AGREEMENT OF SALE
This Agreement of Sale (this "Agreement") is made as of the 6th day of
October, 2003 (the "Effective Date"), by and between AMB PROPERTY, L.P., a
Delaware limited partnership ("Purchaser"), and INTERNATIONAL AIRPORT CENTERS
L.L.C., a Delaware limited liability company ("IAC"), IAC SEATTLE L.L.C., a
Delaware limited liability company ("Seattle"), IAC SEATTLE - III L.L.C., a
Delaware limited liability company ("Seattle - III"), IAC SEATTLE - IV L.L.C., a
Delaware limited liability company ("Seattle - IV"), IAC SEATTLE - V L.L.C., a
Delaware limited liability company ("Seattle - V"), HICTC HOUSTON L.L.C., a
Delaware limited liability company ("HICTC"), IAC LOS ANGELES L.L.C., a Delaware
limited liability company ("Los Angeles"), IAC AVIATION L.L.C., a Delaware
limited liability company ("Aviation"), IAC AVIATION - II L.L.C., a Delaware
limited liability company ("Aviation II"), IAC CHARLOTTE L.L.C., a Delaware
limited liability company ("Charlotte"), IAC CHARLOTTE - YAB L.L.C., a Delaware
limited liability company ("Charlotte YAB"), IAC MIAMI L.L.C., a Delaware
limited liability company ("Miami", and collectively with Seattle, Seattle -
III, Seattle - IV, Seattle - V, HICTC, Los Angeles, Aviation, Aviation II,
Charlotte and Charlotte YAB, the "Selling Companies"), IAC NEW YORK L.L.C., a
Delaware limited liability company ("New York"), IAC NEW YORK - II L.L.C., a
Delaware limited liability company ("New York - II"), IAC NEW YORK - III L.L.C.,
a Delaware limited liability company ("New York - III"), IAC NEW YORK - IV
L.L.C., a Delaware limited liability company ("New York - IV"), INTERNATIONAL
CARGO PORT - BOSTON L.L.C., a Delaware limited liability company ("Boston"), IAC
GATEWAY L.L.C., a Delaware limited liability company ("LAX"), IAC PARKING
L.L.C., a Delaware limited liability company ("LAX Parking", and collectively
with New York, New York - II, New York - III, New York - IV, Boston and LAX, the
"Leasing Companies"), and IAC SEATTLE - II L.L.C., a Delaware limited liability
company ("Seattle - II"). IAC, the Selling Companies, the Leasing Companies, and
Seattle - II are herein collectively referred to as the "Seller".
W I T N E S S E T H:
WHEREAS, IAC is the direct or indirect owner of one hundred percent
(100%) of the membership interests in each of the Selling Companies, the Leasing
Companies and Seattle - II (individually, a "Company" and, collectively, the
"Companies"), each of which has been formed in accordance with the laws of the
State of Delaware and holds a one hundred percent (100%) leasehold or fee simple
interest in certain real estate that is legally described below the name of such
Company on Exhibit A attached hereto (the "Land"), along with, for the portions
of the Land that are not identified as vacant on said Exhibit A, the
office/warehouse buildings (together with all other buildings, improvements and
structures located thereon, and appurtenances thereto, collectively, the
"Improvements") erected on such portions of the Land, as well as all of the
interest of such Company in the fixtures located therein and/or thereon
(collectively, the "Fixtures"), along with the personal property owned by
Seller, if any, located on the Land and used exclusively in the operation or
maintenance of the Land (the "Personal Property"), and any intangible personal
property now or hereafter owned by Seller and used exclusively in the ownership,
use or operation of the Land, Improvements and Personal Property, including,
without limitation, any lease rights (including, without limitation, the
lessor's interest in and to all existing tenant leases (the "Leases"), and,
subject to Article 9, Seller's interest in all security deposits and prepaid
rent, if any, under the Leases and any and all guaranties of the Leases),
utility contracts, all warranties and guaranties made by or received from any
third party with respect to any Improvements, building component, structure,
fixture, machinery, equipment, or material situated on, contained in any
building or other improvement situated on, or comprising a part of any building
or other improvement situated
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on, any part of the Property (as defined below), and any other contracts or
other agreements or rights relating to the ownership, use and operation of the
Property (collectively, the "Intangible Property"), other than Seattle - II,
which does not hold a leasehold or fee simple interest in any of the Properties,
but rather, owns a fifty percent (50%) membership interest (the "Interests") in
IAC Aero SeaTac L.L.C., a Delaware limited liability company ("Aero SeaTac"),
which holds a one hundred percent (100%) leasehold interest in a portion of the
Properties, as more particularly identified on said Exhibit A (the Land, the
Improvements, the Fixtures, the Personal Property and the Intangible Property,
collectively, the "Properties" and, to the extent attributable to a single
Company or Aero SeaTac, the "Property"); and
WHEREAS, Seller has agreed to sell to Purchaser, and Purchaser has
agreed to purchase from Seller, (i) all of Seattle - II's right, title and
interest in and to the Interests in Aero SeaTac, (ii) all of the Selling
Companies' right, title and interest in and to the Properties described on
Exhibit A attached hereto which are owned by the Selling Companies (the "Sale
Properties"), and (iii) all of the Leasing Companies' right, title and interest
in and to the leasehold interests in the Properties described on Exhibit A
attached hereto which are leased or ground leased by the Leasing Companies (the
"Leased Properties").
NOW, THEREFORE, in consideration of the mutual covenants and agreements
of each party contained herein, the parties hereto do hereby mutually covenant
and agree as follows:
ARTICLE 1
PURCHASE AND SALE; PURCHASE PRICE; EARNEST MONEY
1.1 Subject to the terms and conditions herein contained, Seller
agrees to sell the Interests, the Sale Properties, and its interests in the
Leased Properties to Purchaser, and Purchaser agrees to purchase the Interests,
the Sale Properties, and Seller's interests in the Leased Properties from
Seller. The total purchase price (the "Purchase Price") for the Interests, the
Sale Properties, and Seller's interests in the Leased Properties, subject to the
provisions contained in this Agreement, shall be an amount equal to Four Hundred
Seventy Four Million Five Hundred Thousand and No/100 Dollars ($474,500,000.00),
which shall consist of the following, plus or minus prorations, as hereinafter
provided and shall be allocated to the Properties as provided in that certain
Side Letter Agreement of even date herewith (the "Side Letter Agreement")
between the Seller and Purchaser (the "Property Allocations"):
(a) Approximately Three Hundred Fifty-Five Million Five Hundred
Twenty-Six Thousand Eighty-Three and No/100 Dollars
($355,526,083.00) thereof shall be payable in immediately
available funds by wire transfer ("Cash").
(b) Approximately, One Hundred Eighteen Million Nine Hundred
Seventy-Three Thousand Nine Hundred Seventeen and No/100
Dollars ($118,973,917.00) thereof shall be payable in the form
of an assumption by Purchaser and/or an Approved Assignee (as
hereinafter defined) of each of the mortgage loans previously
made by various lenders (collectively, the "Lenders") to
certain of the Companies, as well as Aero SeaTac
(collectively, the "Assumed Debt Companies"), as provided in
the Side Letter Agreement (the "Assumed Loans"), which amount
Purchaser and Seller each (i) estimates shall be the
outstanding principal balance of the Assumed Loans as of
November 30, 2003 and (ii) agrees shall be adjusted at the
Second Closing (as hereinafter defined) based on the actual
amount of the
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outstanding principal balance of the Assumed Loans as of the
date of the Second Closing, whereupon there shall be a
corresponding adjustment to this component of the overall
Purchase Price. The foregoing assumption shall consist of
and/or include, as the case may be, the assumption by
Purchaser and/or an Approved Assignee of all liabilities and
obligations under the Assumed Loans, if any, arising from and
after the Closing Date of the Property subject to the
applicable Assumed Loan of (i) all guarantors and affiliates,
including, without limitation, Seller under the Assumed Loans
(collectively, the "Loan Guarantors") and (ii) the borrowers
under the Assumed Loans.
1.2 The Closing (as hereinafter defined) shall consist of the
following closings:
(i) A portion of the Cash shall be paid at the initial
closing, which shall occur on October 9, 2003 (the "First Closing"). At
the First Closing, except as otherwise provided in this Agreement, the
Properties described on Exhibit B as "First Closing Properties" shall
be acquired by Purchaser.
(ii) A portion of the Cash shall be paid at the second
closing, which shall occur on the earlier of (i) the date that is five
(5) business days after the date on which all conditions to closing
with respect to an applicable Second Closing Property have been
satisfied, and (ii) November 30, 2003 (the "Second Closing"); it being
understood that the Closings for Second Closing Properties could occur
on different dates. At the Second Closing, except as otherwise provided
in this Agreement, the Properties described on Exhibit B as "Second
Closing Properties" shall be acquired by Purchaser.
(iii) A portion of the Cash shall be paid at the third
closing (the "Third Closing"), which shall occur on the earlier of (A)
five (5) business days after the date on which (i) the Improvements
(other than the tenant improvements) on the Leased Property to which
New York - IV holds leasehold title shall have been Completed (as
herein defined) and (ii) the Cash portion of the Purchase Price for all
of the Third Closing Properties (as herein defined), in the aggregate,
shall be sufficient to satisfy in full the indebtedness owed under the
construction loans encumbering the Leased Properties to which New York
- III and New York - IV hold leasehold title, and (B) June 30, 2004. At
the Third Closing, except as otherwise provided in this Agreement, the
Properties described on Exhibit B as "Third Closing Properties" shall
be acquired by Purchaser. The Purchaser and Seller acknowledge and
agree that the Closing of the New York Properties must occur
simultaneously and neither Purchaser nor Seller shall be required or
entitled to close on any of the New York Properties unless all of the
New York Properties close simultaneously. The Improvements shall deemed
"Completed" when all of the conditions described in Paragraph 4.1(r)
have been satisfied (or waived in writing by Purchaser) with respect to
such Improvements (other than the tenant improvements). With respect to
any of the Third Closing Properties which are Third Closing
Holdback/Adjustment Properties (as herein defined) and which have not
achieved 95% Occupancy (as herein defined) on or before the Third
Closing, then the provisions of Paragraph 1.4(d) shall apply to each
such Third Closing Holdback/Adjustment Property with the following
modifications: (A) the twelve (12) month period referred to in
Paragraph 1.4(d) shall be deemed to end on June 30, 2005 and (B) the
fifteen (15) month period referred to in Paragraph 1.4(d) shall be
deemed to end on September 30, 2005, if applicable.
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(iv) A portion of the Cash shall be paid at the fourth
closing, which shall occur five (5) business days after the earlier to
occur of (A) five (5) business days after the date on which Panalpina,
Inc. ("Panalpina") under the lease (the "Houston Lease") previously
entered into between HICTC, as landlord, and Panalpina, as tenant,
shall have taken occupancy of the premises covered by such lease and
all other conditions precedent to such Closing as herein provided shall
have been satisfied (or waived in writing by Purchaser) (the "Houston
Space") and commenced paying the rent payable under the Houston Lease
and (B) March 1, 2005 (the "Fourth Closing"). At the Fourth Closing,
except as otherwise provided in this Agreement, the Property described
on Exhibit B as the "Fourth Closing Property" shall be acquired by
Purchaser.
1.3 The Purchase Price shall be payable as set forth in the Side
Letter Agreement.
1.4 Closing Holdbacks:
(a) As used herein, the term "Closing Holdback" shall mean (i)
with respect to the First Closing and Second Closing, as
applicable, the aggregate amount, to be determined at the
First Closing or the Second Closing, as applicable, by
applying the following calculation, individually, to each
Property to which Seattle - IV, Charlotte and Charlotte YAB
hold fee simple title (each, a "First/Second Closing
Holdback/Adjustment Property" and collectively the
"First/Second Closing Holdback/Adjustment Properties"); and
(ii) with respect to the Third Closing, the aggregate amount,
to be determined at the Third Closing, by applying the
following calculation, individually, to each Property to which
New York - III and New York - IV hold leasehold title (each, a
"Third Closing Holdback/Adjustment Property;" and ,
collectively, the "Third Closing Holdback/Adjustment
Properties;" and, together with the First/Second Closing
Holdback/Adjustment Properties, the "Holdback/Adjustment
Properties" and individually, a "Holdback/Adjustment
Property"); provided, however, that notwithstanding the
foregoing, it is the parties' intention that the amount of the
Closing Holdback be determined with respect to each
Holdback/Adjustment Property individually, such that when the
Third Closing occurs, there would be a separate calculation of
the Closing Holdback for the Leased Property to which New York
- III owns leasehold title (the "NY III Property") and a
separate calculation of the Closing Holdback for the Leased
Property to which New York - IV owns leasehold title (the "NY
IV Property"):
(1) First, the difference shall be calculated, between
(a) the product of (i) the total square footage of
the Improvements on the applicable
Holdback/Adjustment Property, multiplied by (ii)
ninety-five percent (95%), less (b) the actual square
footage of such Improvements Leased (as herein
defined) as of the applicable Closing (with respect
to the applicable Holdback/Adjustment Property);
provided, however, that if, as of the applicable
Closing, ninety-five percent (95%) or more of the
square footage of the Improvements on the applicable
Holdback/Adjustment Property are Leased, then there
shall be no Closing Holdback with respect to such
Holdback/Adjustment Property.
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(2) Second, the product shall be calculated of (a) the
difference calculated in subclause (1) of this
subparagraph, multiplied by (b) an amount equal to
the projected per square foot Weighted Base Net Rent
(as herein defined) attributable to the Vacant Space
(as herein defined) in the applicable
Holdback/Adjustment Property; provided, however, that
this calculation shall be made separately for Vacant
Space designated as "warehouse space" and Vacant
Space designated as "office space" based on the
Weighted Base Net Rent attributable to warehouse
space and office space for the applicable
Holdback/Adjustment Property.
(3) Finally, the quotient shall be calculated of (a) the
amount calculated in subclause (2) of this
subparagraph, divided by (b) the capitalization rate
for the market in which such Holdback/Adjustment
Property is located, as set forth in the Side Letter
Agreement opposite the name of the Company that holds
fee simple or leasehold title to such
Holdback/Adjustment Property (the "Capitalization
Rate"), which quotient shall constitute the Closing
Holdback for such Holdback/Adjustment Property.
(4) Definitions:
"Weighted Base Net Rent" shall mean, with respect to
each Holdback/Adjustment Property (as determined
individually with respect to each such Property) an
amount equal to the quotient of (A) the sum produced
by adding the result of the following calculation for
each space located within the Improvements on the
applicable Holdback/Adjustment Property that is
Vacant Space as of the applicable Closing: (i) the
projected base net rent per square foot set forth in
the Side Letter Agreement for the applicable Vacant
Space as of the applicable Closing (the "Projected
Base Net Rent"), multiplied by (ii) the square
footage of such Vacant Space as set forth in the Side
Letter Agreement, divided by (B) the aggregate square
footage for all such Vacant Space at the applicable
Holdback/Adjustment Property as of the applicable
Closing.
"Vacant Space" shall mean the space located within
the Improvements located on a Holdback/Adjustment
Property that is not Leased as of the applicable date
upon which such calculation is to be made hereunder
for such Holdback/Adjustment Property (i.e., the
Effective Date, the date of a Closing, the
Determination Date (as herein defined) or such other
calculation date as is herein provided).
"Leased" shall mean space which is leased to a
Qualified Tenant under a Qualified Lease.
"Qualified Lease" shall mean any lease of space
included in the applicable Property which satisfies
each of the following requirements: (a) it has been
approved in writing by Purchaser (which approval
shall be subject to the
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standards for determining "reasonable" approval as
provided in Paragraph 6.5(b)) and fully executed by
the landlord and the tenant; (b) as evidenced by an
estoppel certificate in the form attached to this
Agreement as Exhibit C or, if the applicable
Qualified Lease was dated less than forty-five (45)
days prior to the applicable Closing or end of a
calendar quarter (for the purpose of making the
determination under Paragraph 1.4(b) below), as
applicable, an acceptance letter in the form attached
to this Agreement as Exhibit C-1, (i) it shall be in
full force and effect and in good standing and free
from default by any party thereto, (ii) the tenant
thereunder shall have accepted in writing, and shall
have occupied (if the applicable tenant is a Major
Tenant (as herein defined)), the premises subject or
to be subject to such lease, and shall have been
obligated to pay, and shall have commenced to pay,
the rent thereunder, or, if the subject lease
provides for a free rent period which is in effect at
the time this determination is being made, then the
tenant thereunder shall have been obligated to pay,
and shall have commenced to pay, expense
reimbursements thereunder, (iii) the tenant
improvements required to be made or paid for by the
landlord in connection therewith shall have been
substantially completed (except for so called
"punchlist items," i.e., minor details of
construction, decoration or mechanical adjustments
which do not materially interfere with a tenant's
occupancy of the premises and which shall be
completed diligently by Seller but in any event prior
to any time such work is required to be completed
under the applicable lease) and shall have been paid
in full by Seller, and (iv) all leasing commissions
required to be paid for by the landlord in connection
therewith have been paid in full (or, if not paid in
full, Purchaser shall have received a credit at the
applicable Closing for any commissions payable after
the applicable Closing as provided herein); (c)
neither Seller nor any related party of Seller
(including Newco (as herein defined)) shall be the
tenant thereunder; and (d) the tenant thereunder
shall not have received any payment or other
consideration from Seller or any related party of
Seller in connection therewith other than tenant
inducements approved in writing by Purchaser. Seller
hereby agrees to make a good faith effort to lease
all Vacant Space at or above market terms.
"Qualified Tenant" shall mean a tenant approved by
Purchaser in writing (which approval shall be deemed
to have been given by Purchaser upon the full
execution of a lease by Purchaser and the applicable
tenant and Purchaser's delivery of such fully
executed lease to the applicable tenant.
"Actual Base Net Rental" means (A) the fixed or
minimum annual cash rent payable to the landlord by
the tenants under Qualified Leases (based on such
rent payable during the first full month in which
fixed or minimum annual cash rent is to be paid by
such tenant (i.e., the first full month after any
free rent period has expired) multiplied by twelve
(12)), excluding prepaid rent, prepaid payments,
security deposits, lease cancellation payments (which
are addressed elsewhere in this Paragraph 1.4), any
rent escalations (which are addressed elsewhere in
this Paragraph 1.4) and any additional rent and any
contributions toward, or reimbursements of, expenses,
taxes, insurance premiums, utilities, capital costs,
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or other costs and charges associated with the
applicable Property (without limitation on the
foregoing, Actual Base Net Rental excludes any sign
or antenna revenue, any parking, garage or storage
rent (provided that the parties acknowledge that the
Improvements are to be used as distribution
facilities and/or warehouses and that the exclusion
of storage rent is not intended to exclude base rent
under Qualified Leases payable as a result of a
tenant's lease of space within such Improvement for
distribution and/or warehouse purposes), any income
from pay telephones, cigarette machines or similar
vending arrangements), minus (B)(i) the amount of any
expenses (based on expenses attributable to the first
12 month period after rent commences to be paid under
the applicable Qualified Lease) for which the tenant
under the applicable Qualified Lease is not
responsible and which are customarily passed through
to a tenant under a fully net lease (i.e., all CAM
expenses, taxes, insurance expenses and management
fees are customarily passed through to the tenant
under a fully net lease), (ii) the amount necessary
to amortize on a straight line basis over the initial
term of the applicable lease (not to exceed ten (10)
years and excluding any portion of such term
occurring after the date that the applicable
Qualified Lease could be terminated pursuant to a
termination option contained in such Qualified Lease)
any "Above Market Free Rent" (as defined in the Side
Letter Agreement) or other monetary concessions
provided to the applicable tenant in connection with
the applicable Qualified Lease regardless of whether
such Above Market Free Rent or other monetary
concessions apply to the period prior to or after the
applicable Closing (and any free rent and other
monetary concessions that are not Above Market Free
Rent shall be paid by Seller to Purchaser at the
applicable Closing (to the extent such free rent or
other monetary concessions that are not Above Market
Free Rent have not previously been paid by Seller or
have expired as of the applicable Closing with
respect to Qualified Leases in effect as of the
applicable Closing) or at the time a payment is made
to Seller pursuant to Paragraph 1.4(b) hereof (with
respect to Qualified Leases in effect after the
Closing and before the Determination Date (as herein
defined)), as applicable)[it being agreed by the
parties that Seller can average free rent with
respect to a Holdback/Adjustment Property based on
the aggregate amount of the applicable free rent
abated on a Property by Property basis for the
purposes of making the calculation in this clause
(ii) provided that in no event shall free rent with
respect to any lease exceed 5% of the initial term of
such lease (not to exceed 10 years and excluding any
portion of such term occurring after the date that
the applicable Qualified Lease could be terminated
pursuant to a termination option contained in such
Qualified Lease)(i.e., no more than 3 months of free
rent on a 5 year initial term)], and (iii) the amount
necessary to amortize the cost of all Excess Tenant
Finish Costs (as herein defined) over the initial
term of the applicable lease (not to exceed ten (10)
years and excluding any portion of such term
occurring after the date that the applicable
Qualified Lease could be terminated pursuant to a
termination option contained in such Qualified Lease)
at an interest rate equal to 11% per annum (10% per
annum for Credit Leases (as herein defined));
provided, however, there shall be no reduction under
this clause (iii) for any Excess Tenant Finish Costs
(not to
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exceed ten percent (10%) of the Base Tenant Finish
Allowance (as herein defined) for the applicable
space) which do not result in the Actual Base Net
Rental for the applicable lease exceeding the
Projected Base Net Rent for the applicable lease. For
the purposes hereof, the term "Excess Tenant Finish
Costs" shall mean the tenant finish costs for a
building in excess of the Base Tenant Finish
Allowances for that building as set forth below.
"Base Tenant Finish Allowances" shall be as set forth
in the Side Letter Agreement. "Base Tenant Finish",
as that term is used in this paragraph, shall include
(i) all improvements ("Required Improvements") that
the landlord is obligated to build or pay for
pursuant to the terms of a Qualified Lease and (ii)
all improvements ("Necessary Improvements") that it
is necessary for the landlord to build in order to
build Required Improvements. Base Tenant Finish shall
not include the cost of the foundation, roof,
exterior walls, site work and other costs generally
associated with building shell construction, or other
improvements that are within common areas or are part
of space occupied or used exclusively by other
tenants, their employees or invitees, except if
Required Improvements or Necessary Improvements. For
the purposes hereof, a "Credit Lease" shall mean a
Qualified Lease with a tenant reasonably determined
by Purchaser to be a "credit" tenant at the time
Seller requests Purchaser's approval of the
applicable lease. All of the calculations in the
definition of "Actual Base Net Rental" shall be made
on a per square foot basis.
(b) Within fifteen (15) days after the end of each calendar
quarter after the applicable Closing, with respect to any
Vacant Space at a Holdback/Adjustment Property that has been
Leased pursuant to a Qualified Lease during the calendar
quarter just ending, and until such time as (and then only to
the extent that) ninety-five percent (95%) of the square
footage of the Improvements at the applicable
Holdback/Adjustment Property are Leased (hereinafter referred
to as "95% Occupancy"), the amount of the Closing Holdback
shall be disbursed by Purchaser to Seller and/or retained by
Purchaser with respect to each Vacant Space at a
Holdback/Adjustment Property (it being the intent and
agreement that no amounts, other than an "Earnout Amount" (as
defined below), shall be paid with respect to any Vacant Space
Leased in excess of 95% Occupancy) as follows:
(1) disbursed to Seller, within fifteen (15) days after
the end of each calendar quarter after the applicable
Closing with respect to any Vacant Space at the
applicable Holdback/Adjustment Property that shall
have been Leased pursuant to a Qualified Lease during
the calendar quarter just ending, (i) with respect to
the amount of the Actual Base Net Rent that is equal
to or less than the Projected Base Net Rent
attributable to the applicable Vacant Space, an
amount equal to (A) the actual square footage of each
Vacant Space Leased during the applicable calendar
quarter (with respect to the applicable
Holdback/Adjustment Property), multiplied by the
lesser of (x) the Actual Base Net Rent for such
Vacant Space and (y) the Projected Base Net Rent for
such Vacant Space, the product of which shall be
divided by (B) the Capitalization Rate for the
applicable Holdback/Adjustment Property, subject to
the remaining provisions hereof;
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provided, however, that the total amount of the
Closing Holdback to be paid to Seller with respect to
a Holdback/Adjustment Property under this clause (i)
shall be limited to the amount of the Closing
Holdback attributable to such Holdback/Adjustment
Property, and (ii) with respect to the amount of the
Actual Base Net Rent for the applicable Vacant Space
that is greater than the Projected Base Net Rent for
such Vacant Space, an amount (the "Earnout Amount")
equal to the net present value of the difference
between the Projected Base Net Rent for such Vacant
Space and the Actual Base Net Rent for such Vacant
Space over the initial term (excluding any portion of
such term attributable to option periods and periods
occurring after the date such Qualified Lease could
be terminated pursuant to any termination options
contained in such Qualified Lease) of the applicable
Qualified Lease (but in no event to exceed ten (10)
years), assuming no increases in Actual Base Net Rent
over the term of such Qualified Lease, and utilizing
a discount rate of 10%.
(2) retained by Purchaser, within fifteen (15) days after
the end of each calendar quarter after the Closing as
an adjustment to the Purchase Price at the applicable
Closing (the "Closing Purchase Price Adjustment"),
with respect to any Vacant Space at the applicable
Holdback/Adjustment Property that shall have been
Leased pursuant to a Qualified Lease during the
calendar quarter just ending pursuant to which the
Projected Base Net Rent attributable to the
applicable Vacant Space is greater than the Actual
Base Net Rent payable under the Qualified Lease for
such Vacant Space, an amount equal to (A) the actual
square footage of each Vacant Space Leased during the
applicable calendar quarter (with respect to the
applicable Holdback/Adjustment Property), multiplied
by the difference between (x) the Projected Base Net
Rent for such Vacant Space and (y) the Actual Base
Net Rent for such Vacant Space, the product of which
shall be divided by (B) the Capitalization Rate for
the applicable Holdback/Adjustment Property.
(c) Notwithstanding anything contained herein to the contrary,
with respect to the NY III Property and the NY IV Property
only, if the Actual Base Net Rent is greater than the
Projected Base Net Rent attributable to the applicable Vacant
Space at the applicable Holdback/Adjustment Property (i) in
making the calculations in Paragraph 1.4(b)(1)(i) above, an
amount equal to seventy-five percent (75%) of the first $1.00
per square foot (or lesser amount if Actual Base Net Rent
exceeds Projected Base Net Rent by less than $1.00 per square
foot) of Actual Base Net Rent in excess of the Projected Base
Net Rent shall also be divided by the applicable
Capitalization Rate and added to the amount to be paid to
Seller pursuant to Paragraph 1.4(b)(1)(i) with respect to the
applicable Holdback/Adjustment Property, and (ii) in making
the calculations in Paragraph 1.4(b)(1)(ii) above, an amount
equal to the first $1.00 per square foot (or lesser amount if
Actual Base Net Rent exceeds Projected Base Net Rent by less
than $1.00 per square foot) of Actual Base Net Rent in excess
of the Projected Base Net Rent shall be added to the Projected
Base Net Rent before determining the difference between Actual
Base Net Rent and Projected Base Net Rent for the purpose of
performing the net present value calculation provided in that
Paragraph 1.4(b)(1)(ii).
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(d) Notwithstanding anything contained herein to the contrary,
with respect to any Holdback/Adjustment Property that has not
reached 95% Occupancy (it being the intent and agreement that
no amounts, other than an "Earnout Amount" paid to Seller
pursuant to the provisions hereof, shall be paid with respect
to any Vacant Space Leased in excess of 95% Occupancy), if any
Vacant Space in such Holdback/Adjustment Property shall not
have been Leased as of the date that is twelve (12) months
after the Closing for such Property (the "Determination
Date"), then Seller shall receive an amount equal to the
product of (A) fifty percent (50%), multiplied by (B) the
amount that would result from the application of the
provisions of Paragraph 1.4(a) (1)-(3) to such
Holdback/Adjustment Property if the calculation were to be
made as of the Determination Date (which amount corresponds to
the portion of the Closing Holdback for such
Holdback/Adjustment Property to which Seller shall not have
earned the right to receive in accordance with the provisions
hereof as of the Determination Date), and any remaining
Closing Holdback for such Holdback/Adjustment Property shall
be retained by Purchaser as a permanent adjustment to the
Purchase Price, whereupon (except as otherwise provided in
this Paragraph 1.4) there shall be no further adjustments to
the Purchase Price or payments to the Seller with respect to
the applicable Holdback/Adjustment Property, whether in the
form of the Closing Purchase Price Adjustment, or otherwise
(and Purchaser shall thereafter be responsible for the payment
of all leasing commissions and tenant improvement allowances
with respect to such Vacant Space). Notwithstanding the
foregoing provisions of this Paragraph 1.4(d), if 95%
Occupancy has not been achieved by the Determination Date and
Seller and a Qualified Tenant shall have entered into a lease
prior to the Determination Date which does not satisfy all of
the requirements of a Qualified Lease as of the Determination
Date (collectively, "Non-Qualified Leases") and on or before
the Determination Date Seller notifies Purchaser in writing
that Seller desires to extend the Determination Date to allow
additional time for any such Non-Qualified Leases to become
Qualified Leases, the Determination Date shall be extended to
the date that is fifteen (15) months after the applicable
Closing; provided, however, that only leases of Vacant Space
that were (i) Qualified Leases as of the original
Determination Date and (ii) Non-Qualified Leases as of the
original Determination Date and which become Qualified Leases
as of the extended Determination Date shall be included as
Vacant Space that has been Leased in making the determination
of the amounts to be paid to Seller and retained by Purchaser
pursuant to this Paragraph 1.4(d), which determination shall
be made as of the extended Determination Date.
(e) Notwithstanding anything to the contrary contained in this
Agreement, in no event shall Seller receive aggregate payments
pursuant to this Paragraph 1.4 with respect to a
Holdback/Adjustment Property in excess of the Closing Holdback
with respect to such Holdback/Adjustment Property (excluding
any payments made to Seller by Purchaser as Earnout Amounts,
which amounts shall not be subject to the foregoing cap in
this sentence). In addition, notwithstanding anything to the
contrary contained in this Paragraph 1.4, at the time of each
calculation of the amount of the Closing Holdback to which
either Seller or Purchaser shall be entitled pursuant to the
provisions of this Paragraph 1.4, such calculation shall be
made with respect to the applicable Property on
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an aggregate basis (i.e., as if such calculation was the first
such calculation being performed with respect to the
applicable Property) and if, as a result of such calculation,
Seller has received an overpayment or underpayment as a result
of the prior payments, if any, made to Seller from the
applicable Closing Holdback, then there shall be an
appropriate payment made to Seller from the Closing Holdback
or from Seller to the Closing Holdback or Purchaser, as the
case may be, in order to adjust such payments so as to correct
any such overpayment or underpayment.
(f) Notwithstanding anything to the contrary contained in this
Agreement, with respect to any Vacant Space in excess of 95%
Occupancy that is Leased, Seller and Purchaser shall each pay
fifty percent (50%) of the tenant improvement costs
attributable to such Vacant Space in excess of 95% Occupancy
that is Leased. If, as of the Determination Date (or such
earlier date upon which a Holdback/Adjustment Property has
achieved 95% Occupancy (or the date of the Closing for such
Property if such Closing occurs after 95% Occupancy has been
achieved)), there is any Vacant Space at such
Holdback/Adjustment Property in excess of 95% Occupancy that
is not Leased, then at such date Seller shall pay to Purchaser
an amount equal to fifty percent (50%) of the Base Tenant
Finish Allowances for such Vacant Space. Purchaser shall pay
all of the leasing commissions attributable to the leasing of
the Vacant Space in excess of 95% Occupancy.
(g) Notwithstanding anything to the contrary contained in this
Agreement, if Vacant Space is Leased and the initial term of
the Qualified Lease (excluding any portion of such term
occurring after the date that the applicable Qualified Lease
could be terminated pursuant to a termination option contained
in such Qualified Lease) is less than five (5) years, the
amount to be paid to Seller with respect to the applicable
Qualified Lease either as Purchase Price (pursuant to
Paragraph 1.3 if applicable) or pursuant to Paragraph
1.4(b)(1) (if applicable) shall be reduced by an amount equal
to (such amount being herein referred to as the "Term
Reduction Amount") (i) ten percent (10%) (if the Qualified
Lease has an initial term of four (4) years or more but less
than five (5) years) and (ii) twenty percent (20%) (if the
Qualified Lease has an initial term of three (3) years or more
but less than four (4) years) of the amount which otherwise
would have been paid to Seller under the foregoing Paragraphs,
as applicable, determined on a prorated basis (e.g., if the
applicable lease term is 4 1/2 years, the applicable
percentage would be 5% and if the applicable lease term is 3
1/2 years, the applicable percentage would be 15%).
Notwithstanding the foregoing, to the extent that a Qualified
Lease at a Holdback/Adjustment Property has an initial term
greater than five (5) years (excluding any portion of such
term occurring after the date that the applicable Qualified
Lease could be terminated pursuant to a termination option
contained in such Qualified Lease), Seller shall have the
right to utilize the aggregate "Post 5 Year Rent" (as defined
below) remaining from time to time after the application of
any such Post 5 Year Rent pursuant to the provisions of this
Paragraph 1.4 (g) ("Remaining Post 5 Year Rent") to make up
all or a portion of the short fall in term of a Qualified
Lease having an initial term under five (5) years (excluding
any portion of such term occurring after the date that the
applicable Qualified Lease could be terminated pursuant to a
termination option contained in such Qualified Lease)(a "Short
Fall Lease") that is thereafter executed as
11
follows: Seller can apply any Remaining Post 5 Year Rent to a
Qualified Lease having a term under five (5) years (excluding
any portion of such term occurring after the date that the
applicable Qualified Lease could be terminated pursuant to a
termination option contained in such Qualified Lease) by
applying such Remaining Post 5 Year Rent to the actual square
footage and utilizing the Actual Base Net Rent of the
applicable Short Fall Lease to determine the extent of
additional term such Short Fall Lease would have had if such
applicable Remaining Post 5 Year Rent had been paid under such
Short Fall Lease and such additional term shall be added to
the actual term of the Short Fall Lease solely for the purpose
of making the calculation of the Term Reduction Amount
pursuant to this Paragraph 1.4 (g). As used herein "Post 5
Year Rent" shall mean an amount equal to the Projected Base
Net Rent for the space demised under such Qualified Lease
multiplied by the square footage of such Qualified Lease and
by the number of years (or fraction thereof), not to exceed
five (5), in the initial term of such Qualified Lease in
excess of the first (5) years of such Qualified Lease
(excluding any portion of such term occurring after the date
that the applicable Qualified Lease could be terminated
pursuant to a termination option contained in such Qualified
Lease). Notwithstanding the foregoing provisions of this
Paragraph 1.4(g), if the applicable Qualified Lease has a
termination option which can be exercised by the tenant so as
to terminate the applicable Qualified Lease prior to the end
of a full five year initial term, then (A) if the Term
Reduction Amount for such Qualified Lease is equal to or
greater than the applicable termination fee that would be
payable by the tenant in connection with the exercise of the
applicable termination option, then the amount to be paid to
Seller with respect to the applicable Qualified Lease either
as Purchase Price (pursuant to Paragraph 1.3 if applicable) or
pursuant to Paragraph 1.4(b)(1) shall be reduced by the
difference between the applicable Term Reduction Amount and
the applicable termination fee and Purchaser shall be entitled
to receive the applicable termination fee if the tenant
exercises such option (it being agreed that any adjustment to
the Purchase Price pursuant to this Paragraph 1.4(g) for the
applicable Qualified Lease shall not be affected by the
applicable tenant's subsequent failure to exercise such
termination option), and (B) if the Term Reduction Amount for
such Qualified Lease is less than the applicable termination
fee that would be payable by the tenant in connection with the
exercise of the applicable termination option, then the amount
to be paid to Seller with respect to the applicable Qualified
Lease either as Purchase Price (pursuant to Paragraph 1.3 if
applicable) or pursuant to Paragraph 1.4(b)(1) shall not be
reduced by the Term Reduction Amount and Purchaser shall be
entitled to receive the applicable termination fee if the
tenant exercises such option (it being agreed that the
non-adjustment to the Purchase Price pursuant to this
Paragraph 1.4(g) for the applicable Qualified Lease shall not
be affected by the applicable tenant's subsequent failure to
exercise such termination option). Except as provided in this
Paragraph 1.4(g), Purchaser shall be entitled to retain or be
paid all termination fees paid by tenants under Leases in
effect as of the Effective Date or entered into after the
Effective Date (in either case subject to Purchaser acquiring
the applicable Property). The amount of any reduction to the
Purchase Price pursuant to this Paragraph 1.4(g) shall be
retained by Purchaser as an adjustment to the Purchase Price
for the applicable Holdback/Adjustment Property.
(h) Notwithstanding anything to the contrary contained in this
Agreement, if Vacant Space
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is Leased and the amount of the actual base rent escalations
in the applicable Qualified Lease as applied to the Actual
Base Net Rental payable over the initial term (excluding any
portion of such term attributable to option periods and
periods occurring after the date such Qualified Lease could be
terminated pursuant to any termination options contained in
such Qualified Lease) of the applicable Qualified Lease (but
in no event to exceed ten (10) years)("Actual Escalated Base
Rent") varies from the amount of the Pro Forma Base Rent
Escalations (as defined in the Side Letter Agreement) as
applied to the Projected Base Net Rent for the applicable
Vacant Space over the same period ("Projected Escalated Base
Rent"), then the net present value of the variance in the rent
for such Vacant Space over the same period and utilizing a
discount rate of 10% shall be determined (the "Escalation
NPV") and (i) if the Actual Escalated Base Rent is greater
than the Projected Escalated Base Rent, the amount of the
Escalation NPV shall be added to the Purchase Price (pursuant
to Paragraph 1.3 if applicable) or paid to Seller pursuant to
Paragraph 1.4(b)(1) (if applicable) with respect to the
applicable Holdback/Adjustment Property, and (ii) if the
Actual Escalated Base Rent is less than the Projected
Escalated Base Rent, the amount of the Escalation NPV shall be
retained by Purchaser as an adjustment to the Purchase Price
for the applicable Holdback/Adjustment Property.
Notwithstanding the foregoing provisions of this Paragraph
1.4(h), (A) if the actual base rent escalations in the
applicable Qualified Lease are 3% or less per year, then there
shall be no payment to Seller under this Paragraph 1.4(h) with
respect to such Qualified Lease regardless of whether the
Actual Escalated Base Rent is greater than the Projected
Escalated Base Rent, and (B) if the actual base rent
escalations in the applicable Qualified Lease are greater than
3% per year and the Actual Escalated Base Rent is greater than
the Projected Escalated Base Rent, then the amount to be paid
to Seller, if any, under this Paragraph 1.4(h) shall be
calculated as if the actual base rent escalations were equal
to the applicable Pro Forma Base Rent Escalations plus the
amount of the actual base rent escalations above 3% per year.
(i) Examples of the application of this Paragraph 1.4 are as set
forth in the Side Letter Agreement.
1.5 Purchaser, on or before 9:00 A.M. (San Francisco, California
time), October 7, 2003, shall deposit with the San Francisco, California office
of the Title Company, as escrow agent, the amount of Eight Million Five Hundred
Thousand and No/100 Dollars ($8,500,000), which amount, together with all
interest earned thereon, shall be referred to, collectively, as the "Earnest
Money." The Earnest Money shall be in the form of a wire transfer of immediately
available funds of the United States of America. If Purchaser shall not have so
deposited the Earnest Money on a timely basis, as herein required, Seller may
terminate this Agreement by written notice thereof to Purchaser, whereupon no
party shall have any further obligations to the other hereunder, except as
otherwise herein provided. The Earnest Money shall become nonrefundable as of
9:00 A.M. (Pacific Time), October 7, 2003, except as otherwise herein provided.
The Earnest Money shall be held and disbursed by the Title Company, pursuant to
an earnest money escrow agreement substantially in the form attached hereto as
Exhibit D. The Earnest Money shall be invested in a federally issued or insured
interest bearing instrument and shall be paid to the party to which the Earnest
Money shall be paid, pursuant to the provisions hereof. If the transaction
contemplated hereby shall be consummated in accordance with the terms hereof, at
each Closing, the Earnest Money allocated to the applicable Properties being
acquired
13
at such Closing (the "Earnest Money Allocations") shall be applied to the
allocable Purchase Price for such Properties at the applicable Closing.
Notwithstanding anything to the contrary contained in this Agreement, if a
Closing fails to occur for any reason whatsoever other than Purchaser's default,
the Earnest Money allocable to the Properties for which such Closing(s) do not
occur shall be returned to Purchaser.
ARTICLE 2
REVIEW OF INFORMATION
2.1 On or before the Effective Date, Seller has delivered or made
available to Purchaser complete copies of any of the materials listed on Exhibit
E attached hereto that shall be in the possession of Seller (the "Due Diligence
Materials").
2.2 From and after the Effective Date and during the term of this
Agreement, Seller also shall provide Purchaser and its employees, agents,
representatives, attorneys and consultants ("Purchaser's Consultants") access to
the Properties, at any reasonable time, during normal business hours, upon
reasonable prior notice, to conduct such inspections, investigations, tests,
studies, reports, analyses, appraisals, verifications and evaluations with
respect to the Interests, Aero SeaTac and/or the Properties, as Purchaser shall
deem necessary in its commercially reasonable discretion, subject to the
remaining provisions hereof (collectively, the "Investigations"); provided,
however, that Purchaser shall not perform any intrusive Investigations,
including, without limitation, probes and/or borings, without Seller's prior
written approval, which may be granted or denied in Seller's reasonable
discretion. Prior to the commencement of any Investigations as to any of the
Properties, Purchaser shall obtain or cause Purchaser's Consultants to obtain,
at Purchaser's sole cost and expense, a policy of general commercial liability
insurance, with limits of not less than One Million and No/100 Dollars
($1,000,000.00) combined single limit per occurrence, for bodily injury and
property damage liability, covering any and all liability of Purchaser with
respect to or arising out of such Investigations, which shall name Seller, the
Companies, Aero SeaTac and all lenders, including, without limitation, the
Lenders, who then have an interest in the applicable Property, as an insured
party, and shall be in form and of substance, and issued by an insurance
company, reasonably satisfactory to Seller. Any damage caused to the Properties
due to any Investigations shall be repaired by Purchaser at its sole cost and
expense, if Purchaser shall elect not to consummate the transactions
contemplated hereby, pursuant to the provisions of this Agreement. Also,
Purchaser shall indemnify, defend and hold harmless Seller, the Companies, Aero
SeaTac, all lenders, including, without limitation, the Lenders, who then have
an interest in applicable Property, from and against any Losses that Seller
shall suffer due to any claim or cause of action that shall have arisen out of
or resulted from any Investigations, which indemnification, defense and hold
harmless agreements shall not be merged into this Agreement and shall survive
the termination of this Agreement, if applicable; provided, however, that the
foregoing indemnity shall not apply to the mere discovery of a pre-existing
condition. For purposes of this Agreement, the term "Losses" shall be deemed to
mean any claim, cause of action, loss, damage, liability, cost and expense,
including, without limitation, reasonable attorneys' fees and court costs
(collectively, "Losses").
2.3 Seller shall be entitled to have a representative of Seller
present during any meetings between Purchaser and any governmental official or
representative regarding Hazardous Materials (as defined below) in, at, on,
about and/or under, or the environmental condition of, any of the Properties,
14
as well as advance written notice of any such meeting at least one (1) business
day prior to the date thereof.
2.4 Intentionally Omitted.
2.5 If Purchaser shall not have delivered to Seller, on or prior
to 9:00 a.m. (San Francisco, California time) on October 7, 2003 (the period
between the Effective Date and such date, "Due Diligence Period"), written
notice (the "Approval Notice") that Purchaser shall have waived its right to
terminate this Agreement, pursuant to the provisions of this Paragraph 2.5,
which election shall be in Purchaser's sole and absolute discretion, then this
Agreement automatically shall be terminated as of 9:00 a.m. (San Francisco,
California time) on October 7, 2003 and the Earnest Money shall be returned to
Purchaser, whereupon no party shall have any further obligations to the other
hereunder, except as otherwise herein provided; provided, however, that upon the
full execution of this Agreement by Purchaser and Seller (and the execution of
this Agreement by the Joinder Parties (as herein defined)) and delivery of the
fully executed Agreement by Purchaser to Seller prior to 9:00 a.m. (San
Francisco, California time) on October 7, 2003, Purchaser shall be deemed to
have delivered the Approval Notice in accordance with the provisions hereof.
2.6 Purchaser acknowledges that, if Purchaser shall have delivered
(or is deemed to have delivered) the Approval Notice to Seller, prior to the
expiration of the Due Diligence Period, then, pursuant to the provisions of
Paragraph 2.5 but subject to the provisions of Paragraphs 6.1, 6.2 and 6.3, and
subject to Purchaser's ongoing right to update any of its reports, studies or
investigations conducted with respect to any Property if, by the applicable
Closing Date, such reports, studies or investigations will be more than sixty
(60) days old (provided that Purchaser may update such reports, studies and
investigations for the sole purpose of confirming the satisfaction of the
covenants, conditions, representations and warranties contained in this
Agreement), Purchaser shall be deemed to have (a) conducted (or shall have
waived its right to conduct), to its satisfaction, all Investigations,
including, without limitation, those as to Hazardous Materials, (b) reviewed,
examined, evaluated and verified, to its satisfaction, all of the Due Diligence
Items (as hereinafter defined) and the results of the Investigations, including,
without limitation, Purchaser's satisfaction as to the assignability of the
Interests from Seattle - II to Purchaser and/or the Approved Assignee(s), as
hereby contemplated, and (c) become familiar with the physical condition of all
of the Properties.
2.7 Except as otherwise herein provided, (i) any reports, repairs
and/or alterations with respect to the Properties required by Purchaser,
including, without limitation, the cost and expense thereof, shall be the sole
responsibility of Purchaser, and (ii) Purchaser hereby agrees that there shall
be no obligation on the part of Seller to make any reports, changes, alterations
or repairs, cure any violations of applicable law or comply with the
requirements of any insurer, with respect to any of the Properties.
2.8 Radon is a naturally occurring radioactive gas that, when it
has accumulated in a building in sufficient quantities, may present health risks
to persons who are exposed to it over time. Levels of radon that exceed federal
and state guidelines have been found in buildings in Florida. Additional
information regarding radon and radon testing may be obtained from your county
public health department. With respect to the Improvements situate in the State
of Florida, Purchaser acknowledges receipt of the energy efficiency disclosure
brochure described in Section 553.996 of the
15
Florida Statutes. Purchaser acknowledges that Seller has advised Purchaser that
Purchaser may have the energy efficiency of such Improvements determined during
the Due Diligence Period.
ARTICLE 3
TITLE AND SURVEY
3.1 Seller agrees to furnish to Purchaser, at Purchaser's sole
cost and expense, not later than five (5) business days prior to the expiration
of the Due Diligence Period, a commitment (collectively, the "Commitments"),
from Chicago Title Insurance Company, San Francisco, California (the "Title
Company"), to issue to Purchaser at the Closing, with respect to each Property,
an ALTA owner's title insurance Policy (collectively, the "Title Policies"),
naming as the proposed insured thereunder the Purchaser or the Purchaser's
designee, as well as Aero SeaTac, as to the portion of the Property to which
Aero SeaTac holds leasehold title, as the case may be, for each of such policy,
which Commitments shall be in the aggregate amount of the Purchase Price to be
divided among such Title Policies, in accordance with the Property Allocations,
and shall show, and obligate the Title Company to insure, good and marketable
leasehold or fee simple title, as the case may be, to such Property in
Purchaser, or its designee, as well as Aero SeaTac, as to the portion of the
Property to which Aero SeaTac holds leasehold title, as the case may be, subject
only to (A) general and special real estate taxes and assessments not yet due
and payable, and (B) such other matters of record identified on the Commitments
or an Updated Survey (as hereinafter defined) and not objected to by Purchaser
pursuant to Paragraph 3.2 (or, if objected to by Purchaser, not subsequently
accepted by Purchaser or removed, insured over or bonded over by Seller pursuant
to Paragraph 3.2) (the "Permitted Exceptions").
3.2 If any Commitment or any Updated Survey shall show any
exceptions or matters not acceptable to Purchaser, Purchaser shall notify Seller
thereof in writing prior to the expiration of the Due Diligence Period,
whereupon Seller, on or before the earlier of (i) five (5) days prior to the
Closing for the applicable Property, and (ii) thirty (30) days after receipt of
such written notice (the "Cure Period"), may, but shall have no obligation to,
remedy the defects of title shown thereon or to obtain at Seller's sole cost and
expense title insurance issued by the Title Company insuring over and against
such defects and provide evidence reasonably satisfactory to Purchaser thereof.
If Seller shall fail to remedy such defects or obtain such title insurance
within the Cure Period, Purchaser shall have the option, exercisable within five
(5) days after the expiration of the Cure Period, by written notice thereof to
Seller, to (a) accept the status of title, subject to such title and/or survey
defects, and proceed with this Agreement, (b) extend the Closing Date (as
hereinafter defined) a reasonable period of time, but in no event more than
thirty (30) additional days, to give Seller an opportunity to comply with the
terms hereof (at which time the options contained in this Paragraph 3.2 (other
than the option to extend) again shall be available to Purchaser) or (c) give
written notice to Seller of Purchaser's election to terminate this Agreement and
receive a refund of the Earnest Money allocated to the applicable Properties
pursuant to the Earnest Money Allocations, whereupon no party shall have any
further obligations to the other hereunder, except as otherwise herein provided.
Notwithstanding anything to the contrary contained herein, Seller shall be
obligated, at Seller's sole cost and expense, to either (x) remove any monetary
liens affecting any Property from title to said Property (other than the Assumed
Loans), (y) insure over such monetary lien by means of an endorsement to the
Title Policy, in form approved by Purchaser, or (z) bond over such monetary
lien.
3.3 Purchaser, at its sole cost and expense, shall have the right,
at its option, to cause the
16
preparation of one or more (a) updates to the existing survey that shall have
been delivered or made available to Purchaser in accordance with the provisions
hereof or (b) new surveys (collectively, the "Updated Survey(s)"), with respect
to the Land and the Improvements that comprise each Property, prepared by a
surveyor licensed in the state in which such Land is situated.
ARTICLE 4
CONDITIONS PRECEDENT
4.1 Purchaser's obligation to consummate the transactions
contemplated hereby shall be subject to satisfaction of all of the following
(collectively, "Purchaser's Conditions Precedent"):
(a) On the applicable Closing Date, neither Seller nor Aero SeaTac
shall be in material default in the performance of any
material covenant or agreement to be performed by Seller
hereunder or under any of the (i) Leases, (ii) New Leases (as
defined below), if applicable, (iii) Service Contracts and/or
(iv) New Service Contracts (as defined below), if applicable,
or in default under any of the documents and/or instruments
evidencing and/or securing the Assumed Loans (collectively,
the "Assumed Loan Documents") or any of the ground leases (the
"Ground Leases") previously entered into, between various
ground lessors (collectively, the "Ground Lessors"), and the
Leasing Companies and Aero SeaTac (collectively, the "Ground
Lessees"), as the case may be, as to the respective Properties
leased by such Ground Lessees, upon the terms and conditions
thereof, as the case may be.
(b) All representations and warranties made by Seller in this
Agreement shall be true and correct in all material respects
as of the Effective Date and as of the applicable Closing
Date.
(c) On the applicable Closing Date, there shall exist no pending
action, suit or proceeding with respect to Seller and/or Aero
SeaTac, before any court or administrative agency, which shall
seek to restrain or prohibit, in whole or part, or to obtain
damages or a discovery order with respect to, this Agreement
or the consummation of the transactions contemplated hereby,
other than any of the foregoing that shall exist between
Purchaser and Seller with respect to this Agreement and/or the
transactions contemplated hereby.
(d) On or prior to the applicable Closing Date, Seller shall have
delivered to Purchaser estoppel letters substantially in the
form of Exhibit C attached hereto (as modified to address
specific concerns arising as a result of Purchaser's review of
the Leases) dated not more than forty five (45) days prior to
the applicable Closing that shall have been executed by
tenants under leases for space in the Improvements ("Tenants")
that, as of such Closing, shall occupy, collectively, at least
seventy-five percent (75%) of the total square footage of the
Improvements on each Property being conveyed, directly or
indirectly, at such Closing, and at least eighty percent (80%)
of the aggregate square footage of all of the Improvements
being conveyed, directly or indirectly, at such Closing
(provided, that the 80% figure shall be used if there is only
one Property being conveyed at a particular Closing), and
shall include estoppels from all Tenants occupying as of such
Closing Date twenty-five thousand (25,000) square feet or more
of the square footage of the
17
Improvements on any single Property being conveyed, directly
or indirectly, at such Closing (each such Tenant, a "Major
Tenant"); provided, however, that, if Seller only shall have
delivered to Purchaser such estoppel letters from Tenants
under leases for space in the Improvements being conveyed,
directly or indirectly, at such Closing, that, as of the
Closing Date, shall encompass less than ninety percent (90%)
of the aggregate square footage of all of the Improvements
being conveyed, directly or indirectly, at such Closing, then
Seller shall deliver to Purchaser an estoppel letter, which
shall be substantially in the form of Exhibit F attached
hereto, executed by Seller, with respect to Tenants selected
by Purchaser occupying the square footage of the Improvements
being conveyed, directly or indirectly, at such Closing, equal
to the difference between ninety percent (90%) of the
aggregate square footage of all of the Improvements being
conveyed, directly or indirectly, at such Closing, and the
square footage of the Improvements covered by the estoppel
letters delivered to Purchaser by Seller and executed by
Tenants with respect to the applicable Closing, pursuant to
the provisions of this paragraph. If all of the estoppel
letters required to have been delivered, pursuant to the
provisions of this paragraph, shall not have been so delivered
on a timely basis, either Purchaser or Seller shall have the
right to extend the applicable Closing Date for up to ten (10)
business days to provide additional time to obtain such
estoppel letters, whereupon Seller shall use commercially
reasonable efforts, at no cost or liability to Seller, to
obtain such estoppel letters on or prior to the applicable
Closing Date. With respect to any Seller executed estoppel
delivered to Purchaser, Seller shall have the right to
substitute therefor an estoppel executed by the applicable
Tenant which satisfies the requirements for such tenant
estoppel as provided above in this paragraph and in such event
the applicable Seller executed estoppel shall be of no further
force or effect.
(e) Unless otherwise agreed to in writing by Purchaser, as of the
date of the First Closing, Seller or the Companies, other than
the Assumed Debt Companies, shall have defeased or repaid, in
full, at Seller's expense, all of the loans previously made by
various lenders to the Companies, other than the Assumed Debt
Companies, as the case may be, which loans are more
particularly described in the Side Letter Agreement
(collectively, the "Other Loans").
(f) On or before the expiration of the Due Diligence Period,
Purchaser shall have obtained the written approval of the
Investment Committee and Board of Directors of its general
partner, AMB Property Corporation ("Purchaser's Approval") to
enter into and consummate the transaction contemplated by this
Agreement, pursuant to the terms and conditions set forth
herein.
(g) At the applicable Closing, the Title Company shall have
irrevocably committed to issue to Purchaser the Title Policies
for the Properties being conveyed, directly or indirectly, at
such Closing, subject only to the Permitted Exceptions
applicable to such Properties and containing such endorsements
to such Title Policies as are requested by Purchaser and
approved by the Title Company during the Due Diligence Period.
(h) As of the applicable Closing Date, there shall have been no
material adverse changes since the end of the Due Diligence
Period in the physical condition of any of the Properties
18
being conveyed, directly or indirectly, at such Closing,
subject to ordinary wear and tear and the provisions of
Article 10.
(i) With respect to any Closing occurring after the Second Closing
(other than with respect to the Properties owned by New York
and New York - II), as of the applicable Closing Date, there
shall have been no material adverse changes in the tenant
condition of any of the Properties being conveyed, directly or
indirectly, at such Closing since the end of the Due Diligence
Period. For purposes of this Subparagraph 4.1(i), "material
adverse changes in the tenant condition" shall mean a material
adverse change in the tenant condition of any Major Tenant as
reasonably determined by Purchaser (e.g., the bankruptcy of a
Major Tenant, a material adverse change in the financial
condition of a Major Tenant as reasonably determined by
Purchaser or the material default by a Major Tenant under its
lease where such default is not cured within any applicable
cure period). In the event that a material adverse change in
the tenant condition of a Major Tenant occurs, Purchaser may
elect not to purchase the affected Property, this Agreement
shall terminate with respect to the affected Property, the
Purchase Price shall be reduced by the amount of the Property
Allocation applicable to such Property, the Earnest Money
allocated to such Property pursuant to the Earnest Money
Allocations shall be returned to Purchaser, and Purchaser and
Seller shall thereafter have no further obligation or
liability with respect to said Property, except as set forth
herein. The parties agree that it shall not be a material
adverse change in the tenant condition if a property tax
assessment results in an increase in the taxes that may be
payable by a tenant under its lease; provided, however, that
this sentence shall not serve as a limitation or waiver of any
other right or Condition Precedent expressly granted herein to
Purchaser, including, without limitation, the Condition
Precedent set forth in Paragraph 4.1(d) hereof.
(j) On or before the First Closing, Headlands Realty Corporation,
an affiliate of Purchaser ("Headlands") and IAC shall have
formed AMB International Airport Centers, LLC, a Delaware
limited liability company ("Newco"), which entity shall be
duly organized, validly existing and in good standing under
the laws of the State of Delaware and qualified to do business
in all jurisdictions in which it is required to do business.
(k) On or before the expiration of the Due Diligence Period,
Headlands and IAC shall have agreed on a limited liability
company agreement for Newco in form satisfactory to the
parties pursuant to which Headlands and IAC shall each own a
50% membership interest in Newco (the "Newco LLC Agreement").
On or before the First Closing, IAC shall have made its
initial capital contributions thereto, all leases, service
contracts and other agreements being assumed by Newco shall
have been validly transferred (with all required consents
received), all representations and warranties of IAC contained
in the Newco LLC Agreement shall be true, correct and complete
in all material respects, and IAC shall not otherwise be in
default thereunder.
(l) On or before the expiration of the Due Diligence Period,
Purchaser, IAC and certain other related parties shall have
agreed on a strategic alliance agreement in form satisfactory
to the parties relating to the conduct of Newco and certain
activities among the parties (the "Strategic Alliance
Agreement"). On or before the First Closing, Purchaser, IAC
and
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certain other related parties shall have entered into the
Strategic Alliance Agreement and no party to such agreement
other than Purchaser or Headlands shall be in default
thereunder.
(m) On or before the expiration of the Due Diligence Period, the
"Senior Employees" of IAC and Perlmutter Investment Company,
L.L.C., an Illinois limited liability company, as more
particularly described in the Side Letter Agreement, and
Purchaser shall have agreed on a form of non-competition
agreement to be entered into between such Senior Employees and
Newco in form satisfactory to Purchaser (the "Non-Competition
Agreements"). On or before the expiration of the Due Diligence
Period, Seller and Purchaser shall have agreed on a form of
personal services agreement with respect to IAC's retention of
employees during the period between the First Closing and
December 31, 2003 and the utilization of such employees for
Newco's business (the "Services Agreement"). On or before the
First Closing, the Senior Employees shall have entered the
Non-Competition Agreements with Newco. On or before the First
Closing, IAC and Newco shall have entered into the Services
Agreement.
(n) As of the applicable Closing, each Lender shall have delivered
to Purchaser a written consent of such Lender, as applicable,
to the relevant transactions contemplated hereby, including,
without limitation, the (i) assumption by Purchaser and/or an
Approved Assignee of all of the Loan Guarantees and the
Assumed Loans, as the case may be, from and after the Closing
Date (which consent shall include provisions that will permit
the new borrower under the Assumed Loan (or the parent of the
new borrower if such new borrower is a single asset entity) to
convert from a limited liability company to a limited
partnership and/or to make transfers of interests in such
entity (or in any entity holding an interest in such entity)
as long as AMB Property, L.P., a Delaware limited partnership
(or, if applicable, the City and County of San Francisco
Employees Retirement System) owns, directly or indirectly, at
least a twenty percent (20%) interest in the new borrower (or
such parent) and directly or indirectly manages or controls
the new borrower), (ii) release of all of the Loan Guarantors
from all of the Loan Guarantees from and after the Closing
Date, and (iii) in the case of the Assumed Loan evidenced and
secured by the Property to which Aero SeaTac holds leasehold
title, replacement of Seller by Purchaser as the Manager of
Aero SeaTac, which shall include an estoppel from each such
Lender and shall be in form and of substance reasonably
satisfactory to Purchaser and Seller (provided, if the form of
such estoppel is contained in the applicable loan documents,
the parties shall accept such form from the applicable Lender
as is so provided in such documents; provided, however that
the foregoing proviso shall not affect, limit or negate
Purchaser's requirement that the applicable Lender Consents
contain the acknowledgements and requirements provided in
clause (i) of this Subparagraph (n))(collectively, the "Lender
Consents").
(o) As of the applicable Closing, each of the Ground Lessors shall
have delivered to Seller and Purchaser in form satisfactory to
Purchaser and Seller, a written consent of such Ground Lessor
(the "Ground Lessor Consents"), as applicable, to the relevant
transactions contemplated hereby, including, without
limitation, (i) the assignment to and assumption by Purchaser
and/or an Approved Assignee of all of Seller's rights,
liabilities and
20
obligations arising from and after the applicable Closing
under the Ground Leases, including all liabilities and
obligations of all guarantors and affiliates of the Ground
Lessees (the "Ground Lease Guarantees"), including, without
limitation, Seller (collectively, the "Ground Lease
Guarantors"), if any, under each of the Ground Leases (which
consent shall include provisions that will permit the new
ground lessee under the Ground Lease (or the parent of the new
ground lessee if such new ground lessee is a single asset
entity) to convert from a limited liability company to a
limited partnership and/or to make transfers of interests in
such entity (or in any entity holding an interest in such
entity) as long as AMB Property L.P., a Delaware limited
partnership (or, if applicable, the City and County of San
Francisco Employees Retirement System) owns, directly or
indirectly, at least a twenty percent (20%) interest in the
new ground lessee (or such parent) and directly or indirectly
manages or controls the new ground lessee), (ii) the release
of all of the Ground Lease Guarantors from all of the Ground
Lease Guarantees for the period occurring from and after the
applicable Closing, and (iii) with respect to the New York
Properties (as herein defined), an acknowledgement that the
Purchaser and/or Approved Assignee under the applicable Ground
Leases shall be afforded all of the benefits that otherwise
would have been available to the existing lessees under such
Ground Leases with respect to the tax abatements under the
PILOT provisions contained therein. The Ground Lessor Consents
shall also include an estoppel from each such Ground Lessor,
all of which shall be in form and of substance reasonably
satisfactory to Seller and Purchaser (provided, if the form of
such estoppel is contained in the applicable Ground Lease, the
parties shall accept such form from the applicable Ground
Lessor as is so provided in such documents; provided, however
that the foregoing proviso shall not affect, limit or negate
Purchaser's requirement that the applicable Ground Lessor
Consents contain the acknowledgements and requirements
provided in clauses (i) and (iii) of this Subparagraph (o)).
(p) On or before the applicable Closing, Purchaser shall have
received an estoppel from Seven Star SeaTac L.L.C. ("Seven
Star") in form reasonably acceptable to Purchaser, and an
acknowledgement or consent executed by Seven Star consenting
to the substitution of Purchaser as the Manager of Aero
SeaTac, the substitution of Purchaser as the Tax Matters
Member of Aero SeaTac, and such other matters as are
reasonably requested by Purchaser (the "Aero SeaTac Estoppel
and Consent").
(q) On or before the First Closing, Seller shall deliver to
Purchaser (i) a certified copy of the operating agreement (and
all amendments thereto) (the "ID Operating Agreement") for IAC
Developers L.L.C., a Delaware limited liability company ("IAC
Dev"), and one of the direct members of IAC, and a certified
copy of a fully executed amendment to the ID Operating
Agreement (the "Amendment"), which Amendment shall provide
that, notwithstanding anything to the contrary contained in
the Amendment, or elsewhere, in the event that any member of
IAC Dev shall fail to sign the Amendment, the Manager of IAC
Dev shall withhold all amounts otherwise distributable to such
member from the sale of the Properties and apply such amounts
solely to the satisfaction of such member's pro rata share of
the obligations described in Paragraph 12.9 hereof; provided,
however, that, upon the earlier of (A) the expiration of the
statute of limitations applicable to claims by Purchaser,
pursuant to Paragraph 12.9 hereof, or (B) the signature, by
such member, who shall have failed to sign the Amendment, of a
separate written agreement, pursuant to which such member
shall agree to remain responsible to return a portion and up
to all of the distributions such member received on account of
the distributions by IAC to IAC Dev from the sale of the
Properties to meet such member's pro rata share of the
obligations described in Paragraph 12.9 hereof, the Manager of
IAC Dev shall distribute to such member the remaining portion
of such withheld amounts, if any, relating to such member,
(ii) an indemnity, in form reasonably acceptable to Purchaser,
from Norman Perlmutter ("Perlmutter"), pursuant to which
Perlmutter shall agree that, in the event and solely to the
extent that (1) a member of IAC Dev that shall have failed to
sign the Amendment shall fail to pay any portion of such
member's pro rata portion of the obligations described in
Paragraph 12.9 hereof and (2) any such amounts otherwise shall
not have been paid to Purchaser on behalf of such member, then
Perlmutter shall agree to indemnify, defend and hold harmless
Purchaser for such portion of such member's pro rata portion
of the obligations described in Paragraph 12.9 hereof, and
(iii) a fully executed resolution by the direct members of IAC
in the form of Exhibit W attached hereto (the "Resolution").
21
(r) On or before the Closing with respect to New York - III, New
York - IV and HICTC, as the case may be, (A) Seller shall have
provided Purchaser with evidence reasonably satisfactory to
Purchaser that the applicable Improvements (it being
understood that with respect to New York - III and New York -
IV Improvements shall not include tenant improvements) (i)
have been substantially completed in accordance with Approved
Plans (as herein defined) except for so called "punchlist
items," i.e., minor details of construction, decoration or
mechanical adjustments which do not materially interfere with
a tenant's occupancy of the applicable premises (provided that
such punchlist items shall be diligently completed by Seller),
as evidenced by a certificate from the project architect in
form and content reasonably satisfactory to Purchaser, (ii)
have been accepted by any tenant under a Qualified Lease (as
provided in the definition of "Qualified Lease" provided
herein), (iii) have received all permits (provided that Seller
need not have obtained minor permits which are not necessary
for the use or occupancy of the applicable Property as long as
the failure to obtain any such minor permits will not expose
Purchaser to any fines, penalties or damages, whatsoever, and
Seller shall remain responsible for obtaining such minor
permits at its sole cost and expense, which obligation shall
survive the applicable Closing), licenses and approvals from
governmental entities having jurisdiction over the property,
including, without limitation, a final unconditional
Certificate of Occupancy, or its equivalent ("Final CO") for
the Improvements (which shall not include the tenant
improvements with respect to the New York - III and New York -
IV Improvements), permitting occupancy of the Improvements
(which shall not include the tenant improvements with respect
to the New York - III and New York - IV Improvements) by its
tenant(s); provided that Seller may provide Purchaser with a
temporary Certificate of Occupancy ("TCO") if customary in the
applicable jurisdiction so long as (x) such TCO permits
occupancy of the Improvements (which shall not include the
tenant improvements with respect to the New York - III and New
York - IV Improvements) by its tenant(s) and (y) Seller shall
continue to use its commercially reasonable efforts to obtain
a Final CO at Seller's sole cost and expense, and (B) Seller
shall have provided to Purchaser evidence reasonably
satisfactory to Purchaser that all utilities serving such
Property are located in a public right of way abutting such
Property and are connected to such Property without passing
over other property or, are within an easement which is
appurtenant to such property and insured by the Title Policy,
and are sufficient to satisfy the requirements of the Property
for its intended purpose.
(s) On or before the expiration of the Due Diligence Period,
Purchaser and Seller shall have agreed upon (i) the manner in
which Newco shall be compensated by Purchaser with respect to
the Properties acquired by Purchaser hereunder, (ii) the
manner in which Newco shall be compensated by Seller with
respect to all Second, Third and Fourth Closing Properties
until such time as such Properties are acquired by Purchaser
hereunder, (iii) the extent to which Newco shall enter into
leases with Purchaser with respect to space in the Properties
utilized by Newco after the applicable Closing, and (iv) the
form of property management agreement to be entered into
between Purchaser and Newco.
(t) On or before the applicable Closing, Seller shall have
delivered to Purchaser a written waiver in form reasonably
satisfactory to Purchaser of (i) Panalpina's (as herein
defined)
22
purchase option contained in the Houston Lease (as herein
defined) (provided that such waiver shall not be necessary if
the Title Company affirmatively insures that such purchase
option does not apply to Purchaser's purchase of the Property
owned by HICTC) and (ii) Massport's purchase option under the
Ground Lease for the Property leased by Boston.
(u) On or before the Third Closing, the New York City Economic
Development Corporation ("EDC") shall have delivered to Seller
and Purchaser in form satisfactory to Purchaser and Seller (i)
a written consent of EDC (the "EDC Consent") to the relevant
transactions contemplated hereby, including, without
limitation, the assignment to and assumption by Purchaser
and/or an Approved Assignee of all of Seller's rights,
liabilities and obligations arising from and after the Third
Closing under the applicable Ground Leases (which consent
shall include provisions that will permit the new ground
lessee under the Ground Lease (or the parent of the new ground
lessee if such new ground lessee is a single asset entity) to
convert from a limited liability company to a limited
partnership and/or to make transfers of interests in such
entity (or in any entity holding an interest in such entity)
as long as AMB Property L.P., a Delaware limited partnership,
owns, directly or indirectly, at least a twenty percent (20%)
interest in the new ground lessee (or such parent) and
directly or indirectly manages or controls the new ground
lessee), and (ii) a document in recordable form to be recorded
on or before the Third Closing confirming that Seller has
complied with those provisions of the Indenture dated May 31,
2001 between EDC and New York (the "EDC Deed") which the EDC
Deed references in connection with the delivery of a
recordable document confirming compliance with certain
provisions of the EDC Deed.
(v) On or before the First Closing, Seller shall have delivered to
Purchaser an opinion in form reasonably acceptable to
Purchaser from Stadtmauer, Bailkin LLP ("SB") with respect to
the PILOT and ICIP tax abatements (the "Tax Opinion"), and on
or before the Third Closing, Seller shall have delivered to
Purchaser an update of the Tax Opinion to the date of the
Third Closing in form reasonably acceptable to Purchaser from
SB.
(w) On or before the applicable Closing, Seller shall have
delivered to Purchaser in form satisfactory to Purchaser each
of the estoppels described on Exhibit V attached hereto (or
caused the Title Company to provide affirmative title
insurance with respect to the matters to be addressed in a
particular estoppel, which affirmative title insurance is
reasonably acceptable to Purchaser and paid for by Seller, in
which event Seller shall continue to use diligent commercially
reasonable efforts to obtain such missing estoppels after the
applicable Closing, which obligation shall survive the
applicable Closing).
The Conditions Precedent contained in Subparagraphs 4.1(a) through (w)
are intended solely for the benefit of Purchaser. Subject to the provisions of
Subparagraph 4.1(i), Articles 7 and 10 below and the last sentence of this
paragraph, if any of the Purchaser's Conditions Precedent is not satisfied on a
timely basis, Purchaser shall have the right in its sole discretion either to
waive in writing the Purchaser's Condition Precedent and proceed with the
purchase or terminate this Agreement. If, by the end of the Due Diligence
Period, Purchaser shall not have approved (or be deemed to have approved) or
waived in writing all of the Purchaser's Conditions Precedent which are to be
satisfied by the end of the Due
23
Diligence Period, then this Agreement shall automatically terminate, the Earnest
Money shall be returned to Purchaser, and thereafter neither Seller nor Buyer
shall have any further obligations hereunder, except as otherwise herein
provided; provided, however, that, notwithstanding anything contained herein to
the contrary, if Purchaser shall have delivered (or be deemed to have delivered)
the Approval Notice to Seller, then Purchaser shall be deemed to have approved
or waived all of Purchaser's Conditions Precedent that are required to have been
satisfied by the end of the Due Diligence Period. Furthermore, at any time after
the First Closing, in the event any of Purchaser's Conditions Precedent are not
satisfied on a timely basis with respect to a particular Property, Purchaser may
elect either to waive in writing the Purchaser's Condition Precedent and proceed
with the purchase or not to purchase the affected Property only, in which event
this Agreement shall terminate with respect to the affected Property only, the
Purchase Price shall be reduced by the amount of the Property Allocation
applicable to such Property, the Earnest Money allocated to such Property
pursuant to the Earnest Money Allocations shall be returned to Purchaser, and
Purchaser and Seller shall thereafter have no further obligation or liability
with respect to said affected Property, except as set forth herein; provided,
further, that if the First Closing has occurred and as of a subsequent outside
Closing Date any of Purchaser's Conditions Precedent have not been satisfied as
to a particular Property, then notwithstanding anything to the contrary
contained herein, Purchaser or Seller shall have the right to a reasonable
extension of the Closing Date for such Property (not to exceed ninety (90) days)
in order to provide additional time for such Conditions Precedent to be
satisfied.
4.2 In addition to the satisfaction by Purchaser of the remaining
obligations of Purchaser herein provided, Seller's obligation to consummate the
transactions contemplated hereby shall be subject to satisfaction of the
following (collectively, "Seller's Conditions Precedent")::
(a) On the applicable Closing Date, Purchaser shall not be in
material default in the performance of any covenant or
agreement to be performed by Purchaser under this Agreement.
(b) All representations and warranties made by Purchaser in this
Agreement shall be true and correct in all material respects
as of the Effective Date and as of the applicable Closing
Date.
(c) On the applicable Closing Date, there shall exist no pending
action, suit or proceeding with respect to Purchaser, before
any court or administrative agency, which shall seek to
restrain or prohibit, in whole or part, or to obtain damages
or a discovery order with respect to, this Agreement or the
consummation of the transactions contemplated hereby, other
than any of the foregoing that shall exist between Purchaser
and Seller with respect to this Agreement and/or the
transactions contemplated hereby.
(d) As of the Second Closing Date, each Lender shall have
delivered to Seller the Lender Consent.
(e) As of the Second Closing Date, each of the Ground Lessors
shall have delivered to Seller the Ground Lessor Consent.
(f) On or before the expiration of the Due Diligence Period,
Headlands and IAC shall have formed Newco, which entity shall
be duly organized, validly existing and in good standing
24
under the laws of the State of Delaware and qualified to do
business in all jurisdictions in which it is required to do
business.
(g) On or before the expiration of the Due Diligence Period,
Headlands and IAC shall have agreed on the Newco LLC
Agreement. On or before the First Closing, Headlands shall
have made its initial capital contributions thereto, all
representations and warranties of Headlands contained in the
Newco LLC Agreement shall be true, correct and complete in all
material respects, and Headlands shall not otherwise be in
default thereunder.
(h) On or before the expiration of the Due Diligence Period,
Purchaser, IAC and certain other related parties shall have
agreed on the Strategic Alliance Agreement. On or before the
First Closing, Purchaser, IAC and certain other related
parties shall have entered into the Strategic Alliance
Agreement and no party to such agreement other than IAC shall
be in default thereunder.
(i) On or before the expiration of the Due Diligence Period,
Purchaser and Seller shall have agreed upon (i) the manner in
which Newco shall be compensated by Purchaser with respect to
the Properties acquired by Purchaser hereunder, (ii) the
manner in which Newco shall be compensated by Seller with
respect to all Second, Third and Fourth Closing Properties
until such time as such Properties are acquired by Purchaser
hereunder, (iii) the extent to which Newco shall enter into
leases with Purchaser with respect to space in the Properties
utilized by Newco after the applicable Closing, and (iv) the
form of property management agreement to be entered into
between Purchaser and Newco.
The Seller's Conditions Precedent contained in Subparagraphs 4.2(a) through (i)
are intended solely for the benefit of Seller. Subject to the provisions of
Article 7, if any of the Seller's Conditions Precedent is not satisfied, Seller
shall have the right, in its sole discretion, either to waive in writing such
Seller's Conditions Precedent and proceed with the sale or terminate this
Agreement (provided, that Seller shall not have the right to terminate this
Agreement as a result of the failure of the conditions contained in
Subparagraphs 4.2(d) and/or 4.2(e) if Purchaser shall have elected to terminate
this Agreement as to only the affected Property or Properties as provided in the
Agreement), whereupon the Earnest Money allocated to such Property pursuant to
the Earnest Money Allocations shall be returned to Purchaser, and thereafter
neither Seller nor Buyer shall have any further obligations hereunder, except as
otherwise herein provided.
ARTICLE 5
CLOSING
5.1 Provided that all conditions precedent to a particular Closing
set forth in this Agreement shall have been satisfied, or waived, the applicable
Closing shall take place at the main office of the Title Company in the San
Francisco metropolitan area, whereupon Purchaser agrees to deliver the portion
of the Cash required to be paid on the applicable Closing Date to the Title
Company no later than 5:00 p.m. (San Francisco, California time) on the last
business day prior to the applicable Closing Date (provided, that such Cash
portion for the First Closing shall be delivered no later than noon (San
Francisco, California time) on the last business day prior to the Closing Date
for the First Closing), and
25
directing the Title Company to deposit the same in Seller's designated account
by 12:00 noon (San Francisco, California time) on the applicable Closing Date;
provided, however, that, if any of the Lender Consents or the Ground Lessor
Consents shall not have been executed and delivered by the relevant Lender or
Ground Lessor, as the case may be, or any of the other Conditions Precedent have
not been satisfied or waived as of the applicable Closing, then the applicable
Closing, for only such Property(ies) with respect to which such Lender Consent
and/or Ground Lessor Consent, as the case may be, shall not have been executed
and delivered, or such other Conditions Precedent shall not have been satisfied
or waived, shall be postponed, until five (5) business days after such Lender
Consent and/or Ground Lessor Consent to Purchaser, as the case may be, shall
have been so executed and delivered, or such other Conditions Precedent shall
have been satisfied or waived, but in no event shall the applicable Closing
occur later than ninety (90) days after the original Closing Date therefor.
Except as otherwise expressly provided in this Agreement, as used herein, the
term "Closing" shall mean either the First Closing, the Second Closing, the
Third Closing, the Fourth Closing or the consummation of any of the sales
contemplated herein at another Closing, as applicable, and the term "Closing
Date" shall mean the date of either the First Closing, the Second Closing, the
Third Closing, the Fourth Closing or such other date upon which a Closing
actually occurs, as applicable. Purchaser and Seller and their respective
employees, agents, attorneys and consultants, shall reasonably cooperate with
each other to facilitate the consummation of the transactions contemplated
hereby on or before the applicable Closing Date.
5.2 Each Closing, as well as the disbursement of funds in
connection with the transactions contemplated hereby, shall take place
simultaneously through the Title Company by means of a so-called "New York style
closing". For purposes of this Agreement, a "New York style closing" shall be a
closing with the concurrent delivery of the documents and instruments
contemplated hereby and payment of the Purchase Price.
ARTICLE 6
REPRESENTATIONS, WARRANTIES, AND COVENANTS
6.1 Seller hereby represents and warrants to and covenants with
Purchaser as follows (such representations and warranties being herein referred
to as the "Property Representations"):
(a) The rent roll (the "Rent Roll") as set forth in the Side
Letter Agreement is a complete list of all leases, subleases,
licenses and other agreements to use, occupy and/or improve
any part of the Properties, in which any Company or Aero
SeaTac has any right, title and/or interest as landlord, as of
the Effective Date (collectively, the "Leases"), and there are
no other agreements in favor of any person to use, occupy
and/or improve any part of the Properties, which would have a
materially adverse effect on any Seller, Aero SeaTac or any
Property, as the case may be; provided, however that any lease
shown on the Rent Roll as being a lease "propect" or "vacant"
is to be considered vacant space. Except as otherwise stated
on the Rent Roll, and except for such matters as would not
have a materially adverse affect on any Seller, Aero SeaTac or
any Property, as the case may be, all rental and other
payments due under the Leases as of the date thereof have been
paid in full, no rents or other payments have been collected
more than one (1) month in advance and no rents or other
deposits are held by any Seller or Aero SeaTac, except prepaid
rent
26
for the current month and security deposits described thereon.
To the best knowledge of Seller, as of the date of the Rent
Roll, the Tenants under the Leases were not in default
thereunder and each Company, as well as Aero SeaTac, that
constitutes the landlord thereunder, materially has complied
with its respective obligations under the Leases, except as
would not have a materially adverse effect on any Seller, Aero
SeaTac or any Property, as the case may be.
(b) All service and maintenance contracts, and equipment leases,
in effect as of the Effective Date, for purposes of operating
the Properties, and with respect to which a Company or Aero
SeaTac is a party (but excluding any management and leasing
agreements), are listed in the Side Letter Agreement
(collectively, the "Service Contracts"), and neither any
Company or Aero SeaTac, nor, to the best knowledge of Seller,
any other party thereto, is in default thereunder, beyond all
applicable notice and/or cure periods, which would have a
materially adverse effect on any Seller, Aero SeaTac or any
Property, as the case may be.
(c) All material items of Personal Property owned by any Seller or
Aero SeaTac that are used for purposes of operating the
Properties, as of the Effective Date, are set forth in the
Side Letter Agreement.
(d) To the best knowledge of Seller, except as disclosed in any of
the items, documents and/or materials delivered or made
available to Purchaser by Seller pursuant to this Agreement,
including, without limitation, Paragraph 2.1 hereof
(collectively, the "Due Diligence Items"), other than (i) the
Leases, (ii) the New Leases, if applicable, (iii) the Assumed
Loan Documents, (iv) the Ground Leases, (v) the Service
Contracts, (vi) the New Service Contracts, if applicable, and
(vii) the operating agreements, certificates of formation,
articles of organization, articles of incorporation, by-laws,
certificates, if any, representing the Interests, and other
organizational documents in effect with respect to the
Companies and Aero SeaTac, no Company or Aero SeaTac is a
party to any material contract or other agreement, which shall
not be terminated as of the Closing. All Service Contracts,
and New Service Contracts, if applicable, which can be
terminated on thirty (30) day notice without penalty or
termination fee shall be assigned to Purchaser at Closing and
all other Service Contracts and New Service Contracts and any
management and leasing agreements shall be terminated by
Seller as of the applicable Closing at Seller's expense.
(e) To the best knowledge of Seller, neither Seller nor Aero
SeaTac has received any written notice of any (i) reduction or
curtailment of any utility service supplied to the Properties,
(ii) violation of any ordinance, statute, or regulation
affecting the Properties, (iii) cancellation or suspension of
any Certificate of Occupancy for any portion of the Properties
or (iv) assessments for real estate tax purposes affecting the
Properties, which in any case would have a materially adverse
effect on any Seller, Aero SeaTac or any Property, as the case
may be.
(f) Except as provided in the Leases, the Ground Leases and the
operating agreement for Aero SeaTac, neither any Seller nor
Aero SeaTac is subject to a right of first refusal, redemption
right, option to purchase, or management or leasing contract
in favor of any party, as to the Properties, other than the
property management agreements that presently exist in favor
of
27
Seller, all of which shall be terminated as of the Closing
Date.
(g) Except as disclosed in the Due Diligence Items, there are no
actions, suits, litigation or proceedings pending, or, to the
best knowledge of Seller, threatened, against or relating to
Seller, Aero SeaTac or any Property in any court or before any
administrative agency, which, if ruled against Seller or Aero
SeaTac, as the case may be, would have a materially adverse
effect on any Seller, Aero SeaTac or any Property, as the case
may be, or the ability of Seller to perform its obligations
under this Agreement.
(h) To the best knowledge of Seller, all items required, as of the
Effective Date, to have been filed, pursuant to any applicable
law, judgment, order, writ, injunction, decree, rule or
regulation of any court, administrative agency or other
governmental authority, or any determination or award of any
arbitrator, have been so filed in accordance therewith (where
the failure to so file would have a material adverse effect on
any Seller, Aero SeaTac or any Property, as the case may be,
or the ability of Seller to perform its obligations under this
Agreement).
(i) All of the representations and warranties of Seller appearing
in this Paragraph 6.1 are true and correct in all material
respects as of the Effective Date.
(j) To the best knowledge of Seller, neither Seller nor Aero
SeaTac is in default, beyond the expiration of any applicable
notice and/or cure period, in the performance of any covenant
or agreement to be performed hereunder or under any Assumed
Loan Document, Ground Lease, Ground Lease Guarantee or the EDC
Deed, as the case may be, except any default as would not have
a materially adverse effect on any Seller, Aero SeaTac or on
any Property, as the case may be, and neither Seller nor Aero
SeaTac has received written notice of such default. Seller has
delivered to Purchaser true, correct and complete copies of
all of the Assumed Loan Documents, Ground Leases, Ground Lease
Guarantees and Leases.
(k) Except as disclosed in the Due Diligence Items, to the best
knowledge of Seller, (i) there are no material physical or
mechanical defects of any of the Properties, including,
without limitation, the structural and load bearing components
of any of the Properties, the roof(s), the parking lot(s), the
plumbing, heating, air conditioning and electrical and life
safety systems, and (ii) all such items are in good operating
condition and repair and in compliance with all Laws (as
herein defined), including, without limitation, applicable
building codes, environmental, zoning and land use laws,
except where such non-compliance would not have a material
adverse effect on the applicable Property.
(l) To the best knowledge of Seller, the use and operation of all
of the Properties are in material compliance with all Laws.
Seller shall not commit (and Seller shall not permit Aero
SeaTac to commit) or permit to occur, any action which will
result in such a violation between the date hereof and the
applicable Closing.
(m) To the best knowledge of Seller, all water, sewer, gas,
electric, telephone, and drainage facilities and all other
utilities required by Law or by the normal use and operation
of the Properties are and at the time of Closing will be
installed to the property lines of the Land,
28
are duly connected and are adequate to service the Properties
for their respective current uses and to permit material
compliance with all Laws, except where such non-compliance
would not have a material adverse effect on the applicable
Property.
(n) To the best knowledge of Seller, Seller or Aero SeaTac have
obtained all licenses, permits, variances, approvals,
authorizations, easements and rights of way, including proof
of dedication (collectively, "Licenses"), required from all
governmental authorities having jurisdiction over the
Properties or from private parties for the intended use,
operation and occupancy of the Properties and to insure
vehicular and pedestrian ingress to and egress from the
Properties, except where the failure to obtain any such
Licenses would not have a material adverse effect on the
Property.
(o) To the best knowledge of Seller, except as disclosed in the
Due Diligence Items, none of the Properties is in material
violation of any federal, state, local or administrative
agency ordinance, law, rule, regulation, order or requirement
relating to environmental conditions or Hazardous Material
("Environmental Laws"). From and after the date on which any
Seller or Aero SeaTac, as the case may be, took title to any
of the Properties, (i) neither Seller nor Aero SeaTac, and to
the best knowledge of Seller, any third party, except as
disclosed in the Due Diligence Items, has (A) used,
manufactured, generated, treated, stored, disposed of, or
released any Hazardous Material in, at, on, under or about any
of the Properties in material violation of any Environmental
Law, (B) or transported any Hazardous Material over any of the
Properties in material violation of any Environmental Law.
Neither Seller nor Aero SeaTac, nor to the best knowledge of
Seller any third party has installed, used or removed any
storage tank on or from, as the case may be, in connection
with any of the Properties, except in material compliance with
all Environmental Laws. To the best knowledge of Seller,
except as disclosed in the Due Diligence Items, (1) there are
no storage tanks or wells (whether existing or abandoned)
located in, at, on, under or about any of the Properties and
(2) no storage tank has been installed on, used on or removed
from or used in connection with any of the Properties in
material violation of any Environmental Laws. To the best
knowledge of Seller, except as disclosed in the Due Diligence
Items, the Properties do not consist of any building materials
that contain Hazardous Material. For the purposes hereof,
"Hazardous Material" shall mean any substance, chemical, waste
or other material which is listed, defined or otherwise
identified as "hazardous" or "toxic" under any federal, state,
local or administrative agency ordinance or law, including,
without limitation, the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C.Sections 9601 et seq.
and the Resource Conservation and Recovery Act, 42 U.S.C.
Sections 6901 et seq., or any regulation, order, rule or
requirement adopted thereunder, as well as any formaldehyde,
urea, polychlorinated biphenyls, petroleum, petroleum product
or by product, crude oil, natural gas, natural gas liquids,
liquefied natural gas, or synthetic gas usable for fuel or
mixture thereof, radon, asbestos, and "source," "special
nuclear" and "by product" material as defined in the Atomic
Energy Act of 1985, 42 U.S.C.Sections 3011 et seq.
(p) Except as otherwise provided with respect to the
Holdback/Adjustment Properties, as of the applicable Closing,
the Companies and Aero SeaTac shall have substantially
completed all construction and punch-list items with respect
to the initial development and construction of the applicable
Improvements (except for any tenant improvement work
29
which is in process at the time of the applicable Closing and
for which Seller is responsible for completing and except for
the work described in the Side Letter Agreement as work that
Seller shall not be responsible for completing by a Closing or
thereafter (the "Seller Non-Completion Work")).
(q) To the best knowledge of Seller, (i) except as disclosed in
the Due Diligence Items, no Tenant has indicated to any Seller
or Aero SeaTac either orally or in writing its intent to
terminate its Lease prior to expiration of the term of such
Lease, and (ii) no Ground Lessor has indicated to any Seller
or Aero SeaTac either orally or in writing its intent to
terminate its Ground Lease prior to expiration of the term of
such Ground Lease.
(r) Except as disclosed in the Due Diligence Items, there are no
petitions, whether voluntary, or otherwise, pending, on behalf
of, or against, or, to the best knowledge of Seller,
threatened against, Seller or any of the Tenants under the
bankruptcy laws of the United States or under any insolvency,
bankruptcy or receivership laws of any state or other
jurisdiction.
(s) No brokerage or similar fee is due and unpaid by Seller or
Aero SeaTac with respect to the Leases. No brokerage or
similar fee shall be due or payable from and after the Closing
with respect to the Leases, including, without limitation, on
account of the exercise of any renewal, extension or expansion
options arising under the Leases, except as otherwise set
forth on the commission schedule attached to the Side Letter
Agreement.
6.2 Entity/PILOT/ICIP Representations. Seller hereby represents
and warrants to Purchaser as follows (such representations and warranties being
herein referred to as the "Entity/PILOT/ICIP Representations"):
(a) Each Seller and Aero SeaTac is a limited liability company,
duly organized and validly existing and in good standing,
under the laws of the State of Delaware, and each Seller
(other than Seattle - II) has good, valid and marketable title
to the Properties, free and clear of all encumbrances.
(b) Seattle - II is the direct owner of fifty percent (50%)
membership interest in Aero SeaTac, and, to the best knowledge
of Seller, Seven Star is the sole owner of the remaining fifty
percent (50%) membership interest in Aero SeaTac.
(c) No Seller or Aero SeaTac is a "foreign person" within the
meaning of Section 1445(f)(3) of the Code.
(d) Aero SeaTac is a limited liability company, duly organized,
validly existing and in good standing under the laws of the
State of Delaware, and is duly qualified and in good standing
in the State of Washington.
(e) Aero SeaTac has the authority to own, operate and lease its
assets, and to carry on its business as the same currently is
being conducted.
(f) At the applicable Closing, Seattle - II shall own the
Interests free and clear of all liens, charges, encumbrances,
claims, rights of others, mortgages, pledges or security
interests;
30
and the Interests are not subject to any agreements or
understandings among any persons with respect to the voting or
transfer thereof, other than the operating agreement of Aero
SeaTac. As of the applicable Closing, Seattle - II shall have
the full legal right to sell, assign, and transfer the
Interests and, upon delivery of the Assignment from Seattle -
II will have title to one hundred percent (100%) of Seattle -
II's Interests, free and clear of any liens, charges,
encumbrances, pledges, security interests, taxes, or known
rights of others.
(g) Seller has the full, power and authority to execute this
Agreement and to consummate the transactions contemplated
hereby in accordance with the terms and conditions hereof,
and, upon the execution hereof, this Agreement shall be
binding upon Seller and enforceable in accordance with its
terms. To the best knowledge of Seller, none of the execution,
delivery and/or performance of this Agreement (or of any
document or instrument to be executed or delivered pursuant to
the terms hereof) will result in the violation of any
contractual obligation of Seller to any third party, or
conflict with, constitute an event of default under, or result
in a breach or violation of, any such document or instrument,
or of any applicable law, judgment, order, writ, injunction,
decree, rule or regulation of any court, administrative agency
or other governmental authority, or any determination or award
of any arbitrator, which would have a materially adverse
effect on any Seller, Aero SeaTac or any Property, as the case
may be, other than the Assumed Loan Documents, the documents
evidencing and/or securing the Other Loans (the "Other Loan
Documents") and the Ground Leases.
(h) The Side Letter Agreement contains (i) a copy of the audited
nonconsolidated financial statements for Aero SeaTac for the
2002 calendar year and (ii) for the first two quarters of 2003
a true and correct copy of an unaudited internally prepared
income statement, balance sheet and cash flow statement of
Aero SeaTac (collectively the "Financial Statements").
(i) Aero SeaTac does not own, control or hold with the power to
vote, directly or indirectly, any shares or capital stock or
beneficial interest in any corporation, partnership, limited
liability company, association, joint venture or other entity.
(j) As of the applicable Closing Date, Aero SeaTac will not have
any liabilities (whether accrued, fixed, absolute, conditional
or determined) which Purchaser would not have assumed under
this Agreement had Purchaser acquired the Seattle - II
Property (as defined below) in fee simple rather than by means
of acquiring the Interests, except for the liabilities (i)
referred to as the "Lease and Contract Liabilities" (as
hereinafter defined), and/or (ii) under the Assumed Loans, the
Assumed Loan Documents, the Ground Leases or the
Organizational Documents (as herein defined), and/or (iii)
incurred in the ordinary course of business after the Due
Diligence Period and disclosed to Purchaser in writing
promptly after incurring such liability but no later than the
applicable Closing (and, if such liability, when combined with
all other such liabilities, exceeds $10,000, Purchaser's
consent shall be required prior to Aero SeaTac incurring such
liability). For purposes of this Agreement, the term "Lease
and Contract Liabilities" shall mean the liabilities and
obligations of Aero SeaTac under the Leases and the New
Leases, if applicable, and Service Contracts and New Service
Contracts, if applicable, which are
31
not required to be terminated as of Closing with respect to
the Seattle II Property, but only to the extent such
liabilities and obligations are required to be performed and
satisfied after the applicable Closing Date (except for those
liabilities and obligations to be performed prior to the
Closing Date for which Purchaser receives a credit from Seller
at the applicable Closing)(collectively, "Lease and Contract
Liabilities").
(k) Except as disclosed in the Due Diligence Items, there are no
petitions, whether voluntary, or otherwise, pending, on behalf
of, or against, or, to the best knowledge of Seller,
threatened against, Aero SeaTac under the bankruptcy laws of
the United States or under any insolvency, bankruptcy or
receivership laws of any state or other jurisdiction.
(l) There are no employees of Seller, Aero SeaTac and/or the
Properties, or employment contracts or other employment
obligations, to which the Purchaser and/or the Properties, or
any subsequent owner(s) thereof, shall be obligated.
(m) Aero SeaTac has never had an interest in any real property
other than its interest in that certain leasehold interest in
real property located at 2427 S. 161st Street , Seattle, WA,
and ground leased from the Port of Seattle (the "Seattle - II
Property").
(n) Aero SeaTac, directly or indirectly, has never (a) operated or
managed a lodging facility or health care facility or (b)
provided to any Person rights to any brand name under which
any lodging facility or health care facility is operated. For
purposes hereof, "Person" shall mean an individual, trust,
corporation, partnership, limited liability company and any
other type of entity.
(o) Aero SeaTac has no safe deposit boxes which will be
transferred to the Purchaser with the Interests.
(p) Aero SeaTac has timely filed or caused to be timely filed all
federal, state and local tax returns and informational filings
for taxes, and all such tax returns and informational filings
are, in all material respects, proper, complete and accurate.
Copies of all available tax returns and informational filings
of Aero SeaTac existing as of the date hereof have been
provided or made available to Purchaser and any subsequent tax
returns and informational filings prepared or made prior to
the applicable Closing Date shall be delivered to Purchaser as
they become available. Aero SeaTac has withheld and/or paid
all taxes which have become due pursuant to Aero SeaTac's tax
returns and all other taxes, assessments and other
governmental charges which have become due and are imposed by
law upon Aero SeaTac or any of its property. Except as
otherwise set forth in any of the Title Reports, neither Aero
SeaTac nor Seller has received any written notice of
deficiency or assessment with respect to Aero SeaTac and the
Seattle - II Property from any taxing authorities. There is no
litigation, governmental or other proceeding (formal or
informal) or investigation pending or, to the Seller's
knowledge, threatened with respect to any such federal, state
or local income or other taxes, tax returns or informational
filings of Aero SeaTac.
(q) The Side Letter Agreement sets forth the list of all insurance
policies of Aero SeaTac by which Aero SeaTac and the Seattle -
II Property is now covered or, to the best knowledge
32
of Seller has ever been covered. Copies of certificates of
insurance for all currently effective policies have already
been provided or made available to the Purchaser. To the best
knowledge of Seller, Aero SeaTac has not received any written
notice from any insurance carrier of its present intent to
discontinue any insurance coverage presently in effect.
(r) Except as may be expressly provided in Aero SeaTac's operating
agreement, there are no (A) existing liabilities that require
Aero SeaTac to indemnify its members for acts or omissions by
such persons acting on behalf of Aero SeaTac, or (B) existing
agreements to provide indemnification for such liabilities.
(s) Exhibit U attached hereto sets forth a list of Aero SeaTac's
operating agreements, certificates of formation, articles of
organization, certificates, if any, representing the
Interests, and other organizational documents in effect with
respect to Aero SeaTac (collectively, the "Organizational
Documents"), and there have been no amendments or
modifications to such Organizational Documents except as shown
on Exhibit U. Seller has delivered to Purchaser true, correct
and complete copies of all of the Organizational Documents. To
the best knowledge of Seller, except as disclosed in any of
the Due Diligence Items, other than the Organizational
Documents, Aero SeaTac is not a party to any material contract
or other agreement which shall not be terminated as of the
Closing, other than any New Service Contracts, if applicable.
(t) Seller has not granted any warrants, rights to subscribe for,
options or rights of first refusal or first opportunity to any
party to acquire any of the Interests in Aero SeaTac except
pursuant to this Agreement.
(u) To the best of Seller's knowledge, (i) to the fullest extent
possible, as of the Effective Date Seller has taken and as of
the applicable Closing Date Seller shall have taken all
actions necessary to obtain the maximum benefits available to
the applicable Properties of PILOT, as such term is defined in
the leases (the "New York Leases") between New York, New York
- II, New York - III, New York - IV and New York Industrial
Development Agency, a corporate governmental agency
constituting a body corporate and politic and a public benefit
corporation of the State of New York ("IDA"), and Seller has
done nothing that does, or with the passage of time will,
constitute a Recapture Event, as such term is defined in the
Master Guaranty dated May 1, 2001 between IAC and IDA or to
otherwise cause the real estate tax abatements provided in the
New York Leases to terminate or be subject to recapture, (ii)
the Facility (as defined in each of the New York Leases) has
been determined to be tax exempt, and (iii) and STRET (as
defined in each of the New York Leases) is zero dollars ($0).
(v) To the best of Seller's knowledge, to the fullest extent
possible, as of the Effective Date Seller has taken and as of
the applicable Closing Date Seller shall have taken all
actions necessary to be eligible for the maximum real estate
tax benefits available to the applicable Properties under the
New York City Industrial and Commercial Incentive Program as
outlined on the Side Letter Agreement ("ICIP")(the "ICIP
Outline") and Seller has done nothing that has, or with the
passage of time will, result in a loss of such
33
eligibility or such benefits.
(w) The members of IAC who have signed this Agreement and/or the
Resolution for the purposes of joining in this Agreement to
agree to the liability obligations set forth in Paragraph 12.9
hereof are all of the direct members of IAC.
(x) All of the representations and warranties of Seller appearing
in this Paragraph 6.2 are true and correct in all material
respects as of the Effective Date.
6.3 Purchaser hereby represents and warrants to Seller as follows:
(a) There are no actions, suits or proceedings pending or, to the
best knowledge of Purchaser, threatened, against or as to
Purchaser in any court or before any administrative agency.
(b) Other than Purchaser's Approval, Purchaser shall require no
other approval or authorization to execute this Agreement
and/or consummate the same, and upon the execution hereof,
this Agreement shall be binding upon Purchaser and enforceable
in accordance with its terms.
(c) To the best knowledge of Purchaser, none of the execution,
delivery and/or performance of this Agreement (or of any
document or instrument to be executed or delivered pursuant to
the terms hereof) will result in the violation of any
contractual obligation of Purchaser to any third party, or
conflict with, constitute an event of default under, or result
in a breach or violation of, any such document or instrument,
or of any applicable law, judgment, order, writ, injunction,
decree, rule or regulation of any court, administrative agency
or other governmental authority, or any determination or award
of any arbitrator.
(d) Purchaser has received a copy of (i) the Florida Energy
Efficient Rating System Brochure and (ii) the California
Natural Hazards Disclosure Report, with respect to each tax
parcel that comprises each of the Properties located in the
State of California.
All of the representations and warranties contained in this Paragraph
6.3 shall be deemed to be remade by Purchaser as of the applicable Closing Date,
which representations and warranties shall not be merged into this Agreement and
shall survive the Closing or the termination of this Agreement, as applicable,
and run in favor of, and benefit, Seller and its successors and assigns.
6.4 All representations and warranties by the respective parties
contained herein or made in writing pursuant to this Agreement are intended to
and shall remain true and correct as of the time of the applicable Closing,
shall be deemed to be material, and, together with all conditions, covenants and
indemnities made by the respective parties contained herein or made in writing
pursuant to this Agreement (except as otherwise expressly limited or expanded by
the terms of this Agreement), shall survive the execution and delivery of this
Agreement and the applicable Closing; provided, however, that notwithstanding
the foregoing, Seller's and Purchaser's representations and warranties shall be
limited as follows: (i) the Property Representations and Purchaser's
representation and warranty set forth in Subparagraph 6.3(a) shall survive the
applicable Closing for a period of one (1) year, and (ii) the Entity/PILOT/ICIP
Representations, and Purchaser's representations and warranties set forth in
34
Subparagraphs 6.3(b) and 6.3(c) shall have unlimited survival (except as limited
by any applicable statute of limitations). For purposes hereof, any reference to
"knowledge" or "best knowledge" of Seller shall mean the actual knowledge as of
the date of such statement of Doug Krahnke (with respect to Property related
matters only), Jerry Powalish (with respect to construction related matters
only), Dan Johnson (with respect to construction related matters only),
Alexander Kurrelmeier, Craig Arnson, Joseph Perlmutter, Jacob Citrin and Norman
Perlmutter (and any individuals who hereafter shall assume all or substantially
all of the duties and responsibilities of such individuals), without any
independent duty of diligence or investigation or any constructive, imputed
and/or deemed knowledge, which individuals, under no circumstances, shall be
subject to any personal liability of any kind whatsoever.
Notwithstanding anything to the contrary herein contained, Purchaser
shall not assume any liability with respect to any construction defects due to
Purchaser having acquired an Interest in Aero SeaTac, which liability Purchaser
would not have assumed had Purchaser acquired the Seattle - II Property in fee
simple rather than by means of acquiring an Interest. Any liability for such
construction defects shall be borne by Seller, subject to the provisions of
Paragraph 12.9 hereof. Seller shall retain, on a non-exclusive basis with
Purchaser, all rights to seek recovery of these amounts from any third party
that actually may have been responsible for any such losses, and Purchaser shall
cooperate with those efforts at no cost or expense to Purchaser.
Notwithstanding anything to the contrary herein contained, to the
extent that Purchaser shall have actual knowledge or shall be "deemed to have
known" prior to the expiration of the Due Diligence Period that any of the
representations and/or warranties made herein by Seller shall be inaccurate,
untrue and/or incorrect in any respect, such representations and warranties
shall be deemed to have been modified to reflect such knowledge or deemed
knowledge, as the case may be. For purposes of this Agreement, Purchaser shall
be "deemed to have known" of the existence of a fact or circumstance, to the
extent that (a) this Agreement, (b) the Due Diligence Materials listed on
Exhibit E, (c) any estoppel certificate executed by any Tenant or Seller and
delivered to Purchaser, (d) the Side Letter Agreement, or (e) any tests,
studies, reports, analyses, appraisals, verifications and/or evaluations
prepared by or for Purchaser or any of Purchaser's Consultants and delivered to
Purchaser, or otherwise obtained by Purchaser or any of Purchaser's Consultants,
shall disclose a fact or circumstance, or otherwise contain information, that
shall be inconsistent in any way with any representation and/or warranty made
herein by Seller.
If, after the expiration of the Due Diligence Period, but prior to the
applicable Closing, Purchaser shall know or be deemed to have known that any of
the representations and/or warranties made herein by Seller shall be untrue,
inaccurate and/or incorrect in any material respect, Purchaser shall give Seller
written notice thereof within five (5) business days of obtaining actual
knowledge (but, in any event, prior to the applicable Closing). If, at or prior
to the applicable Closing, Seller shall obtain actual knowledge that any of the
representations or warranties made herein by Seller shall be untrue, inaccurate
and/or incorrect in any material respect, Seller shall give Purchaser written
notice thereof within five (5) business days of obtaining such knowledge (but,
in any event, prior to the applicable Closing). In either such event, Seller
shall have the right to cure such breach and shall be entitled to a reasonable
adjournment of the Closing (not to exceed ten (10) business days) for such
purpose. On the other hand, if Seller shall be unable to so cure any such
breach, or, if Seller shall elect, in its sole and absolute discretion, not to
cure such breach, by giving Purchaser written notice of such
35
election, within two (2) business days of obtaining actual knowledge of such
breach, then Purchaser, as its sole and exclusive remedy, as a result of any
such breach, shall elect, by giving written notice to Seller, within one (1)
business day of receiving written notice from Seller that Seller shall have
elected not to cure such breach, to either (a) waive such breach and consummate
the transactions contemplated hereby, without any reduction of or credit against
the Purchase Price, or (b) terminate this Agreement with respect to the
applicable Property or Properties unless such uncured breach was a wilful and
intentional breach by Seller in which event Purchaser may terminate this
Agreement with respect to all of the Properties, as of the date of such notice,
and receive a refund of the Earnest Money allocated to the applicable
Properties, whereupon no party shall have any further obligations to the other
hereunder, except as otherwise herein provided including, without limitation,
the provisions of Paragraph 7.1.
Notwithstanding anything to the contrary herein contained, the
liability of Seller for any breach(es) of the representations and warranties
made by Seller herein or in any documents and/or instruments executed by Seller
at the Closing shall be limited as set forth in Paragraph 12.9; provided,
however, that, if a Closing shall occur, Purchaser hereby expressly waives,
relinquishes and releases any right and/or remedy available to it at law, in
equity and/or under this Agreement, to make a claim against Seller for damages
that Purchaser may incur with respect to the applicable breach(es), or to
rescind this Agreement and the transactions contemplated by this Agreement, as a
result of any of the fact that any of such representations and/or warranties
shall have been untrue, inaccurate and/or incorrect, if Purchaser actually knew
or shall be deemed to have known such representation or warranty was untrue,
inaccurate and/or incorrect at the time of the applicable Closing.
Purchaser acknowledges and agrees that the Due Diligence Period
provides Purchaser adequate opportunity to inspect and investigate each and
every aspect of the Properties and the Interests. Purchaser acknowledges and
agrees that, except for Seller's express representations and warranties set
forth in this Agreement, Purchaser is purchasing the Interests, Sale Properties
or leasehold interests in the Leased Properties based solely on Purchaser's
inspection and investigation of the Properties and the Interests, Sale
Properties and the Leased Properties, or its opportunity to do so, and Purchaser
is purchasing the Interests, Sale Properties and leasehold interests in the
Leased Properties without relying on any representations or warranties, express
or implied, of any kind, other than as specifically set forth in this Agreement.
Without limiting the foregoing, Purchaser expressly acknowledges and agrees
that, except for Seller's express representations and warranties set forth in
this Agreement, neither Seller nor Seller's agents have made any representations
or warranties as to any matters concerning the Properties, including, but not
limited to, its intended use, the condition of the Properties, square footage,
layout, development rights and exactions, permissible uses, utilities, zoning,
soil, subsoil, drainage, compliance with applicable laws, the presence of
Hazardous Materials or any other matters.
6.5 Seller hereby covenants and agrees with Purchaser that, from
and after the Effective Date, Seller shall (and Seller shall cause Aero SeaTac
to) conduct their respective businesses involving the Properties as follows, and
during such period Seller shall (and Seller shall cause Aero SeaTac to) (except
as otherwise herein provided to the contrary):
(a) Continue, up to the applicable Closing, to operate, maintain,
repair and/or replace the Properties in the same manner as on
the Effective Date in all material respects, subject to
ordinary wear and tear; provided, however, that none of
Sellers or Aero SeaTac shall have any duty to repair, replace
or restore any of the Properties upon any damage or
36
destruction, or condemnation, except as otherwise herein
provided.
(b) Refrain, (i) up to expiration of the Due Diligence Period from
entering into any new or renegotiated lease (collectively,
"New Leases") regarding the Properties, without the prior
written approval of Purchaser, which approval shall not be
unreasonably withheld, conditioned or delayed; provided,
however, that, with respect to potential New Leases regarding
the Properties to which Seattle, Seattle - IV and Seattle - V
hold fee simple title (collectively, the "Seattle
Properties"), and the Third Closing Holdback/Adjustment
Properties, Seller only shall be required at least three (3)
days prior to the expiration of the Due Diligence Period to
(A) give Purchaser written notice of the economics of any
potential New Lease, exclusive of the name of the prospective
tenant thereunder, and (B) solicit feedback from Purchaser
with respect to such potential New Lease, but Purchaser's
approval of such potential New Lease shall not be required for
Seller to execute any such potential New Lease, and (ii) from
and after the expiration of the Due Diligence Period, from
entering into any New Lease regarding any Property, including,
without limitation, the Seattle Properties and the Third
Closing Holdback/Adjustment Properties, without the prior
written approval of Purchaser; provided, however, that, any
such potential New Lease for vacant space in any Improvement
shall be deemed to have been approved by Purchaser, if
Purchaser shall not have notified Seller in writing of
Purchaser's approval or disapproval, if applicable, of any
such potential New Lease, within five (5) business days after
receipt thereof by Purchaser. In addition, Purchaser shall not
unreasonably withhold its consent to a potential New Lease, if
such potential New Lease shall (a) be on a form substantially
similar to Seller's form lease for such Improvement that is in
effect as of the Effective Date (and Seller shall deliver to
Purchaser a certified copy of each such form lease at the
First Closing) without material modifications, and (b) contain
such economic and other provisions for such vacant space as
shall be within the applicable leasing parameters set forth on
the Side Letter Agreement; provided, however, that
notwithstanding the foregoing, Seller shall obtain Purchaser's
approval of the proposed new tenant or tenants, based on
Purchaser's evaluation of (1) the financial qualifications of
the new tenant, (3) the proposed use of the Property by the
new tenant, (2) the space plan and configuration requested by
the new tenant (including a designation of the office and
warehouse layout), approval of which configuration shall,
notwithstanding anything to the contrary contained in this
Agreement, be in Purchaser's sole discretion, (4) to the
extent the applicable lease allocates parking spaces, the
number of parking spaces to be allocated at the Property to
such tenant, (5) at the New York Properties, whether such
tenant will have employees that will qualify as "Facility
Tenant Employees" (as such term is defined in the Ground
Leases entered into by New York, New York - I, New York - II
and New York - III) and (6) whether or not said new tenant is
reasonably compatible with other tenants and uses on the
Property. Seller shall deliver to Purchaser a fully signed
counterpart of any New Lease promptly upon the full execution
and delivery thereof by the parties thereto; and provided,
further, that without limiting Purchaser's right to disapprove
a potential New Lease on the basis of a tenant's lack of
creditworthiness in Purchaser's reasonable discretion, Seller
agrees that Purchaser shall have the right to condition its
approval of any potential New Lease on Seller waiving its
right to receive an Earnout Amount with respect to such
potential New Lease, and Purchaser shall advise Seller that it
requires such waiver at the time that Purchaser approves the
potential New
37
Lease.
(c) Refrain, up to the Closing, from entering into or amending any
agreement (other than any New Lease, subject to the terms and
conditions hereof) regarding the Properties, without having
first obtained the prior written consent of Purchaser thereto
in each instance, which consent shall not be unreasonably
withheld, conditioned or delayed, unless such contract could
be terminated by the relevant Company and/or Aero SeaTac,
without penalty or termination fee (unless paid by the
relevant Company or Aero SeaTac, as the case may be, prior to
the applicable Closing), upon not more than thirty (30) days'
notice (collectively, "New Service Contracts"); provided,
however, that, if Purchaser shall not have notified Seller in
writing of Purchaser's approval or disapproval of any such
agreement, within five (5) business days after receipt
thereof, then the same shall be deemed to have been approved
by Purchaser. Seller shall deliver to Purchaser a fully signed
counterpart of any New Service Contract promptly upon the full
execution and delivery thereof by the parties thereto.
(d) Maintain, through the Closing, the insurance coverage that is
in effect with respect to the Properties as of the Effective
Date, so long as such coverage continues to be available at a
commercially reasonable rate.
(e) Be solely responsible for all rent abatements, tenant
improvement costs, leasing commissions and any other monetary
concessions that shall be the obligation of the landlord
(collectively, "Landlord Obligations") under any (i) lease
entered into prior to the Effective Date, with respect to any
space in the Improvements, including, without limitation, the
work to be performed with respect to the space described on
the Side Letter Agreement ("Other Landlord Obligation Space"),
and (ii) New Lease entered into on or after the Effective
Date, (A) with respect to any Vacant Space (subject to
Paragraph 1.4) or (B) with respect to any vacant space other
than Vacant Space (which is addressed in Paragraph 1.4) as
follows: (1) Seller shall be responsible for any rent
abatements applicable to any portion of the term of a New
Lease for such vacant space occurring prior to the applicable
Closing (and Purchaser shall be responsible for the rent
abatements under such New Lease applicable to the portion of
the term of such New Lease occurring from and after the
applicable Closing) and Seller and Purchaser shall each be
responsible for their prorata share of the other Landlord
Obligations attributable to such New Lease based on the
relative portions of the lease term occurring during the
Seller's and the Purchaser's period of ownership of the
applicable Property, respectively, and (2) Seller shall not be
responsible (and Purchaser shall be responsible) for any
leasing commissions that shall be the obligation of the
landlord under any lease(s) entered into prior to, on or after
the Effective Date (and prior to the Determination Date for
the applicable Property, if applicable) in accordance with
this Agreement, with respect to any space in the Improvements,
but only to the extent such commissions (i) are described on
the Side Letter Agreement or, with respect to New Leases, are
otherwise approved by Purchaser in writing at such time as
Purchaser approves of the applicable New Lease, and (ii) are
payable only as a result of any options, including, without
limitation, extension, renewal and/or expansion options,
exercised, on or after the Effective Date, by a tenant under
any such lease; provided, however, that notwithstanding the
foregoing, Seller shall not be responsible for any such
leasing commissions described in the foregoing clause (2)
38
applicable to any space at a Holdback/Adjustment Property to
the extent such commission arises as a result of a commission
agreement entered into after the Determination Date for such
Property. The parties' respective obligations under this
Paragraph 6.5(e) shall not be merged into this Agreement and
shall survive the applicable Closing.
(f) Diligently construct, at Seller's sole cost and expense, the
Improvements at the NY III Property and the NY IV Property
(other than the tenant improvements at the NY III Property and
the NY IV Property) and the real property owned by HICTC (the
"HICTC Property") in substantial accordance with the plans and
specifications therefor (and any change orders thereto) which
have been approved by Purchaser, and which plans and
specifications shall be delivered to Purchaser on or before
the expiration of the Due Diligence Period, with respect to
the NY III Property and the NY IV Property, or by Panalpina,
with respect to the HICTC Property, (respectively, the
"Approved Plans") such work to be performed in a good and
workmanlike manner using new materials and to be free from
material defects. Seller shall substantially complete, as of
the applicable Closing, all construction with respect to the
initial development and construction of the Improvements
(other than the tenant improvements at the NY III Property and
the NY IV Property) to be completed with respect to the NY III
Property and the NY IV Property and the HICTC Property, as
contemplated hereby (except for so called "punchlist items,"
i.e., minor details of construction, decoration or mechanical
adjustments which do not materially interfere with occupancy
of the applicable Property and which shall be diligently
completed by Seller). In addition, Seller shall complete and
make operational, at Seller's sole cost and expense, on or
before the Closing for the New York Properties, the infrared
and other security systems that are installed but not intended
to be operational at the Properties owned by New York - I, New
York - II, New York -III and New York - IV (collectively, the
"New York Properties") until all of the Improvements (other
than the tenant improvements at the NY III Property and the NY
IV Property) located thereon are completed.
(g) Refrain from modifying, amending or terminating any of the
Assumed Loan Documents or the Ground Leases or any of the
organizational documents, including, without limitation, the
operating agreement, of Aero SeaTac, and to refrain from
dissolving Aero SeaTac.
(h) Refrain from taking any action that could result in a change
of zoning or a change to any of the entitlements affecting any
of the Properties and to refrain from permitting or causing
any new liens or encumbrances (with the exception of any new
easements which are reasonably approved by Purchaser) to
affect any of the Properties.
(i) Refrain from taking any action that would cause any of
Seller's representations and warranties contained in this
Agreement to become untrue or incorrect in any material
respect.
(j) At Seller's sole cost and expense, (A) take all actions which
are required to be taken between the Effective Date and the
applicable Closing in order to obtain and maintain the maximum
benefits available to the applicable Properties of (i) PILOT
pursuant to the New York Leases, and (ii) ICIP, with respect
to the real properties leased by New York and
39
New York - II, and the NY III Property and the NY IV Property,
and (B) provide to Purchaser any notices, communications or
other information received or sent by Seller in connection
therewith.
(k) Deliver to Purchaser, promptly upon receipt thereof by Seller,
any tax returns and informational filings, with respect to
Aero SeaTac, prepared or made prior to the applicable Closing
Date.
(l) Diligently construct, at Seller's sole cost and expense, the
Improvements described in the Side Letter Agreement as the
"Seller Completion Improvements" substantially in accordance
with the plans and specifications therefor (and any change
orders thereto) which have been approved by Purchaser, and
which plans and specifications shall be delivered to Purchaser
on or before the expiration of the Due Diligence Period, such
work to be performed in a good and workmanlike manner using
new materials and to be free from material defects.
(m) Use commercially reasonable efforts on a diligent basis to
obtain from the IDA prior to the Third Closing an
acknowledgement that the employees of any current or future
tenants at the New York Properties which are federal
government agencies can be counted in the determination of
"Facility Tenant Employees" as defined in the applicable
Ground Leases.
6.6 Purchaser hereby covenants and agrees with Seller as follows:
(a) Prior to the expiration of the Due Diligence Period, Purchaser
shall have obtained Purchaser's Approval.
(b) Purchaser solely shall be responsible for any and all leasing
commissions and other Landlord Obligations which are described
in Paragraph 6.5(e) as being the responsibility of Purchaser,
which obligations shall not be merged into this Agreement and
shall survive the Closing.
(c) From time to time, following the Effective Date, Purchaser,
upon Seller's request, at no out-of-pocket cost to Purchaser,
shall confirm to Seller in writing that to Purchaser's
knowledge (i) this Agreement then shall be in full force and
effect, (ii) no default then shall exist hereunder, (iii)
Purchaser shall be proceeding diligently to consummate the
transactions contemplated hereby and (iv) to the best
knowledge of Purchaser, no condition precedent to the Closing
then required to have been satisfied shall have been
unsatisfied in any respect.
(d) SUBJECT TO ANY APPLICABLE REPRESENTATIONS OR WARRANTIES MADE
HEREIN BY SELLER AND EXCEPT AS OTHERWISE PROVIDED HEREIN, FROM
AND AFTER CLOSING, PURCHASER SHALL TAKE RESPONSIBILITY AND BE
LIABLE FOR ANY AND ALL LOSSES OF ANY KIND OR NATURE WHATSOEVER
ATTRIBUTABLE TO THE PROPERTIES, INCLUDING, WITHOUT LIMITATION,
THE STRUCTURAL, PHYSICAL, GEOTECHNICAL AND/OR ENVIRONMENTAL
CONDITION THEREOF.
40
(e) SUBJECT TO ANY APPLICABLE REPRESENTATIONS OR WARRANTIES MADE
HEREIN BY SELLER, PURCHASER SHALL PURCHASE THE PROPERTIES AND
THE INTERESTS FROM SELLER ON AN "AS IS" ,"WHERE IS," AND "WITH
ALL FAULTS" BASIS, UPON ALL OF TERMS AND CONDITIONS HEREIN
CONTAINED, WITHOUT ANY REPRESENTATION, WARRANTY OR COVENANT of
any kind or nature, express, implied or otherwise, OF, BY OR
FROM SELLER, OR ANY PERSON ACTING BY, THROUGH OR UNDER SELLER,
INCLUDING, WITHOUT LIMITATION, ANY OF SELLER'S MANAGERS,
MEMBERS, PARTNERS, OFFICERS, DIRECTORS, EMPLOYEES, TRUSTEES,
AGENTS AND/OR BENEFICIARIES (COLLECTIVELY, "SELLER'S
PARTIES"), BASED ON THE INVESTIGATIONS AS TO THE INTERESTS,
AERO SEATAC, THE DUE DILIGENCE ITEMS AND THE PROPERTIES, WITH
NO RIGHT OF SETOFF OR REDUCTION IN THE PURCHASE PRICE, EXCEPT
AS OTHERWISE PROVIDED HEREIN.
(f) SUBJECT TO ANY APPLICABLE REPRESENTATIONS OR WARRANTIES MADE
HEREIN BY SELLER, NONE OF SELLER OR ANY OF SELLER'S PARTIES
HAS OR SHALL BE DEEMED TO HAVE MADE ANY VERBAL OR WRITTEN
REPRESENTATIONS, WARRANTIES, PROMISES OR GUARANTEES (WHETHER
EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE) TO PURCHASER WITH
RESPECT TO (I) THE INTERESTS, (II) AERO SEATAC, (III) ANY OF
THE PROPERTIES, (IV) ANY MATTER SET FORTH, CONTAINED AND/OR
ADDRESSED BY AND/OR IN THE DUE DILIGENCE ITEMS (INCLUDING, BUT
NOT LIMITED TO, THE ACCURACY AND COMPLETENESS THEREOF) OR (V)
THE RESULTS OF ANY OF THE INVESTIGATIONS. PURCHASER
SPECIFICALLY ACKNOWLEDGES THAT, EXCEPT FOR ANY APPLICABLE
REPRESENTATIONS OR WARRANTIES MADE HEREIN BY SELLER, PURCHASER
SHALL NOT RELY UPON (AND SELLER AND EACH OF SELLER'S PARTIES
HEREBY DOES DISCLAIM AND RENOUNCE) ANY REPRESENTATIONS OR
WARRANTIES OF ANY KIND OR NATURE WHATSOEVER, WHETHER ORAL OR
WRITTEN, EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, FROM SELLER
OR ANY OF SELLER'S PARTIES, WITH RESPECT TO (A) THE OPERATION
OF THE PROPERTIES, AND/OR THE INCOME POTENTIAL, USES AND/OR
THE MERCHANTABILITY, SUITABILITY, HABITABILITY, QUALITY OF
CONSTRUCTION AND/OR FITNESS OF ANY OF THE PROPERTIES FOR A
PARTICULAR PURPOSE, (B) THE PHYSICAL CONDITION OF ANY OF THE
PROPERTIES AND/OR THE CONDITION AND/OR SAFETY OF ANY OF THE
PROPERTIES, INCLUDING, BUT NOT LIMITED TO, PLUMBING, SEWER,
HEATING, VENTILATING AND ELECTRICAL SYSTEMS, ROOFING, AIR
CONDITIONING, FOUNDATIONS, SOILS, GEOLOGY AND/OR LOT SIZE, (C)
THE PRESENCE, ABSENCE, LOCATION AND/OR SCOPE OF ANY HAZARDOUS
MATERIALS IN, AT, ON, ABOUT AND/OR UNDER ANY OF THE
PROPERTIES, (D) WHETHER THE IMPROVEMENTS ARE STRUCTURALLY
SOUND, IN GOOD CONDITION, AND/OR IN COMPLIANCE WITH APPLICABLE
MUNICIPAL, COUNTY, STATE
41
OR FEDERAL STATUTES, CODES, ORDINANCES, LAWS, RULES AND/OR
REGULATIONS IN EFFECT AS OF THE EFFECTIVE DATE, AS THE SAME
HEREAFTER MAY BE AMENDED, FROM TIME TO TIME (COLLECTIVELY, THE
"LAWS"), (E) THE ACCURACY OF ANY STATEMENTS, CALCULATIONS
AND/OR CONDITIONS STATED OR SET FORTH IN ANY OF THE DUE
DILIGENCE ITEMS, (F) THE DIMENSIONS OF THE PROPERTIES AND/OR
THE ACCURACY OF ANY FLOOR PLANS, SQUARE FOOTAGE, ABSTRACTS,
SKETCHES, REVENUE AND/OR EXPENSE PROJECTIONS WITH RESPECT TO
ANY OF THE PROPERTIES, (G) THE OPERATING PERFORMANCE, INCOME,
EXPENSES AND/OR ECONOMIC STATUS OF ANY OF THE PROPERTIES, (H)
THE ABILITY OF PURCHASER TO OBTAIN ANY AND ALL NECESSARY
GOVERNMENTAL APPROVALS OR PERMITS FOR PURCHASER'S INTENDED
USE, OPERATION AND/OR DEVELOPMENT OF THE PROPERTIES AND (I)
THE LEASING STATUS OF THE PROPERTIES AND/OR THE INTENTIONS OF
ANY PARTIES AS TO THE NEGOTIATION AND/OR EXECUTION OF ANY
LEASE FOR ANY PORTION OF ANY OF THE PROPERTIES.
(g) EXCEPT WITH RESPECT TO (I) SELLER'S FRAUD OR (II) A BREACH BY
SELLER OF ANY OF THE REPRESENTATIONS, WARRANTIES, COVENANTS OR
INDEMNITIES CONTAINED HEREIN (COLLECTIVELY, THE "RELEASE
EXCLUSIONS"), PURCHASER, FOR PURCHASER AND ITS SUCCESSORS AND
PERMITTED ASSIGNS, HEREBY RELEASES SELLER AND EACH OF SELLER
PARTIES, FROM, AND WAIVES ALL CLAIMS AND LIABILITY AGAINST
SELLER AND EACH OF SELLER PARTIES, FOR, OR ATTRIBUTABLE TO (A)
SUBJECT TO ANY APPLICABLE REPRESENTATIONS OR WARRANTIES MADE
HEREIN BY SELLER, ANY AND ALL STATEMENTS OR OPINIONS
HERETOFORE OR HEREAFTER MADE, OR INFORMATION FURNISHED, BY
SELLER AND/OR SELLER'S PARTIES TO PURCHASER AND/OR PURCHASER'S
CONSULTANTS, AND (B) SUBJECT TO ANY APPLICABLE REPRESENTATIONS
OR WARRANTIES MADE HEREIN BY SELLER, ANY AND ALL LOSSES OF ANY
KIND OR NATURE WHATSOEVER ATTRIBUTABLE TO THE INTERESTS, AERO
SEATAC, THE DUE DILIGENCE ITEMS AND/OR THE PROPERTIES, WHETHER
ARISING OR ACCRUING BEFORE, ON OR AFTER THE DATE HEREOF, AND
WHETHER ATTRIBUTABLE TO EVENTS OR CIRCUMSTANCES THAT
HERETOFORE OR HEREAFTER MAY OCCUR, INCLUDING, WITHOUT
LIMITATION, (I) ALL LOSSES WITH RESPECT TO THE STRUCTURAL,
PHYSICAL, GEOTECHNICAL AND/OR ENVIRONMENTAL CONDITION OF THE
PROPERTIES, (II) ALL LOSSES RELATING TO THE RELEASE OF OR THE
PRESENCE, DISCOVERY OR REMOVAL OF ANY HAZARDOUS MATERIALS IN,
AT, ON, ABOUT AND/OR UNDER ANY OF THE PROPERTIES, OR CONNECTED
WITH OR ARISING OUT OF ANY AND ALL CLAIMS OR CAUSES OF ACTION
BASED UPON ANY APPLICABLE ENVIRONMENTAL LAWS, INCLUDING,
WITHOUT LIMITATION, THE RESOURCE CONSERVATION AND RECOVERY ACT
OF 1976, 42 U.S.C. Section 6901 ET SEQ., AND/OR ANY RELATED
CLAIMS AND/OR CAUSES OF ACTION, AND/OR ANY OTHER FEDERAL,
STATE OR MUNICIPAL BASED STATUTORY OR REGULATORY CAUSE OF
ACTION FOR ENVIRONMENTAL
42
CONTAMINATION AT, IN, ON, ABOUT AND/OR UNDER ANY OF THE
PROPERTIES, AND (III) ANY TORT CLAIMS MADE OR BROUGHT WITH
RESPECT TO ANY OF THE PROPERTIES AND/OR THE USE AND/OR
OPERATION THEREOF. PURCHASER ALSO HEREBY EXPRESSLY WAIVES THE
BENEFITS OF ANY LAW THAT PROVIDES MATERIALLY AS FOLLOWS:
"A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THE
CREDITOR DOES NOT KNOW TO EXIST IN HIS FAVOR AT THE TIME OF
EXECUTING THE RELEASE, WHICH IF KNOWN TO HIM MUST HAVE
MATERIALLY AFFECTED THE SETTLEMENT WITH THE DEBTOR."
IN THIS CONNECTION AND TO THE EXTENT PERMITTED BY ANY LAW,
PURCHASER HEREBY AGREES, REPRESENTS AND WARRANTS THAT
PURCHASER REALIZES AND ACKNOWLEDGES THAT FACTUAL MATTERS NOW
UNKNOWN TO PURCHASER MAY HAVE GIVEN OR HEREAFTER MAY GIVE RISE
TO LOSSES THAT PRESENTLY ARE UNKNOWN, UNANTICIPATED AND
UNSUSPECTED, AND PURCHASER FURTHER AGREES, REPRESENTS AND
WARRANTS THAT THE WAIVERS AND RELEASES HEREIN GIVEN BY
PURCHASER HAVE BEEN NEGOTIATED AND AGREED UPON IN LIGHT OF
THAT REALIZATION, AND THAT EXCEPT WITH RESPECT TO THE RELEASE
EXCLUSIONS, PURCHASER NEVERTHELESS HEREBY INTENDS TO RELEASE,
DISCHARGE AND ACQUIT SELLER, FROM AND AGAINST ANY SUCH UNKNOWN
LOSSES THAT IN ANY WAY MIGHT BE INCLUDED AS A MATERIAL PORTION
OF THE CONSIDERATION GIVEN TO SELLER BY PURCHASER IN EXCHANGE
FOR SELLER'S PERFORMANCE HEREUNDER. NOTWITHSTANDING THE
FOREGOING SELLER IS AND SHALL REMAIN LIABLE FOR ALL OF ITS
COVENANTS, INDEMNITIES, REPRESENTATIONS AND WARRANTIES, AS AND
TO THE EXTENT SET FORTH IN THIS AGREEMENT.
SELLER'S INITIALS:/S/ A.K. PURCHASER'S INITIALS:/S/ T.H.
SELLER HAS GIVEN PURCHASER MATERIAL CONCESSIONS REGARDING THIS
TRANSACTION IN EXCHANGE FOR THE AGREEMENT BY PURCHASER TO THE
PROVISIONS OF THIS SUBPARAGRAPH. SELLER AND PURCHASER EACH HAS
INITIALED THIS SUBPARAGRAPH TO FURTHER INDICATE THEIR
AWARENESS AND ACCEPTANCE OF EACH AND EVERY PROVISION HEREOF.
FURTHERMORE, PURCHASER ACKNOWLEDGES AND AGREES THAT THE
PROVISIONS OF THIS SUBPARAGRAPH WERE A MATERIAL FACTOR IN
SELLER'S ACCEPTANCE OF THE PURCHASE PRICE, AND SELLER WOULD BE
UNWILLING TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY,
UNLESS SELLER AND SELLER PARTIES SHALL BE RELEASED AS
EXPRESSLY SET FORTH IN THIS SUBPARAGRAPH.
6.7 Seller shall be entitled to, and Purchaser shall pay to
Seller, promptly upon receipt thereof by Purchaser, if applicable, any portion
of the Earnout Amount (as defined below) that shall be
43
paid and received by Purchaser, pursuant to the provisions of the Earnout
Agreement (as defined below). Purchaser shall cooperate with Seller, at no cost
or liability to Purchaser, in connection with Seller's efforts to collect the
Earnout Amount. For all purposes of this Agreement, the term "Earnout Amount"
shall have the meaning ascribed to such term in the Earnout Agreement, and the
term Earnout Agreement shall mean the Earnout Agreement dated as of May 20,
2003, between Boston, as borrower, and LaSalle Bank National Association
("LaSalle"), as lender, with respect to the Assumed Loan made by LaSalle to
Boston in the original principal amount of $51,000,000. In no event shall
Purchaser have any liability to Seller in the event Seller is unable to receive
all or any portion of the Earnout Amount from LaSalle. To the extent that Seller
is not entitled to the full amount of the Earnout Amount and the applicable
Lender applies all or any portion of the Earnout Amount to the applicable
Assumed Loan, Seller shall be responsible for the payment of any Yield
Maintenance Amount (as defined in the Earnout Agreement) arising as a result of
such prepayment of the applicable Assumed Loan. The Earnout Amount shall not
reduce the amount of the outstanding principal amount of the applicable Assumed
Loan for the purposes of determining the amount of the Cash portion of the
Purchase Price to be paid with respect to the applicable Property. The
provisions of this Paragraph 6.7 shall not be merged into this Agreement and
shall survive the applicable Closing.
ARTICLE 7
DEFAULTS
7.1 If there shall be a default by Purchaser or Seller hereunder,
and such default shall not have been cured within five (5) days after the
non-defaulting party shall have given written notice thereof to the defaulting
party, then the non-defaulting party, at its option, may (i) specifically
enforce the terms and provisions of this Agreement against the other party (BUT
NO OTHER ACTION, FOR DAMAGES, OR OTHERWISE, SHALL BE PERMITTED); provided, that
Seller shall only be entitled to the remedy described in this clause (i) after
the First Closing has been consummated (provided, that if specific performance
is not available in the applicable jurisdiction through no fault of the Seller
at the time that Seller seeks to enforce such specific performance, then only in
such instance Seller shall be entitled to its damages as are available at law
(but excluding any punitive damages) arising as a result of Purchaser's uncured
failure to Close in breach of this Agreement as it relates solely to the
specific Property or Properties located in the applicable jurisdiction which are
not acquired by Purchaser as a result of Purchaser's uncured wrongful refusal to
Close (in which event and notwithstanding anything to the contrary provided in
this Paragraph 7.1 or in Paragraph 7.2, Seller shall not also be entitled to
retain any portion of the Earnest Money allocable to the applicable Property or
Properties for which Seller is seeking damages), or (ii) terminate its
obligations under this Agreement with respect to the applicable Property or
Properties unless such uncured breach was a wilful and intentional breach by the
defaulting party in which event the non-defaulting party may terminate this
Agreement with respect to all of the Properties, in either case by written
notice thereof to the other party and such non-defaulting party shall receive a
refund or the payment of the Earnest Money allocated to the applicable
Properties (provided, however, that if Purchaser is the defaulting party and
such default occurs at or prior to the First Closing, then the Seller shall only
be entitled to receive a portion of the Earnest Money in the amount of Four
Million Dollars and Purchaser shall receive a refund of the balance of the
Earnest Money in the amount of Four Million Five Hundred Thousand Dollars), as
the case may be, and if the non-defaulting party is the Purchaser, Seller shall
reimburse to Purchaser its third party out-of-pocket
44
expenses incurred in connection with the transactions contemplated in this
Agreement (not to exceed $400,000 in the aggregate), whereupon no party hereto
shall have any further obligations to the other hereunder, except as otherwise
herein provided.
SELLER'S INITIALS: /S/ A.K. PURCHASER'S INITIALS: /S/ T.H.
7.2 IF THERE SHALL BE A DEFAULT BY PURCHASER HEREUNDER, AND SELLER
SHALL ELECT TO TERMINATE ITS OBLIGATIONS UNDER THIS AGREEMENT, PURSUANT TO THE
IMMEDIATELY PRECEDING PARAGRAPH, THE PARTIES AGREE THAT IT WOULD BE IMPRACTICAL
AND EXTREMELY DIFFICULT TO ESTIMATE THE DAMAGES THAT SELLER MAY SUFFER AS A
RESULT THEREOF. THUS, PURCHASER AND SELLER HEREBY DO AGREE THAT A REASONABLE
ESTIMATE OF THE DAMAGES THAT SELLER WOULD SUFFER IN THE EVENT THAT PURCHASER
SHALL DEFAULT AND FAIL TO COMPLETE THE TRANSACTIONS CONTEMPLATED HEREBY AND
SELLER SHALL ELECT TO TERMINATE ITS OBLIGATIONS UNDER THIS AGREEMENT WOULD BE,
AS SELLER'S SOLE AND EXCLUSIVE REMEDY (WHETHER AT LAW OR IN EQUITY), AN AMOUNT
EQUAL TO THE EARNEST MONEY ALLOCATED TO THE APPLICABLE PROPERTIES (PROVIDED,
HOWEVER, THAT IF SUCH DEFAULT OCCURS AT OR PRIOR TO THE FIRST CLOSING, THEN THE
SELLER SHALL ONLY BE ENTITLED TO RECEIVE A PORTION OF THE EARNEST MONEY IN THE
AMOUNT OF FOUR MILLION DOLLARS AND PURCHASER SHALL RECEIVE A REFUND OF THE
BALANCE OF THE EARNEST MONEY IN THE AMOUNT OF FOUR MILLION FIVE HUNDRED THOUSAND
DOLLARS), WHICH AMOUNT WOULD BE THE FULL, AGREED AND LIQUIDATED DAMAGES FOR SUCH
DEFAULT BY PURCHASER UNDER SUCH CIRCUMSTANCES, AND ALL OTHER CLAIMS TO DAMAGES
OR OTHER REMEDIES HEREIN EXPRESSLY SHALL BE WAIVED BY SELLER; PROVIDED, HOWEVER,
THAT THE FOREGOING SHALL NOT LIMIT SELLER'S RIGHT TO RECEIVE REIMBURSEMENT FOR
REASONABLE ATTORNEYS' FEES, AS HEREIN PROVIDED, OR WAIVE OR AFFECT PURCHASER'S
INDEMNITY OBLIGATIONS UNDER THIS AGREEMENT. THE PAYMENT OF SUCH AMOUNT AS
LIQUIDATED DAMAGES WOULD NOT BE INTENDED AS A FORFEITURE OR PENALTY, BUT RATHER,
WOULD BE INTENDED TO CONSTITUTE LIQUIDATED DAMAGES TO SELLER. IN CONNECTION WITH
THE FOREGOING, THE PARTIES RECOGNIZE THAT SELLER WILL INCUR EXPENSE IN
CONNECTION WITH THE TRANSACTION CONTEMPLATED HEREBY AND THAT THE INTERESTS AND
THE PROPERTIES WILL BE REMOVED FROM THE MARKET. NOTWITHSTANDING THE FOREGOING,
BUT SUBJECT TO THE PROVISIONS OF PARAGRAPH 7.1 ABOVE, NOTHING HEREIN SHALL ACT
TO REDUCE ANY RIGHTS OR REMEDIES OF SELLER AGAINST PURCHASER ARISING OUT OF ANY
DEFAULT BY PURCHASER WITH RESPECT TO WHICH SELLER SHALL SPECIFICALLY ENFORCE THE
TERMS AND PROVISIONS OF THIS AGREEMENT AGAINST PURCHASER.
SELLER'S INITIALS: /S/ A.K. PURCHASER'S INITIALS: /S/ T.H.
ARTICLE 8
CLOSING DOCUMENTS
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8.1 At the Closing, in connection with the conveyance of the
Interests to Purchaser, Seller shall execute and/or deliver to Purchaser and,
where applicable, the Title Company, the following, all in form and substance
satisfactory to Purchaser:
(a) An assignment and assumption agreement, pursuant to which
Seattle - II shall assign to Purchaser and/or the Approved
Assignee(s), and Purchaser and/or the Approved Assignee(s)
shall assume from Seattle - II, the Interests, which shall be
substantially in the form of Exhibit G attached hereto (the
"Assignment").
(b) A general release to Aero SeaTac in form reasonably acceptable
to Purchaser with respect to all known and unknown liabilities
or claims Seller may have against Seattle - II or Aero SeaTac.
(c) A copy of the operating agreement of Aero SeaTac, which shall
have been certified by an authorized officer of Seller, as
being true, correct and complete copies thereof, which shall
not have been amended or modified, except as otherwise
specified therein.
(d) Endorsements to the certificates, if any, representing the
Interests.
8.2 At the applicable Closing, in connection with the conveyance
of the Sale Properties to Purchaser, the Selling Companies shall execute and/or
deliver to Purchaser and, where applicable, the Title Company, the following,
all in form and substance satisfactory to Purchaser:
(a) A good and sufficient (1) special warranty deed in the form of
Exhibit H (for Texas), (2) bargain and sale deed in the form
Exhibit I (for Washington), (3) grant deed in the form of
Exhibit J (for California), (4) special warranty deed in the
form of Exhibit K (for North Carolina), and (5) special
warranty deed in the form of Exhibit L (for Florida), attached
hereto (the "Deed") for each of the Sale Properties, pursuant
to which the Selling Companies shall convey title to the Sale
Properties to Purchaser and/or the Approved Assignee(s).
(b) Two (2) duly executed counterparts of a bill of sale, pursuant
to which the Selling Companies shall transfer title to the
Personal Property, in the form attached hereto as Exhibit M
(the "Bill of Sale").
(c) Two (2) duly executed counterparts of an assignment and
assumption of Leases, pursuant to which the Selling Companies
shall transfer title to the Leases, in the form attached
hereto as Exhibit N (the "Assignment and Assumption of
Leases").
(d) Two (2) duly executed counterparts of an assignment and
assumption of Intangible Property pursuant to which the
Selling Companies shall transfer title to the Intangible
Property, in the form attached hereto as Exhibit O (the
"Assignment and Assumption of Intangible Property").
8.3 At the Closing, in connection with the conveyance of the
leasehold interests in the Leased Properties to Purchaser, the Leasing Companies
shall execute and/or deliver to Purchaser and, where applicable, the Title
Company, the following, all in form and substance satisfactory to Purchaser:
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(a) An assignment and assumption agreement, pursuant to which each
Leasing Company shall assign to Purchaser and/or the Approved
Assignee(s), and Purchaser and/or the Approved Assignee(s)
shall assume from the applicable Leasing Company, the
leasehold interest in the applicable Leasing Company's Leased
Properties, which shall be substantially in the form of
Exhibit P attached hereto (the "Lease Assignment").
(b) Two (2) duly executed counterparts of a Bill of Sale.
(c) Two (2) duly executed counterparts of an Assignment and
Assumption of Leases.
(d) Two (2) duly executed counterparts of an Assignment and
Assumption of Intangible Property.
8.4 At each Closing, Seller shall execute (or cause the applicable
party affiliated with Seller to execute) and/or deliver to Purchaser and, where
applicable, the Title Company, the following, all in form and substance
satisfactory to Purchaser:
(a) A closing statement as to the transactions contemplated hereby
(the "Closing Statement").
(b) A notice addressed to each party that shall be a Tenant as of
the Closing in the form of Exhibit Q attached hereto, which
shall be sent by Purchaser promptly after the Closing.
(c) Re-certification, as of the Closing, of Seller's
representations and warranties made herein in the form of
Exhibit R attached hereto, subject to the Updates (as
hereinafter defined).
(d) Originals, if the same shall be in the possession of Seller,
of all of the Due Diligence Items, as well as any New Lease
and any New Service Contracts; provided, however, that, any or
all of such items to be delivered by Seller in accordance with
the terms of this subparagraph may be delivered outside of
escrow, within five (5) business days after the Closing, and
shall be deemed to have been delivered, if the same shall be
available at the relevant Property as of such time.
(e) Certified copies of all resolutions evidencing the authority
of Seller to enter into this Agreement and perform its
obligations hereunder.
(f) Written updates, supplements, documents and other information
with respect to the Due Diligence Items and/or the items
described in any of the exhibits attached to and made a part
of this Agreement, if applicable, which first shall have come
into Seller's possession, if at all, between the Effective
Date and the Closing Date (collectively, the "Updates").
(g) a FIRPTA affidavit (in the form attached as Exhibit S)
pursuant to Section 1445(b)(2) of the Code, and on which
Purchaser is entitled to rely, that Seller is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Code
and properly executed state equivalents, if applicable;
(h) all documents and instruments as reasonably shall be required
to effectuate, as applicable, the (i) written consent of each
Lender, each Ground Lessor and the EDC, as the case may be, to
the relevant transactions contemplated hereby, (ii) assumption
by Purchaser and/or
47
an Approved Assignee of all of the Loans and the Ground
Leases, any Loan Guarantees and the Ground Lease Guarantees,
and (iii) release of all of the Loan Guarantors and the Ground
Lease Guarantors, from all of the Loan Guarantees and the
Ground Lease Guarantees, respectively, all as contemplated
hereby;
(i) The Newco LLC Agreement, the Strategic Alliance Agreement, the
Non-Competition Agreements and the Services Agreement (First
Closing Only).
(j) Such other actions, documents, instruments, filings and
consents as reasonably shall be required to consummate the
transactions contemplated hereby, which obligation shall not
be merged into this Agreement and shall survive the Closing.
8.5 At the applicable Closing, Purchaser will execute (or cause
the applicable party affiliated with Purchaser to execute) and/or deliver to
Title Company the following documents to the extent applicable to the particular
Closing: (a) the portion of the Cash required to be paid on the applicable
Closing Date, (b) the Assignment, (c) the Closing Statement, (d)
re-certification by Purchaser, as of the applicable Closing, of Purchaser's
representations and warranties made herein in the form of said Exhibit T, (e)
certified copies of all resolutions evidencing the authority of Purchaser to
enter into this Agreement and perform its obligations hereunder, (f) all
documents and instruments as reasonably shall be required to effectuate, as
applicable, the (i) written consent of each Lender and each Ground Lessor, as
the case may be, to the relevant transactions contemplated hereby, (ii)
assumption by Purchaser and/or an Approved Assignee of all of the Loan
Guarantees and the Ground Lease Guarantees, and (iii) release of all of the Loan
Guarantors and the Ground Lease Guarantors, from all of the Loan Guarantees and
the Ground Lease Guarantees, respectively, all as contemplated hereby, (g) an
Assignment and Assumption of Lease, (h) an Assignment and Assumption of
Intangible Property, (i) the Newco LLC Agreement and the Strategic Alliance
Agreement (First Closing only), (j) the Lease Assignment, and (k) such other
actions, documents, instruments, filings and consents as reasonably shall be
required to consummate the transactions contemplated hereby, which obligation
shall not be merged into this Agreement and shall survive the applicable
Closing.
ARTICLE 9
CLOSING ADJUSTMENTS
Except as otherwise herein provided, the following items shall
be paid, prorated and/or adjusted as of the close of business on the day prior
to the Closing Date (the "Proration Date"), as follows:
9.1 All real estate taxes and all personal property taxes accruing
with respect to the period ending on, but inclusive of, the Proration Date, and
all penalties and interest thereon, and all certified and other special
assessments affecting the Properties shall be paid in full by Seller (or
credited to Purchaser) at Closing; provided, however, that, if any such
certified and special assessments shall be pending or payable in installments,
Seller only shall be responsible for paying the portion of such assessments
accruing with respect to the period ending on, but inclusive of, the Proration
Date.
9.2 Current real estate and personal property taxes shall be
prorated as of the Proration Date, on an "accrual" basis in accordance with the
standard closing practice of the county in which the Property,
48
with respect to which such item shall relate, is located. The parties hereby
further do agree to re-prorate such real estate taxes promptly upon Purchaser's
receipt of the actual tax bill for the tax year in question. In no event shall
Seller be charged with or be responsible for any increase in such taxes
resulting from the sale of the Interests or improvements made to the Properties
after the Closing. Seller shall be entitled to retain the full amount of any tax
refund received by Purchaser or Seller after the Closing and attributable to a
period prior to the Closing, if such refund shall not be owed to Tenants
pursuant to any leases. Purchaser promptly shall deliver the full amount of such
tax refund to Seller, if the same shall have been received by Purchaser. The
foregoing shall not be merged into this Agreement and shall survive the Closing.
9.3 Any non-cash security deposits shall be assigned (and all
consents necessary to effectuate such assignment shall have been obtained) to
Purchaser at the Closing, and Seller reasonably shall cooperate with Purchaser
to change the named beneficiary under such security deposits, if, on the
Proration Date, such deposits are not to be in the name of Purchaser or Aero
SeaTac, as the case may be, all at Seller's sole cost and expense). In the event
that as of a Closing, Seller has not obtained all necessary consents or
otherwise effectuated the assignment of any non-cash security deposits with
respect to any Properties acquired by Purchaser at such Closing, Seller shall
use diligent commercially reasonable efforts to obtain such consents and cause
such assignment to occur promptly after the Closing at Seller's expense. In
addition, with respect to any such non-cash security deposits for which a
consent has not been obtained or which has not been assigned as of the
applicable Closing, if a tenant defaults under its lease and the landlord would
have the right to apply any such non-cash security deposit, then Seller shall,
upon Purchaser's written request, draw down on such non-cash security deposit
and immediately deliver the proceeds therefrom to Purchaser and Purchaser agrees
to indemnify, defend and hold Seller harmless against any Losses arising out of
any claims by the applicable tenant arising as a result of the drawing down of
such non-cash security deposit.
9.4 All of the following will be credited to Purchaser as of the
Proration Date: (a) prepaid rent and rent paid for the balance of the month of
the Closing, (b) cash security deposits made by Tenants, along with all interest
thereon that shall be due to such Tenants, but not including interest earned
thereon that shall belong to Seller or Aero SeaTac, if any, received by Seller
or Aero SeaTac, as the case may be, prior to the Proration Date, (c) except as
provided in Paragraph 6.6(b), the amount of any Landlord Obligations remaining
unpaid as of (or with respect to rent abatements, the amount applicable to the
period occurring after) the applicable Closing, and (d) utility costs, operating
expenses, insurance costs, personal property expenses and real estate tax
expenses (collectively, "Expense Contributions") that shall have been prepaid by
Tenants. Any payment of rental obligations or Expense Contributions due, but not
received, on the Proration Date, from Tenants, as well as any unbilled Expense
Contributions accrued as of the Closing (collectively, the "Credit Items"),
shall be paid by Purchaser to Seller as and when such amounts are collected from
the applicable Tenants and after Purchaser is made current on all rental
obligations and Expense Contributions due and payable following the Closing.
Following the Closing Date, if Seller or Aero SeaTac shall receive any payments
from any Tenant, all such payments, other than Credit Items, promptly shall be
remitted to Purchaser, and Seller shall take all steps as reasonably shall be
necessary to notify the remitting party that all future payments should be sent
to Purchaser. Seller shall cooperate with Purchaser in its efforts to collect
Credit Items, but shall not be required to take any direct action against any
Tenant for such purpose (provided that, Seller shall be entitled to sue a Tenant
or take any other actions to collect any Credit Items due to Seller (and not
previously paid to Seller) so long as such suit or other action does not seek a
termination of such Tenant's Lease or eviction of such Tenant).
49
When actual Expense Contributions shall have become known, Purchaser shall bill
each Tenant, pursuant to its lease, for the additional amount, if any, owed by
such Tenant as a result of non-payment or underpayment of such Tenant's share of
Expense Contributions. Upon the collection of such amounts, the same shall be
prorated between Seller and Purchaser based on each such Tenant's share of the
amount of the applicable Expense Contribution incurred by each party and the
collections from each of such Tenants of such Expense Contributions by each
party, through and including the Proration Date. The amount of any refund or
credit due to any Tenant as a result of collection by Seller or Aero SeaTac
prior to the Closing Date of payments by any Tenant for Expense Contributions,
which shall exceed the actual amount of such Expense Contributions owed by such
Tenant for the period prior to the Closing Date, shall be paid by Seller to
Purchaser promptly after such Expense Contributions shall have been determined.
9.5 Seller shall (and Seller shall cause Aero SeaTac to) pay all
expenses necessary to repair, operate and maintain the Properties, as the case
may be, in accordance with the ordinary course of its business up to the
Proration Date, any such expenses which are prepaid by Seller (to the extent
attributable to the period after the Proration Date) as of the Proration Date
shall be credited to Seller and/or Aero SeaTac, as the case may be, and
Purchaser and/or an Approved Assignee shall be responsible to pay such expenses
incurred subsequent to the Proration Date.
9.6 Meters for utility services payable by Seller or Aero SeaTac,
as the case may be, shall be read on or immediately prior to the Proration Date,
or as close to the Closing as shall be possible, if a reading on the day prior
to the Closing cannot be obtained, and the amounts due, as disclosed by such
readings, shall be paid by Seller or credited to Purchaser. Otherwise, all
utility charges and billings shall be prorated using the bill for the calendar
month immediately preceding the Proration Date. Any security or service deposits
delivered by the Companies or Aero SeaTac to utility providers, and any interest
required to be paid thereon, shall be and remain the sole property of Seller,
and any refund of such security deposits shall be made directly to Seller,
except to the extent such deposits shall have been assigned to Purchaser and/or
the Approved Assignee(s) by Seller, in which case, Purchaser shall be debited
and Seller shall be credited the amount of such assigned deposits.
9.7 Seller shall bear and pay (a) the charges to comply with the
terms of Paragraph 3.1, (b) additional title insurance premiums charged in
connection with issuance to a Lender of any loan policy(ies) of title insurance
(and endorsements thereto), (c) all fees, costs and/or expenses, including,
without limitation, mortgage recording taxes, if applicable, imposed in
connection with, as applicable, the (i) written consent of each Lender and each
Ground Lessor, as the case may be, to the relevant transactions contemplated
hereby, (ii) assumption of the Assumed Loans, the Loan Guarantees, the Ground
Leases and/or the Ground Lease Guarantees, and/or (iii) release of all of the
Loan Guarantors from all of the Loan Guarantees and/or all of the Ground Lease
Guarantors from all of the Ground Lease Guarantees, all as contemplated hereby,
including, without limitation, all assignment and/or assumption fees charged by
any Lender or Ground Lessor or EDC.
9.8 Purchaser shall bear and pay all costs and expenses incurred
in connection with (a) the Investigations, including, without limitation, the
preparation of any Phase I, (b) any Updated Survey and/or the issuance to any
lender, other than a Lender, of any loan policy(ies) of title insurance (and
endorsements thereto).
50
9.9 Except as otherwise herein provided, each party shall be
responsible for, and shall bear, any and all costs and expenses incurred by
either of them or their respective employees, agents and/or representatives in
connection with the transactions contemplated hereby, including, without
limitation, those of their respective attorneys, accountants and consultants,
which obligations shall not merge into this Agreement and shall survive the
Closing or the termination of this Agreement, as applicable.
9.10 All costs relating directly to any escrow and/or closing
services provided in connection with the transactions contemplated hereby shall
be divided equally between the parties. Any and all (a) premiums for the Title
Policies and the title update charges in connection therewith, (b) state, county
and local transfer, documentary and/or stamp taxes imposed regarding the
transactions contemplated hereby, (c) recording fees and (d) other items that
are customarily prorated in transactions similar to the transactions
contemplated hereby, but have not been herein addressed, will be prorated as of
the Proration Date in accordance with the standard closing practice of the
county in which the Property, with respect to which such item shall relate, is
located as such standard closing practice is set forth in the Side Letter
Agreement.
9.11 Any non-delinquent bonds that relate to items other than real
estate taxes, that, as of the Closing Date, shall be a current lien against any
of the Properties shall be prorated as of the Closing Date.
9.12 All adjustments made pursuant to this Article 9 shall be paid
in cash or credited against the cash portion of the Purchase Price at the
Closing. All adjustments made pursuant to this Article 9 shall be made on the
basis of a 365 day year and, to the extent reasonably practicable, such
prorations shall be made at the Closing. To the extent any such prorations
cannot be made at the Closing, the same shall be adjusted and completed after
the Closing as and when complete information shall become available. Seller and
Purchaser each agrees to cooperate and use its commercially reasonable efforts
to complete such prorations no later than thirty (30) days after the Closing
Date. Seller and Purchaser each shall use its commercially reasonable efforts
prior to the Closing to prepare a schedule of prorations that shall cover
current monthly rent, prepaid rent, security deposits, utility charges,
operating expenses, if applicable, and real property taxes, so that such
prorations can be made at the Closing.
9.13 Subject to the provisions of Paragraph 12.9, each party hereby
agrees to defend, indemnify and forever hold harmless the other, from and
against any Losses that such other party shall sustain by reason of the failure
of the indemnifying party to pay the amounts it shall be required to pay or to
take the actions it is required to take on a timely basis, pursuant to this
Article 9, which indemnifications, defenses and hold harmless agreements shall
not be merged into this Agreement and shall survive the Closing.
ARTICLE 10
FIRE DAMAGE AND CONDEMNATION
If, prior to the Closing Date, any portion of a particular Property
shall have been damaged or destroyed by fire or other casualty in an amount
exceeding One Million Dollars ($1,000,000), as determined by an insurance
adjuster mutually satisfactory to Seller and Purchaser (which insurance adjuster
shall have at least ten (10) years experience adjusting claims relating to
similar commercial properties in the metropolitan area in which the applicable
Property is located and who is not affiliated
51
with either party and who has not been engaged by either party within the
previous two (2) year period; provided, that if the parties cannot agree on such
an adjuster within twenty (20) days after Seller notifies Purchaser of the
occurrence of the applicable casualty, the parties shall request that the local
JAMS or equivalent mediation company select such an insurance adjuster meeting
the aforesaid requirements), or written notice shall have been received by
Seller, of any action, suit or proceeding to condemn or take all or any
substantial part of a particular Property (whether a substantial part of a
particular Property is affected shall be reasonably determined by Purchaser)
under the power of eminent domain, Seller promptly shall notify Purchaser
thereof in writing, and Purchaser, by giving Seller written notice thereof,
within the earlier to occur of (a) the date that shall be thirty (30) days after
receiving Seller's written notice of such fire or casualty, or such condemnation
or taking (or ten (10) days after receiving the insurance adjuster's
determination of the casualty amount, if later), and (b) the Closing Date, shall
have the right to terminate its obligations under this Agreement and receive a
refund of the Earnest Money, whereupon no party hereto shall have any further
obligations to the other hereunder, except as otherwise herein provided;
provided, however, that in the event the damage or casualty occurs at any time
after the First Closing, Purchaser may elect not to purchase the affected
Property only, in which event this Agreement shall terminate with respect to the
affected Property only, the Purchase Price shall be reduced by the Property
Allocation applicable to such Property, the Earnest Money allocated to such
Property pursuant to the Earnest Money Allocations shall be returned to
Purchaser, and Purchaser and Seller shall thereafter have no further obligation
or liability with respect to said affected Property, except as set forth herein.
If the damage or destruction caused by a fire or other casualty shall be such
that Purchaser shall not be entitled, or shall not elect, to terminate this
Agreement, pursuant to this Article 10, then (i) the transactions contemplated
hereby shall be consummated as herein provided, (ii) there shall be credited
against the Purchase Price an amount equal to the estimated cost to repair or
restore the damage not so repaired or restored by Seller as of the Closing,
together with an amount equal to the anticipated rental loss for the period
subsequent to the Closing, if applicable, the amount of which credit shall be
reduced by an amount equal to the insurance proceeds that are made available to
Purchaser at the Closing to cover such loss(es), if applicable, and (iii) the
Closing Date shall be extended for such reasonable period of time (not to exceed
thirty (30) days) to enable the aforesaid adjuster to determine the amount of
such damage, if applicable. The amount to be credited against the Purchase
Price, pursuant to the foregoing sentence, shall be determined by the aforesaid
adjuster. If, in the case of a condemnation or taking, Purchaser shall not be
entitled, or have elected, to terminate its obligations hereunder, pursuant to
this Article 10, and the corresponding condemnation award has been paid to the
relevant Company or Aero SeaTac, Purchaser shall receive, on the applicable
Closing Date, a credit towards the Purchase Price equal to the amount of the
award received by such Company or Aero SeaTac. If, in the case of a condemnation
or taking, Purchaser shall not be entitled, or have elected, to terminate its
obligations hereunder, pursuant to this Article 10, and the corresponding
condemnation award shall not have been paid to the relevant Company or Aero
SeaTac, as the case may be, Purchaser shall receive, on the Closing Date an
assignment of the entire amount of such corresponding condemnation award, and
the Purchase Price shall be the full amount herein provided. The agreements
contained in this Article 10 shall not be merged into this Agreement and shall
survive the Closing.
ARTICLE 11
BROKER
Each party represents and warrants to the other that no person or
entity acting as broker, finder or
52
agent brought about this Agreement or the transactions contemplated hereby.
Seller agrees to and does hereby indemnify, defend and forever hold harmless
Purchaser, from and against all Losses that Purchaser may suffer as a result of
any claim or action brought by any broker, finder or agent acting or allegedly
acting on behalf of Seller in connection with this Agreement and the
transactions contemplated hereby, and Purchaser agrees to and does hereby
indemnify, defend and forever hold harmless Seller, from and against all Losses
that Seller may suffer as a result of any claim or action brought by any broker,
finder or agent acting or allegedly acting on behalf of Purchaser in connection
with this Agreement and the transactions contemplated hereby. The agreements
contained in this Article 11 shall not be merged into this Agreement and shall
survive the Closing.
ARTICLE 12
MISCELLANEOUS
12.1 All notices to be given hereunder shall be personally
delivered or sent by express or overnight mail with a nationally recognized
express or overnight courier, by certified or registered mail, return receipt
requested, with postage prepaid, or by delivery of a facsimile transmission
which shall be confirmed on the sender's facsimile machine as having been sent
to the recipient at the proper facsimile copier number, to the parties at the
following addresses (or to such other or further addresses as the parties
hereafter may designate by like notice similarly sent):
To Seller: International Airport Centers L.L.C.
1849 Green Bay Road, 4th Floor
Highland Park, IL 60035
Attn: Alex Kurrelmeier and Craig Arnson
Fax No.: 847/748-3099
With a copy to: Perlmutter Investment Company, LLC
23852 Pacific Coast Highway, Suite 764
Malibu, CA 90265
Attention: Joseph Perlmutter
Fax No.: 310/317-6849
To Purchaser: AMB Property, L.P.
c/o AMB Property Corporation
Pier 1, Bay 1
San Francisco, CA 94111
Attn: Tyler W. Higgins
Fax No.: 415/477-2157
With a copy to: AMB Property, L.P.
60 State Street, 37th Floor
Boston, MA 02109
Attn: David S. Fries
Fax No.: 617/531-9001
53
and: Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, CA 94304-1018
Attn: Philip J. Levine, Esq.
Fax No.: 650/494-0792
All notices personally delivered shall be deemed effectively given on the date
of such delivery or refusal. All notices sent by overnight mail shall be deemed
effectively given on receipt. All notices sent by certified or registered mail
shall be deemed effectively given on receipt. All notices sent by facsimile
transmission shall be deemed effectively given on the date of such delivery,
pursuant to the terms hereof.
12.2 This Agreement, including all exhibits attached hereto,
embodies the entire agreement between the parties as to the transactions
contemplated hereby, and there are no oral or parol agreements, representations,
warranties or inducements between the parties as to such transactions that are
not otherwise herein provided. This Agreement may not be modified, except by a
written agreement signed by the parties.
12.3 Each covenant, condition and indemnification set forth in this
Agreement shall not be merged into this Agreement and shall survive the Closing
or the termination of this Agreement, as applicable, including any of the
foregoing that are intended to be performed or applied to circumstances
subsequent to the Closing Date, and shall run in favor of, and benefit, Seller
and Purchaser and their respective successors and permitted assigns, except as
and to the extent otherwise provided in this Agreement.
12.4 Subject to the provisions of Paragraph 12.9 hereof, if either
Seller or Purchaser shall be comprised of more than a single entity or other
person, each representation, warranty, covenant, indemnity and/or agreement made
by Purchaser and Seller conclusively shall be presumed to have been made jointly
and severally by each entity and other person that comprises Purchaser and
Seller, as the case may be.
12.5 No written waiver by any party at any time of any breach of
any provision of this Agreement shall be deemed a waiver of a breach of any
other provision herein, or a consent to any subsequent breach of the same or any
other provision. If any action by any party shall require the consent or
approval of another party, such consent or approval of such action on any
particular occasion shall not be deemed a consent to or approval of such action
on any subsequent occasion, or a consent to or approval of any other action on
the same or any subsequent occasion.
12.6 The captions, paragraphs and article numbers that appear in
this Agreement have been inserted only as a matter of convenience and shall not
define, limit, construe or describe the scope or intent of any portion of this
Agreement or in any way affect this Agreement.
12.7 The parties hereto agree that time is of the essence as to the
transactions contemplated hereby. This Agreement shall be governed by and
construed according to the laws of the State of California.
12.8 Subject to the provisions of Paragraph 12.20, both Seller and
Purchaser shall not, and shall
54
not permit any broker, finder or agent to, publicize the transactions
contemplated hereby in any way and shall treat the same with confidentiality.
12.9 It is expressly understood and agreed that, notwithstanding
anything to the contrary herein contained, from and after the Effective Date,
the representations, warranties, covenants, indemnities, undertakings and
agreements made by Seller hereunder, or under any of the documents executed and
delivered by Seller at the Closing, shall not be for the purpose and/or with the
intention of binding Seller or any of the Seller's Parties in their individual
capacities, but rather, solely for the purpose of binding (and shall be
enforceable against), after the Closing, Seller's assets only, and that no
personal liability or personal responsibility shall be assumed by, or shall at
any time be asserted or enforceable against, any of the Seller's Parties in
their individual capacities, after the Closing, on account of any
representation, warranty, covenant, undertaking, indemnity or agreement of
Seller, either express or implied, all such personal liability or
responsibility, if any, being expressly waived and released by Purchaser and by
all persons claiming by, through or under Purchaser. Notwithstanding anything to
the contrary contained in this Paragraph 12.9 or elsewhere in this Agreement,
(i) if Seller's assets are not sufficient to satisfy any claim by Purchaser made
on account of any representation, warranty, covenant, undertaking, indemnity or
agreement of Seller, then Purchaser shall be entitled to pursue collection of
any such claims against the Seller's Parties to the extent of any distributions
of the Cash portion of the Purchase Price made to such Seller's Parties;
provided that each of the Seller's Parties shall only be responsible for payment
of such claim to the extent of its pro rata share of such distributions actually
received by all of the Seller's Parties with respect to the particular Property
for which a particular claim relates (provided that for the purposes of this
clause (i) the New York Properties shall be deemed to be one Property), and (ii)
Seller's and the Seller's Parties liability under this Paragraph 12.9 with
respect to Purchaser's claims relating to a particular Property shall be limited
to the amount of the Property Allocation for such Property (provided that for
the purposes of this clause (ii) the New York Properties shall be deemed to be
one Property). The provisions of this Paragraph 12.9 shall not be merged into
this Agreement and shall survive the Closing.
12.10 Purchaser hereby agrees to cooperate with Seller, at no cost
or liability to Purchaser, and subject to the provisions contained herein, in
connection with any attempts on the part of the Seller to recover from any third
party any amounts for which Purchaser shall have received a credit from Seller,
pursuant to the terms and conditions of this Agreement, where such credit
relates to an obligation of Seller to indemnify Purchaser or otherwise pay for
the cost of any claims that relate to the acts of such third parties.
12.12 Both 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.
12.13 If an event specified to occur herein falls on a Saturday or
Sunday, or on a day on which banking institutions in the State of Illinois or
California are authorized by law to close, then such event shall occur on the
next day that is not a Saturday or Sunday, or on a day on which banking
institutions in the State of Illinois or California are located are authorized
by law to close.
12.14 In connection with any litigation arising out of this
Agreement, the prevailing party shall be entitled to recover all of its
reasonable attorneys' fees and costs, including, without limitation, all fees
and costs incurred prior to and at all trial and appellate levels.
55
12.15 This Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective heirs, executors, administrators,
legal representatives, successors and permitted assigns.
12.16 This Agreement may be signed in counterparts, which, together,
shall be deemed to be an original and shall constitute one and the same
instrument. Counterparts of this Agreement also may be transmitted by facsimile
copier, which, together, shall be deemed to be an original.
12.17 Purchaser may not assign this Agreement, without the prior
written consent of Seller, unless (a) Purchaser first shall have notified Seller
in writing of such assignment (and Seller shall hereby be deemed to have been
notified of Purchaser's intended assignment of this Agreement with respect to
the First Closing Properties to AMB Institutional Alliance Fund III, LLC, a
Delaware limited liability company), and (b) such assignee(s) shall be an
"Approved Assignee(s)", which, for purposes hereof, shall be any entity that
shall be owned or controlled by, or under common control with, Purchaser;
provided, however, that no such assignment shall relieve Purchaser of any of its
obligations under this Agreement; provided, further that Purchaser can assign
all or a part of this Agreement to one or more Approved Assignees.
12.18 Purchaser and Seller have entered into a certain Letter of
Intent dated as of August 15, 2003 (the "LOI"). Notwithstanding anything to the
contrary contained herein or in the LOI, (a) this Agreement shall supercede the
LOI, (b) from and after the Effective Date, the LOI shall be null and void and
of no further force or effect and (c) in the event of any conflict between any
term, provision or condition contained herein and any term, provision or
condition contained in the LOI, the terms, provisions and conditions of this
Agreement shall govern and control.
12.19 Except with respect to any Properties that Purchaser has
elected not to acquire pursuant to the provisions of Paragraph 4.1, 5.1 and
Article 10 hereunder, Seller agrees not to market or show any of the Properties
to any other prospective purchasers during the term of this Agreement.
12.20 Purchaser and Seller each agree that the terms of this
transaction, the identities of Purchaser and Seller, and all information made
available by one party to the other or in any way relating to the other party's
interest in this transaction, shall be maintained in strict confidence and no
disclosure of such information will be made, whether or not the transaction
contemplated by this Agreement shall close, except to such attorneys,
accountants, investment advisors, lenders and others as are reasonably required
to evaluate and consummate the transaction or as required by law. Purchaser and
Seller each further agree and covenant as follows:
(1) Neither Purchaser nor Seller shall disclose or
authorize the disclosure of the terms of this Agreement or any instruments,
documents, or assignments delivered in connection with this Agreement, or the
identity of the other party to this Agreement in any public statement, news
release, or other announcement or publication.
(2) Nothing in this paragraph shall prevent either
Purchaser or Seller from disclosing or accessing any information otherwise
deemed confidential under this paragraph (i) in connection with that party's
enforcement of its rights hereunder; (ii) pursuant to any legal requirement, any
statutory reporting requirement or any accounting or auditing disclosure
requirement; (iii) in connection with
56
performance by either party of its obligations under this Agreement (including,
but not limited to, the delivery and recordation of instruments, notices or
other documents required hereunder); or (iv) to potential investors,
participants or assignees in or of the transaction contemplated by this
Agreement or such party's rights therein. Notwithstanding anything to the
contrary provided in this Subparagraph 12.20 (but subject to the provisions of
Paragraph 12.20(4)), Purchaser shall be permitted to make such disclosures
regarding the Property and the subject transaction as are reasonably determined
to be required by law and/or as are similar or consistent with Purchaser's
general public disclosure policy, including disclosures made by Purchaser in its
quarterly supplemental analyst disclosure packages, and including disclosures
that are necessary or appropriate in connection with Purchaser's securities
filings, which may include the filing of this Agreement with the SEC.
(3) If this Agreement is terminated with respect to any
or all of the Properties, Purchaser shall destroy or return to Seller all
materials received by Purchaser from Seller with respect to such Properties as
are affected by such termination of this Agreement.
(4) Notwithstanding anything to the contrary contained in
this Paragraph 12.20, Purchaser shall have the sole right to determine the
timing and content of the initial public announcement of the Strategic Alliance
and each new Project (as such terms are defined in the Strategic Alliance
Agreement), subject to IAC's consent to the content thereof (which shall not be
unreasonably withheld); thereafter, either Owner (as defined in the Strategic
Alliance Agreement) shall have the right to publicize the Strategic Alliance and
such Project subject to the other Owner's consent (which shall not be
unreasonably withheld). Notwithstanding the foregoing, Purchaser shall be
permitted to make such disclosures regarding the Strategic Alliance and each
Project as are similar or consistent with Purchaser's general public disclosure
policy, including disclosures made by Purchaser in its quarterly supplemental
analyst disclosure packages; provided, however, that in no event shall Purchaser
make a public announcement of Verizon's (as defined in the Strategic Alliance
Agreement) involvement in the Strategic Alliance unless, prior to such public
announcement of Verizon's involvement, Purchaser determines in good faith that
such public announcement of Verizon's involvement may be required by applicable
laws and regulations and Purchaser provides written notice to Verizon at least
two (2) business days prior to any such public announcement, which notice shall
include the specific language that Purchaser proposes to include in such public
announcement regarding Verizon's involvement. Purchaser shall consider in good
faith any suggested revisions to such language provided by Verizon, which must
be provided to Purchaser within two (2) business days after delivery of a notice
to Verizon pursuant to Section 7.2 of the Strategic Alliance Agreement. In any
event Purchaser may, without providing prior notice to Verizon, make a public
announcement that IAC includes a pension fund affiliated with a "publicly held
corporation," a "Fortune 500 company" or other similar designation.
12.21 If, within two years following the applicable Closing Date, it
becomes reasonably necessary to do so in order to comply with applicable
securities laws or the rules or regulations of the Securities and Exchange
Commission, Purchaser shall have the right, to the extent reasonably necessary,
to inspect the books and records of Seller relating to the operation of the
applicable Property for the period of three (3) years preceding the Closing
Date. Purchaser shall give reasonable prior written notice to Seller when
Purchaser wishes to exercise its right to inspect such books and records. Such
inspection shall take place at the offices of Seller's investment advisors,
property manager or other location as Seller shall reasonably designate during
normal business hours and on a date and at a time reasonably convenient to
Seller and Purchaser. The provisions of this Subparagraph 12.22 shall
57
survive the Closing.
12.22 This Agreement is intended for the sole benefit of the parties
hereto and their successors and assigns and shall not be for the benefit of any
other party.
58
IN WITNESS WHEREOF, the parties have executed and delivered this
Agreement as of the date first above written.
SELLER:
INTERNATIONAL AIRPORT CENTERS L.L.C.,
a Delaware limited liability company
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC SEATTLE L.L.C., a Delaware limited liability
company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC SEATTLE - II L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC SEATTLE - III L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC SEATTLE - IV L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC SEATTLE - V L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
59
IAC LOS ANGELES L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC AVIATION L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC AVIATION - II L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC CHARLOTTE L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC CHARLOTTE - YAB L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC MIAMI L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
60
HICTC HOUSTON L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC NEW YORK L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC NEW YORK - II L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC NEW YORK - III L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC NEW YORK - IV L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
INTERNATIONAL CARGO PORT - BOSTON L.L.C., a
Delaware limited liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
61
IAC GATEWAY L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
IAC PARKING L.L.C., a Delaware limited
liability company
By: International Airport Centers L.L.C., a
Delaware limited liability company, its
Manager
By: -s- ALEX KURRELMEIER
----------------------------
Name: ALEX KURRELMEIER
Managing Director
62
PURCHASER:
AMB PROPERTY, L.P., a Delaware
limited partnership
By: AMB Property Corporation, its
General Partner
By: -s- Tyler W. Higgins
---------------------
Name: Tyler W. Higgins
Title: SVP
THE UNDERSIGNED (COLLECTIVELY, THE "JOINDER PARTIES"), BEING THE DIRECT MEMBERS
OF SELLER (OTHER THAN THE BELL ATLANTIC MASTER TRUST WHICH HAS JOINED IN THIS
AGREEMENT BY EXECUTING THE RESOLUTION ATTACHED HERETO AS EXHIBIT W), HEREBY JOIN
IN THIS AGREEMENT FOR THE PURPOSE OF AGREEING TO THE LIABILITY OBLIGATIONS SET
FORTH IN PARAGRAPH 12.9 HEREOF.
IAC Developers L.L.C., a Delaware limited liability
company
By:Perlmutter Investment Company L.L.C., an
Illinois limited liability company, its Manager
By: -s- ALEX KURRELMEIER
--------------------------
for Norman Perlmutter, Manager
PIC IAC L.L.C., a Delaware limited liability company
By:Perlmutter Investment Company L.L.C., an
Illinois limited liability company, its Manager
By: -s- ALEX KURRELMEIER
--------------------------
for Norman Perlmutter, Manager
IACEA LLC, a Delaware limited liability company
63
By:International Airport Centers L.L.C., a
Delaware limited liability company
By: -s- ALEX KURRELMEIER
--------------------------
Name: ALEX KURRELMEIER
Managing Director
64
LIST OF EXHIBITS
A. Legal Descriptions
B. First Closing Properties, Second Closing Properties, Third Closing
Properties, Fourth Closing Properties
C. Tenant Estoppel Letter
D. Escrow Agreement
E. Due Diligence Materials
F. Seller Estoppel Letter
G. Assignment
H. Texas Deed
I. Washington Deed
J. California Deed
K. North Carolina Deed
L. Florida Deed
M. Bill of Sale
N. Assignment of Lease
O. Assignment of Intangible Property
P. Lease Assignment
Q. Tenant Notice
R. Seller's Re-certification of Representations and Warranties
S. FIRPTA Affidavit
T. Purchaser's Re-certification of Representations and Warranties
U. Aero SeaTac Organizational Documents
V. Required Estoppels
i
W. IAC Resolution