor shall remain responsible
and liable for all costs and expenses incurred by the Company and/or Acquirer to
perform and complete such work, including, without limitation, any work required
to correct defects in such work and all cost overruns, notwithstanding the
Company’s obligation to retain and perform the Timco/Mickman Agreements.
Contributor and Acquirer agree to appoint Mark A. Davis as their agent for the
purpose of supervising, completing and enforcing the performance of the
Timco/Mickman Agreements, including completion of all work to be

 

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performed thereunder. At Closing, Contributor shall deposit the sum of
$204,067.50 with the Title Company, subject to the Escrow Agreement, to be
disbursed to pay all amounts due to Timco and Mickman for the work to be
performed by Timco and Mickman under the Timco/Mickman Agreements. In no event
shall Contributor be entitled to have any of such escrow deposit returned to
Contributor. Contributor agrees to indemnify, defend and hold Acquirer and the
Company harmless from and against any and all costs, expenses, claims, damages,
causes of action, liabilities, judgments, liens or other losses (including
reasonable attorneys’ fees and costs) asserted against or incurred by Acquirer
and the Company arising out of the matters described herein.

 

21.4                        Contributor and Acquirer acknowledge that the City
of Minnetonka, Minnesota (the “City”), will require that the Company post a
letter of credit or cash deposit in the amount of $50,000 (the “Security”) to
secure the Company’s obligation to complete landscaping improvements and to
guaranty the survival of such improvements in accordance with City requirements
and the Landscaping Plan approved by the City.  Contributor shall be responsible
for posting the Security on behalf of the Company. Contributor and Acquirer
acknowledge and agree that, if the Security is in the form of a letter of
credit, Contributor intends to obtain such letter of credit from Wells Fargo and
that Contributor shall be solely responsible for fulfilling all requirements in
connection therewith or any other letter of credit provider.  Upon satisfaction
of the Company’s obligations  to the City with respect to such landscaping
improvements and the release of the Security by the City, Contributor shall be
entitled to the return of the Security and any collateral granted to the letter
of credit provider.

 

21.5                        Acquirer agrees it shall not transfer, or cause the
Company to transfer, title to the Property or the Acquired Assets before
January 1, 2016, without the prior written consent of each Contributor, which
consent may be withheld in the sole discretion of each Contributor. Acquirer and
the Operating Partnership acknowledge each Contributor, for income tax planning
purposes, is relying on Acquirer’s agreement to retain title to the Property and
the Acquired Assets in entering into this Agreement and that each Contributor or
its members may incur increased income tax liabilities if Acquirer or the
Company breaches this covenant.

 

21.6                        Notwithstanding the provisions of Section 20.1
above, the provisions of this Section 21 shall survive Closing and the transfer
of the Acquired Assets to Acquirer indefinitely.

 

(The Remainder of this Page is Intentionally Left Blank

Signatures shall Commence on the Following Page)

 

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IN WITNESS WHEREOF, intending to be legally bound, the parties have caused this
Contribution Agreement to be duly executed, under seal, as of the date first set
forth above.

 

 

CONTRIBUTOR:

 

 

 

 

 

Minnetonka Medical Building, LLC

 

 

 

 

 

By:

/s/ Mark A. Davis

 

 

 

 

Mark A, Davis,

 

Title: Chief Manager

 

 

 

Date:

February 5, 2015

 

 

 

 

Ownership Percentage 48.936%

 

 

 

 

 

United Properties Investment, LLC

 

 

 

 

 

By:

/s/ William P. Katter

 

 

 

 

Its:

Executive Vice President

 

 

 

 

Ownership Percentage 51.064%

 

 

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ACQUIRER:

 

 

 

DOC-15450 STATE HIGHWAY 7 MOB, LLC,

 

a Wisconsin limited liability company

 

 

 

By: Physicians Realty L.P., its Manager

 

 

 

By:

Physicians Realty Trust,

 

 

its General Partner

 

 

 

 

 

 

By:

/s/ John T. Thomas

 

 

 

John T. Thomas, President & CEO

 

 

 

 

 

Date:

February 5, 2015

 

 

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