EXHIBIT 10.3
OMNIBUS OPTION AGREEMENT
BY AND AMONG
▇▇▇▇▇▇ REALTY, L.P.
AND
THE GRANTORS NAMED HEREIN
Dated as of October 30, 1996
OMNIBUS OPTION AGREEMENT
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This Omnibus Option Agreement (this "Agreement") is executed as of the
___ day of October, 1996 by ▇▇▇▇▇▇ Realty, L.P., a Delaware limited partnership
(the "Operating Partnership" or "Optionee"), and the grantors whose names are
set forth on the signature pages hereto (each, a "Grantor" and, collectively,
the "Grantors"). Capitalized terms used but not defined herein shall have the
meaning given to each such term in the Memorandum (as defined below).
WHEREAS, the Grantor owns a direct or indirect interest in one or more
of the office and industrial properties and related real and personal property,
contracts and other rights (collectively, the "Properties") affiliated with the
business of ▇▇▇▇▇▇ Industries, a California corporation ("KI") and set forth on
Exhibit A hereto;
WHEREAS, the Grantor holds such interest (an "Interest") directly (any
entity owning a Property directly is referred to herein as an "Entity"), as a
beneficiary of a trust, in the form of general or limited partnership interests
in one or more partnerships or in the form of membership interests in a limited
liability company;
WHEREAS, Optionee desires to acquire from each Grantor, and each
Grantor desires to grant to Optionee, an option (the "Option") to require
Grantor's contribution, transfer, assignment and conveyance of the Interests
(the "Contribution"), including the Option Property (as defined below), to
Optionee in exchange (the "Exchange") for limited partnership interests ("OP
Units") in the Operating Partnership on the terms and conditions set forth
herein;
WHEREAS, the Contribution may be effected, with respect to certain
partnerships and limited liability companies at the discretion of the general
partner(s) or members thereof, as applicable, either by (i) the direct transfer
of all or a portion of the Grantor's direct or indirect interests in an Entity
to the Operating Partnership in exchange for OP Units, followed in certain cases
by the Entity's distribution of its Properties to the Operating Partnership in
redemption of such transferred interests, or (ii) the direct transfer of a
Property by an Entity to the Operating Partnership in exchange for OP Units
followed, in the case of certain partnerships, limited liability companies or
trusts, by the Entity's distribution, either directly or through a constituent
entity that owns an interest in an Entity, of such OP Units to the holders of
direct or indirect interests in that Entity, as more fully described in the
private placement memorandum dated as of October 29, 1996 delivered to Grantors
and attached hereto as Exhibit D (the "Memorandum"), and the Representation
Letter, Consent and Power of Attorney of even date herewith delivered by or on
behalf of such Grantor to the Operating Partnership (each such letter is
hereinafter referred to as such Grantor's "Consent Letter"); and
WHEREAS, the parties acknowledge that the Operating Partnership is
considering the acquisition of each Grantor's Interests in connection with the
formation of a real estate investment trust, ▇▇▇▇▇▇ Realty Corporation, a
Maryland corporation (the
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"Company"), which will be the sole general partner of the Operating Partnership
and a proposed initial public offering (the "IPO") of the Company's shares of
common stock (the "REIT Shares");
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants and conditions set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Optionee and each of the Grantors agree as follows:
ARTICLE I. THE OPTION
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1.1 Grant of Option. Each Grantor hereby grants to Optionee an
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option (each such option is hereinafter referred to as such Grantor's "Option"
and collectively, the "Options") to require the Contribution to Optionee of all
right, title and interest of such Grantor in its Interests, free and clear of
any security interests, claims, liens, equities, or other encumbrances of any
kind or nature whatsoever and any preemptive or preferential rights, except as
previously disclosed to the Operating Partnership, all on the terms and
conditions hereinafter set forth.
1.2 Term and Exercise of Option. Optionee may exercise an Option at
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any time from and after the date hereof through the date of the closing of the
IPO; provided, however, that in the case of the Option with respect to Interests
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in the Property set forth in Exhibit C (the "Option Property"), such Option
shall be exercisable in accordance with the provisions set forth in such
Exhibit. The last date on which an Option may be exercised is referred to
herein as an "Option Termination Date." Each Option may be exercised by the
giving of notice by Optionee to the Grantor. If Optionee does not exercise an
Option by the Option Termination Date, such Option shall be deemed terminated
and shall be of no further force and effect and neither Grantor nor Optionee
shall have any further obligations hereunder. Notwithstanding the foregoing,
from the date hereof through the applicable Option Termination Date, each
Grantor's Option shall be irrevocable.
1.3 Treatment as Contribution. The Contribution shall constitute a
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"Capital Contribution" pursuant to Article 4 of the Agreement of Limited
Partnership of the Operating Partnership to be executed on or prior to the
closing of the IPO (the "OP Partnership Agreement"), a draft of which is
included in the disclosure materials accompanying the Consent Letter, and is
intended to be governed by Section 721(a) of the Internal Revenue Code of 1986,
as amended.
1.4 Consideration. The full consideration for each Grantor's
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Interests (such consideration with respect to such Grantor is hereinafter
referred to as such Grantor's "Option Consideration") shall be such number of OP
Units to be determined as set forth in the Memorandum or, in the case of the
Option Property, as set forth in Exhibit C, as such Option Consideration may be
adjusted pursuant to Section 4.2 hereof.
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1.5 Acknowledgment Regarding Memorandum and Consent Letter. Each
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Grantor acknowledges the receipt and review of the Memorandum describing the
terms of the Contribution and relevant information concerning the Operating
Partnership, the Company and the IPO, and each Grantor has executed the Consent
Letter concurrently herewith.
1.6 Acquisition of Interests. Upon Optionee's exercise of an Option,
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such Grantor shall make the Contribution and the Operating Partnership shall
acquire and accept the Interests from such Grantor, as set forth in the recitals
hereto, and the Operating Partnership shall deliver to such Grantor such
Grantor's Option Consideration in accordance with the terms of this Agreement.
Such Contribution will be evidenced by a form of assignment or other
documentation satisfactory in form and substance to the Operating Partnership.
1.7 Assumption of Obligation. Except as otherwise expressly provided
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herein, upon the Closing (as hereinafter defined) the Operating Partnership
shall assume the obligations of the Entities under all leases, contracts and
other agreements or other obligations of Grantors relating to the Properties, in
each case, which have been entered into in the ordinary course of business or
have been previously disclosed to the Operating Partnership and which are not
otherwise in violation of this Agreement except claims of any Grantor or other
liabilities arising out of the consummation of the transactions contemplated by
the Memorandum.
1.8 ▇▇▇▇▇▇ LAX. Any payments with respect to (i) obligations in an
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amount up to $3,650,000 plus any interest or penalties in connection with the
elimination of the joint venture obligation relating to Tower VI at ▇▇▇▇▇▇ LAX
and the extension of the ▇▇▇▇▇▇ Electronic Corporation's Space & Communications
Company lease at ▇▇▇▇▇▇ LAX and (ii) the freeway on-ramp under construction
(including, without limitation, reparations and improvements as a result thereof
or in connection therewith) at ▇▇▇▇▇▇ LAX, shall, in each case, be the
responsibility of the Grantor who is the owner of such Property and such Grantor
agrees that any such payment is such Grantor's responsibility.
1.9 Contract Rights. Upon Optionee's exercise of any Option, the
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Grantor of such Option agrees to transfer, or to cause any of its affiliates to
transfer, as contemplated in Section 5.3.A hereto, all of such Grantor's right,
title and interest in the contracts set forth in Exhibit B hereto to the
Operating Partnership or an affiliate thereof, free and clear of any security
interests, claims, liens, equities or other encumbrances of any kind or nature
whatsoever other than those which are disclosed to, and approved by, Optionee.
ARTICLE II. CONDITIONS TO OBLIGATIONS TO CLOSE
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2.1 Conditions to Grantor's Obligation to Close. The obligation of
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each Grantor to close hereunder upon the exercise of any Option shall be subject
to (i) the consummation of the IPO, (ii) the issuance to those Grantors whose
Option Consideration is determined by the amount that the value of such
Grantor's Interest in the Properties bears to the aggregate value of all such
Grantors' Interests in the Properties (the "Percentage Valuation Grantors") and
whose Options are exercised at the closing of the IPO of OP Units
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which in the aggregate have an initial value of at least $5.0 million (each OP
Unit to be deemed to have an initial value equal to the public offering price of
one REIT Share in the IPO), and (iii) the approval for listing, subject to
notice of issuance, of the REIT Shares on a national securities exchange or the
approval for designation, subject to notice of issuance, of the REIT Shares as
national market system securities on an interdealer quotation system by the
National Association of Securities Dealers, Inc.
2.2 Conditions to Operating Partnership's Obligations to Close. The
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obligation of the Operating Partnership to close hereunder upon the exercise of
any Option shall be subject to the satisfaction of the following conditions
unless waived by the Operating Partnership in its sole and absolute discretion:
A. Closing of IPO. The Company shall have consummated the IPO and
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received proceeds therefrom in such amount as to adequately
provide for the issuance to the Percentage Valuation Grantors
whose Options are exercised at or prior to the closing of the IPO
of OP Units which in the aggregate have an initial value of at
least $5.0 million (each OP Unit to be deemed to have an initial
value equal to the public offering price in the IPO of one REIT
Share).
B. Representations and Warranties True at Closing. The
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representations and warranties made by the Grantor in the Consent
Letter shall be true in all material respects as of the Closing
(as defined herein) with the same effect as though such
representations and warranties had been made or given at the
Closing.
C. Compliance with Agreements. The Grantor shall have timely and
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duly performed and complied in all respects with such Grantor's
respective obligations under this Agreement and the Consent
Letter prior to or at the Closing and shall have executed and
delivered the OP Partnership Agreement.
D. Supplemental Representations, Warranty and Indemnity Agreement.
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The Grantors named as parties to that certain Supplemental
Representations, Warranties and Indemnity Agreement (the
"Supplemental Agreement"), shall have entered into the
Supplemental Agreement and such Supplemental Agreement shall be
in form and substance satisfactory to the Operating Partnership
in its sole discretion and the representations and warranties of
the Grantors contained therein shall be true in all material
respects as of the Closing. The parties thereto shall have
pledged their OP Units in accordance therewith to secure their
indemnity obligations under the Supplemental Agreement, and such
pledge shall be in form and substance satisfactory to the
Operating Partnership.
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E. No Material Adverse Change. There shall not have occurred
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between the date hereof and the Closing any casualty, loss,
condemnation or other adverse event with respect to any Property,
or any development involving a prospective adverse event with
respect to any Property, including, without limitation, any
change in the level of occupancy of any Property (as applicable)
or any change in the rental rates with respect to any Property,
that would be material to the business proposed to be conducted
by the Operating Partnership.
F. No Prohibition on Consummation of Transactions. No order,
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statute, rule, regulation, executive order, injunction, stay,
decree or restraining order shall have been enacted, entered,
promulgated or enforced by any court of competent jurisdiction or
governmental or regulatory authority or instrumentality that
prohibits the consummation of the transactions contemplated
hereby, and no litigation or governmental proceeding seeking such
an order shall be pending or threatened.
G. Delivery of Documents. The Grantor shall have executed and
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delivered to the Operating Partnership all documents the
Operating Partnership shall deem necessary for the transfer of
the Interests and the consummation of the transactions
contemplated herein, including, without limitation, the documents
set forth in Section 5.3 hereof.
H. Consents. The Grantor shall have obtained all consents or
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approvals of governmental authorities or third parties to the
consummation of the transactions contemplated herein that the
Operating Partnership shall deem necessary for the transfer of
the Interests.
I. No Breach. Each Grantor shall not have breached any of its
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covenants contained herein.
▇. ▇▇▇▇-▇▇▇▇▇ ▇▇▇▇▇▇ Act. If Optionee shall determine that any of
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the transactions contemplated hereby is subject to the reporting
requirements of the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act
of 1976, then all filings shall have been made and all other
actions shall have been taken as necessary to comply with such
act and the rules and regulations thereunder. Each Grantor
covenants to take all such actions and make all such filings
requested by Optionee as necessary to comply with such act and
the rules and regulations thereunder.
K. No Condemnation. There shall be no pending or threatened
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condemnation or taking of any part of any Property or any means
of ingress or egress thereto (other than any such taking which,
in the Optionee's reasonable judgment, does not materially
adversely affect such Property).
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ARTICLE III. COVENANTS
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3.1 Covenants of Grantor. Each Grantor covenants and agrees that
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from the date hereof through the Closing:
A. Such Grantor will not, and will not enter into any agreement to,
transfer, sell or otherwise dispose of any of such Grantor's
Interests to any other person or entity, subject to the rights of
certain of the Grantors to sell the Option Property following
consummation of the IPO as provided on Exhibit C.
B. Such Grantor will, or (if not an Entity) will cause any Entity in
which it has a direct or indirect interest, to conduct its
business in the ordinary course, and operate and maintain the
Properties, in each case, consistent with past practice.
C. Such Grantor will allow, and will cause an Entity over which it
has control to allow, the Operating Partnership and its agents
and representatives to inspect the Properties and the records,
books and accounts of the Entities at all reasonable times.
D. Such Grantor will promptly notify the Operating Partnership if
any of its representations or warranties in the Consent Letter is
untrue or if it becomes aware of any transaction or occurrence
which would make any of such representations or warranties
untrue.
E. Such Grantor will or (if not an Entity) will cause any Entity
over which it has control, to maintain in effect insurance of
such types, in such amounts and on such terms as are currently in
effect with respect to the Properties and keep in force and renew
such permits and licenses as are necessary to own and operate the
Properties.
F. Such Grantor shall not modify or amend any partnership agreement,
limited liability company operating agreement or trust agreement
of any partnership, limited liability company or trust in which
it has an Interest without the prior consent of the Operating
Partnership other than as necessary to permit or facilitate the
Contribution and the transactions related thereto contemplated
thereby.
G. Such Grantor shall not, without the Operating Partnership's prior
consent and other than in connection with the arrangement of any
interim financing with respect to the Properties, permit any
Entity to:
1. enter into any material transaction or contract;
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2. amend, modify or terminate any material agreement to which
the Entity is a party; or
3. materially alter the manner of keeping the Entity's books,
accounts or records or the accounting practices therein
reflected.
H. Such Grantor will, or (if not an Entity) will cause any Entity
over which it has control to, maintain the Properties in at least
as good condition and repair as prevails on the date hereof
except for reasonable wear and tear.
I. The Grantor agrees to transfer any and all insurance and
condemnation proceeds payable to a Grantor with respect to a
Property, provided, however, that the obligation to restore such
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Property related thereto shall be the obligation of the Operating
Partnership.
J. Such Grantor shall use its good faith best efforts to obtain any
approvals, waivers or other consents of governmental authorities
or other third parties required to effect the transactions
contemplated by this Agreement.
ARTICLE IV. CLOSING ADJUSTMENTS
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4.1 Prorations. On the Closing Date (as defined below), or as
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promptly as practicable following the Closing Date, to the extent such matters
are not the right or responsibility of any tenant of a Property, all revenues
and all charges that are customarily prorated in transactions of this nature,
including, without limitation, accrued rent, overpaid taxes or fees, real and
personal property taxes, and other similar periodic charges payable or
receivable with respect to each applicable Property shall be ratably prorated
between the Operating Partnership and the applicable Grantor(s) effective as of
the Closing Date.
4.2 Allocation of Adjustments. All adjustments contemplated by this
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Article 4 shall be made by adjusting the Option Consideration to each Percentage
Valuation Grantor by debiting or crediting (as the case may be) such Grantor's
Option Consideration.
ARTICLE V. CLOSING
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5.1 Closing. In connection with or at any time after the exercise by
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Optionee of an Option, the Operating Partnership will specify a closing date
(the "Closing Date") for the closing of a Contribution or Contributions (a
"Closing"), which shall occur on the date of, the closing of the IPO, provided,
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however, that in the event the Option with respect to the Option Property is not
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exercised by the Operating Partnership prior to the closing of the IPO, the
Closing of such Contribution shall occur on such date, consistent with the
provisions of Exhibit C, as the Operating Partnership shall determine in its
discretion but in no event later than 60 days after the exercise of the Option
for such Option Property (such exercise to be deemed to occur on the date the
Operating Partnership gives the OP Notice (as
7
defined in Exhibit C)). The consummation of the Contributions made on the
closing of the IPO shall be deemed to occur concurrently with the consummation
of the IPO. Any Closing of the Option with respect to the Option Property
exercised after the consummation of the IPO shall be held at such place and time
as determined by the Operating Partnership in its sole discretion and, with
respect to all other Properties, shall be held at such place and time as the
closing of the IPO is held.
5.2 Failure of Closing to Occur. If, other than with respect to the
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Option Property, the Closing does not occur on or before December 31, 1998, this
Agreement will terminate, and any and all rights or obligations hereunder shall
cease and no longer be binding on the parties hereto and no party shall
thereafter have any liability or obligation hereunder to any other party.
5.3 Closing Deliveries.
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A. At the Closing, each Grantor shall, directly or through its
attorney-in-fact, execute, acknowledge and deliver to the Operating Partnership
the legal documents and other items necessary to carry out the intention of this
Agreement, including, but not limited to, deeds and bills of sale and
assignments of such Grantor's Interests, including bills of sale and assignments
(as applicable) for such Grantor's interest in leases (including, without
limitation, ground leases and space leases), contracts, licenses, permits,
personalty agreements and proprietary rights related to the ownership,
development, use and operation of the Properties, as well as assignments of the
interests in the agreements listed on Exhibit B, in a form reasonably
satisfactory to the Operating Partnership.
B. In addition to the documents mentioned above and herein,
each Grantor shall deliver or cause to be delivered any other documents
reasonably requested by Operating Partnership or reasonably necessary to assign,
transfer and convey such Grantor's Interests and effectuate the transactions
contemplated hereby.
C. At the Closing, each Grantor shall execute, acknowledge and
deliver and shall cause each entity in which the Grantor has a direct or
indirect interest to execute, acknowledge and deliver an affidavit from each of
such Grantor or entity as appropriate, stating under penalty of perjury the
United States Taxpayer Identification Number of the Grantor or entity, as
appropriate, and that Grantor or entity, as appropriate, is not a foreign person
pursuant to Section 1445(b)(2) of the Internal Revenue Code of 1986, as amended,
and a comparable affidavit satisfying state and any other withholding
requirements.
5.4 Breach of Agreement.
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(a) Optionee may, in its sole discretion, elect not to complete
the acquisition of all or any portion of the Interests of any Grantor in the
event that the Grantor breaches any provision of this Agreement (any such
Grantor, a "Non-Complying Grantor"). The election of Optionee to not acquire all
or any portion of the Interests of a particular Non-Complying Grantor shall not
affect the obligations of any other Grantor hereunder, including any other Non-
Complying Grantor.
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(b) If any Grantor defaults with respect to its obligations
under this Agreement, Optionee shall be entitled to exercise against each such
Grantor any and all remedies provided at law or in equity, including but not
limited to, the right to specific performance. No default by any Grantor
hereunder shall in any way limit or affect the obligations of any other Grantor
hereunder.
5.5 Cessation of Public Offering. If at any time Optionee or its
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underwriter or underwriters determines in good faith to abandon the IPO,
Optionee will so advise each Grantor in writing and thereupon all parties hereto
will be relieved of all obligations under this Agreement.
5.6 Further Assurances. Each Grantor will, from time to time,
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execute and deliver to Optionee all such other and further instruments and
documents and take or cause to be taken all such other and further action as
Optionee may reasonably request in order to effect the transactions contemplated
by this Agreement, including instruments or documents deemed necessary or
desirable by Optionee to effect and evidence the conveyance of such Grantor's
Interests and the interests described in Section 1.9 hereof in accordance with
the terms of this Agreement.
ARTICLE VI. MISCELLANEOUS
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6.1 Entire Agreement. This Agreement and the Consent Letter,
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including any exhibits and schedules hereto and thereto and other documents or
agreements, entered into pursuant hereto and thereto and all instruments and
certificates delivered pursuant to the terms hereof or thereof, constitutes the
entire agreement and understanding of the parties hereto in respect of the
subject matter hereof, and supersedes all prior agreements, promises, covenants,
arrangements, representations or warranties, whether oral or written, by any
party hereto or any officer, director, employee or representative of any party
hereto.
6.2 Counterparts. This Agreement may be executed in several
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counterparts, each of which will be deemed an original and all of which taken
together shall constitute one and the same instrument.
6.3 Governing Law. This Agreement shall be governed by the laws of
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the State of California without giving effect to the conflict of law provisions
thereof.
6.4 Amendment. This Agreement may be amended or modified only in a
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writing signed by the parties to be bound by such amendment and any waiver of a
provision must be in writing signed by the parties to be bound and such waiver
shall not constitute a waiver of any other provisions of this Agreement;
provided, however, that no such amendment shall alter the irrevocability of a
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Grantor's Option as set forth in Section 1.2 or vary the obligation of each
Grantor to close hereunder as set forth in Section 2.1 hereof.
6.5 Successors. This Agreement shall be binding upon, and shall be
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enforceable by and inure to the benefit of, the parties hereto and their
respective heirs, legal
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representatives, successors and assigns; provided, that this agreement may not
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be assigned without the Operating Partnership's prior written consent.
6.6 Titles. The titles and captions of the Articles, Sections and
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paragraphs of this Agreement are included for convenience of reference only and
shall have no effect on the construction or meaning of this Agreement.
6.7 Severability. If any provision of this Agreement, or the
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application thereof, is for any reason held to any extent to be invalid or
unenforceable, the remainder of this Agreement and application of such provision
to other persons or circumstances will be interpreted so as reasonably to effect
the intent of the parties hereto.
6.8 Third Parties. Except as specifically set forth or referred to
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herein, nothing herein expressed or implied is intended or shall be construed to
confer upon or give to any person or entity other than the parties hereto and
their successors or assigns any rights or remedies under or by reason of this
Agreement.
6.9 Notices. All notices, demands, requests, consents, approvals or
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other communications (collectively, "Notices") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be personally served, delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice in accordance with this Section 6.9.
Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by telegram, telex or facsimile. Notice
otherwise sent as provided herein shall be deemed given on the next business day
following delivery of such notice to a reputable air courier service.
To the Operating Partnership:
▇▇▇▇▇▇ Realty, L.P.
c/▇ ▇▇▇▇▇▇ Industries
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
To Grantor:
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
6.10 Exhibits. Each of the exhibits referred to herein and attached
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hereto is an integral part of this Agreement and is incorporated herein by
reference.
6.11 Time of the Essence. Time is of the essence with respect to all
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obligations of each Grantor under this Agreement.
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6.12 Attorneys Fees. In the event of a dispute arising out of the
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interpretation or enforcement of this Agreement, or a declaration of rights
hereunder, or enforcement of any judgment of any judicial or non-judicial body
with respect to the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees.
6.13 Trusts. In the event any Grantor which is a trust has
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terminated or the Properties held by such trust are deemed distributed, this
Agreement shall be deemed modified to reflect the direct ownership by the
beneficiaries of such trust of the Properties held by such trust as set forth on
Exhibit A hereto.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement, or caused the Agreement to be duly executed on its behalf, as of the
date first written above.
OPTIONEE: ▇▇▇▇▇▇ REALTY, L.P.
By: ▇▇▇▇▇▇ Realty Corporation
Its: General Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: President
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GRANTOR SIGNATURE PAGE
The undersigned, desiring to become one of the within named Grantors
to this Omnibus Option Agreement by and among Optionee and the Grantors named
therein, dated as of October __, 1996, hereby becomes a party to such Agreement.
The undersigned agrees that this signature page may be attached to any
counterpart of this Agreement.
___________________________________
Name:
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EXHIBIT A
Property/Agreement Party
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(Other than as indicated below, each entry
below includes real estate (but only a
ground leasehold estate with respect to
land held subject to a ground lease),
substantially all personal property owned
by a Grantor related thereto, and leases)
▇▇▇▇▇▇ Airport Center at El ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Airport Associates
2240, 2250, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, 3760, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ Associates*
Long Beach, California ▇▇▇▇▇▇ Long Beach Partner
(and ground lease) II**
Phases III and IV ▇▇▇▇▇▇ Long Beach
▇▇▇▇▇▇ Airport Center Long Beach Associates
Long Beach, California
(all ground leases and development
agreement)
▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇-Freehold Industrial
El Segundo, California Development Organization
(Bldgs 213/215)
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Kilroy Industries
El Segundo, California
(Bldg 51)
▇▇▇▇/▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.*
Anaheim, California Kilroy Building 73
(Bldg 73) Partnership**
▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇. Kilroy-Freehold Industrial
El Segundo, California Development Organization
(Bldg 214)
▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇▇-Freehold Industrial
El Segundo, California Development Organization
(Bldg 218)
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 1979 Trust(1)/▇▇▇▇▇▇
Anaheim, California Industries
(Bldg 235)
A-1
Property/Agreement Party
------------------ -----
(Other than as indicated below, each entry
below includes real estate (but only a
ground leasehold estate with respect to
land held subject to a ground lease),
substantially all personal property owned
by a Grantor related thereto, and leases)
▇▇▇▇/▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ 1979 Trust(1)/▇▇▇▇▇▇
Anaheim, California Industries
(Bldg 236)
12681/12691 Pala Drive ▇▇▇▇▇▇ Industries*
Garden Grove, California ▇▇▇▇▇▇ Garden Grove
(Bldg 241) Associates**
▇▇▇▇ ▇. ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇. ▇▇▇▇▇▇-Freehold Industrial
El Segundo, California Development Organization
(Bldg 212)
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ A-102 Trust(2)
Phoenix, Arizona
SeaTac Office Center Sea/Tac Properties, Ltd.
17900, 17930, ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇***
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
(and all ground and air leases)
Administrative Assets ▇▇▇▇▇▇ Industries/▇▇▇▇▇▇
Technologies Company,
LLC
Thousand Oaks Exclusive Negotiation ▇▇▇▇▇▇ Industries
Agreement
---------------------------
* holds legal title to property as agent on behalf of beneficial owner
** beneficial owner of 100% interest in property
*** Party to ground and air leases only
(1) Beneficiaries are ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇
(2) Beneficiaries are ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇.
A-2
EXHIBIT B
ASSIGNMENT OF CONTRACTS
Agreement Party
--------- -----
Development Management Agreement ▇▇▇▇▇▇ Technologies
(Riverside) Company, LLC
Agreement to Provide Real Estate Services ▇▇▇▇▇▇ Technologies
(Northrop Grumman - Pico ▇▇▇▇▇▇) Company, LLC
Exclusive Broker Employment Agreement The ▇▇▇▇▇▇
(Northrop Grumman) Companies,
LLC
Lease between ▇▇▇▇▇▇ Industries, as ▇▇▇▇▇▇ Industries
landlord, and United Artists Theatre
Circuit, Inc., as tenant
Option to Enter Into Ground Lease ▇▇▇▇▇▇ Long Beach
between City of Long Beach and ▇▇▇▇▇▇ Associates
Long Beach Associates, as amended
Any contract rights held by any Grantor
with respect to properties to be acquired
by the Operating Partnership or any
affiliate thereof
B-1
EXHIBIT C
I. TERMS OF OPTION FOR SEATAC OFFICE CENTER
1. Option Property: SeaTac Office Center at Seattle-Tacoma
---------------
International Airport, 17900, 17930 and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ (the "SeaTac Property").
2. Term of Option: The option (the "SeaTac Option") is exercisable
--------------
by the Operating Partnership beginning on the date of this
Agreement and continues until the first anniversary of the
consummation of the IPO; provided, that, in the event that
--------------
SEA/TAC Properties, Ltd. (the "Owner") is unable to deliver to
the Operating Partnership (i) estoppel certificates reasonably
satisfactory to the Operating Partnership regarding the continued
validity of, and absence of breaches under, the ground leases
applicable to the SeaTac Property and (ii) assurance reasonably
satisfactory to the Operating Partnership with respect to the
indebtedness on the Option Property that such indebtedness can be
subject to at least one of the following: (A) assumption with
all prior defaults or breaches deemed cured or waived or (B)
repayment with the lenders' rights being deemed discharged in all
material respects (collectively, the "Estoppel Certificates")
prior to the 270th day following consummation of the IPO, then
the SeaTac Option shall be exercisable until the date that is 90
days following the delivery of the Estoppel Certificates. The
Owner shall use its reasonable efforts to obtain the Estoppel
Certificates as soon as reasonably practicable following the date
of this Agreement.
3. Purchase Price:
--------------
a. If the Operating Partnership exercises the SeaTac Option
prior to or concurrently with the closing of the IPO, the
Grantor(s) of the SeaTac Option shall be entitled to receive
such number of OP Units in exchange for its Interests as
described in the Memorandum.
b. In the event that the Operating Partnership exercises the
SeaTac Option following the consummation of the IPO, the
purchase price for such Option Property, payable in OP
Units, will be equal to the greater of (i) the Net Operating
Income (as defined below) for each of such office
properties, capitalized at a 9.5% rate, plus capitalized
expenditures and expenses, excluding carrying costs,
incurred from the date the underwriting agreement is
executed in connection with the IPO (the "Offering Date")
through the date of exercise of the SeaTac Option (the
"Exercise Date"), less the amount of outstanding debt on
such
C-1
Property as of the Exercise Date or (ii) $20 million, plus
capitalized expenditures and expenses, excluding carrying
costs, incurred from the Offering Date through the Exercise
Date, net to holder less the amount of outstanding debt on
such Property as of the Exercise Date (but in no event less
than zero). Upon exercise of the Option, the Operating
Partnership will be responsible for all indebtedness related
to the Option Property. For purposes of this paragraph,
"Net Operating Income" is defined as net operating income
for the 12-month period ending the Offering Date, adjusted
for (A) the incremental increase in net operating income
attributable to contractual rental increases for the 12-
month period immediately following the Offering Date, (B)
the incremental increase in net operating income
attributable to rental revenue from leases commencing during
the 12-month period ending the Offering Date for the 12-
month period immediately following the Offering Date, (C)
the elimination of rental revenue reflected in rental
revenue for the 12-month period ending the Offering Date
from (1) leases which expired during such 12-month period,
and (2) leases which expire during the 12-month period
immediately following the Offering Date for that portion of
such 12-month period that such leases are no longer in
effect and (D) the effect of adjusting straight-line rental
income and expenses included in net operating income from an
accrual basis under GAAP to a cash basis. The number of OP
Units to be issued in respect of the foregoing will be in an
amount determined by reference to the average trading value
of the REIT Shares for the ten trading days immediately
preceding the Exercise Date. In exercising the Option
following the consummation of the IPO, the Operating
Partnership will use reasonable efforts to cooperate with
the Grantors to minimize any taxes payable in connection
with such exercise or the assumption or repayment of debt
relating to the SeaTac Property.
4. Third Party Offers. In the event the Grantor(s) desire to offer
------------------
the SeaTac Property to a third party, the Grantor(s) shall give
written notice (the "Notice") thereof to the Operating
Partnership (the date notice is given is referred to as the
"Notice Date"), which notice shall include the proposed purchase
price, leasing terms and other economic terms, as applicable (the
"Proposed Purchase Price"), of the proposed transfer of the
SeaTac Property, and the Operating Partnership shall then have 60
days to give notice (the "OP Notice") of its election to acquire
such property at the lower of the Option Price or the Proposed
Purchase Price. In the event the Operating Partnership does not
give the OP Notice, the SeaTac Option shall be suspended and the
Grantor(s) may proceed with the sale pursuant to the terms of
such
C-2
offer, provided that the economic terms may be up to 5% below
those described in the Notice; provided, however, that if such
sale is at a price in excess of the Option Price and at the time
the Notice is given the Estoppel Certificates have not been
delivered, the Operating Partnership shall have the right to
acquire at the Option Price the Owner's rights and related
monetary obligations under such sales agreement. In the event
the Grantor(s) of the SeaTac Property (i) have not entered into a
letter of intent for the sale of the SeaTac Property within 180
days following the Notice Date, or (ii) have not completed the
sale of the SeaTac Property within 270 days following the Notice
Date, then the Operating Partnership's SeaTac Option will be
reinstated. The SeaTac Option shall be subject to any
arrangements entered into by the Grantor(s) in connection with
any financing, recapitalization or leasing of the SeaTac Property
including, without limitation, any rights of the current
lender(s) with respect to the SeaTac Property with respect to a
transfer pursuant to the SeaTac Option.
C-3
EXHIBIT D
[Private Placement Memorandum]
C-4