EXHIBIT 10.70
CONTRIBUTION AGREEMENT
BY AND BETWEEN
▇▇▇▇▇▇ REALTY, L.P.,
a Delaware limited partnership
as
"KR"
and
▇▇▇▇▇▇ REALTY CORPORATION,
a Maryland corporation
as
"KRC"
and, collectively as "TAG"
UTC GREENWICH PARTNERS, L.P.,
a California limited partnership
ADI ARROW PARTNERS, L.P.,
a California limited partnership
KOM PARTNERS, L.P.,
a California limited partnership
WHISPERWOOD LIMITED-LIABILITY COMPANY,
a Nevada limited liability company
▇▇▇▇▇ AEROJET, LLC,
a Nevada limited liability company
ADI-FFF PARTNERS, L.P.,
a California limited partnership
ADI MESA PARTNERS-ICS, L.P.,
a California limited partnership
ADI MESA PARTNERS-AMCC, L.P.,
a California limited partnership
ADI COMMUNICATION PARTNERS, L.P.,
a California limited partnership
ADI EASTGATE PARTNERS, L.P.,
a California limited partnership
ADI MEMEC PARTNERS, L.P.,
a California limited partnership
▇▇▇▇▇ EXPRESS PETALUMA, L.P.,
a California limited partnership
ADI CARMEL VALLEY PARTNERS, L.P.,
a California limited partnership
McCARRAN COMMERCE CENTER, LLC,
a Nevada limited liability company
SORRENTO WATERIDGE PARTNERS, L.P.,
a California limited partnership
▇▇▇▇▇ ▇▇▇▇▇ PARTNERS, L.P.,
a California limited partnership
PIAZZA PARTNERS, L.P.,
a California limited partnership
ADI RESEARCH PARTNERS, L.P.,
a California limited partnership
ADI MESA PARTNERS, L.P.,
a California limited partnership
and, collectively as the "Allens"
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇
R.E. ▇▇▇▇▇
TABLE OF CONTENTS
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Page
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ARTICLE I. RECITALS...................................................................... 1
ARTICLE II. DEFINITIONS................................................................... 2
ARTICLE III. CONTRIBUTION AND ACQUISITION.................................................. 7
Section 3.1. Agreement to Contribute and Acquire...................................... 7
Section 3.2. Contribution Value and Costs............................................. 7
Section 3.3. Issuance of Contribution Value........................................... 11
Section 3.4. Transferability of Units; Redemption Rights; Registration Rights......... 11
ARTICLE IV. TITLE AND SURVEY.............................................................. 12
Section 4.1. Delivery of Title Documents.............................................. 12
Section 4.2. Title Examination........................................................ 12
Section 4.3. Title Notice............................................................. 12
Section 4.4. Pre-Closing "Gap" Title Defects.......................................... 13
Section 4.5. Permitted Exceptions..................................................... 13
Section 4.6. Conveyance of Title...................................................... 14
ARTICLE V. REVIEW OF PROPERTIES.......................................................... 14
Section 5.1. Right of Inspection...................................................... 14
Section 5.2. Environmental Reports.................................................... 15
Section 5.3. Right of Termination..................................................... 15
Section 5.4. Review of Tenant Estoppels............................................... 15
ARTICLE VI. CLOSING....................................................................... 16
Section 6.1. Time and Place........................................................... 16
Section 6.2. TAG's Obligations At and Prior to Initial Closing........................ 16
Section 6.3. KR's Obligations at or Prior to Initial Closing.......................... 20
Section 6.4. Subsequent Closings...................................................... 22
Section 6.5. Credits and Prorations................................................... 24
Section 6.6. Transaction Taxes and Closing Costs...................................... 27
Section 6.7. Conditions Precedent to Obligation of KR................................. 28
Section 6.8. Conditions Precedent to Obligation of TAG................................ 29
ARTICLE VII. BUILDINGS UNDER CONSTRUCTION/EXISTING LEASES.................................. 30
Section 7.1. Management Agreement..................................................... 30
Section 7.2. Closings................................................................. 30
Section 7.3. Issuance of Contribution Value........................................... 30
i
ARTICLE VIII. TO BE LEASED PROPERTIES....................................................... 31
Section 8.1. Management Agreement..................................................... 31
Section 8.2. Closings; Right of First Refusal......................................... 31
Section 8.3. Contribution Value of To Be Leased Properties............................ 32
Section 8.4. Issuance of Contribution Value........................................... 33
ARTICLE IX. LAND UNDER DEVELOPMENT........................................................ 33
Section 9.1. Development LLC.......................................................... 33
Section 9.2. ▇▇▇▇▇ Ranch.............................................................. 34
Section 9.3. Property Related Matters................................................. 36
Section 9.4. Issuance of the Contribution Value....................................... 38
Section 9.5. Valuation of Land when Originally Contributed............................ 39
Section 9.6. KR Option to Acquire..................................................... 39
Section 9.7. DoubleTree Restaurant Parcel............................................. 40
Section 9.8. Expansion Parcel......................................................... 41
Section 9.9. Units Issued Pursuant to LLC Operating Agreement......................... 42
ARTICLE X. DENVER FED EX................................................................. 42
Section 10.1. Management Agreement (Denver Fed Ex)..................................... 42
Section 10.2. Funding.................................................................. 42
ARTICLE XI. REPRESENTATIONS, WARRANTIES AND COVENANTS..................................... 43
Section 11.1. Representations and Warranties of TAG.................................... 43
Section 11.2. Survival of TAG's Representations and Warranties......................... 49
Section 11.3. Covenants of TAG and the Allens.......................................... 49
Section 11.4. Representations and Warranties of KR..................................... 52
Section 11.5. Survival of KR's Representations and Warranties.......................... 56
Section 11.6. Covenants of KR.......................................................... 56
Section 11.7. Indemnities.............................................................. 56
ARTICLE XII. DEFAULT....................................................................... 57
Section 12.1. Default by KR............................................................ 57
Section 12.2. Default by TAG........................................................... 57
ARTICLE XIII. RISK OF LOSS.................................................................. 57
Section 13.1. Minor Damage............................................................. 57
Section 13.2. Major Damage............................................................. 58
Section 13.3. Definition of "Major" Loss or Damage..................................... 58
ARTICLE XIV. MISCELLANEOUS................................................................. 58
Section 14.1. Brokers.................................................................. 58
Section 14.2. Public Disclosure........................................................ 59
Section 14.3. Assignment............................................................... 59
Section 14.4. Notices.................................................................. 59
Section 14.5. Modifications............................................................ 60
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Section 14.6. Entire Agreement......................................................... 60
Section 14.7. Further Assurances....................................................... 60
Section 14.8. Counterparts............................................................. 60
Section 14.9. Facsimile Signatures..................................................... 60
Section 14.10. Severability............................................................. 61
Section 14.11. Applicable Law........................................................... 61
Section 14.12. No Third Party Beneficiary............................................... 61
Section 14.13. Captions................................................................. 61
Section 14.14. Construction............................................................. 61
Section 14.15. Recordation.............................................................. 61
Section 14.16. Exhibits................................................................. 61
Section 14.17. Date of Performance...................................................... 61
Section 14.18. Attorneys' Fees.......................................................... 61
iii
EXHIBITS
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A - Description of Land
B - List of Personal Property
C - Categories of Properties
D - List of Operating Agreements
E - List of Environmental Reports
F - Tenant Estoppel Form
G - Form of Registration Rights Agreement
H - San Diego FFE
I - Form of First Amendment to Partnership Agreement
J - Form of Development, Construction and Property Management Agreement (Buildings Under Construction)
K - Form of Development, Construction and Property Management Agreement (Denver Fed Ex)
L - Form of Development, Construction and Property Management Agreement (▇▇▇▇▇ Ranch)
M - Form of Development, Construction and Property Management Agreement (Land Under Development)
N - Form of Development, Construction and Property Management Agreement (To Be Leased Buildings)
O - Form of Memorandum of Agreement to Contribute
P - Form of Memorandum of Contribution Agreement (DoubleTree)
Q - Form of Memorandum of Contribution Agreement (Corporate Research Park)
R - Form of Employment Agreement (Black)
S - Form of Employment Agreement (▇▇▇▇▇)
T - Form of LLC Operating Agreement
U - Form of Deed
V - Form of ▇▇▇▇ of Sale
W - Form of Assignment of Leases
X - Form of Assignment of Contracts
Y - Form of FIRPTA and CALFIRPTA Certificates
Z - Form of Tenant Notice
AA - Contribution Value
BB - Appraisal Process (▇▇▇▇▇ Ranch)
CC - Appraisal Process (Land Under Development)
DD - Appraisal Process (Uncontributed Property)
EE - Anticipated Entitlements for Determination of Value of Land Under Development
FF - List of Brokerage Agreements
GG - Rent Roll
HH - 8-K and Audit Requirements
II - Intentionally Omitted
JJ - Additional REIT Representations and Warranties
iv
SCHEDULES
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I - TAG Disclosure Schedule
II - Kilroy Disclosure Schedule
III - Capital Expenditure Schedule
v
CONTRIBUTION AGREEMENT
This Contribution Agreement (this "Agreement") is made as of October
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21, 1997 (the "Effective Date"), by and among ▇▇▇▇▇▇ REALTY, L.P., a Delaware
--------------
limited partnership ("KR"), ▇▇▇▇▇▇ REALTY CORPORATION, a Maryland corporation
--
("KRC"), and each of the affiliated entities set forth on the signature page
---
hereto under the name "TAG" (collectively "TAG"), and each of the individuals
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set forth on the signature page hereto under the name "The Allens"
(collectively, the "Allens"), the Allens being parties hereto only for the
limited purposes specifically set forth herein.
ARTICLE I.
RECITALS
A. KR is an Affiliate of a Real Estate Investment Trust and desires to
acquire certain real property and Improvements owned by the entities referred to
herein as "TAG."
B. The Properties referred to herein as "Existing Buildings" are
Buildings which have been constructed and leased by TAG and are to be acquired
by KR at the Initial Closing.
C. The Properties referred to herein as "Buildings Under Construction/
Existing Leases" are Buildings which are under construction by TAG where an
executed lease exists as to the entire Building. These Properties are to be
acquired by KR following completion and leaseup as set forth herein.
D. The Properties referred to herein as "To Be Leased Properties" are
Buildings to be constructed, under construction or completed which are not yet
fully leased. These Buildings are to be acquired by KR following completion and
leaseup as set forth herein.
E. The Properties referred to herein as "Land Under Development" have
not yet been entitled and improved. Following entitlement, subdivision into
buildable lots and construction of infrastructure, these Properties will be
placed into the Development LLCs in the manner set forth herein. The separate
Buildings to be constructed on the lots by the Development LLCs are to be
acquired by KR on the terms set forth herein. The Property referred to herein
as "▇▇▇▇▇ Ranch" shall continue to be held by ▇▇▇▇▇ LLC, and KR shall have an
option on the terms set forth herein to acquire TAG's membership interest in
▇▇▇▇▇ LLC. TAG and a KR affiliate intend to enter into the Management
Agreements and the Management Agreement (▇▇▇▇▇ Ranch) pursuant to which these
Properties will be developed and managed by a KR affiliate prior to acquisition.
F. The Property referred to as "Expansion Parcel" will be acquired by
KR at the time and in the manner set forth in Section 9.8 hereof. The Property
referred to herein as the "DoubleTree Restaurant Parcel" will be acquired by KR,
if at all, in the manner set forth in Section 9.7 hereto.
ARTICLE II.
DEFINITIONS
"Additional Rent" shall have the meaning set forth in Section
11.1(w)(vi).
"ADI" means ▇▇▇▇▇ Development, Inc., a California corporation.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control" when used with respect to
any Person, means the possession, directly or indirectly, of the power to direct
or cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract or otherwise; and the
terms "controlling" and "controlled" have meanings correlative to the foregoing.
"▇▇▇▇▇ Affiliate" means an Affiliate of any one or more of the Allens.
"Allens" means collectively ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ and R.E. ▇▇▇▇▇.
"Assignment of Contracts" means the Assignment of Contracts, in the
form attached hereto as Exhibit X.
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"Assignment of Leases" means the Assignment of Leases, in the form
attached hereto as Exhibit W.
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"Average Closing Price" means the average closing price for the common
stock of KRC as reported on the New York Stock Exchange Composite Tape for the
15 trading days ending on the trading day next preceding the acquisition of each
Property.
"Base Rent" shall have the meaning set forth in Section 11.1(w)(vi).
"Base Unit Value" means Twenty-Five Dollars and Ninety-Six Cents
($25.96).
"▇▇▇▇ of Sale" shall mean the ▇▇▇▇ of Sale, in the form attached
hereto as Exhibit V.
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"Black" means ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
"Building" means a Substantially Completed building on any one of the
Properties including those which (i) currently exist as part of Properties
designated as Existing Buildings, (ii) are under construction as part of
Properties designated as Buildings Under Construction/Existing Leases, (iii) are
to be constructed, are under construction or exist as part of the Properties
designated as "To Be Leased Properties," and (iv) will be constructed on
Properties designated as Land Under Development. "Building" includes the portion
of the Land which is the subdivided lot upon which the Building is constructed.
2
"Buildings Under Construction/Existing Leases" shall mean those
Properties designated as "Buildings Under Construction/Existing Leases" on
Exhibit C attached hereto.
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"Capital Expenditure Schedule" means the schedule of TAG capital
expenditures set forth on Schedule III hereto as may be modified by TAG from
time to time hereafter consistent with Section 3.2 hereof.
"Cash Election" shall have the meaning set forth in Section
3.2(c)(vii).
"Central Valley" means the geographic region of the state of
California bounded on the north by the southernmost extreme of the Sacramento
area ,on the east by the Sierra Nevada mountains, on the west by the Coast and
Diablo mountain ranges, and on the south by the Tehachapi mountains.
"Closing" shall have the meaning set forth in Section 6.1. "Common
Stock" means the common stock, $.01 par value, of KRC. "Confidential Documents"
shall have the meaning set forth in Section 5.1(f). "Consideration
Determination" shall have the meaning set forth in Section 3.2(f)(i).
"Contribution Value" means the value of a Property or Building
determined at the time and in the manner set forth in this Agreement, which
determines the amount of Units to be issued and cash to be distributed by KR to
TAG upon the contribution of such Property or Building by TAG to KR.
"Deeds" shall have the meaning set forth in Section 6.2(l)(i).
"Denver - Fed Ex" shall mean that certain Property designated as
"Denver--Fed Ex" on Exhibit C attached hereto.
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"Development LLCs" shall have the meaning set forth in Section 9.1.
"DoubleTree Restaurant Parcel" means that Property labeled "DoubleTree
Restaurant Parcel" on Exhibit A hereto.
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"Escrow" shall mean an Escrow established for purposes of Section 3.2
hereof.
"Existing Buildings" shall mean those Properties designated as
"Existing Buildings" on Exhibit C attached hereto.
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"Expansion Facility" shall have the meaning set forth in Section
9.8(c) hereof.
"Expansion LLC" shall have the meaning set forth in Section 9.8(c)
hereof.
3
"Expansion Parcel" means that parcel labeled "ComStream Expansion
Parcel" on Exhibit A hereto.
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"First Amendment" shall mean that certain First Amendment to the
Partnership Agreement to be entered into by and among KR and the Members listed
on the signature pages thereto.
"Gap Notice" shall have the meaning set forth in Section 4.4.
"Improvements" means the Buildings, structures, fixtures and other
improvements affixed to or located on the Land, excluding fixtures owned by
tenants.
"Initial Closing" shall have the meaning set forth in Section 6.1.
"Inspection Period" shall have the meaning set forth in Section
5.1(a).
"Intangibles" means all assignable existing permits, licenses,
approvals and authorizations issued by any governmental authority in connection
with the Properties including Buildings located thereon.
"▇▇▇▇▇ LLC" shall have the meaning set forth in Section 9.2.
"▇▇▇▇▇ Ranch" means that certain real property owned by ▇▇▇▇▇ LLC and
described in Exhibit A hereto.
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"KR" means ▇▇▇▇▇▇ Realty, L.P., a Delaware limited partnership.
"KRC" means ▇▇▇▇▇▇ Realty Corporation, a Maryland corporation.
"Land" means those certain parcels of land more particularly described
in Exhibit A attached hereto and made a part hereof (with the exception of ▇▇▇▇▇
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Ranch), together with all rights and appurtenances pertaining to such parcels
including any right, title and interest of TAG in and to adjacent streets,
alleys or rights-of-way.
"Land Under Development" shall mean those Properties designated as
"Land Under Development" on Exhibit C attached hereto.
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"Leases" means any and all of TAG's right, title and interest in and
to the leases, licenses, and occupancy agreements (including Rents and Security
Deposits) covering all or any portion of the Real Properties.
"LLC Operating Agreement" means the Limited Liability Company
Agreement of a Development LLC, in the form attached hereto as Exhibit T.
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"Major" shall have the meaning set forth in Section 13.3.
4
"Management Agreement (Buildings Under Construction)" means the
Development, Construction and Property Management Agreement, in the form
attached hereto as Exhibit J.
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"Management Agreement (Denver Fed Ex)" means the Development,
Construction and Property Management Agreement, in the form attached hereto as
Exhibit K.
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"Management Agreement (▇▇▇▇▇ Ranch)" means the Development,
Construction and Property Management Agreement, in the form attached hereto as
Exhibit L.
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"Management Agreement (Land Under Development)" means the Development,
Construction and Property Management Agreement, in the form attached hereto as
Exhibit M.
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"Management Agreement (To Be Leased Properties)" means the
Development, Construction and Property Management Agreement, in the form
attached hereto as Exhibit N.
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"Members" shall have the meaning set forth in Section 11.1(x).
"NOI" means, unless otherwise specified herein or in an Exhibit
hereto, net operating income of a Property, which is equal to (i) the gross
revenue generated from the operation of the Property, less (ii) management fees
and operating expenses incurred in the operation of such Property (including (A)
real property taxes and assessments not paid by Tenants pursuant to leases and
(B) the establishment of reserves for vacancy and credit losses), but excluding
financing-related expenses, income taxes, and depreciation. Gross revenue shall
not include parking revenue or any part of the revenue from a Property which
amortizes tenant improvements which are either (a) in excess of the building
standard tenant improvements provided for in the business plan for that Property
mutually approved by KR and TAG or (b) "specialized," so that such tenant
improvements typically would not be usable by other prospective tenants upon a
termination of that particular Lease. Wherever a definition of NOI appears
elsewhere in this Agreement or in an Exhibit hereto, that definition shall be
used and this definition shall have no force or effect.
"Operating Agreements" means any and all of TAG's right, title and
interest in and to (i) all assignable contracts and agreements (collectively,
the "Operating Agreements") listed and described on Exhibit D attached hereto
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and made a part hereof, relating to the upkeep, repair, maintenance or operation
of the Land, Improvements or Personal Property, and (ii) all assignable existing
warranties and guaranties (express or implied) issued to TAG in connection with
the Improvements or the Personal Property, and (iii) the Intangibles.
"Permitted Exceptions" shall have the meaning set forth in Section
4.5.
"Partnership Agreement" shall mean that certain Amended and Restated
Agreement of Limited Partnership of KR dated as of January 31, 1997, as amended
to date.
5
"Person" means an individual or a corporation, partnership, limited
liability company, association, trust, or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Personal Property" means any and all of TAG's right, title and
interest in and to all tangible personal property located upon the Land or
within the Improvements, including, without limitation, any and all appliances,
furniture, carpeting, draperies and curtains, tools and supplies, and other
items of personal property owned by TAG and located on and used exclusively in
connection with the operation of the Land and the Improvements, which personal
property includes without limitation the personal property listed on Exhibit B
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attached hereto.
"Properties" means collectively the Land, the Improvements, the
Personal Properties, the Leases and the Intangibles.
"Property" means a particular one of the Properties, and where the
context requires, any Building or Improvements currently existing or to be
constructed thereon.
"Ready-to-Close Notice" means a written notice, delivered by TAG to
KR, notifying KR that the conditions required for the contribution of a Property
as set forth in this Agreement have been or will, by a date specified in such
notice, be satisfied.
"Real Properties" means collectively the Land and the Improvements.
"Registration Rights Agreement" shall mean the Registration Rights
Agreement, in the form attached hereto as Exhibit G.
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"Rents" means all rents and other sums due under the Leases.
"San Diego FFE" shall mean those portions of the furniture, fixtures
and equipment located at TAG's San Diego office to be acquired by KR and listed
on Exhibit H hereto.
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"Security Deposits" means any and all security deposits in TAG's
possessions in connection with the Leases.
"▇▇▇▇▇" means T. ▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Substantially Completed" means with respect to a Building (other than
tenant improvements):
(i) the completion thereof in substantial conformance with the
plans and specifications therefore, and
(ii) the receipt of a certificate of occupancy or similar
evidence of governmental approval of completion thereof.
6
"Surveys" shall have the meaning set forth in Section 4.2(b).
"TAG Exchange Notice" shall have the meaning set forth in Section
3.2(f)(3).
"TAG Holdings LLC Operating Agreement" shall mean the TAG Holdings LLC
Operating Agreement to be approved by KR and entered into prior to the Initial
Closing.
"Tenant Estoppels" shall have the meaning set forth in Section 5.4.
"Tenant Notices" shall have the meaning set forth in Section
6.2(l)(vii).
"Tenants" shall have the meaning set forth in Section 11.1(w).
"Title Documents" shall have the meaning set forth in Section 4.1.
"Title Inspection Period" shall have the meaning set forth in Section
4.2.
"Title Notice" shall have the meaning set forth in Section 4.3.
"Title Policy" shall have the meaning set forth in Section 4.6.
"To Be Leased Properties" means the Properties referred to in Exhibit
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C as Pilot Commerce Center, Carmel Valley, Wateridge and Redwood Shores.
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"Uncontributed Property" shall have the meaning set forth in Section
9.6(a)(i).
"Unit" shall have the meaning set forth in Section 3.2.
"Unit Cap" means Three Million (3,000,000) Units.
"Unpaid Costs" shall have the meaning set forth in Section 3.2(c)(vi)
hereof.
ARTICLE III.
CONTRIBUTION AND ACQUISITION
Section 3.1. Agreement to Contribute and Acquire. Subject to the
-----------------------------------
terms and conditions and at the times hereinafter set forth, TAG agrees to
contribute or otherwise transfer to KR, and KR agrees to acquire from TAG, the
Properties. Except as otherwise set forth herein, each contribution or transfer
is intended to be accomplished by means of a contribution pursuant to Section
721 of the Internal Revenue Code of 1986, as amended (the "Code"), or a tax-
deferred exchange pursuant to Code Section 1031.
Section 3.2. Contribution Value and Costs. KR will acquire the
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Properties in exchange for limited partnership units of KR (individually a
"Unit" and collectively, the "Units") and cash. The method of calculating the
Contribution Value for each of the Properties is stated below. TAG has incurred
certain capital expenditures in connection with the acquisition and development
of the Properties. KR shall reimburse such expenditures as part of the
Contribution
7
Value, in cash, in accordance with the Capital Expenditure Schedule which is
attached hereto. The following provisions apply to the acquisition of each
Property:
(a) The maximum aggregate number of Units which KR shall be
obligated to issue to the Allens and the ▇▇▇▇▇ Affiliates shall be limited to
the Unit Cap. For purposes of this Section 3.2, issuance of Units to the heirs
or successors in interest of the Allens or to an ▇▇▇▇▇ Affiliate (to the extent
of their ownership interest in such ▇▇▇▇▇ Affiliate as of the date hereof) shall
be deemed to be an issuance directly to the Allens and the ▇▇▇▇▇ Affiliates.
For purposes of this Section 3.2, all Units issued to ADI or TAG Holdings LLC
shall be deemed to be a direct issuance of Units to the Allens (to the extent of
their ownership in such entity). Except as set forth in Section 3.2(c) all
consideration shall be in the form of issued Units until the Unit Cap has been
reached. After the Unit Cap has been reached, consideration for the
Contribution Value for the interests of the ▇▇▇▇▇ Affiliates in the Properties
shall be accomplished in accordance with the procedure set forth in Section
3.2(f), below. KR shall have no obligation to issue Units to any Person who has
not executed the First Amendment, the Registration Rights Agreement and an
instrument making the representations and warranties set forth in Section
11.1(x) hereof.
(b) The Allens and the ▇▇▇▇▇ Affiliates will not sell any shares
of KRC obtained in connection with the transactions described herein during the
three (3) year period commencing as of the date of issuance of the first Units
by KR to TAG, and violation of this provision will entitle KR to make all future
Contribution Value payments in cash.
(c) Subject to the limitations set forth in this Section 3.2, at
any time prior to the issuance of Two Million Two Hundred Fifty Thousand
(2,250,000) Units to the Allens and the ▇▇▇▇▇ Affiliates, the Contribution Value
for each Property contributed by TAG to KR shall be distributed to TAG in Units
and cash in accordance with the following procedures:
(i) TAG may from time to time elect in writing, prior to
each Closing, to receive from KR up to Twenty Million Dollars ($20,000,000)
of the aggregate Contribution Values of the Properties in cash as
reimbursement for certain capital expenditures in connection with such
Properties, as contemplated by Treasury Regulations Section 1.707-
4(d)(2)(ii); provided, however, that none of such cash is to be distributed
to ▇▇▇▇▇ and Black. ADI shall give one written notice to KR not less than
five (5) days prior to the Initial Closing and not less than thirty (30)
days prior to each subsequent Closing of the Cash Election. KR may rely
upon the written notice from ADI and shall have no obligation to solicit
notices from any other TAG partner or member, nor shall KR have any
obligation to comply with any notice from any other person or entity. Until
such time as the Unit Cap is reached, each failure to timely make such Cash
Election shall be deemed to be an election to receive Units.
(ii) TAG may from time to time elect in writing, prior to
each Closing, to receive from KR up to Four Million Two Hundred Thousand
Dollars ($4,200,000) of the aggregate Contribution Values of the Properties
in cash in order to make cash distributions to certain investors in TAG
other than the Allens and the ▇▇▇▇▇
8
Affiliates, ▇▇▇▇▇ or Black. ADI shall give one written notice to KR not
less than thirty (30) days prior to each Closing of the Cash Election. KR
may rely upon the written notice from ADI and shall have no obligation to
solicit notices from any other TAG partner or member, nor shall KR have any
obligation to comply with any notice from any other person or entity. Until
such time as the Unit Cap is reached, each failure to timely make such Cash
Election shall be deemed to be an election to receive Units.
(iii) Notwithstanding any provision of the Partnership
Agreement to the contrary and subject to the provisions of subsection (iv),
below, at each Closing, (A) KR shall deliver to Escrow cash in an amount
sufficient to cause the payment by TAG from Escrow of all monetary
encumbrances then encumbering the Property which is the subject of the
Closing, including the reimbursement to TAG of any prepayment penalties
arising therefrom, (B) such loans and prepayment penalties shall be repaid
from Escrow and (C) the Contribution Value of such Properties shall be
reduced by the amount of such paid monetary encumbrances and penalties.
(iv) At the Closing of the Intuit and Kraft Properties,
(A) KR shall assume the permanent loans presently encumbering the Intuit
and Kraft Properties, (B) KR shall deliver to Escrow cash in an amount
sufficient to reimburse TAG for the related assumption fees to be paid from
Escrow, (C) such assumption fees shall be paid from Escrow, and (D) the
Contribution Value of such Properties shall be reduced by the amount of
such assumed loans and assumption fees. Notwithstanding any provision of
the Partnership Agreement to the contrary, KR may thereafter at its sole
cost and expense repay such loans, including any prepayment penalties
associated therewith.
(v) At each Closing, KR shall deliver to Escrow cash in
an amount sufficient to reimburse TAG for its partnership syndication and
organization expenses related to such Closing pursuant to Treasury
Regulations Section 1.707-4(d)(2)(i), in such amounts as TAG shall request
in writing to KR and the Escrow holder prior to such Closing; and the
Contribution Value of such Property shall be reduced by the amount of such
reimbursement.
(vi) Prior to each Closing, TAG shall deliver to Escrow an
estimate of costs incurred in connection with the construction of the
Building which is part of the Property to be acquired at the Closing which
will not have been paid by the Closing (the "Unpaid Costs"). Unpaid Costs
shall not include any amounts for which TAG has received an invoice more
than ten (10) days prior to Closing. Financial responsibility for such
Unpaid Costs, or any costs associated with the construction of the
Building, shall be TAG's, provided that KR shall deliver into Escrow cash
in an amount equal to one hundred percent (100%) of the estimate of Unpaid
Costs and those funds shall be held in a separate Escrow account and made
available to TAG for the payment of those Unpaid Costs. At the Closing, the
Contribution Value of the subject Property shall be temporarily reduced by
the amount held in such Escrow account. Following payment from the Escrow
account of all Unpaid Costs and any other costs incurred in construction of
the subject Building, the Contribution Value shall be retroactively
adjusted; and,
9
subject to Sections 3.2 (d) and (e), KR shall issue Units to TAG based upon
the amount remaining in the Escrow account divided by the Base Unit Value
as to Existing Properties and by the Average Closing Price as to any other
Property, Building or interest therein. Concurrently with the issuance of
such Units, the amounts remaining in the Escrow account shall be released
to KR.
(vii) If TAG owes any fees to a ▇▇▇▇▇▇ Affiliate pursuant
to a Management Agreement for the Property or Building as to which an
Escrow has been established, KR may, at its option, deposit into the Escrow
cash in an amount equal to such unpaid fees for release to the KR Affiliate
upon the Closing; and the Contribution Value of such Property or Building
shall be reduced by the amount of such reimbursement.
(viii) Any portion of the Contribution Value not accounted
for in (i) through (vii), above, shall be issued to TAG in Units, subject
to the limitations of this Section 3.2. An election to receive cash
pursuant to subsections (i) or (ii), above, shall be referred to as a "Cash
Election."
(ix) The amounts deposited by KR pursuant to paragraphs
(iii) through (vii) of this section shall be in addition to the amounts
referred to in paragraphs (i) and (ii) of this section.
(d) Subject to the Unit Cap and the Cash Election, the
Contribution Value for each Property shall be distributed in Units in a number
equal to the Contribution Value for the Property divided by the Average Closing
Price, except that such Average Closing Price shall be not less than $24 nor
more than $29.85 until the first to occur of (a) the date which is one (1) year
following the Initial Closing or (b) the issuance of an aggregate of Two Million
Two Hundred Fifty Thousand (2,250,000) Units by KR to the Allens and the ▇▇▇▇▇
Affiliates. The restrictions on Average Closing Price set forth in the preceding
sentence shall not apply to any portion of such Two Million Two Hundred Fifty
Thousand (2,250,000) Units issued after the one (1) year period following the
Initial Closing.
(e) Following the issuance of the first Two Million Two Hundred
Fifty Thousand (2,250,000) Units by KR to the Allens and the ▇▇▇▇▇ Affiliates,
and until the Unit Cap is reached, the Contribution Value for each Property
shall be distributed in Units in a number equal to the Contribution Value for
the Property divided by the Average Closing Price, except that the Average
Closing Price used in making such determination shall be not less than $28.
However, if such Average Closing Price would be less than $28 but for such $28
floor, TAG may elect to take the Contribution Value in cash rather than Units,
and KR will use commercially reasonable efforts to allow TAG to accomplish a
Code Section 1031 tax deferred exchange with respect to such Property
contribution. If the Allens and the ▇▇▇▇▇ Affiliates receive cash rather than
Units, the number of Units that would have been issued to the Allens and the
▇▇▇▇▇ Affiliates under this section shall be deemed to have been issued solely
for the purpose of determining whether the Unit Cap has been reached.
10
(f) In any circumstance where the Unit Cap has been reached,
providing consideration equal to the Contribution Value for TAG's interest in
the Properties shall be accomplished in accordance with the following procedure:
(i) First, within thirty (30) days following receipt by
KR of a Ready-to-Close Notice from TAG, the KRC Board of Directors, in its
discretion, shall determine whether such consideration is proposed to be in
the form of issued Units or cash (the "Consideration Determination"). If
the Consideration Determination provides for cash consideration, the
provisions of Section 3.2(f)(ii) through (v) shall apply. Otherwise the
consideration shall be paid entirely in Units and the remaining provisions
of this Section 3.2(f) will not apply.
(ii) Second, written notice of the Consideration
Determination shall be provided to TAG by the KRC Board of Directors within
five (5) business days after having been made.
(iii) Third, within thirty (30) days after the effective
date of said written notice, TAG shall provide written notice to the KRC
Board of Directors whether it intends to accomplish a Code Section 1031
tax-deferred exchange or proposes other structuring alternatives to the
proposed cash transaction. Said written notice (the "TAG Exchange Notice")
shall provide, with reasonable specificity, the details of TAG's proposed
alternatives.
(iv) Fourth, for the thirty (30) day period following
KRC's receipt of the TAG Exchange Notice, TAG and KRC shall cooperate in a
commercially reasonable manner to finalize the structure for a transaction
consistent with the TAG Exchange Notice.
(v) Fifth, if following the thirty (30) day period
described in the preceding paragraph, the parties have not agreed to a
structure which can be completed within an additional thirty (30) days, TAG
and KR shall promptly complete the transaction on the terms originally set
forth in the Consideration Determination.
Section 3.3. Issuance of Contribution Value. The Unit portion of the
------------------------------
Contribution Value shall be issued by the delivery at each Closing of
certificates representing the Units. Subject to the Escrow provisions of Section
3.2, the cash portion of the Contribution Value shall be issued in full at each
Closing in cash by wire transfer of immediately available funds to a bank
account designated by TAG in writing to KR at least two (2) business days prior
to the Closing.
Section 3.4. Transferability of Units; Redemption Rights;
-------------------------------------------
Registration Rights. TAG acknowledges that the Units will be subject to
substantial restrictions on transfer, as provided in the Partnership Agreement
and the First Amendment and that its redemption rights with respect to the Units
shall be governed by the Partnership Agreement and the First Amendment. TAG
acknowledges the limitations on the registration of any shares of Common
11
Stock issued in a redemption of Units (including the timing thereof) contained
in the Registration Rights Agreement. KR acknowledges that TAG intends to
distribute the Units it receives to its general and limited partners and that
certain of those partners will in turn distribute those Units to their
constituent members, partners or owners, who may in turn further distribute
those Units to their constituent members, partners or owners, provided, however,
that Units shall not be distributed to any person or entity who does not execute
the Member Signature Page hereto.
ARTICLE IV.
TITLE AND SURVEY
Section 4.1. Delivery of Title Documents. TAG has caused to be
---------------------------
delivered to KR as to each of the Properties (a) a current preliminary title
report (b) copies of all documents referred to in each preliminary title report,
(c) copies of the most recent Property tax bills for the Properties; and (d) a
copy of TAG's title insurance policy and/or survey for the Properties, if
available (the documents referred to in (a) - (d) of this Section 4.1 are
collectively referred to as the "Title Documents").
---------------
Section 4.2. Title Examination.
-----------------
(a) During the Title Inspection Period, TAG shall deliver to KR
new or updated ALTA surveys of each Property which shall be prepared by a
licensed surveyor or engineer hired by TAG at TAG's expense (the "Surveys"). TAG
-------
shall cause to be delivered to KR an ALTA "extended coverage" supplemental
report or reports for any Property covered by the Surveys.
(b) KR shall have the right to review the Title Documents and
otherwise examine the status of title to the Properties until five (5) business
days following receipt of the last of the Surveys by both KR and KR's legal
counsel (the "Title Inspection Period"). The Initial Closing shall be extended
to a date which is ten (10) days following the termination of the Title
Inspection Period.
Section 4.3. Title Notice. KR shall notify TAG in writing (the "Title
-------------
Notice") prior to the expiration of the Title Inspection Period which exceptions
to title (including Survey matters), if any, will not be accepted by KR. If KR
fails to notify TAG in writing of any exceptions to title by the expiration of
the Title Inspection Period, then KR shall be deemed to have approved the
condition of title to the Properties. If KR notifies TAG in writing that KR
objects to any exceptions to title, then TAG shall have five (5) days after
receipt of the Title Notice to notify KR in writing (i) that TAG will remove
such objectionable exceptions from title on or before the Initial Closing; or
(ii) that TAG elects not to cause such exceptions to be removed. If TAG fails to
notify KR in writing of its election within said five (5) day period, then TAG
shall be deemed to have elected not to cause such exception to be cured. If TAG
gives KR notice under clause (ii) above, then KR shall have five (5) days within
which to notify TAG in writing that KR will nevertheless proceed with the
acquisition and take title to the Properties subject to such exceptions, or that
KR will terminate this Agreement. If this Agreement is terminated pursuant to
the foregoing provisions of this paragraph, then neither party shall have
12
any further rights or obligations hereunder (except for any indemnity
obligations of either party pursuant to the other provisions of this Agreement),
and each party shall bear its own costs incurred hereunder. If KR fails to
notify TAG in writing of its election within said five (5) day period, then KR
shall be deemed to have elected to proceed with the acquisition and take title
to the Properties subject to such exceptions.
Section 4.4. Pre-Closing "Gap" Title Defects. KR may, at or prior to
-------------------------------
each Closing, notify TAG in writing (the "Gap Notice") of any objections to
title exceptions (a) raised by the Title Company between the expiration of the
Title Inspection Period and the Closing and (b) not disclosed by the Title
Company or otherwise known to KR prior to the expiration of the Title Inspection
Period. The Gap Notice shall be delivered to TAG within five (5) business days
following receipt by KR of written notification from the Title Company of the
previously undisclosed exception. If KR sends a Gap Notice to TAG, then KR and
TAG shall have the same rights and obligations with respect to such notice as
apply to a Title Notice under Section 4.3 hereof except that this Agreement may
only be terminated as to the Properties which were the subject of the Gap
Notice.
Section 4.5. Permitted Exceptions. The Properties shall be conveyed
--------------------
subject to the following matters, which are hereinafter referred to as the
"Permitted Exceptions":
(a) those matters that either (i) are not objected to in
writing within the time periods provided in Sections 4.3 or 4.4 hereof, or (ii)
if objected to in writing by KR, are those which TAG has elected not to remove
or cure, or has been unable to remove or cure, and subject to which KR has
elected or is deemed to have elected to accept the conveyance of the Properties;
(b) the rights of tenants under the Leases;
(c) the lien of all ad valorem real estate taxes and
assessments not yet due and payable as of the date of Closing, subject to
adjustment as herein provided;
(d) local, state and federal laws, ordinances or
governmental regulations, including but not limited to building and zoning laws,
ordinances and regulations, now or hereafter in effect relating to the
Properties;
(e) items shown on the Surveys which are not objected to by
KR or are waived or deemed waived by KR in accordance with Section 4.3 hereof;
(f) matters caused by KR after the Initial Closing pursuant
to its management of the Properties under the Management Agreement; and
(g) Existing mortgage-related indebtedness secured by the
Existing Properties known as "Kraft" and "Intuit." Unless otherwise specifically
provided herein, all other mortgage-related indebtedness shall be paid off
through the Escrow referred to in Section 6 hereof.
13
Section 4.6. Conveyance of Title. At each Closing TAG shall convey
-------------------
and transfer to KR the appropriate Properties, by execution and delivery of
Deeds. Evidence of delivery of such title shall be the issuance by Title Company
of (i) an ALTA Standard Coverage Owner's Policy or Policies of Title Insurance
(the "Title Policy") covering the Properties transferred, in the full amount of
the Contribution Value subject only to the Permitted Exceptions; provided,
however, that if KR has delivered to the Title Company prior to the Closing a
Survey or Surveys in compliance with all applicable ALTA requirements, then the
Title Policy or Policies required hereunder shall be an ALTA Extended Coverage
Owner's Policy of Title Insurance.
ARTICLE V.
REVIEW OF PROPERTIES
Section 5.1. Right of Inspection.
-------------------
(a) During the period beginning upon the Effective Date and
ending concurrently with the Title Inspection Period (hereinafter referred to as
the "Inspection Period") KR shall have the inspection rights set forth in this
section.
(b) TAG has prior to the Effective Date, delivered all
documents requested by KR in a diligence request, including audited Property
operating statements.
(c) KR may perform, or hire consultants to perform a
physical inspection of the Properties.
(d) KR may inspect, or hire consultants to inspect, the
environmental condition of the Properties pursuant to the terms and conditions
of this Agreement, and to obtain and review, at KR's sole election and cost,
soils, geology, structural and environmental and any other engineering reports.
(e) KR may obtain and examine a search report showing liens
against the Personal Properties which have been perfected by filings under the
Uniform Commercial Code.
(f) KR may examine at the Properties or TAG's office all
books, records, reports, and files related to the ownership, leasing,
maintenance and operation of the Properties, which are to be provided or made
available to KR by TAG to the extent available. Such documents include, without
limitation, (i) TAG's current lease files for the Properties, including copies
of all existing Leases and Operating Agreements, and letters of intent from
prospective tenants (ii) audited income and expense statements showing, among
other things, all sources of revenue and expense (including utility rates, ad
valorem tax rates, maintenance expenses and any anticipated capital
improvements) through July 31, 1997 related to the Properties (iii) existing
notes and deeds of trust encumbering the Properties, (iv) as-built plans and
specifications for the Improvements, (v) prior soils, geology, structural and
engineering reports, (vi) recorded and unrecorded parking agreements, (vii)
common area maintenance
14
agreements or other agreements affecting the Properties, (viii) certificates of
occupancy pertaining to the Improvements (ix) pertinent correspondence with
governmental agencies and current tenants concerning the Properties and (x)
evidence that the Properties are zoned for the purpose to which KR intends to
use them. Notwithstanding the foregoing, except for documents related to the
▇▇▇▇▇ LLC, KR shall not have the right to examine TAG's partnership or corporate
records, internal memoranda, financial projections, budgets, appraisals,
accounting and tax records and similar proprietary, confidential or privileged
information (collectively, the "Confidential Documents").
(g) Any on-site inspections of the Properties shall occur at
reasonable times agreed upon by TAG and KR after reasonable prior written notice
to TAG and shall be conducted so as not to interfere unreasonably with the use
of the Properties by TAG or its tenants. TAG may have a representative present
during any such inspections. If KR desires to do any invasive testing at the
Properties, KR shall do so only after notifying TAG and obtaining TAG's prior
written consent thereto, which consent shall not be unreasonably withheld or
delayed. KR agrees to protect, indemnify, defend and hold TAG harmless from and
against any claim for liabilities, losses, costs, expenses (including reasonable
attorneys' fees), damages or injuries arising out of or resulting from the
inspection of the Properties by KR or its agents or consultants, and
notwithstanding anything to the contrary in this Agreement, such obligation to
indemnify and hold harmless TAG shall survive the Closing or any termination of
this Agreement. KR shall keep the Properties free and clear of any mechanic's
liens or materialmen's liens arising out of KR's entry onto the Properties.
Section 5.2. Environmental Reports. KR acknowledges that KR has
---------------------
received copies of the environmental reports listed on Exhibit E attached
---------
hereto.
Section 5.3. Right of Termination. If for any reason whatsoever KR
--------------------
determines that any aspect of the documents listed in Section 5.1 and 5.2 hereof
or the results of any inspections contemplated by Section 5.1 and 5.2 hereof
makes the Properties unsuitable for KR's acquisition, KR shall have the right,
prior to the expiration of the Inspection Period, to give written notice thereof
to TAG. If KR gives such notice, this Agreement shall terminate and neither
party shall have any further obligations hereunder (except for any indemnity
obligations of either party pursuant to the other provisions of this Agreement),
and each party shall bear its own costs incurred hereunder. If KR fails to give
TAG a notice of termination prior to the expiration of the Inspection Period,
then KR shall be deemed to have approved all aspects of the Properties (except
(i) title and Survey, which shall be governed by Article IV hereof and (ii)
tenant estoppels, which shall be governed by Section 5.4 hereof) and to have
elected to proceed with the acquisition of the Properties pursuant to the terms
hereof.
Section 5.4. Review of Tenant Estoppels. Prior to the Initial Closing
--------------------------
(as to all Properties) and prior to each Closing for a Building or Property
thereafter (but only as to the Property or Building being acquired), TAG shall
deliver to each tenant of the Properties an estoppel certificate in
substantially the form of Exhibit F attached hereto (the "Tenant Estoppels") and
---------
shall request that the tenants complete and sign the Tenant Estoppels and return
them to TAG. No Tenant Estoppel shall be dated more than thirty (30) days prior
to the Closing
15
Date. TAG shall deliver copies of the completed Tenant Estoppels to KR as TAG
receives them. KR shall notify TAG within ten (10) business days of receipt of
any Tenant Estoppel if KR determines that such Tenant Estoppel is not acceptable
to KR, along with the reasons for such determination. If KR fails to give such
notice within such ten (10) business day period, then any such Tenant Estoppel
shall be deemed to be acceptable to KR. If TAG fails to obtain Tenant Estoppels
that are satisfactory to KR with respect to tenants of the Properties on or
before ten (10) business days prior to the Closing, KR shall have the right to
terminate this Agreement by written notice to TAG or to extend the Initial
Closing or Closing, as appropriate, for not more than thirty (30) days. If this
Agreement is terminated pursuant to the foregoing provisions of this paragraph,
then neither party shall have any further rights or obligations hereunder
(except for any indemnity obligations of either party pursuant to the other
provisions of this Agreement), and each party shall bear its own costs incurred
hereunder. If KR fails to give TAG a notice of termination as set forth above,
KR shall be deemed to have approved the Tenant Estoppels and to have elected to
proceed with the acquisition of the Properties pursuant to the terms hereof. In
that event KR may demand and TAG shall deliver an estoppel certificate in
substantially the form of Exhibit F attached hereto as to any premises for which
---------
a Tenant Estoppel has not been obtained, with such estoppel certificate to be
executed by the landlord/owner of the leased premises. The provisions of this
Section 5.4 shall survive the Closing.
ARTICLE VI.
CLOSING
Section 6.1. Time and Place. This Agreement contemplates a series of
--------------
closings as to the Properties and Buildings (individually a "Closing" and
collectively the "Closings"). The consummation of the initial transactions
contemplated hereby and the acquisition of the Existing Buildings (the "Initial
Closing") shall be held at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ at the address set
forth under Section 14.4 ("Notices") on that date which is the earlier of (a) a
date specified by KR in writing to TAG or (b) ten (10) days following the
termination of the Title Inspection Period, subject to the extension provisions
of Section 5.4. If such date is not a business day, the Initial Closing shall be
held on the first business day thereafter. If the Initial Closing has not
occurred within ten (10) days following the termination of the Title Inspection
Period (or such later date to which the Closing may be extended pursuant to
Section 5.4) then either KR or TAG may elect to terminate this agreement by
giving written notice in the manner set forth in Section 14.4 hereto. Subject to
Section 3.2(f) of this Agreement, subsequent Closings shall occur within thirty
(30) days following the effective date of a Ready-to-Close Notice from TAG
stating that the conditions required for the contribution of a Property to close
as set forth in Sections 7.2 and 8.2 of this Agreement have been satisfied. At
each of the Closings, TAG and KR shall each perform their respective obligations
set forth herein, the performance of which obligations shall be concurrent
conditions. There shall be a pre-closing at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ at
9:00 a.m. on the business day prior to each Closing. The pre-closing shall be
attended by (i) legal counsel to TAG, (ii) legal counsel to KR and (iii)
representatives of TAG and of KR with signature authority.
Section 6.2. TAG's Obligations At and Prior to Initial Closing. At
-------------------------------------------------
the Initial Closing, TAG shall deliver or cause to be delivered:
16
(a) a duly executed Registration Rights Agreement in the
form attached hereto as Exhibit G;
---------
(b) a duly executed First Amendment in the form attached
hereto as Exhibit I;
---------
(c) the following duly executed Management Agreements:
(i) a Management Agreement (Buildings Under
Construction) as to each such Property.
(ii) Management Agreement (Denver Fed Ex).
(iii) Management Agreement (▇▇▇▇▇ Ranch).
(iv) Management Agreement (Land Under Development) as
to each of DoubleTree and Corporate Research Park.
(v) Management Agreement (To Be Leased Properties) as
to each such Property.
(d) a separate, duly executed and notarized Memorandum of
Contribution Agreement as to each of the Buildings Under Construction/Existing
Leases, the To Be Leased Buildings, the DoubleTree Restaurant Parcel and the
ComStream Expansion Parcel in the form attached hereto as Exhibit O;
---------
(e) a duly executed and notarized Memorandum of Contribution
Agreement (DoubleTree) and Memorandum of Contribution Agreement (DoubleTree
Restaurant Parcel) in the form attached hereto as Exhibit P;
---------
(f) a duly executed and notarized Memorandum of Contribution
Agreement (Corporate Research Park) in the form attached hereto as Exhibit Q;
---------
(g) Employment Agreement (Black), duly executed by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ generally in the form attached hereto as Exhibit R;
---------
(h) Employment Agreement (▇▇▇▇▇), duly executed by T.
▇▇▇▇▇▇▇ ▇▇▇▇▇ generally in the form attached hereto as Exhibit S;
---------
(i) LLC Operating Agreement (DoubleTree) in the form
attached hereto as Exhibit T;
---------
(j) LLC Operating Agreement (Corporate Research Park) in the
form attached hereto as Exhibit T;
---------
(k) a duly executed assignment and assumption of the space
lease of TAG's San Diego office in a form reasonably satisfactory to TAG and KR;
17
(l) a duly executed ▇▇▇▇ of sale in a form reasonably
satisfactory to TAG and KR conveying the San Diego FFE to KR;
(m) As to the Existing Buildings:
(i) duly executed and notarized grant deeds (the
"Deeds") in the form attached hereto as Exhibit U, conveying the Existing
---------
Buildings, subject only to the Permitted Exceptions;
(ii) duly executed bills of sale (the "Bills of Sale")
in the form attached hereto as Exhibit V, conveying the Personal Property
---------
without warranty of title or use and without warranty, express or implied,
as to merchantability and fitness for any purpose;
(iii) duly executed assignments of leases (the
"Assignments of Leases") in the form attached hereto as Exhibit W;
---------
(iv) duly executed assignment and assumption
agreements (the "Assignments of Contracts") in the form attached hereto as
Exhibit X;
---------
(v) such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of TAG;
(vi) FIRPTA and CALFIRPTA certificates in the form
attached hereto as Exhibit Y duly executed by the appropriate TAG entities,
---------
if required under applicable laws and regulations for similar transactions;
(vii) join with KR to execute notices (the "Tenant
Notices") in the form attached hereto as Exhibit Z, which KR shall send to
---------
each tenant under each of the Leases of the Existing Buildings promptly
after the Closing, informing such tenant of the transfer of the Existing
Buildings and of the assignment to KR of TAG's interest in, and obligations
under the Leases (including, if applicable, any Security Deposits), and
directing that all Rent and other sums payable after the Closing under each
such Lease be paid as set forth in the notice; and
(viii) the original Leases and the Operating Agreements,
together with such leasing and Property files and records located at the
Properties or TAG's office, which are material in connection with the
continued operation, leasing and maintenance of the Existing Buildings, but
excluding any Confidential Documents. For a period of three (3) years after
the Closing, KR shall allow TAG and its representatives access without
charge to all files, records and documents delivered to KR at the Closing,
upon reasonable advance notice and at all reasonable times, to make copies
of any and all such files, records and documents, which right shall survive
the Closing;
18
(ix) keys (if any) to, and possession and occupancy
of, the Existing Buildings, subject only to the Permitted Exceptions.
(x) such affidavits as may be customarily and
reasonably required by the Title Company;
(xi) an executed closing statement reasonably
acceptable to TAG; and
(xii) such additional documents as shall be reasonably
required to consummate the transactions contemplated by this Agreement;
(n) if any representation or warranty of TAG or of the
Allens needs to be modified due to changes since the Effective Date, a
certificate, dated as of the date of Initial Closing and executed on behalf of
TAG by a duly authorized representative thereof or executed by the Allens,
identifying any representation or warranty which is not, or no longer is, true
and correct and explaining the state of facts giving rise to the change. In no
event shall TAG or the Allens be liable to KR for, or be deemed to be in default
hereunder by reason of any breach of representation or warranty which results
from any change that (x) occurs between the Effective Date and the date of the
Closing and (y) is expressly permitted under the terms of this Agreement or is
beyond the reasonable control of TAG or the Allens to prevent. The occurrence of
a change in a representation and warranty which is not permitted hereunder or is
beyond the reasonable control of TAG or the Allens to prevent shall, if
materially adverse to KR, constitute the non-fulfillment of the condition set
forth in Section 6.7(b) hereof. If, despite changes or other matters described
in such certificate, the Closing occurs, TAG's or the Allens' representations
and warranties set forth in this Agreement shall be deemed to have been modified
by all statements made in such certificate;
(o) if the parties hereto are able to obtain the consent of
▇▇▇▇▇▇ Construction Company, duly executed assignment and assumption of the
March 13, 1997, letter agreement between TAG and ▇▇▇▇▇▇ Construction Company in
a form reasonably satisfactory to KR and if the parties are unable to obtain
such consent, such legal instruments as may be satisfactory to KR providing for
KR to render services to TAG in return for the economic benefits under such
letter agreement;
(p) the written consent of Life Investors Insurance Company
of America to the assumption by KR of the loans on the Kraft and Intuit
Properties;
(q) Escrow instructions as to each Building providing for
the cash payment into Escrow by KR of that portion of the Contribution Value
necessary to pay all amounts referred to in Section 3.2(c)(iii) through (vi)
hereof;
(r) Copies of written consents of the limited partners,
members, shareholders and boards of directors, as appropriate, of each of the
TAG entities approving the
19
transactions set forth herein, certified by the secretary or, where appropriate,
the general partner or managing member;
(s) A fully executed copy of the TAG Holdings LLC Operating
Agreement in a form approved by KR;
(t) A certificate containing the representations and
warranties set forth in Section 11.1(x) hereto signed by each Person who is to
receive Units and who has not signed this Agreement or the Member Signature Page
hereto.
(u) the consent of the other members of the ▇▇▇▇▇ LLC to the
grant of the option contained in Section 9.2 hereof, such consent to be in a
form approved by KR.
Section 6.3. KR's Obligations at or Prior to Initial Closing. At the
Initial Closing, KR shall deliver to TAG:
(a) a duly executed Registration Rights Agreement in the
form attached hereto as Exhibit G;
(b) a duly executed First Amendment in the form attached
hereto as Exhibit I;
(c) the following duly executed Management Agreements:
(i) Management Agreement (Buildings Under
Construction) as to each such Property.
(ii) Management Agreement (Denver Fed Ex).
(iii) Management Agreement (▇▇▇▇▇ Ranch).
(iv) Management Agreement (Land Under Development) as
to each of DoubleTree and Corporate Research Park.
(v) Management Agreement (To Be Leased Properties) as
to each such Property.
(d) a separate, duly executed and notarized Memorandum of
Contribution Agreement as to each of the Buildings Under Construction/Existing
Leases, the To Be Leased Buildings, the DoubleTree Restaurant Parcel and the
ComStream Expansion Parcel in the form attached hereto as Exhibit O;
(e) a duly executed and notarized Memorandum of Contribution
Agreement (DoubleTree) in the form attached hereto as Exhibit P;
(f) a duly executed and notarized Memorandum of Contribution
Agreement (Corporate Research Park) in the form attached hereto as Exhibit Q;
20
(g) Employment Agreement (Black), duly executed by ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ in the form attached hereto as Exhibit R;
---------
(h) Employment Agreement (▇▇▇▇▇), duly executed by T.
▇▇▇▇▇▇▇ ▇▇▇▇▇ in the form attached hereto as Exhibit S;
---------
(i) LLC Operating Agreement (DoubleTree) in the form
attached hereto as Exhibit T;
---------
(j) LLC Operating Agreement (Corporate Research Park) in the
form attached hereto as Exhibit T;
---------
(k) Subject to Section 3.2, in return for the contribution
of the Existing Buildings by TAG, cash and/or Units in a number equal to the
Contribution Value for the Existing Buildings (as increased or decreased by
prorations and adjustments) divided by the Base Unit Value. KR shall disburse a
portion of the Contribution Value in cash into the Escrow provided for in
Section 3.2 in the amount described in Section 3.2(c)(iii) through (vi);
(l) The purchase price for the San Diego FFE in the amount
set forth on Exhibit H;
---------
(m) a duly executed assignment and assumption of the space
lease of TAG's San Diego office in a form reasonably satisfactory to TAG and KR;
(n) a duly executed ▇▇▇▇ of sale in a form reasonably
satisfactory to TAG and KR conveying the San Diego FFE to KR;
(o) As to each of the Existing Buildings:
(i) a duly executed Assignment of Leases in the form
attached hereto as Exhibit W;
---------
(ii) a duly executed Assignment of Contracts in the
form attached hereto as Exhibit X;
---------
(iii) join with TAG to execute the Tenant Notices;
(iv) such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of KR;
(v) such affidavits as may be customarily and
reasonably required by the Title Company;
(vi) an executed closing statement reasonably
acceptable to KR; and
21
(vii) such additional documents as shall be reasonably
required to consummate the transactions contemplated by this Agreement;
(p) if any representation or warranty of KR set forth in
Section 11.4 hereof needs to be modified due to changes since the Effective
Date, deliver to TAG a certificate, dated as of the date of Initial Closing and
executed on behalf of KR by a duly authorized representative thereof,
identifying any such representation or warranty which is not, or no longer is,
true and correct and explaining the state of facts giving rise to the change. In
no event shall KR be liable to TAG for, or be deemed to be in default hereunder
by reason of any breach of representation or warranty set forth in Section 11.4
hereof which results from any change that (i) occurs between the Effective Date
and the date of Initial Closing and (ii) is expressly permitted under the terms
of this Agreement or is beyond the reasonable control of KR to prevent. The
occurrence of a change in a representation or warranty which is not permitted
hereunder or is beyond the reasonable control of KR to prevent shall, if
materially adverse to TAG, constitute the non-fulfillment of the conditions set
forth in Section 6.8(c) hereof. If, despite changes or other matters described
in such certificate, the Initial Closing occurs, KR's representations and
warranties set forth in this Agreement shall be deemed to have been modified by
all statements made in such certificate;
(q) if the parties hereto are able to obtain the consent of
▇▇▇▇▇▇ Construction Company, duly executed assignment and assumption of the
March 13, 1997, letter agreement between TAG and ▇▇▇▇▇▇ Construction Company in
a form reasonably satisfactory to KR and if the parties are unable to obtain
such consent, such legal instruments as may be satisfactory to KR providing for
KR to render services to TAG in return for the economic benefits under such
letter agreement;
(r) Escrow instructions as to Building providing for the
cash payment into Escrow by KR of that portion of the Contribution Value
necessary to pay all amounts referred to in Section 3.2(c)(iii) through (vi)
hereof.
Section 6.4. Subsequent Closings.
-------------------
(a) At each of the subsequent Closings, TAG shall deliver
each of the following as to the Building or Property being acquired at such
Closing:
(i) duly executed and notarized grant deeds (the
"Deeds") in the form attached hereto as Exhibit U, subject only to the
---------
Permitted Exceptions;
(ii) duly executed bills of sale (the "Bills of Sale")
in the form attached hereto as Exhibit V, conveying the Personal Property
---------
without warranty of title or use and without warranty, express or implied,
as to merchantability and fitness for any purpose;
(iii) duly executed assignments of leases (the
"Assignments of Leases") in the form attached hereto as Exhibit W;
---------
22
(iv) duly executed assignment and assumption agreements (the
"Assignments of Contracts") in the form attached hereto as Exhibit X;
---------
(v) such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of TAG;
(vi) FIRPTA and CALFIRPTA certificates in the form attached
hereto as Exhibit Y duly executed by the appropriate TAG entities, if
required under applicable laws and regulations for similar transactions;
(vii) join with KR to execute notices (the "Tenant Notices")
in the form attached hereto as Exhibit Z, which KR shall send to each
tenant promptly after the Closing, informing such tenant of the transfer of
the Properties and of the assignment to KR of TAG's interest in, and
obligations under the Leases (including, if applicable, any Security
Deposits), and directing that all Rent and other sums payable after the
Closing under each such Lease be paid as set forth in the notice;
(viii) the original Leases and the Operating Agreements,
together with such leasing and Property files and records located at the
Properties or TAG's office, which are material in connection with the
continued operation, leasing and maintenance, but excluding any
Confidential Documents. For a period of three (3) years after the Closing,
KR shall allow TAG and its representatives access without charge to all
files, records and documents delivered to KR at the Closing, upon
reasonable advance notice and at all reasonable times, to make copies of
any and all such files, records and documents, which right shall survive
the Closing;
(ix) keys (if any) to, and possession and occupancy, subject
only to the Permitted Exceptions;
(x) such affidavits as may be customarily and reasonably
required by the Title Company;
(xi) an executed closing statement reasonably acceptable to
TAG; and
(xii) such additional documents as shall be reasonably
required to consummate the transaction contemplated by this Agreement;
(xiii) Escrow instructions as to each Building providing for
the cash payment into Escrow by KR of that portion of the Contribution
Value necessary to pay all amounts referred to in Section 3.2(c)(iii)
through (vi) hereof.
(xiv) Copies of the First Amendment, Registration Rights
Agreement and a certificate containing the representations set forth in
Section 11.1(x)
23
hereof, duly executed by any Person who is to receive Units and who has not
previously executed and delivered such instruments to KR.
(b) At each of the subsequent Closings, KR shall deliver
each of the following as to the Property or Building being acquired at such
Closing:
(i) subject to Section 3.2, in return for the
contribution of such Property or Building by TAG, cash and/or Units in a
number equal to the Contribution Value for such Property or Building (as
increased or decreased by prorations and adjustments) divided by the
Average Closing Price. KR shall pay a portion of the Contribution Value in
cash into the Escrow provided for in Section 3.2 in the amount described in
Section 3.2(c)(iii) through (vi).
(ii) a duly executed Assignment of Leases in the form
attached hereto as Exhibit W;
---------
(iii) a duly executed Assignment of Contracts in the
form attached hereto as Exhibit X;
---------
(iv) join with TAG to execute the Tenant Notices;
(v) such evidence as the Title Company may reasonably
require as to the authority of the person or persons executing documents on
behalf of KR;
(vi) such affidavits as may be customarily and
reasonably required by the Title Company;
(vii) an executed closing statement reasonably
acceptable to KR;
(viii) such additional documents as shall be reasonably
required to consummate the transactions contemplated by this Agreement; and
(ix) Escrow instructions as to each Building providing
for the cash payment into Escrow by KR of that portion of the Contribution
Value necessary to pay all amounts referred to in Section 3.2(c)(iii)
through (vi) hereof.
Section 6.5. Credits and Prorations.
----------------------
(a) This Agreement contemplates a series of Closings for the
acquisition of the Properties and Buildings by KR. All income and expenses of a
Property or Building shall be apportioned as of 12:01 a.m., on the day of the
Closing for that Property or Building as if KR were vested with title during the
entire day upon which such Closing occurs. Such prorated items with respect to a
Property or Building shall include without limitation the following:
(i) all Rent (including prepaid Rent), if any;
24
(ii) taxes and assessments (including personal
property taxes on the Personal Property) (unless and to the extent payment
of such taxes and assessments is the responsibility of a Tenant under a
Lease related to the subject Property);
(iii) utility charges for which TAG is liable (i.e. not
paid by Tenants), if any, such charges to be apportioned at Closing on the
basis of the most recent meter reading occurring prior to Closing (dated
not more than fifteen (15) days prior to Closing) or, if unmetered, on the
basis of a current ▇▇▇▇ for each such utility;
(iv) all amounts payable under brokerage agreements
and Operating Agreements, pursuant to the terms of this Agreement accrued
or owing and unpaid at the time of the Closing;
(v) all operating cost reimbursements, percentage
rents, additional rents and other retroactive rental escalations, sums or
charges payable by tenants under the Leases which accrue prior to the
Closing but are not then due and payable, shall be prorated as of the
Closing. Such amounts shall be for the account of TAG for the period before
the Closing and for the account of KR from and after the Closing; and
(vi) any other operating expenses or other items which
are customarily prorated between a seller and a buyer in the county in
which that Property or Building is located.
(b) Notwithstanding anything contained in Section 6.5(a)
hereof, with regard to the Property or Building which is the subject of the
Closing:
(i) At each Closing, (A) TAG shall, at KR's option,
either deliver to KR any Security Deposits actually held by TAG pursuant to the
Leases or credit to the account of KR the amount of such Security Deposits (to
the extent such Security Deposits have not been applied against delinquent Rents
or otherwise as provided in the Leases), and (B) KR shall credit to the account
of TAG all refundable cash or other deposits posted with utility companies, or,
at KR's option, TAG shall be entitled to receive and retain such refundable cash
and deposits;
(ii) Subject to Section 6.5(a)(ii), above, any taxes
paid at or prior to each Closing shall be prorated based upon the amounts
actually paid. If taxes and assessments due and payable during the year of
Closing have not been paid before Closing, TAG shall be charged at Closing an
amount equal to that portion of such taxes and assessments which relates to the
period before Closing, and KR shall pay the taxes and assessments prior to their
becoming delinquent. Any such apportionment made with respect to a tax year for
which the tax rate or assessed valuation, or both, have not yet been fixed shall
be based upon the tax rate and/or assessed valuation fixed. To the extent that
the actual taxes and assessments for the current year differ from the amount
apportioned at Closing, the parties shall make all necessary adjustments by
appropriate
25
payments between themselves within thirty (30) days after such amounts are
determined following Closing, subject to the provisions of Section 6.5 (d)
hereof. KR shall pay all supplemental taxes resulting from the change in
ownership and reassessment occurring as of the Closing;
(iii) Unpaid and delinquent Rent collected by TAG and
KR after the date of each Closing shall be delivered as follows: (a) if TAG
collects any unpaid or delinquent Rent, TAG shall, within fifteen (15) days
after the receipt thereof, deliver to KR any such Rent which KR is entitled
to hereunder relating to the date of Closing and any period thereafter, and
(b) if KR collects any unpaid or delinquent Rent, KR shall, within fifteen
(15) days after the receipt thereof, deliver to TAG any such Rent which TAG
is entitled to hereunder relating to the period prior to the date of
Closing. TAG and KR agree that all Rent received by TAG or KR after the
date of Closing shall be applied first to actual out-of-pocket costs of
collection incurred by TAG or KR, as applicable, with respect to such
tenant; second, to Rents due from such tenant for the month in which such
payment is received; third, to Rents and other tenant charges attributable
to any period after the Closing which are past due on the date of receipt,
and; finally, to Rents and other tenant charges delinquent as of Closing.
Any costs of collection shall be deducted only from Rents which are
delinquent at the time of collection and shall be deducted from Rents pro
rata based upon the respective delinquent Rents collected for KR and TAG.
KR shall use commercially reasonable efforts after Closing to collect all
Rents in the usual course of KR's operation of the Properties, but KR will
not be obligated to institute any legal proceedings, including an action
for unlawful detainer, or other collection procedures to collect delinquent
Rents. TAG may attempt to collect any delinquent Rents owed to TAG and may
institute any lawsuit or collection procedures, but may not evict any
tenant; and
(iv) with respect to any year-end reconciliations of
percentage rent, retroactive rental escalations and reimbursable expenses
(including common area expense reimbursements and the like) under any
Lease, TAG and KR shall cooperate to complete such reconciliations as soon
as possible after the Closing, with TAG responsible for amounts owing to
tenants under any Lease and entitled to amounts payable by tenants under
any Lease (as the case may be), with respect to periods prior to the
Closing, and with KR responsible for amounts owing to tenants under any
Lease and entitled to amounts payable by tenants under any Lease (as the
case may be), with respect to periods from and after the Closing. With
respect to any such amounts payable to TAG, KR shall use commercially
reasonable efforts after Closing to collect all amounts in the usual course
of KR's operation, but KR will not be obligated to institute legal
proceedings, including an action for unlawful detainer, or other collection
procedures to collect such amounts. TAG may attempt to collect any such
amounts owed to TAG and may institute any lawsuit or collection procedures,
but may not evict any tenant.
(c) TAG may prosecute an appeal of the real property tax
assessment for any tax years to and including the tax year in which the Closing
occurs, and may take related action which TAG deems appropriate in connection
therewith. KR shall cooperate with TAG in
26
connection with such appeal and collection of a refund of real property taxes
paid. TAG owns and holds all right, title and interest in and to such appeal and
refund relating to the period prior to the Closing, and all amounts payable in
connection therewith shall be paid directly to TAG by the applicable
authorities. If such refund or any part thereof is received by KR, KR shall
promptly pay to TAG any amounts relating to the period prior to the Closing. Any
refund received by TAG shall be distributed as follows: first, to reimburse TAG
and KR for all costs incurred in connection with the appeal; second, with
respect to refunds payable to tenants of the Properties pursuant to any Lease,
to such tenants in accordance with the terms of such Leases; and third, to TAG
to the extent such appeal covers the period prior to the Closing, and to KR to
the extent such appeal covers the period as of the Closing and thereafter. If
and to the extent any such appeal covers the period after the Closing, KR shall
have the right to participate in such appeal.
(d) Except as otherwise provided herein, any revenue or
expense amount which cannot be ascertained with certainty as of Closing shall be
prorated on the basis of the parties' reasonable estimates of such amount, and
shall be the subject of a final proration sixty (60) days after Closing, or as
soon thereafter as the precise amounts can be ascertained. KR shall promptly
notify TAG when it becomes aware that any such estimated amount has been
ascertained. Once all revenue and expense amounts have been ascertained, KR
shall prepare, and certify as correct, a final proration statement which shall
be subject to TAG's approval. Upon TAG's acceptance and approval of any final
proration statement submitted by KR, such statement shall be conclusively deemed
to be accurate and final. Such statement shall be deemed to increase or
decrease, as the case may be, the Contribution Value for purposes of Section 3.2
hereof.
(e) The provisions of this Section shall survive Closing.
Section 6.6 Transaction Taxes and Closing Costs. In connection with
-----------------------------------
each closing:
(a) TAG and KR shall execute such returns, questionnaires
and other documents as shall be required with regard to all applicable real
property transaction taxes imposed by applicable federal, state or local law or
ordinance;
(b) Subject to the reimbursement provisions of Section
3.2(c)(v) hereof, TAG shall pay the fees of any counsel representing TAG in
connection with this transaction and the following costs and expenses:
(i) the premium for the ALTA Owner's Policy or
Policies of Title Insurance (with Regional Exceptions) and any option
policies to be issued to KR by the Title Company at the Initial Closing as
to Properties to be acquired after the Initial Closing;
(ii) the cost of the Surveys;
27
(iii) the fees for recording the Deeds and other
recordable instruments;
(iv) any documentary transfer tax or similar tax which
becomes payable by reason of the transfer of the Properties;
(c) any cost reasonably incurred by KR in connection with
the prepayment or assumption of any loans encumbering any of the Properties;
(d) KR shall pay the fees of any counsel representing KR in
connection with this transaction. KR shall also pay the premium for the Extended
Coverage Owner's Policy or Policies of Title Insurance to be issued to KR by the
Title Company at Closing, and the fee for all endorsements thereto, to the
extent that those costs exceed the cost of an ALTA Standard Coverage Owner's
Policy (with Regional Exceptions);
(e) The Personal Property is included in each contribution
without charge, except that TAG shall be obligated to pay the amount of any and
all sales or similar taxes payable in connection with the transfer of the
Personal Property;
(f) Subject to the reimbursement provisions of Section
3.2(c)(v) hereof, all costs and expenses incident to this transaction and the
Closing hereof, and not specifically described above, shall be paid by the party
incurring same; and
(g) The provisions of this Section shall survive each
Closing.
Section 6.7. Conditions Precedent to Obligation of KR. The obligation
----------------------------------------
of KR to consummate the transactions hereunder at any Closing shall be subject
to the fulfillment on or before the date of each Closing of all of the following
conditions, any or all of which may be waived by KR in its sole discretion:
(a) TAG shall have delivered to KR all of the items required
to be delivered to KR pursuant to the terms of this Agreement, including but not
limited to, those provided for in Section 6.2 or 6.4(a) hereof with respect to
the Property or Building which is the subject of the Closing;
(b) All of the representations and warranties of TAG and the
Allens contained in this Agreement shall be true and correct in all material
respects as of the date of each Closing (with appropriate modifications
permitted under this Agreement) except that no representation or warranty as to
a Building or Property previously acquired by KR needs to continue to be true
and correct;
(c) TAG and the Allens shall have performed and observed in
all material respects, all covenants and agreements of this Agreement to be
performed and observed by TAG and the Allens as of the date of each Closing;
28
(d) KR and TAG shall have mutually agreed not later than the
Initial Closing upon the form and content of the Management Agreements and each
of the Exhibits thereto;
(e) KR and TAG shall have mutually agreed not later than the
Initial Closing on a procedure to account for that portion of real property
taxes which the Tenants are not responsible for paying under the Leases;
(f) KR and TAG shall have mutually agreed not later than the
Initial Closing upon the form of Exhibits BB and DD and Exhibit B to the LLC
Operating Agreements;
(g) TAG shall have submitted to KR and KR shall have
approved not later than the Initial Closing in its sole and absolute discretion
the fully executed TAG Holdings LLC Operating Agreement;
(h) KR shall have approved not later than the Initial
Closing of the final form and terms of the employment agreements attached hereto
as Exhibits R and S;
(i) The loan assumption transactions described in the
September 24, 1997, letters from Aegon to ▇▇▇▇▇ ▇. ▇▇▇▇ concerning the Kraft and
Intuit Properties shall be in a position to close concurrently with the Initial
Closing; and
(j) KR and TAG shall have reached agreement not later than
the Initial Closing concerning a reduction of up to Fifty Thousand Dollars
($50,000) in certain increases, if any, in the Contribution Values of LPL, Memec
and Premier.
Section 6.8 Conditions Precedent to Obligation of TAG. The
-----------------------------------------
obligation of TAG to consummate the transactions hereunder at each Closing shall
be subject to the fulfillment on or before the date of each Closing of all of
the following conditions, any or all of which may be waived by TAG in its sole
discretion:
(a) TAG shall have received the Contribution Value, as
adjusted as provided herein, and payable or issued in the manner provided for in
this Agreement with respect to the Property or Building which is the subject of
the Closing;
(b) KR shall have delivered to TAG all of the items required
to be delivered to TAG pursuant to the terms of this Agreement, including but
not limited to, those provided for in Section 6.3 or 6.4(b) hereof with respect
to the Property or Building which is the subject of the Closing;
(c) All of the representations and warranties of KR
contained in this Agreement shall be true and correct in all material respects
as of the date of each Closing (with appropriate modifications permitted under
this Agreement);
29
(d) KR shall have performed and observed, in all material
respects, all covenants and agreements of this Agreement to be performed and
observed by KR as of the date of Closing;
(e) KR and TAG shall have mutually agreed not later than the
Initial Closing upon the form and content of the Management Agreements and each
of the Exhibits thereto;
(f) KR and TAG shall have mutually agreed not later than the
Initial Closing on a procedure to account for that portion of real property
taxes which the Tenants are not responsible for paying under the Leases;
(g) KR and TAG shall have mutually agreed not later than the
Initial Closing upon the form of Exhibits BB and DD and Exhibit B to the LLC
Operating Agreements;
(h) ▇▇▇▇▇ and Black shall have approved not later than the
Initial Closing of the final form and terms of the employment agreements
attached hereto as Exhibits R and S; and
(i) KR and TAG shall have reached agreement not later than
the Initial Closing concerning a reduction of up to Fifty Thousand Dollars
($50,000) in certain increases, if any, in the Contribution Values of LPL, Memec
and Premier.
ARTICLE VII.
BUILDINGS UNDER CONSTRUCTION/EXISTING LEASES
Section 7.1 Management Agreement. At the Initial Closing, TAG and a
--------------------
KR affiliate shall enter into the Management Agreement (Buildings Under
Construction) for the construction and leaseup of the Properties referred to
herein as "Buildings Under Construction/Existing Leases" in a good and
workmanlike manner at TAG's expense. Such Properties shall be completed on the
time schedule and pursuant to the plans and specifications set forth in the
Exhibits to the Management Agreement. TAG shall cooperate with the KR affiliate
and shall act expeditiously and in good faith in order that the Properties and
Buildings may be delivered on the time schedule set forth in the Management
Agreement.
Section 7.2. Closings. Closing will occur for contribution of each
--------
such Property to KR within thirty (30) days following (i) receipt of a
certificate of occupancy as to such Building, (ii) physical occupancy of the
Building by the Tenant indicated in Exhibit GG, and (iii) commencement of rent
----------
as required under the applicable lease for such Building.
Section 7.3. Issuance of Contribution Value. As of the date of this
------------------------------
Agreement, TAG and KR estimate that the Contribution Value for each of the
Buildings Under Construction/Existing Leases will be as reflected on Exhibit AA
----------
hereto. The actual Contribution Value for the following of the Buildings Under
Construction/Existing Leases may be adjusted upward or downward as a result of
increases or decreases in the rent owed by the tenants under
30
the leases related to those Properties in accordance with the following
provisions of those leases (capitalized terms being defined in the applicable
lease):
(a) ComStream: Section 2.9(b) provides for decreases in
monthly Base Rent if Tenant Improvements Costs are less than the Tenant
Improvements Allowance, up to a maximum amount of $400,000.
(b) LPL: Section 2.9(b) provides for increases in monthly
Base Rent as a result of increases in Shell Costs resulting from Tenant Change
Orders and Tenant-Caused Delays, but only to the extent of an additional $2.00
per square foot of the Demised Premises. In addition, Section 3.1 provides for
increases in monthly Base Rent due to increases in the square footage of the
Demised Premises.
(c) Memec: Sections 2.9(b)(i) through (iv) provide for
increases and decreases in monthly Base Rent due to increases or decreases in
Shell Improvement Costs or Tenant Improvement Costs.
The Contribution Value of each of such properties was based upon an assumed NOI
(predicated upon a Base Rent) divided by an agreed upon capitalization rate. In
the event of any modification in the assumed monthly Base Rent under any of the
foregoing leases, the Contribution Value of the related Property will be
adjusted to an amount equal to the annual increase or decrease in the NOI
divided by the capitalization rate which was originally used to establish the
estimated Contribution Value reflected on Exhibit AA. Subject to Section 3.2
----------
hereof, the Contribution Value shall be issued in Units in a number equal to
Contribution Value, as adjusted by this Section 7.3, if at all, divided by the
Average Closing Price.
ARTICLE VIII.
TO BE LEASED PROPERTIES
Section 8.1. Management Agreement. At the Initial Closing, TAG and a
--------------------
KR affiliate shall enter into the Management Agreement (To Be Leased Properties)
for the construction and leaseup of the Properties referenced to herein as the
"To Be Leased Properties" in a good and workmanlike manner at TAG's expense.
Such Properties shall be completed pursuant to the time schedule and plans and
specifications set forth in the Exhibits to the Management Agreement. TAG shall
cooperate with the KR affiliate and shall act expeditiously and in good faith in
order that the Properties may be delivered on the time schedule set forth in the
Management Agreement.
Section 8.2. Closings; Right of First Refusal.
--------------------------------
(a) Closings will occur for contribution of each Building to
be constructed on the To Be Leased Properties not later than thirty (30) days
following (i) receipt of a certificate of occupancy as to such Building, and
(ii) upon the first to occur of (A) physical occupancy of at least ninety-five
percent (95%) of the rentable area by tenants who have commenced paying rent as
required under the applicable leases or (B) one (1) year following the
31
date upon which seventy-five (75%) of the rentable area has been physically
occupied by tenants who have commenced paying rent as required under the
applicable leases (and even if during such one (1) year period physical
occupancy declines below seventy-five percent (75%). Either KR or TAG may give a
Ready-to-Close Notice when the appropriate of the foregoing conditions have been
satisfied.
(b) Notwithstanding the foregoing or any other provisions of
this Agreement, KR shall neither have the right nor the obligation to acquire
any Building which does not achieve seventy-five percent (75%) physical
occupancy of the rentable area by tenants who have commenced paying rent within
two (2) years following the date of receipt by TAG of a certificate of occupancy
as to such Building (the "Lease-Up Period"), provided that KR shall have the
right of first refusal ("Right of First Refusal") to acquire any such Building
for a three (3) year period following the expiration of the Lease-Up Period (the
"First Refusal Period"). During the First Refusal Period, TAG shall not sell or
agree to sell such Building without first offering to sell it to KR. The term
"sell" shall include any transfer, conveyance, assignment, hypothecation, or
pledge of all or any portion of the Building or TAG's interest therein. Before
TAG sells or agrees to sell such Building, TAG shall offer to sell the Building
to KR in writing and on terms and conditions substantially identical to those
proposed for the sale of the Building to the third party. The offer to KR shall
include all material terms of the proposed sale to the third party. KR shall
have thirty (30) business days from the date of TAG's offer to accept such offer
in writing. If the material terms of the proposed sale are not capable of being
accepted by a "typical" buyer (e.g., the sale involves the issuance of limited
partnership interest in the proposed buyer), KR may nevertheless accept the
offer so long as KR's acceptance provides substantially the same after-tax
economic result to TAG. If KR fails to accept the offer within such period of
time, the offer shall be deemed to be rejected. If KR accepts the offer, KR
shall have thirty (30) days following acceptance of the offer to consummate the
acquisition of the Building on the terms and conditions set forth in the offer.
If KR rejects the offer, TAG shall be free to sell the Building to the third
party on the terms and at a price not more favorable than those set forth in the
offer to KR.
Section 8.3. Contribution Value of To Be Leased Properties. Except
---------------------------------------------
when purchased by KR following the exercise of the Right of First Refusal
granted in Section 8.2(b) above, the Contribution Value of To Be Leased
Properties shall be determined as follows:
(a) First, the actual NOI for such Property in effect as of
the Closing shall be determined. For purposes of this Article VIII only and not
for any other purpose under this Agreement, "NOI" means net operating income of
a Property, which is equal to (1) the gross revenue generated from the operation
of the Property, less (2) operating expenses incurred in the operation of such
Property (including (A) real property taxes and assessments not paid by Tenants
and (B) the establishment of reserves for customary and commercially reasonable
property management fees) which are not reimbursed by tenants under Leases
related thereto, but excluding from such expenses vacancy and credit losses,
financing-related expenses, income taxes, and depreciation. Gross revenue shall
not include surface parking revenue or any part of the revenue from a Property
which amortizes tenant improvements which are either (a) in excess of the
building standard tenant improvements provided for in the business plan for that
Property
32
mutually approved by KR and TAG or (b) "specialized," so that such tenant
improvements typically would not be usable by other prospective tenants upon a
termination of that particular Lease. Leases on To Be Leased Property (i.e. the
Premier lease at Carmel Valley and the four existing leases at Pilot Commerce
Center) and Leases executed after the Initial Closing but with tenant
improvement allowances consistent with leasing guidelines approved in writing by
KR, shall be deemed to be not in excess of fair market rental and not to contain
excess or specialized tenant improvement allowances. For purposes of calculating
gross revenue, rental income shall not be in excess of the then fair market
rental except that any lease executed on To Be Leased Property prior to the
Initial Closing and approved in writing by KR or executed subsequent to the
Initial Closing but which complies with mutually agreed upon leasing parameters
shall be deemed to be at fair rental value. Gross revenue shall not include any
rental increases which occur with respect to, and after the commencement date
of, the leases of the first seventy-five percent (75%) of the leaseable space.
If KR elects to acquire a Building which achieves seventy five percent (75 %)
occupancy but does not achieve ninety-five percent (95%) occupancy within one
(1) year thereafter and the occupancy has at the time of KR's election declined
below seventy-five percent (75%) occupancy, the NOI for such Building shall be
calculated as though such Building were seventy-five percent (75%) leased by
tenants who had occupied and commenced paying rent;
(b) Second, in order to adjust NOI for vacancy and credit losses,
that NOI shall be multiplied by the percentage set forth in the following table,
and the result shall be capitalized at the indicated capitalization rate to
arrive at the Contribution Value:
Percentage of NOI
Cap Rate to be Capitalized
-------- -----------------
Wateridge 8.75% 95%*
Redwood Shores 9.00% 95%
Pilot Commerce Center 10.00% 95%
Carmel Valley 8.60% 98%
* to be 97% if two tenants or less or 95% if more than two tenants.
(c) The Contribution Value of To Be Leased Property acquired by
KR following exercise of the Right of First Refusal granted in Section 8.2(b)
above shall equal the value at which KR accepted TAG's offer thereunder.
Section 8.4. Issuance of Contribution Value. (a) Subject to Section 3.2,
------------------------------
the Contribution Value shall be issued in Units in a number equal to the
Contribution Value for the Property divided by the Average Closing Price.
ARTICLE IX.
LAND UNDER DEVELOPMENT
Intentionally omitted.
33
ARTICLE X.
DENVER FED EX
-------------
Section 10.1. Management Agreement (Denver Fed Ex). At the Initial Closing,
------------------------------------
a KR Affiliate and TAG will enter into the Management Agreement (Denver Fed Ex)
for development management services pursuant to which an affiliate of KR will,
at the direction of the owners of the Denver Fed Ex Property, manage the
development of the Denver Fed Ex Property. KR will not acquire the Denver Fed Ex
Property.
Section 10.2. Funding. KR will not provide funding and will not bear any
-------
risks of ownership in connection with the Denver Fed Ex Property.
42
ARTICLE XI.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 11.1 Representations and Warranties of TAG. TAG hereby makes the
-------------------------------------
following representations and warranties to KR as of the Effective Date, which
representations and warranties shall be deemed to have been made again as of the
Initial Closing, and thereafter as of each subsequent Closing, but only as to
the Property being acquired at such subsequent Closing, subject at each of the
Closings to Section 6.2(m) hereof, provided, however, that the representations
contained in Section 11.1(x) shall be made at each subsequent Closing in the
event any Units are issued in connection with such subsequent Closing. The
Allens join in such representations and warranties made in Sections 11.1(a),
(p), (x), (y) and (aa). Each of the representations and warranties is qualified
by the exceptions set forth in the Disclosure Schedule.
(a) Organization and Authority. Each of the entities comprising
--------------------------
TAG has been duly organized and is validly existing under the laws of its state
of organization. Each of the entities comprising TAG has the full right and
authority to enter into this Agreement and to transfer all of the Properties and
to consummate or cause to be consummated the transactions contemplated by this
Agreement. The persons signing this Agreement on behalf of each of the entities
comprising TAG is authorized to do so.
(b) Pending Actions. There is no action, suit, arbitration,
---------------
unsatisfied order or judgment, government investigation or proceeding pending,
or to TAG's knowledge, threatened against TAG which, if adversely determined,
could individually or in the aggregate materially interfere with the
consummation of the transaction contemplated by this Agreement. There is no
litigation which has been filed against TAG that arises out of the ownership of
the Properties and would materially affect the Properties or use thereof, or
TAG's ability to perform hereunder.
(c) Operating Agreements. The Operating Agreements listed on
--------------------
Exhibit D are all of the agreements concerning the operation and maintenance of
---------
the Properties entered into by TAG and affecting the Properties, except those
Operating Agreements that are not assignable or are to be terminated by TAG
within thirty (30) days after the Closing, including any agreement with any
manager of any Property, which agreement shall be terminated by TAG.
(d) Lease Brokerage. There are no agreements with brokers
---------------
providing for the payment from and after the Closing by TAG or TAG's successor-
in-interest of leasing commissions or fees for procuring tenants with respect to
the Properties, except as disclosed in Exhibit FF hereto.
----------
(e) Condemnation. TAG has received no written notice of any
------------
condemnation proceedings relating to the Properties.
(f) Violations. TAG has not received written notice of any
----------
uncured violation of any federal, state or local law relating to the use or
operation of the Properties which would materially adversely affect the
Properties or use thereof.
43
(g) Leases. The rent roll attached hereto as Exhibit GG is
------ ----------
accurate in all material respects and lists all of the Leases currently
affecting the Real Properties. There are no outstanding offers to lease any
portion of any Property except as set forth on the TAG Disclosure Schedule.
(h) Authorization. This Agreement has been, and on the Closing
-------------
Date, all documents to be executed by TAG hereunder will have been, duly
authorized, executed and delivered by TAG, and constitute and will constitute
the valid and binding obligations of TAG enforceable against it in accordance
with their respective terms.
(i) No Governmental Consents Required. No consent, approval or
---------------------------------
other authorization of, or registration, declaration or filing with, any
governmental authority is required for the due execution and delivery of this
Agreement, and/or any of the documents to be executed by TAG hereunder, or for
the performance by or the validity or enforceability thereof against TAG, other
than the recording or filing for recordation of the Deeds.
(j) Zoning. To TAG's knowledge, TAG has obtained all consents,
------
permits, licenses, approvals and authorizations from governmental authorities or
other third parties which are necessary to permit the conveyance of the
Properties in accordance with the provisions of this Agreement and the use of
the Properties for its current use and for all uses contemplated under the
Leases, all of which are in full force and effect, and the Properties are in
compliance with all applicable zoning ordinances and the Permitted Exceptions.
(k) No Violations. The execution and delivery of this Agreement,
-------------
and all other documents to be executed by TAG hereunder, compliance with the
provisions hereof and thereof and the consummation of the transactions
contemplated hereunder and thereunder will not result in (a) a breach or
violation of (i) any governmental requirement applicable to TAG or the
Properties now in effect and known to TAG; (ii) the organizational documents of
TAG; (iii) any judgment, order or decree of any governmental authority binding
upon TAG; or (iv) any agreement or instrument to which TAG is a party or by
which it is bound; (b) the acceleration of any obligation of TAG; or (c) the
creation of any lien, encumbrance or other matter affecting title (other than
the Permitted Exceptions) to the Properties.
(l) Use Permitted. To TAG's knowledge, current local zoning
-------------
ordinances, general plans and other applicable land use regulations and all
private covenants, conditions and restrictions, if any, affecting the
Properties, permit the transfer of the Properties and the use of the Properties
for its current use (and reconstruction and resumption of use in the event of
damage, destruction, or cessation of use) as a matter of right for an unlimited
time period and not merely as a legal non-conforming use.
(m) Environmental Matters. As to hazardous substances:
---------------------
(i) there are no underground tanks or hazardous substances
currently located on the Properties, no such tanks have ever been located
on the
44
Properties and no hazardous substances have ever been present, used,
stored, treated, released from or disposed of on the Properties;
(ii) no enforcement, cleanup, removal or other governmental
or regulatory actions have, at any time, been instituted or, to TAG's
knowledge, threatened with respect to the Properties;
(iii) there is no current or, to TAG's knowledge, prior
violation or state of noncompliance with any environmental law relating to
hazardous substances with respect to the Properties;
(iv) no claims have been made or, to TAG's knowledge,
threatened by any third party with respect to the Properties relating to
damage, contribution, cost recovery, compensation, loss or injury resulting
from or related to any hazardous substance; and
(v) to TAG's knowledge, there are no current or prior
businesses engaged in the storage, treatment or disposal of hazardous
substances on any Properties adjacent to the Properties.
(n) Special Risk Areas. To TAG's knowledge, none of the
------------------
Properties are located within an area of special risk with respect to natural or
man-made disasters or hazards, including any flood hazard area.
(o) Utilities. All public utilities, including telephone, gas,
---------
electric power, sanitary and storm sewer and water, are available for connection
at the boundaries of the Properties; such utilities are adequate for the current
use of the Properties; and the means of ingress and egress, parking, access to
public streets and drainage facilities are adequate for the current use of the
Properties.
(p) Contiguous Properties. Neither the Allens, TAG nor any
---------------------
Affiliate of either of them is retaining any property contiguous or adjacent to
the Properties.
(q) Physical Condition. To TAG's knowledge, there is no existing
------------------
patent or latent structural or other physical defect of deficiency in the
condition of the Properties, or any component or portion thereof, that would or
could impair or impose costs upon the use, occupancy or operation of the
Properties, and that has not been fully corrected. To TAG's knowledge there is
no defect or deficiency in the Improvements, the structural elements thereof,
the mechanical systems (including, without limitation, all HVAC, plumbing,
electrical, elevator, security, utility and sprinkler systems) therein. To
TAG's knowledge, the Personal Property is in good repair and operating
condition.
(r) Improvements. To TAG's knowledge, the Improvements were
------------
completed and installed in accordance with the plans and specifications therefor
being delivered by TAG to KR hereunder, which were approved by all governmental
authorities having
45
jurisdiction thereover, and do not violate any governmental laws, ordinances,
rules or regulations.
(s) Employees. TAG has no employees at the Properties.
---------
(t) Rezoning. To TAG's knowledge, there is not now pending nor
--------
threatened any proceeding for the rezoning of the Properties or any portion
thereof, or the taking of any other action by governmental authorities that
would have an adverse or material impact on the value of the Project or use
thereof.
(u) Easements and Other Agreements. To TAG's knowledge, TAG is
------------------------------
not in default in complying with the terms and provisions of any of the
covenants, conditions, restrictions, right-of-way or easements constituting one
or more of the Permitted Exceptions.
(v) Soil Condition. To TAG's knowledge, the soil condition of the
--------------
Land is such that it will support all of the Improvements for the foreseeable
life of the Improvements, without the need for unusual or new sub-surface
excavations, fill, footings, caissons or other installations. To TAG's
knowledge, the Improvements, as built, were constructed in a manner compatible
with the soil condition at the time of construction, and all necessary
excavations, fill, footings, caissons or other installations were then and have
since been provided. There are no adverse geological or soil conditions
affecting the Properties.
(w) Tenant Leases. With respect to the Leases and tenants
-------------
("Tenants") listed on the Rent Roll provided to KR by TAG:
(i) The Leases are in full force and effect strictly
according to the terms set forth therein and in the Rent Roll, and have not
been modified, amended, or altered, in writing or otherwise except as
evidenced by copies of amendments thereto previously provided to KR by TAG.
The Tenants are legally required to pay all sums and perform all
obligations set forth in the Leases. There are no concessions, allowances
(for improvements or otherwise), free or reduced rent periods, early
termination rights, options or rights of first refusal regarding expansion
of demised premises or to acquire any Property, with regard to the
Properties or the Leases which are not contained in the copies of the
Leases which TAG has previously provided to KR.
(ii) All obligations of the lessor under the Leases that
accrue to the date of Closing have been performed including, but not
limited to, all required tenant improvements, cash or other inducements,
rent abatements or moratoria, installations and construction (for which
payment in full has been made in all cases), and the Tenants have, to TAG's
knowledge, unconditionally accepted lessor's performance of such
obligations. To TAG's knowledge, the Tenants have asserted no offsets,
defenses or claims available against Rent payable by them or other
performance or obligations otherwise due from them under the Leases. No
portion of any Rent due and payable by any Tenant represents or constitutes
a reimbursement of tenant improvement or construction costs incurred by
TAG. A true, complete and correct summary of the terms
46
and provisions of all concessions granted by TAG to Tenants (including but
not limited to any and all free rent, tenant improvement allowances, direct
payments, moving allowances and buyouts of other leases) is attached hereto
as Exhibit II. Except as set forth on Exhibit II there have been no other
---------- ----------
concessions, of any nature, granted to any Tenant.
(iii) No Tenant is in default under or is in arrears in the
payment of any sums or in the performance of any obligations required of it
under its Lease. No Tenant has prepaid any rent or other charges.
(iv) Except as disclosed in writing to KR, during the
thirty-six (36) month period immediately preceding the Effective Date and
the Closing Date: (1) no Tenant has, at any time, been more than thirty
(30) days delinquent in its respective payment of any and all sums due
under the terms of its respective Lease; (2) no Tenant has requested orally
or in writing that TAG provide that Tenant with any reduction in the
Tenant's monetary obligations under its Lease; (3) no Tenant has expressed
to TAG orally or in writing any weakness or material decline in that
Tenant's financial condition, nor has any Tenant requested that TAG, in its
capacity as lessor, permit any Tenant to sublease its leased premises, or
assign its Lease, or terminate its Lease on an accelerated basis; (4) TAG
has not "written off" any delinquent sums owed by any Tenant to satisfy its
obligation to contribute to the payment of real estate taxes, common area
maintenance charges, and insurance premiums; and (5) TAG has not had, nor
is it currently engaged in, any dispute (whether of a formal or an informal
nature) with any Tenant concerning that Tenant's obligations to make
payments under the terms of its Lease toward real estate taxes, insurance
premiums and common area maintenance charges.
(v) TAG has no reason to believe that any Tenant is, or may
become, unable or unwilling to perform any or all of its obligations under
its Lease, whether for financial or legal reasons or otherwise.
(vi) Except as disclosed in writing to KR, neither base rent
("Base Rent"), nor regularly payable estimated Tenant contributions for
operating expenses, insurance premiums, real estate taxes, common area
charges, and similar or other "pass through" or non-Base Rent items
including, without limitation, cost-of-living or so-called "C.P.I." or
other such adjustments (collectively, "Additional Rent"), nor any other
item payable by any Tenant under any Lease has been heretofore prepaid for
more than one (1) month nor shall it be prepaid between the Effective Date
and the Closing Date for more than one (1) month.
(vii) To TAG's knowledge, no guarantor(s) of any Lease has
been released or discharged, voluntarily or involuntarily, or by operation
of law, from any obligation under or in connection with any Lease or any
transaction related thereto.
(viii) There are no brokers' commissions, finders' fees, or
other charges payable or to become payable to any third party on behalf of
TAG as a result of
47
or in connection with any Lease or any transaction related thereto,
including, but not limited to, any exercised or unexercised option(s) to
expand or renew, except as disclosed on Exhibits FF or II hereto.
(ix) No Tenant or any other party has asserted any claim
(other than for customary refund at the expiration of a Lease) to all or
any part of any Security Deposit.
(x) No Tenant has any right to renew or extend the term of
its Lease, other than as expressly provided in the Lease. No Tenant has:
(1) any option to purchase the Land or Improvements; or (2) any right of
first refusal to purchase the Land or Improvements or to lease additional
space in the Improvements, other than as expressly provided in the Lease.
(x) Investment Representation.
(i) The offering and sale of the Units to be acquired by
TAG pursuant to this Agreement are intended to be exempt from registration
under the Securities Act of 1933, as amended (the "Act") and the rules and
regulations in effect thereunder, as well as state securities laws. TAG and
the Members (as defined below) are acquiring the Units solely for their own
accounts for the purpose of investment and not as a nominee or agent for
any other person and not with a view to, or for the offer or sale in
connection with, any distribution or sale thereof. All of the members and
limited partners of all of the entities constituting TAG (collectively, the
"Members") are listed on the Member Signature Page attached hereto. TAG may
distribute the Units to the Members. By executing the Member Signature
Page, each of the Members acknowledges and agrees that its respective
interests in the Properties are being transferred in part in exchange for
Units (whether directly or through TAG with a distribution of the Units to
the Members) and that the Units will be held by Members. The Members and
the Allens further hereby make each representation and warranty of TAG, and
agree to be bound by each agreement by or for the benefit of TAG, provided
in this Section 11.1(x) and in Sections 3.4 and 11.3(d) of this Agreement
as if the Allens and such Member were "TAG." TAG represents that no other
persons or entities other than the Members will hold the Units distributed
in connection with the Initial Closing or any subsequent Closing.
(ii) TAG has such knowledge, sophistication and experience
in business and financial matters that it is capable of evaluating the
merits and risks of an investment in the Units; TAG understands the
limitations on transfer imposed by the federal and state securities laws
and as described in this Agreement, the Partnership Agreement and the First
Amendment. TAG is able to bear the economic risk of holding the Units for
an indefinite period of time and is able to afford the complete loss of its
investment in the Units. TAG has reviewed all information regarding KR, KRC
and the Units as TAG deems necessary or desirable, and has been given the
opportunity to obtain any additional information or documents and to ask
questions and receive answers about
48
such information and documents, KR, KRC and the Units as TAG deems
reasonably necessary or desirable to evaluate the merits and risks of its
investment in the Units.
(iii) TAG is an "accredited investor" (as such term is
defined in Rule 501(a) of Regulation D under the Act).
(iv) Each Member that is a corporation hereby represents
that it has no intention to dissolve, either presently or upon the transfer of
its interests in the Properties, that it will hold the Units, and that it
presently engages in activities other than those related to, and holds other
assets other than, the Properties, and following the transfer of its interests
in the Properties, will engage in activities other than those related to, and
hold assets other than, the Units.
(y) Real Estate Opportunities. Other than the Properties, neither
-------------------------
TAG nor the Allens owns any interest either directly or indirectly through any
other entity in any commercial or industrial real property or have any rights to
acquire an interest in any commercial or industrial real property other than
those commercial and industrial properties which are located (i) in the Central
Valley or (ii) east of the Continental Divide of North America.
(z) Property Diligence Forms. The Property Diligence Forms
------------------------
completed by TAG and delivered by TAG to KR are accurate and complete in all
material respects.
(aa) ▇▇▇▇▇ and Black. Following the Initial Closing, neither ▇▇▇▇▇
---------------
nor Black shall have any ongoing business relationship with any of TAG or the
Allens except (i) as set forth herein and in the Exhibits hereto and (ii) in the
TAG Holdings LLC Operating Agreement.
(bb) Additional REIT Representations and Warranties. Each of the
----------------------------------------------
representations and warranties set forth in Exhibit JJ are true and correct in
----------
all material respects.
(cc) Material Facts. Neither this Agreement nor any certificate,
--------------
statement or other document furnished or to be furnished to KR by or on behalf
of TAG in connection with the transactions contemplated hereunder and the
Exhibits hereto contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary in order to make the
statements contained herein or therein not misleading.
Section 11.2. Survival of TAG's Representations and Warranties. The
------------------------------------------------
representations and warranties of TAG set forth in Section 11.1 hereof as
updated as of the Closing in accordance with the terms of this Agreement, shall
survive each Closing for a period of one (1) year.
Section 11.3. Covenants of TAG and the Allens. TAG and, where specifically
-------------------------------
stated, the Allens, hereby covenant with KR as follows:
49
(a) From the Effective Date hereof until all of the Closings have
occurred or until earlier termination of this Agreement, TAG shall operate and
maintain the Properties in a manner generally consistent with the manner in
which TAG has operated and maintained the Properties prior to the date hereof.
TAG shall not without the prior written consent of KR encumber or permit to be
encumbered any of the Properties or take any action which would or could
materially and adversely impact the Properties, with the exception of the deed
of trust which will be delivered to Kmart Corporation and which will encumber
the Kmart Property;
(b) Except as provided hereinbelow, TAG agrees not to amend,
renew or expand the Leases or enter into any new Leases between the Effective
Date and the Closing without the prior written approval of KR. TAG will submit
to KR, prior to execution by TAG any such amendment, renewal, expansion or new
Lease and KR shall have ten (10) business days after its receipt thereof to
notify TAG in writing of either its approval or disapproval thereof. If KR fails
to notify TAG in writing of its approval or disapproval within the ten (10)
business day period set forth above, KR shall be deemed to have disapproved such
amendment, renewal, expansion or new Lease.
(c) TAG currently engages in commercial, industrial and
residential development, ownership and management activities in various markets,
including areas where KR currently owns, or following the completion of the
transactions which are the subject of this Agreement will own, commercial and
industrial properties. TAG and the Allens hereby covenants that TAG and the
Allens shall not acquire, develop, finance or invest (either equity or debt) in
any industrial or commercial property which is located in a geographic market
area in which KR owns an industrial or commercial property. The restrictions set
forth in this paragraph shall not apply to:
(i) any property located in the Central Valley or east of
the continental divide of North America or outside of the Continental
United States;
(ii) the Denver - Fed Ex facility;
(iii) the residential activities of TAG or the Allens,
wherever located;
(iv) the ownership of any property which is acquired by TAG
or the Allens in a property exchange with KR or a Development LLC; or
(v) the ownership by TAG or the Allens of any beneficial
interest in a publicly traded entity which owns, operates or invests in
property which TAG or the Allens would otherwise be prohibited from owning,
operating or investing in under this Section 11.3(c), provided that in the
case of ▇▇▇▇▇▇▇ ▇▇▇▇▇, while he is a member of the board of directors of
KRC, his interest in any such publicly traded entity may not exceed five
percent (5%) of the outstanding beneficial ownership thereof.
50
(vi) This provision shall remain in full force and effect so
long as ▇▇▇▇▇▇▇ ▇▇▇▇▇ is a member of the board of directors of KRC, and
shall terminate (A) one (1) year following the date of his voluntary
termination, (B) one (1) year following his removal for cause or (C)
immediately upon any other involuntary termination. Involuntary termination
shall include failure to be reelected to the board.
(d) From and after the date of this Agreement, the Allens, TAG
and their Affiliates shall not: (i) act in concert with any other person or
group (other than TAG and its current Affiliates) with respect to securities of
KRC or KR; (ii) initiate, solicit, encourage or propose to effect any merger,
consolidation, other business combination or sale of KRC or KR or any of their
assets, or any other change of control or similar extraordinary transaction
involving KRC or KR; (iii) initiate, solicit, encourage or participate in any
proxy solicitation, election contest or shareholder proposal, or call for a
shareholder meeting or similar action, with respect to KRC or KR; (iv) seek
additional representation on, or (other than actions by ▇▇▇▇▇▇▇ ▇▇▇▇▇ in the
ordinary course of his duties as a KRC director) other changes in the
composition of, the KRC Board of Directors; (v) acquire shares of KRC such that
TAG or the Allens collectively beneficially own more than 7% of the outstanding
shares of KRC; (vi) request amendment or waiver of, in any manner which would
require public disclosure, or challenge the validity of, any of the foregoing;
or (vii) assist, advise, encourage or act in concert with any person with
respect to, or seek to do, any of the foregoing.
(e) From and after the date of this Agreement, TAG (as
"Borrower") shall satisfy the Borrower conditions to assumption of the loans on
the Kraft and Intuit Properties as set forth in the September 24, 1997 letters
from the lender to ▇▇▇▇▇ ▇. ▇▇▇▇.
(f) TAG shall use its best efforts to acquire the San ▇▇▇▇▇▇ Fed
Ex site on the terms set forth in that certain Agreement for Purchase and Sale
of Real Property dated as of July 20, 1997, between Fireman's Fund Insurance
Company as seller and ADI. Concurrently with the acquisition of that Property,
TAG shall execute and record a Memorandum of Contribution Agreement as to that
Property in substantially the form of Exhibit O hereto. From and after the date
---------
of this Agreement, TAG shall not without the prior written consent of ▇▇ ▇▇▇▇▇,
terminate or otherwise modify such agreement or give or withhold any consents or
notices under such agreement. TAG shall promptly deliver to KR copies of any
notices or other writings received from or on behalf of Fireman's Fund Insurance
Company.
(g) TAG shall use its best efforts to acquire the DoubleTree
Kmart site on the terms set forth in that certain Agreement for Purchase and
Sale of Real Estate and Escrow Instructions as of July 28,1997, between Kmart
Corporation, a Michigan corporation as seller and Piazza Partners, L.P., a
California limited partnership as buyer. Concurrently with the acquisition of
that Property, TAG shall execute and record a Memorandum of Contribution
Agreement as to that Property in substantially the form of Exhibit O hereto.
---------
From and after the date of this Agreement, TAG shall not, without the prior
written consent of KR, amend, terminate or otherwise modify such agreement or
give or withhold any consents or notices under such agreement. TAG shall
promptly deliver to KR copies of any notices or other writings received from or
on behalf of such seller.
51
(h) With respect to ▇▇▇▇▇ LLC, neither ADI nor ▇▇▇▇▇▇▇ ▇▇▇▇▇
shall cause or permit:
(i) The withdrawal by ADI as the Managing Member;
(ii) The sale, transfer or encumbrance of any interest of
ADI or ▇▇▇▇▇▇▇ ▇▇▇▇▇ in ▇▇▇▇▇ LLC;
(iii) Any dissolution or termination; or
(iv) Any amendment or modification of the operating
agreement.
(i) Until the first Anniversary of the Closing for a Property,
TAG shall, upon reasonable advance notice from KR, comply with the provisions of
Exhibit HH with respect to that Property.
----------
(j) TAG will cause repairs to be made to the FFF Enterprises
Property as set forth in the October 15, 1997 letter from ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ to
T. ▇▇▇▇▇▇▇ ▇▇▇▇▇.
(k) From and after the Initial Closing, neither the Allens nor
any TAG Person shall amend or modify or permit the amendment or modification of
the TAG Holdings LLC Operating Agreement.
Section 11.4. Representations and Warranties of KR. KR hereby makes the
------------------------------------
following representations and warranties to TAG as of the Effective Date, which
representations and warranties shall be deemed to have been made again as of the
Initial Closing, and thereafter as of each subsequent Closing, but only as to
the Property being acquired at such subsequent Closing, subject at each of the
Closings to Section 4.2(f) hereof.
(a) Organization and Authority. KR has been duly organized and is
--------------------------
validly existing under the laws of Delaware. KR has the full right and authority
to enter into this Agreement and to consummate or cause to be consummated the
transaction contemplated by this Agreement. The person signing this Agreement on
behalf of KR is authorized to do so;
(b) Pending Actions. There is no action, suit, arbitration,
---------------
unsatisfied order or judgment, government investigation or proceeding pending or
to KR's knowledge, threatened against KR which, if adversely determined, could
individually or in the aggregate materially interfere with the consummation of
the transaction contemplated by this Agreement.
(c) Capital Structure.
-----------------
(i) The authorized shares of capital stock KRC consist of
Thirty Million (30,000,000) shares of preferred stock, $0.01 par value per
share, none of which is issued or outstanding, and One Hundred Fifty
Million (150,000,000) shares of Common Stock, of which Twenty-Four Million
Four Hundred Seventy-Five Thousand
52
(24,475,000) were issued and outstanding as of September 24, 1997 (the "KRC
Common Shares"). On September 24, 1997, (x) One Million Five Hundred
Thousand (1,500,000) KRC Common Shares have been reserved for issuance
under the Stock Incentive Plan of KRC (the "Plan"), of which (1) One
Hundred Thousand (100,000) KRC Common Shares are issued and outstanding and
(2) One Million One Hundred Eighty-Five Thousand (1,185,000) KRC Common
Share are issuable upon the conversion of outstanding stock options, and
(y) Two Million Eight Hundred Seventeen Thousand Four Hundred Seventy-Six
(2,817,476) KRC Common Shares were reserved for issuance upon conversion of
issued and outstanding Units.
(ii) All outstanding shares of capital stock of KRC are duly
authorized, validly issued, fully paid and nonassessable and not subject to
preemptive rights. There are no bonds, debentures, notes or other
indebtedness of KRC having the right to vote (or convertible into, or
exchangeable for, securities having the right to vote) on any matters on
which shareholders of KRC may vote.
(iii) As of the date hereof, Twenty Seven Million Two Hundred
Forty-Five Thousand Eight Hundred Forty-Three (27,245,843) Units are
validly issued and outstanding, fully paid and nonassessable, of which
Twenty Four Million Four Hundred Twenty-Eight Thousand Three Hundred Sixty-
Seven (24,428,367) are owned by KRC. KR has not issued or granted and is
not a party to any outstanding commitments of any kind relating to, or any
presently effective agreements or understandings with respect to, interests
in KR, whether issued or unissued, or securities convertible into interests
in KR other than the outstanding Units.
(d) Authority; Noncontravention; Consents.
(i) The execution and delivery of this Agreement by each of
KR and KRC and the consummation by KR and KRC of the transactions
contemplated by this Agreement have been duly authorized by all necessary
action on the part of KR and KRC. This Agreement has been duly executed and
delivered by each of KR and KRC and constitutes a valid and binding
obligation of each of them, enforceable against them in accordance with its
terms, subject to applicable bankruptcy, insolvency, moratorium or other
similar laws relating to creditors' rights and general principles of
equity.
(ii) The execution and delivery of this Agreement by each of
KR and KRC do not, and the consummation of the transactions contemplated by
this Agreement and compliance by each of them with the provisions of this
Agreement will not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give
rise to a right of termination, cancellation or acceleration of any
obligation or to loss of a benefit under, or result in the creation of any
lien upon any of the properties or assets of KR or KRC under, (x) the
Articles of Amendment and Restatement or the Amended and Restated Bylaws of
KRC or the comparable charter or organizational documents or partnership or
similar agreement of KR (as the case may be),
53
each as amended and supplemented, (y) any loan or credit agreement, note,
bond, mortgage, indenture, reciprocal easement agreement, lease or other
agreement, instrument, permit, concession, franchise or license applicable
to KR or KRC or their respective properties or assets or (z) subject to the
governmental filings and other matters referred to in the following
sentence, any judgment, order, decree, statute, law, ordinance, rule or
regulation (collectively, "Laws") applicable to KR or KRC, or their
respective properties or assets, other than, in the case of clause (y) or
(z), any such conflicts, violations, defaults, rights, loss or liens that
individually or in the aggregate would not (A) have a material adverse
effect or (B) prevent the consummation of the transactions contemplated by
this Agreement. No consent, approval, order or authorization of, or
registration, declaration or filing with, any federal, state or local
government or any court, administrative or regulatory agency or commission
or other governmental authority or agency, domestic or foreign (a
"Governmental Entity"), is required by or with respect to KR or KRC in
connection with the execution and delivery of this Agreement by KR or KRC
or the consummation by KR or KRC of the transactions contemplated by this
Agreement, except for such consents, approvals, orders, authorizations,
registrations, declarations and filings (A) as are contemplated by this
Agreement and the Exhibits hereto or set forth in the ▇▇▇▇▇▇ Disclosure
Schedule, (B) as may be required under (y) federal, state or local
environmental laws or (z) the "blue sky" laws of various states, to the
extent applicable or (C) which, if not obtained or made, would not prevent
or delay in any material respect the consummation of any of the
transactions contemplated by this Agreement or otherwise prevent KR or KRC
from performing its obligations under this Agreement in any material
respect or have, individually or in the aggregate, a material adverse
effect.
(e) SEC Documents; Financial Statements; Undisclosed
Liabilities.
KRC has filed all required reports, schedules, forms,
statements and other documents with the SEC since January 31, 1997 through the
date hereof (the "SEC Documents"). The ▇▇▇▇▇▇ Disclosure Schedule contains a
complete list of all SEC Documents filed by KRC with the SEC since January 31,
1997 and on or prior to the date of this Agreement. All of the SEC Documents
(other than preliminary material), as of their respective filing dates, complied
in all material respects with all applicable requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and, in each case, the rules and
regulations promulgated thereunder applicable to such SEC Documents. None of the
SEC Documents at the time of filing contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, except to the extent such statements
have been modified or superseded by later SEC Documents filed and publicly
available prior to the date of this Agreement. The consolidated financial
statements of KRC included in the SEC Documents complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, have been prepared in
accordance with generally accepted accounting principals ("GAAP") (except, in
the case of
54
unaudited statements, as permitted by the applicable rules and regulations of
the SEC) applied on a consistent basis during the periods involved (except as
may be indicated in the notes thereto) and fairly presented, in accordance with
the applicable requirements of GAAP and the applicable rules and regulations of
the SEC, the consolidated financial position of KRC and its Subsidiaries in each
case taken as a whole, as of the dates thereof and the consolidated results of
operations and cash flows for the period then ended (subject, in the case of
unaudited statements, to normal year-end audit adjustments). Except as set forth
in the ▇▇▇▇▇▇ Disclosure Schedule, KRC has no subsidiaries which are not
consolidated for accounting purposes. Except for liabilities and obligations set
forth in the SEC Documents, neither KRC nor any of the KR subsidiaries has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) required by GAAP to be set forth on a consolidated balance sheet
of KRC or in the notes thereto and which, individually or in the aggregate,
would have a material adverse effect.
(f) Taxes.
-----
(i) Each of KRC and its subsidiaries has filed all tax
returns and reports required to be filed by it (after giving effect to any
filing extension properly granted by a Governmental Entity having authority
to do so) and has paid (or KRC has paid on its behalf) all Taxes (as
defined below) shown on such returns and reports as required to be paid by
it except (x) as set forth in the ▇▇▇▇▇▇ Disclosure Schedule or (y) Taxes
that are being contested in good faith by appropriate proceedings and for
which KRC or the applicable subsidiary shall have set aside on its books
adequate reserves. The most recent audited financial statements contained
in the SEC Documents reflect an adequate reserve for all material Taxes
payable by KRC and its subsidiaries for all taxable periods and portions
thereof through the date of such financial statements. Since its initial
public offering on January 31,1997, KRC has not disposed of property in a
prohibited transaction described in Section 857(b)(6) of the Code, and
neither KRC nor any subsidiary has incurred any liability for taxes other
than in the ordinary course of business. No event has occurred, and no
condition or circumstances exists, which presents a material risk that any
material Tax described in the preceding sentence will be imposed upon KRC.
To the knowledge of KRC, no deficiencies for any Taxes have been proposed,
asserted or assessed against KRC or any of its subsidiaries, and no
requests for waivers of the time to assess any such Taxes are pending. As
used in this Agreement, "Taxes" shall include all federal, state, local and
foreign income, property, sales, franchise, employment, excise and other
taxes, tariffs or governmental charges of any nature whatsoever, together
with penalties, interests or additions to Tax with respect thereto.
(g) KRC (x) for all taxable years commencing with 1997 has been
subject to taxation as a real estate investment trust (a "REIT") within the
meaning of Section 856 of the Code and expects to satisfy all requirements to
qualify as a REIT for such year, (y) has operated since January 31, 1997 to the
date of this representation, and intends to continue to operate, in such a
manner as to qualify as a REIT for the taxable year ending December 31, 1997,
and (z) has not taken or omitted to take any action which would reasonably be
expected to (A) result in any rents paid by the tenants of the KRC Properties in
excess of 2% of the gross
55
income of KR to be excluded from the definition of "rents from real property"
under Section 856(d)(2)(C) of the Code or (B) otherwise result in a challenge to
its status as a REIT, and to KR's knowledge, no such challenge is pending or
threatened. Each subsidiary other than ▇▇▇▇▇▇ Services, Inc. which is a
partnership, joint venture or limited liability company (I) has been since its
formation and continues to be treated for federal income tax purposes as a
partnership and not as a corporation or an association taxable as a corporation
and (II) has not since its formation owned any assets (including, without
limitation, securities) that would cause KRC to violate Section 856(c)(5) of the
Code. Except for ▇▇▇▇▇▇ Services, Inc., each subsidiary of KRC or KR which is a
corporation has been since its formation a qualified REIT subsidiary under
Section 856(i) of the Code. KR is not a publicly traded partnership within the
meaning of Section 7704 of the Code, and the interests in KR are not considered
to be (A) traded on an established securities market or (B) readily tradable on
a secondary market or the substantial equivalent thereof under either IRS Notice
88-75 or Treasury Regulation Section 1.7704-1. KR has not had one hundred (100)
or more partners at any time, including for this purpose any owner of an
interest in a "Flow Through Entity" which would cause such owner to be treated
as a partner of KR pursuant to either IRS Notice 88-75 or Treasury Regulation
Section 1.7704-1(h)(3) For purposes of this Section 11.4(f), "Flow-Through
Entity" means an entity classified as a partnership, a grantor trust or an S
corporation for federal income tax purposes.
(h) Material Facts. Neither this Agreement, nor any other
--------------
agreement or document to be executed by KR or KRC hereunder or any other
document furnished or to be furnished to TAG by or on behalf of KR or KRC in
connection with the transactions contemplated hereunder contains or will contain
any untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements contained herein or therein not
misleading.
Section 11.5. Survival of KR's Representations and Warranties. The
-----------------------------------------------
representations and warranties of KR set forth in Section 11.4 hereof as updated
as of each Closing in accordance with the terms of this Agreement, shall survive
each Closing for a period of one (1) year.
Section 11.6. Covenants of KR. KR hereby covenants with TAG as follows:
---------------
(a) Upon the Closing, ▇▇▇▇▇▇▇ ▇▇▇▇▇ will be appointed a member of
the KRC Board of Directors and Executive Committee and any other appropriate
committees.
(b) From and after the date of this Agreement, KR (as
"Purchaser") shall use commercially reasonable efforts to satisfy the Purchaser
conditions to assumption of the loans on the Kraft and Intuit Properties as set
forth in the September 24, 1997 letters from the lender to ▇▇▇▇▇ ▇. ▇▇▇▇.
Section 11.7. Indemnities.
-----------
(a) KR Indemnity. KR shall indemnify, defend with counsel of
------------
TAG's choice and hold TAG harmless from all expense, loss, damage and claims,
including
56
TAG's attorneys' fee, if necessary, arising out of the breach of any of KR's
warranties, covenants and representations or any actions brought by any of KR's
partners or KRC's shareholders and arising out of the transactions provided for
herein.
(b) TAG Indemnity. TAG shall indemnify, defend with counsel of
-------------
KR's choice and hold KR harmless from all expense, loss, damage and claims,
including KR's attorneys' fee, if necessary, arising out of the breach of any of
TAG's warranties, covenants and representations or any actions brought by any of
TAG's partners or members and arising out of the transactions provided for
herein.
(c) Allens Indemnity. The Allens shall indemnify, defend with
----------------
counsel of KR's choice and hold KR harmless from all expense, loss, damage and
claims, including KR's attorneys' fee, if necessary, arising out of the breach
of any of the Allens' warranties, covenants and representations.
ARTICLE XII.
DEFAULT
Section 12.1. Default by KR. If the acquisition of the Properties as
-------------
contemplated hereunder is not consummated due to KR's default hereunder, TAG
shall be entitled to terminate this Agreement and seek damages and/or to enforce
specific performance of KR's obligations under this Agreement.
Section 12.2. Default by TAG. If the acquisition of the Properties
--------------
as contemplated hereunder is not consummated due to TAG's default hereunder, KR
shall be entitled to terminate this Agreement and seek damages and/or to enforce
specific performance of TAG's obligation to convey the Properties to KR in
accordance with the terms of this Agreement.
ARTICLE XIII.
RISK OF LOSS
Section 13.1. Minor Damage. In the event of loss or damage to a Property
------------
or any portion thereof which is not "Major" (as hereinafter defined), this
Agreement shall remain in full force and effect provided that TAG shall, at KR's
option, either (a) perform any necessary repairs, or (b) assign to KR all of
TAG's right, title and interest in and to any claims and proceeds TAG may have
with respect to any casualty insurance policies or condemnation awards relating
to the premises in question. If TAG performs repairs upon the Property TAG shall
use reasonable efforts to commence and complete such repairs promptly, and the
date of Closing shall be extended a reasonable time in order to allow for the
completion of such repairs. If TAG assigns a casualty claim to KR, the
Acquisition Value for that Property shall be reduced by an amount equal to the
lesser of the deductible amount under any casualty insurance policy related to
such Property or the cost of such repairs as determined in accordance with
Section 7.3 hereof. Upon Closing, full risk of loss with respect to the Property
shall pass to KR.
57
Section 13.2. Major Damage. In the event of a "Major" loss or damage to a
------------
Property, either TAG or KR may terminate this Agreement as to that Property by
written notice to the other party. If neither TAG nor KR elects to terminate
this Agreement as to such Property within ten (10) business days after TAG sends
KR written notice of the occurrence of such Major loss or damage (which notice
shall state the cost of repair or restoration thereof as opined by an architect
or other qualified expert in accordance with Section 7.3 hereof), then TAG and
KR shall be deemed to have elected to proceed with Closing. In that event TAG
shall, at KR's option, either (a) perform any necessary repairs, or (b) assign
to KR all of TAG's right, title and interest in and to any claims and proceeds
TAG may have with respect to any casualty insurance policies or condemnation
awards relating to the premises in question. If TAG elects to perform repairs
upon such Property, TAG shall use reasonable efforts to commence and complete
such repairs promptly, and the date of Closing shall be extended a reasonable
time in order to allow for the completion of such repairs. If TAG assigns a
casualty claim to KR, the Contribution Value shall be reduced by an amount equal
to the lesser of the deductible amount under any casualty insurance policy
related to such Property or the cost of such repairs as determined in accordance
with Section 7.3 hereof. Upon Closing, full risk of loss with respect to such
Property shall pass to KR.
Section 13.3. Definition of "Major" Loss or Damage. For purposes of
------------------------------------
Sections 7.1 and 7.2, "Major" loss or damage refers to the following: (a) loss
or damage to a Property hereof such that the cost of repairing or restoring the
premises in question to substantially the same condition which existed prior to
the event of damage would be, in the opinion of an architect or other qualified
expert selected by TAG and reasonably approved by KR, equal to or greater than
One Hundred Thousand Dollars ($100,000), and (b) any loss due to a condemnation
which permanently and materially impairs the current use of the Property. If KR
does not give written notice to TAG of KR's reasons for disapproving an
architect or other qualified expert within ten (10) business days after receipt
of notice of the proposed architect or other qualified expert, KR shall be
deemed to have approved the architect or other qualified expert selected by TAG.
ARTICLE XIV.
MISCELLANEOUS
Section 14.1. Brokers. With respect to the transaction contemplated by this
-------
Agreement, each of KR and TAG represents to one another that it is not
represented by a broker except that TAG has been represented by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and, subject to the reimbursement provisions of Section 3.2(c) hereof, shall be
solely liable for the fees payable to ▇▇▇▇▇▇ ▇▇▇▇▇▇▇. Each party hereto agrees
that if any person or entity makes a claim for brokerage commissions or finder's
fees related to the contribution of the Properties by TAG to KR, and such claim
is made by, through or on account of any acts or alleged acts of said party or
its representatives, said party will protect, indemnify, defend and hold the
other party free and harmless from and against any and all loss, liability,
cost, damage and expense (including reasonable attorneys' fees) in connection
therewith. The provisions of this paragraph shall survive Closing or any
termination of this Agreement.
58
Section 14.2. Public Disclosure. Prior to and after the Closing, any
-----------------
release to the public of information with respect to the transactions
contemplated herein or any matters set forth in this Agreement will be made only
in the form approved by KR. The provisions of this Section 9.2 shall survive the
Closing or any termination of this Agreement.
Section 14.3. Assignment. Neither KR nor TAG may assign their rights under
----------
this Agreement without the prior written consent of the other which consent may
be withheld in their sole and absolute discretion.
Section 14.4. Notices. Any notice pursuant to this Agreement shall be given
-------
in writing by (a) personal delivery, (b) reputable overnight delivery service
with proof of delivery, (c) United States Mail, postage prepaid, registered or
certified mail, return receipt requested, or (d) legible facsimile transmission,
sent to the intended addressee at the address set forth below, or to such other
address or to the attention of such other person as the addressee shall have
designated by written notice sent in accordance herewith. Any notice so given
shall be deemed to be effective upon receipt or refusal to accept delivery, or,
in the case of facsimile transmission, as of the date of the facsimile
transmission provided that an original of such facsimile is also sent to the
intended addressee by means described in clauses (a), (b) or (c) above.
"Effective date" of a notice for purposes of this Agreement means the date that
a notice is deemed to be effective pursuant to this Section. Unless changed in
accordance with this section, the addresses for notices given pursuant to this
Agreement shall be as follows:
If to KR: ▇▇▇▇▇▇ Realty, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ Realty, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
59
If to TAG or the Allens: The ▇▇▇▇▇ Group
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with copies to: Mr. R.E. ▇▇▇▇▇
▇▇▇▇▇ Investments, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
and Mr. ▇▇▇ ▇▇▇▇▇
Commercial Management Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telephone No. (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Section 14.5. Modifications. This Agreement cannot be changed orally, and
-------------
no executory agreement shall be effective to waive, change, modify or discharge
it in whole or in part unless such executory agreement is in writing and is
signed by the parties against whom enforcement of any waiver, change,
modification or discharge is sought.
Section 14.6. Entire Agreement. This Agreement, including the exhibits and
----------------
schedules hereto and the documents referred to herein, contains the entire
agreement between the parties hereto pertaining to the subject matter hereof and
fully supersedes all prior written or oral agreements and understandings between
the parties pertaining to such subject matter except for certain letters entered
into by the parties essentially concurrently herewith.
Section 14.7. Further Assurances. Each party agrees that it will execute
------------------
and deliver such other documents and take such other action, whether prior or
subsequent to Closing, as may be reasonably requested by the other party to
consummate the transaction contemplated by this Agreement. The provisions of
this Section shall survive Closing.
Section 14.8. Counterparts. This Agreement may be executed in counterparts,
------------
all such executed counterparts shall constitute the same agreement, and the
signature of any party to any counterpart shall be deemed a signature to, and
may be appended to, any other counterpart.
Section 14.9. Facsimile Signatures. In order to expedite the transaction
--------------------
contemplated herein, telecopied signatures may be used in place of original
signatures on this Agreement or any document delivered pursuant hereto. TAG and
KR intend to be bound by the
60
signatures on the telecopied document, are aware that the other party will rely
on the telecopied signatures, and hereby waive any defenses to the enforcement
of the terms of this Agreement based on the form of signature.
Section 14.10. Severability. If any provision of this Agreement is
------------
determined by a court of competent jurisdiction to be invalid or unenforceable,
the remainder of this Agreement shall nonetheless remain in full force and
effect; provided that the invalidity or unenforceability of such provision does
not materially adversely affect the benefits accruing to any party hereunder.
Section 14.11. Applicable Law. This Agreement shall be governed by and
--------------
construed in accordance with the laws of the State of California, unless it
involves a matter regarding a specific Property and the law of the state in
which the Property is located governs under the laws of that state. The
provisions of this Section shall survive the Closing or any termination of this
Agreement.
Section 14.12. No Third Party Beneficiary. The provisions of this Agreement
--------------------------
and of the documents to be executed and delivered at Closing are and will be for
the benefit of TAG and KR only and are not for the benefit of any third party;
and, accordingly, no third party shall have the right to enforce the provisions
of this Agreement or of the documents to be executed and delivered at Closing.
Section 14.13. Captions. The section headings appearing in this Agreement
--------
are for convenience of reference only and are not intended, to any extent and
for any purpose, to limit or define the text of any section or any subsection
hereof.
Section 14.14. Construction. The parties acknowledge that the parties and
------------
their counsel have reviewed and revised this Agreement and that the normal rule
of construction to take effect that any ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this Agreement
or any exhibits or amendments hereto.
Section 14.15. Recordation. This Agreement may not be recorded by any party
-----------
hereto without the prior written consent of the other party hereto. The
provisions of this Section shall survive the Closing or any termination of this
Agreement.
Section 14.16. Exhibits. All exhibits attached to this Agreement are
--------
incorporated herein by reference.
Section 14.17. Date of Performance. If the date on which any performance
-------------------
required hereunder is other than a business day, then such performance shall be
required as of the next following business day.
Section 14.18. Attorneys' Fees. In the event of any litigation,
---------------
arbitration, mediation or any other action taken by either party to this
Agreement to enforce -any provision of this Agreement or any agreement which is
an exhibit hereto, enforce any remedy available upon default under this
Agreement or any agreement which is an exhibit hereto, or seek a
61
declaration of the rights of a party under this Agreement or any agreement which
is an exhibit hereto, the prevailing party shall be entitled to recover in such
action such attorneys' fees and costs as may be reasonably incurred, including,
without limitation, the costs of reasonable investigation, preparation and
professional or expert consultation, travel expenses, costs on appeal, court
reporter fees and expenses, incurred by reason of such litigation, arbitration
or other action. All other attorneys' fees and cost relating to this Agreement
and the transactions described herein shall be borne by the party incurring the
same.
62
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the Effective Date.
"KR"
▇▇▇▇▇▇ REALTY, L.P., a Delaware limited
partnership
By: ▇▇▇▇▇▇ REALTY CORPORATION, a
Maryland corporation, its General
Partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
______________________________
Title: President and CEO
_____________________________
▇▇▇▇▇▇ REALTY CORPORATION,
a Maryland corporation
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
________________________________
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
______________________________
Title: President and CEO
_____________________________
"TAG"
UTC GREENWICH PARTNERS, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
63
ADI ARROW PARTNERS, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
KOM PARTNERS, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
WHISPERWOOD LIMITED-LIABILITY
COMPANY, a Nevada limited liability company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
▇▇▇▇▇ AEROJET, LLC, a Nevada limited
liability company
By: Whisperwood Limited-Liability Company,
a Nevada limited liability company,
Managing Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
64
ADI-FFF PARTNERS, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
ADI MESA PARTNERS-ICS, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
ADI MESA PARTNERS-AMCC, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
ADI COMMUNICATION PARTNERS, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
65
ADI EASTGATE PARTNERS, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
ADI MEMEC PARTNERS, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
▇▇▇▇▇ EXPRESS PETALUMA, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
ADI CARMEL VALLEY PARTNERS, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
66
McCARRAN COMMERCE CENTER, LLC,
a Nevada limited liability company
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its Managing Member
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
SORRENTO WATERIDGE PARTNERS, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
▇▇▇▇▇ ▇▇▇▇▇ PARTNERS, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
PIAZZA PARTNERS, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
67
ADI RESEARCH PARTNERS, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Chief Executive Officer
ADI MESA PARTNERS, L.P.,
a California limited partnership
By: ▇▇▇▇▇ Development, Inc.,
a California corporation,
its sole General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, INC., a California
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
▇▇▇▇▇ DEVELOPMENT, INC., a California
corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________________________
Title: CEO
_________________________________
TAG HOLDINGS, LLC, a California limited
liability company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
____________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________________________
Title: President
_________________________________
68
"THE ALLENS"
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇
__________________________________________
▇▇▇ ▇▇▇▇▇
/s/ R.E. ▇▇▇▇▇
__________________________________________
R.E. ▇▇▇▇▇
69
Member Signature Page
---------------------
The undersigned, constituting (a) certain of the limited partners
and members of the group of affiliated companies known as "The ▇▇▇▇▇ Group"
("TAG") and (b) all of the members of TAG Holdings, LLC hereby execute this
Member Signature Page pursuant to Section 11.1(x) of the Contribution Agreement
dated as of October 21, 1997 between ▇▇▇▇▇▇ Realty, L.P., a Delaware limited
partnership and TAG. Those limited partners and members of TAG who are not
executing this Member Signature Page at this time shall be required to execute a
certificate in the future making the representations and warranties set forth in
Section 11.1(x) hereof as a condition precedent to the issuance of Units.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, INC.,
a California corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
President
COMMERCIAL MANAGEMENT
CORPORATION,
a Tennessee corporation
By: /s/ ▇▇▇ ▇▇▇▇▇
__________________________________
▇▇▇ ▇▇▇▇▇, President
70
▇▇▇▇▇ INVESTMENTS, INC.,
a Florida corporation
By: /s/ R.E. ▇▇▇▇▇
__________________________________
R.E. ▇▇▇▇▇, President
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, an individual
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
_______________________________________
T. ▇▇▇▇▇▇▇ ▇▇▇▇▇, an individual
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, an individual
SELF DIRECTED INDIVIDUAL RETIREMENT
ACCOUNT OF ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
__________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Owner
71
EXHIBIT C
CATEGORIES OF PROPERTIES
EXISTING BUILDINGS
------------------
San Diego
Intuit
Arrowhead
Stockton
Kraft
Las Vegas
Val-Pak
WalMart
Temecula
FFF Enterprises
San Diego
Industrial Computer
Applied Micro
EXHIBIT D
LIST OF OPERATING AGREEMENTS
Property: Pilot Commerce Center
Vendor Name: C.B. Commercial Real Estate Group, Inc.
Agreement Date: May 1, 1997
Purpose: Exclusive Managing Agent for Owners and Property
Term: May 1, 1998
Cancellation Clause: Notice 30 days prior to cancellation
Property: Carmel Valley Corporate Center
Vendor Name: ▇▇▇▇ ▇▇▇▇▇▇▇ & Company
Agreement Date: Under negotiation
EXHIBIT AA
CONTRIBUTION VALUE
EXISTING BUILDINGS
------------------
San Diego
Intuit $20,291,000
Arrowhead 11,721,000
Stockton
Kraft 11,303,000
Las Vegas
Val-Pak 4,433,000/a/
WalMart 4,647,000/b/
Temecula
FFF Enterprises 4,462,000
San Diego
Industrial Computer 12,767,000
Applied Micro 9,570,000
-----------
Total $79,194,000
===========
a Includes $80,000 reduction for deferred maintenance work.
b Includes $20,000 reduction for deferred maintenance work.