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Exhibit 10.166
EXECUTION COPY
PURCHASE AND SALE AGREEMENT [Portfolio #2]
by and between
SUNTRUST BANK, A GEORGIA BANKING CORPORATION
and
INLAND REAL ESTATE ACQUISITIONS, INC., AN ILLINOIS CORPORATION
Effective Date: As of October 17, 2007
TABLE OF CONTENTS
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EXECUTION COPY
PURCHASE AND SALE AGREEMENT [Portfolio #2]
THIS PURCHASE AND SALE AGREEMENT [Portfolio #2] (this “ Agreement ” ) is made to be effective as of October 17, 2007, by and between SUNTRUST BANK, a Georgia banking corporation (“ Seller ”), and INLAND REAL ESTATE ACQUISITIONS, INC., an Illinois corporation (“ Buyer ”).
W I T N E S S E T H:
In consideration of the mutual covenants and agreements set forth herein the parties agree as follows:
ARTICLE 1. CERTAIN DEFINITIONS
As used herein, the following terms shall have the following meanings:
“ Access Agreement Addendum ” means, collectively, the terms and conditions set forth in Schedule 10.3(a)-1 , attached hereto and incorporated herein by this reference.
“ Allocated Purchase Price ” is defined in Section 3.4 .
“ Business Day ” means any day other than Saturday, Sunday, any Federal holiday, or any holiday in the State of Georgia. If any period expires on a day which is not a Business Day or any event or condition is required by the terms of this Agreement to occur or be fulfilled on a day which is not a Business Day, such period shall expire or such event or condition shall occur or be fulfilled, as the case may be, on the next succeeding Business Day.
“ Buyer’s Reports ” means the results of any examinations, inspections, investigations, tests, studies, analyses, appraisals, evaluations and/or investigations previously or hereafter prepared by or for or otherwise obtained by any Buyer’s Representatives in connection with Buyer’s Due Diligence.
“ Buyer’s Representatives ” means Buyer, any direct or indirect owner of any beneficial interest in Buyer, and any officers, directors, employees, agents, representatives and attorneys of Buyer or any such direct or indirect owner of any beneficial interest in Buyer.
“ Closing ” means (i) with respect to the First Property Group, the First Closing, and (ii) with respect to the Second Property Group, the Second Closing.
“ Closing Date ” means (i) with respect to the First Property Group, the First Closing Date, and (ii) with respect to the Second Property Group, the Second Closing Date.
“ Closing Documents ” means all documents and instruments executed and delivered by Buyer or Seller pursuant to the terms of this Agreement or otherwise in connection
with the Transaction or this Agreement, including, without limitation, the documents and instruments required pursuant to the terms of Article 7 .
“ Confidential Materials ” means any books, computer software, records or files (whether in a printed or electronic format) that consist of or contain any of the following: appraisals; budgets (other than the budget for calendar year 2007 or 2008); strategic plans for any Property or Properties; internal analyses; information regarding the marketing of any Property or Properties for sale; submissions relating to obtaining internal authorization for the sale of any Property or Properties by Seller, any direct or indirect owner of any beneficial interest in Seller or any Seller Party; attorney and accountant work product; attorney-client privileged documents; internal correspondence of Seller, any direct or indirect owner of any beneficial interest in Seller, any Seller Party or any of their respective affiliates and correspondence between or among such parties; or other information in the possession or control of Seller or any direct or indirect owner of any beneficial interest in Seller or any Seller Party which such party deems proprietary or confidential. Without limitation on the foregoing, the term “ Confidential Materials ” also includes all books, records and other materials generated, used or maintained by Seller or any affiliate of Seller in the conduct of its banking and other businesses, including customer records.
“ Confidentiality Agreement ” means that certain agreement executed by Buyer previously or contemporaneously with this Agreement, a copy of which is attached hereto as Schedule 10.3(a)-2 and incorporated herein by this reference, the terms of which shall continue and be fully applicable during the term of this Agreement and, if longer, the term therein specified.
“ Consultant Reports ” means, as of any relevant time, all reports and studies prepared by third parties with respect to any Property or Properties that have been made available to Buyer or any Buyer’s Representative, including all such reports and studies on the Portfolio Website, including but not limited to environmental reports, zoning letters, certificate of occupancy letters and (with respect to office buildings only) property condition reports.
“ Contracts ” means all service, supply, maintenance, utility and commission agreements, all equipment leases, and all other contracts, subcontracts and agreements relating to any Property or Properties and the Personal Property (including all contracts, subcontracts and agreements relating to the construction of any unfinished tenant improvements) to which Seller is a party and which relate to the ownership, use or operation of any Property or Properties.
“ Deed ” is defined in Section 7.3 .
“ deemed to know ” (or words of similar import) shall have the following meaning:
(a) Buyer shall be “ deemed to know ” of the existence of a fact or circumstance to the extent that:
(i) any Buyer’s Representative knows of such fact or circumstance, or
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(ii) such fact or circumstance is disclosed by this Agreement, the Closing Documents executed by Seller, the Documents, any of Buyer’s Reports, or on Schedule X hereto.
(b) Buyer shall be “ deemed to know ” that any Seller’s Warranty is untrue, inaccurate or incorrect to the extent that:
(i) any Buyer’s Representative has knowledge of information which is inconsistent with such Seller’s Warranty, or
(ii) this Agreement, the Closing Documents executed by Seller, the Documents, or any of Buyer’s Reports contains information which is inconsistent with such Seller’s Warranty.
“ Deferred Property ” is defined in Section 4.2(a)(iv) .
“ Deposit ” is defined in Section 3.2 .
“ Deposit Reimbursement Amount ” is defined in Section 8.5 .
“ Designated Representatives ” means Douglas Sinclair and Susan Gallienne.
“ Documents ” means the documents and instruments applicable to any Property or Properties that any of Seller Parties has delivered or made available to any Buyer’s Representative on or prior to the Effective Date, or delivers or makes available to any Buyer’s Representative prior to the applicable Closing, or which are otherwise obtained by any Buyer’s Representative prior to the applicable Closing, including, but not limited to the Consultant Reports, the Title Commitments, the Surveys and the Title Documents, and all other documents and instruments applicable to any Property or Properties made available on the Portfolio Website.
“ Due Diligence ” means examinations, inspections, investigations, tests, studies, analyses, appraisals, evaluations and/or investigations with respect to any Property or Properties, the Documents, and other information and documents regarding any Property or Properties, including, without limitation, examination and review of title matters, applicable land use and zoning Laws and other Laws applicable to any Property or Properties, the physical condition of any Property or Properties, and the economic status of any Property or Properties.
“ Effective Date ” means October 17, 2007, the effective date of this Agreement.
“ Election Notice ” is defined in Section 12.2 .
“ Environmental Requirements ” is defined in Section 14.5 .
“ Escrow Agent ” means First American Title Insurance Company, in its capacity as escrow agent.
“ Escrow Deposits ” is defined in Article 13 .
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“ Excluded Items ” means (i) the Personal Property, the Intangible Property, the Contracts, and the Existing Leases, if any, and (ii) without limitation on the foregoing, all trade fixtures, equipment, furniture, furnishings, supplies, records, documents, cash, coin, and other items of moveable personal property relating to the operation of Seller’s business, including, without limitation, all safe deposit boxes, modular vaults, vault doors, safes, Seller identification signage, automated teller machines (“ ATM ”) connected to or located within any Property or situated as freestanding structures on any Property and ATM equipment, telecommunication equipment, security systems and equipment, satellite dishes and antennas, computers, computer terminals and computer equipment, and any office equipment (whether leased or owned) located in the Improvements. “ Excluded Items ” shall include any of the foregoing notwithstanding that such item constitutes real property or an interest in real property under applicable State law. Notwithstanding the foregoing, “ Excluded Items ” does not include heating, ventilation and air conditioning systems, elevators, plumbing and plumbing fixtures, and other mechanical and electrical equipment or fixtures which are necessary for the proper functioning of a building (as opposed to equipment and fixtures which serve the business conducted in any Property, including branch banks or banking offices).
“ Excluded Property ” means any Property with respect to which this Agreement has been terminated or deemed terminated (i) by Buyer under Section 4.2(a)(ii) or Section 8.2(a) , or (ii) by Buyer or Seller under Section 12.1 or Section 12.2 . Any Property which becomes an Excluded Property under Section 4.2(a)(ii) is subject to the terms of Section 4.2(a)(iv) .
“ Existing Leases ” means all leases (if any) for tenants of any Property or Properties on the applicable Closing Date. Immediately upon the Closing for any Property, any such Existing Leases will become subleases under the Property Leases. Seller agrees to provide Buyer with copies of the written Existing Leases as promptly as practical following the full execution of this Agreement and Buyer’s funding of the Deposit.
“ First Closing ” means the closing of the Transaction with respect to the First Property Group on the First Closing Date.
“ First Closing Date ” means December 20, 2007, as the same may be extended pursuant to the express terms of this Agreement.
“ First Deposit ” is defined in Section 3.2 .
“ First Property Group ” means, collectively, those Properties in Property Pools 1, 2, 3 and 4(1).
(1) Prior to October 24, 2007, Seller may, at Seller’s option, elect to change the Property Pools in the First Property Group and the Second Property Group by written notice to Purchaser, provided that (i) there shall be four (4) Property Pools in the First Property Group and eight (8) Property Pools in the Second Property Group, (ii) Seller may not change the Properties in the individual Property Pools and (iii) promptly following such election, Seller and Purchaser shall enter into an amendment to this Agreement which reflects such changes in Property Groups, including (A) the revised Purchase Price for each Property Group (which shall be, for each Property Group the sum of the Allocated Purchase Prices of the Properties within such Property Group, as revised), and (B) the amount of the Second Deposit (which shall be equal to an amount that, when added to the First Deposit, will equal five percent (5.0%) of the Purchase Price for the Second Property Group, as revised.
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“ Florida Assignment ” is defined in Section 2.1 .
“ Florida Expenses ” is defined in Section 2.1 .
“ Florida Property ” is defined in Section 2.1 .
“ Florida Subsidiary ” is defined in Section 2.1 .
“ GAAP ” means generally accepted accounting principles in the United States of America in effect from time to time.
“ Governmental Authority ” means any United States national, federal, state or local government, governmental regulatory or administrative authority, agency, instrumentality o r commission or any court, tribunal, or judicial or arbitral body or self-regulated entity.
“ Hazardous Materials ” is defined in Section 14.4 .
“ Inland Company ” is defined in Section 15.1 .
“ Intangible Property ” means, collectively, Seller’s interest in and to all of the following:
(a) The Contracts; and
(b) To the extent that the same are in effect as of the applicable Closing Date, any licenses, permits and other written authorizations necessary for the use, operation or ownership of any Property or Properties, together with any tradenames, trademarks or logos relating to Seller; and
(c) Any guaranties and warranties in effect with respect to any Property or Properties or the Personal Property as of the applicable Closing Date.
“Law” means any municipal, county, State or Federal statute, code, ordinance, law, rule or regulation. “ Laws ” means all municipal, county, State or Federal statutes, codes, ordinances, laws, rules or regulations.
“ Liabilities ” means, collectively, any and all problems, conditions, losses, costs, damages, claims, causes of action, liabilities, expenses, demands or obligations of any kind or nature whatsoever.
“ Lien ” means any lien, mortgage, pledge, security interest, claim, option, right of first offer or refusal, charge, conditional or installment sale contract, claims of third parties of any kind or other encumbrances.
“ Liquidated Damages Amount ” is defined in Section 11.2 . (..continued)
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“ Material Adverse Change ” means a reduction in the rating of Seller’s long-term unsecured noncredit-enhanced debt securities to a rating of lower than Aa2 by Standard & Poor’s Corporation or to a rating lower than AA- by Moody’s Investor Services, Inc.
“ Master Agreement ” is defined in Article 2 .
“Material Casualty ” is defined in Section 12.2 .
“ Non-Material Casualty ” is defined in Section 12.2 .
“ Owner’s Title Policy ” means an ALTA owner’s title insurance policy for each Property (or such other comparable form of title insurance policy as is available in the State in which the applicable Property is located), in the amount of the Allocated Purchase Price for such Property.
“ Permitted Exceptions ”, with respect to any Property, means and includes all of the following: (a) applicable Laws including zoning and building ordinances and land use regulations, (b) any deed, easement, restriction, covenant or other matter affecting title to such Property caused or created by Seller and approved by Buyer in accordance with the terms of Section 4.2(b) , (c) such state of facts as are disclosed on the Surveys, (d) the Lien of taxes and assessments not yet due and payable, (e) any exceptions caused by any Buyer’s Representative, (f) such other exceptions as are set forth in the Title Commitment for such Property, including all Title Documents, (g) the rights of the tenants under the Existing Leases, if any, (h) any matters about which Buyer knows or is deemed to know as of the Effective Date, and (i) any matters deemed to constitute additional Permitted Exceptions under Section 4.2(a) hereof. Notwithstanding any provision to the contrary contained in this Agreement or any of the Closing Documents, to the extent that any of the Permitted Exceptions are omitted by Seller in the Deed for any Property (whether through oversight of the parties or at Buyer’s request), such omission shall not give rise to any liability of Seller, irrespective of any covenant or warranty of Seller that may be contained in the Deed (which provisions shall survive the applicable Closing and not be merged therein).
“ Permitted Inland Affiliate ” is defined in Section 15.1 .
“ Personal Property ” means, collectively, (a) all tangible personal property owned by Seller that is located on the Properties and used in the ownership, operation and maintenance of the Properties, and (b) all books, records and files of Seller relating to the Properties or the Existing Leases.
“ Portfolio Website ” mean, collectively, (i) that certain electronic data site and internet website (including all data and information contained therein) established for the Properties and certain other properties by STRH at www.peracon.com, Username: jinland, Password: jinland7, and (ii) the Title Company Website, in each case as it has been or may hereafter be updated from time to time.
“ Properties ” means, collectively, each and every Property, but excluding any Property which becomes an Excluded Property in accordance with this Agreement. (Where the
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context requires or permits, the term “ Properties ” also may mean more than one Property but not necessarily every Property, but in all cases shall be construed consistent with the intent that Seller shall sell to Buyer and lease back from Buyer, and Buyer shall purchase from Seller and lease back to Seller, each and every Property, other than any Property which becomes an Excluded Property in accordance with this Agreement). When used in connection with a Property Group, the term “ Properties ” means, collectively, each and every Property included in such Property Group, but excluding any Property which becomes an Excluded Property in accordance with this Agreement.
“ Property ” means each parcel or group of contiguous parcels of land described as a separate “Property” in the Property Schedule, together with all buildings, improvements and fixtures located thereon and owned by Seller as of the applicable Closing Date and all right, title and interest, if any, that Seller may have in and to all rights, privileges and appurtenances pertaining thereto including all of Seller’s right, title and interest, if any, in and to all rights-of-way, open or proposed streets, alleys, easements, strips or gores of land adjacent thereto, and together with all other rights running with such land which, under applicable State law, constitute real property or an interest in real property; provided , however , that the term “ Property ” shall not include any Excluded Items, whether or not such Excluded Items constitute real property or interests in real property under applicable State law; provided , further , that in the event of any condemnation or casualty that occurs after the Effective Date, the term “ Property ” shall not include any of the foregoing that is destroyed or taken as a result of any such condemnation proceeding prior to the applicable Closing.
“ Property Group ” means the First Property Group or the Second Property Group, as applicable.
“ Property Lease ” is defined in Article 2 .
“ Property Material Adverse Effect ” is defined is Section 9.2(c) .
“ Property Pool ” means each of the twelve (12) pools of Properties, into which the Properties are divided and which are identified by Property Pool identification number on the Property Schedule. Each such pool of Properties shall be subject to a separate and independent Master Agreement(2). The First Property Group consists of four (4) Property Pools and the Second Property Group consists of eight (8) Property Pools.
“ Property Schedule ” means Schedule 1 attached hereto and incorporated herein by this reference. The Property Schedule identifies each Property by Property identification number and street address, city, county and state. In addition, the Property Schedule sets out for each Property (1) the Property Pool identification number for each Property, (2) the Allocated
(2) The Property Schedule includes a column entitled “Property Pool”. The designation of Property Pools is provided solely for administrative purposes and to determine which Master Agreement shall govern each Property and to identify the Properties within each Property Group. The inclusion of the “Property Pool” column in the Property Schedule is not intended in any way to provide for an allocation of the Deposit among the Properties in the separate pools, and there shall be no allocation of the Deposit (or any allocation of liquidated damages) among the Property Pools or the Properties for any reason, other than as expressly provided with respect to a Deferred Property, if any, in Section 4.2.(a)(iv) and with respect to any Deposit Reimbursement Amount pursuant to Section 8.5 .
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Purchase Price for such Property, (3) the Annual Basic Rent for each Property during the first lease year under the Property Lease for such Property, and (4) the Title Commitment number for each Property, including the current posting date of such Title Commitment as it appears on the Title Company Website. For purposes of this Agreement, the legal description of each Property shall, except as otherwise noted in the Property Schedule, be the legal description for the Property contained in the Title Commitment for such Property identified in the Property Schedule.
“ Property Threshold Amount ” is defined in Section 12.2 .
“ Purchase and Sale Agreement [Portfolio #1] ” means that certain Purchase and Sale Agreement, dated as of September 27, 2007, by and between Buyer and Seller, with respect to certain other properties of Seller.
“ Purchase Price ” is defined in Section 3.1 .
“ Realization Costs ” is defined in Section 12.2 .
“ Release ” is defined is Section 10.3(b) .
“ Remove ” with respect to any exception to title means that Seller causes the Title Company to remove or affirmatively insure over the same as an exception to the Owner’s Title Policy for the benefit of Buyer, without any additional cost to Buyer, whether such removal or insurance is made available in consideration of payment, bonding, indemnity of Seller or otherwise.
“ Reporting Requirements ” is defined in Section 15.2 .
“ Required Cure Exceptions ” means, collectively, the following:
(a) any Title Objections to the extent (and only to the extent) that the same (i) have not been caused by any of Buyer’s Representatives, and (ii) constitute any of the following:
(A) Liens evidencing monetary encumbrances (other than liens for non-delinquent real estate taxes and assessments) (“ Monetary Liens ”) that are or have been created as a result of the intentional acts or omissions of Seller or its agents and affiliates; or
(B) Liens or encumbrances other than Monetary Liens created by Seller or its agents and affiliates after the Effective Date in violation of Section 4.2(b) .
(b) any exception to title that Seller has specifically agreed in writing to Remove pursuant to the terms of Section 4.2(a)(ii) .
“ Second Closing ” means the closing of the Transaction with respect to the Second Property Group on the Second Closing Date.
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“ Second Closing Date ” means March 28, 2008, as the same may be extended pursuant to the express terms of this Agreement.
“ Second Deposit ” is defined in Section 3.2 .
“ Second Property Group ” means, collectively, those Properties in Property Pools 5, 6, 7, 8, 9, 10, 11 and 12(3).
“ Seller Parties ” means and includes, collectively, (a) Seller; (b) its counsel; (c) STRH; (d) any officer, director, employee, or agent of Seller, its counsel or STRH; and (e) any other entity or individual affiliated or related in any way to any of the foregoing.
“ Seller’s knowledge ” or words of similar import shall refer only to the actual knowledge of the Designated Representatives and shall not be construed to refer to the knowledge of any other Seller Party, or to impose or have imposed upon the Designated Representatives any duty to investigate the matters to which such knowledge, or the absence thereof, pertains, including, but not limited to, the contents of the files, documents and materials made available to or disclosed to Buyer or the contents of files maintained by the Designated Representatives. There shall be no personal liability on the part of the Designated Representatives arising out of any of Seller’s Warranties.
“ Seller’s Warranties ” means Seller’s representations and warranties set forth in Section 9.2 and the Closing Documents executed by Seller, as such representations and warranties may be deemed modified or waived by Buyer pursuant to the terms of this Agreement.
“ State ” means, with respect to each Property, the state in which the Property is located, provided that in the case of any Property located in the District of Columbia, the term “ State ” means the District of Columbia.
“ STRH ” means SunTrust Robinson Humphrey, a division of SunTrust Capital Markets, Inc.
“ Substitute Property ” is defined in Section 8.5 . “ Substitute Properties ” means, collectively, more than one Substitute Property.
“ Surveys ” means those surveys of the Properties previously made available to Buyer by any Seller Party or on the Portfolio Website and any other surveys obtained for the benefit of Buyer.
“ Title Commitment ” means, for each Property as of any relevant time, the commitment to issue an Owner’s Title Policy with respect to such Property, a copy of which has been made available to Buyer on the Portfolio Website.
“ Title Company ” means First American Title Insurance Company.
(3) See note on definition of “First Property Group”.
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“ Title Company Website ” means the electronic data site and internet website maintained by the Title Company (including all data and information contained therein) with respect to the Properties and certain other properties, at http://eaglepro.firstam.com, Username: jinland, Password: jinland7, as it has been or may hereafter be updated from time to time.
“ Title Documents ” mean, for each Property as of any relevant time, all recorded documents referred to on Schedule B of the Title Commitment as exceptions to coverage and any other recorded documents relating to such Property that have been made available to Buyer on the Portfolio Website.
“ Title Objections ” means any exceptions to title to which Buyer is entitled to object and timely objects in accordance with the terms of Section 4.2(a)(i) .
“ Transaction ” means, collectively, the purchase and sale of the Properties, the lease of the Properties pursuant to the Property Leases and the Master Agreements, and all other transactions contemplated in this Agreement. When used with respect to a Property Group, the “ Transaction ” means, collectively, the purchase and sale of the Properties in such Property Group, the lease of the Properties in such Property Group pursuant to the applicable Property Leases and Master Agreements, and all other transactions contemplated in this Agreement with respect to Properties in such Property Group.
ARTICLE 2. SALE OF PROPERTY; PROPERTY LEASES; MASTER LEASE
Section 2.1 Purchase and Sale . Seller agrees to sell, transfer and assign and Buyer agrees to purchase, accept and assume, subject to the terms and conditions set forth in this Agreement and the Closing Documents, all of Seller’s right, title and interest in and to the Properties. Notwithstanding the immediately preceding sentence, at Seller’s election, with respect to any or all of the Properties in a Property Group or a Property Pool located in the State of Florida, Seller may convey title to such Properties free and clear of any mortgages and secured debt financing to newly-formed, wholly-owned, limited liability company subsidiaries of Seller (each a “ Florida Subsidiary ”) at least two (2) days prior to the applicable Closing (and, in any event, no Florida Subsidiary will receive Properties which are in separate Property Groups unless the parties agree otherwise in writing) and then assign to Buyer at such Closing all of the membership interests in the Florida Subsidiary (“ Florida Assignment ”). In such case, no further real property transfer of any Properties located in the State of Florida (the “ Florida Properties ”) by the Florida Subsidiaries shall be required. Buyer agrees to cooperate with Seller in connection with this proposed structure relating to the Properties located in the State of Florida, provided that (i) Seller shall bear any and all costs, expenses and fees in connection with such proposed structure (“ Florida Expenses ”), (ii) no delay in the applicable Closing shall occur as a result thereof and (iii) Buyer and Seller shall share equally in any transfer tax or document stamp savings from such proposed structure provided that such sharing will be net of all Florida Expenses incurred by Seller, with Seller providing Buyer with a credit against the Allocated Purchase Price for the Florida Properties at such Closing. In connection with this proposed structure, at each Closing, Seller shall provide, with respect to the Florida Subsidiaries, an indemnification against liabilities incurred or assumed by the Florida Subsidiaries accruing during the period prior to such Closing, in form and substance reasonably satisfactory to Buyer.
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In the event that it is determined after such Closing that any transfer tax or document tax is due in connection with the Florida Assignment, Buyer and Seller shall each be responsible to pay such transfer tax or document stamp tax up to the amount of their respective savings referenced above and Seller shall be responsible for, the payment of any additional tax, interest or other penalties related thereto and Seller agrees to indemnify Buyer for any costs, expenses, claims or litigations incurred by Buyer in excess of Buyer’s share of the savings as provided above.
Section 2.2 Master Lease . Commencing on the applicable Closing Date, Buyer, as landlord, shall lease to Seller, as tenant, the Properties in the applicable Property Group pursuant to (i) a separate lease agreement for each Property in the form attached as Schedule 7.3(b) hereto (individually a “ Property Lease ” and, collectively, the “ Property Leases ”) and (ii) a separate Master Agreement Regarding Leases (each a “ Master Agreement ”) for each applicable Property Pool in the form attached as Schedule 7.3(c ) hereto. Each Property Pool will be subject to a separate Master Agreement which Master Agreement shall be separate and independent from each other Master Agreement in respect of a different Property Pool. Each Property Lease shall have an initial term of ten (10) years, provided that if the applicable Closing Date is not the first day of a month, the first lease year of the initial term of each Property Lease shall include the partial month in which such Closing occurs and the next full twelve (12) months. Seller shall have the right to renew the term of each Property Lease for up to forty (40) additional years (i.e., a first renewal term of 10 years and 6 additional renewal terms of 5 years each). The Annual Basic Rent for the first lease year under each Property Lease shall be the amount set forth as “Annual Rent Year 1” in the Property Schedule. Annual Basic Rent under each Property Lease shall be increased by 1.5% annually during the Initial Term and each of the first three Renewal Terms. Annual Basic Rent during each Renewal Term thereafter shall be the fair market rental value of the Properties at the commencement of such Renewal Term and shall be increased by 1.5% annually during the remainder of such Renewal Term. (The terms “Annual Basic Rent,” “Initial Term” and “Renewal Term” have the same meanings in this Agreement as in the form of Property Lease attached as Schedule 7.3(a).) In the event of any conflict or inconsistency between the terms of this Agreement and the terms of the Property Leases and the Master Agreements which relate to the period from and after a Closing, the applicable Property Leases and the Master Agreements shall control, including without limitation with respect to the environmental indemnities made by Seller, as tenant, under Section 5.3 of each Property Lease.
Section 2.3 Relationship to Property Leases and Master Agreements . Notwithstanding anything to the contrary contained in this Agreement, nothing contained in this Agreement shall in any way reduce or limit Seller’s obligations, or release Seller in any way from any liability, or excuse Seller in any way from performance, arising from and after the applicable Closing in its capacity as tenant under the Property Leases or the Master Agreements.
In consideration of the sale of the Properties to Buyer, Buyer shall pay to Seller an amount equal to the Purchase Price, as prorated and adjusted as set forth in Article 6 , Section 7.2 , or as otherwise provided under this Agreement. The Purchase Price shall be paid as follows:
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Section 3.1 Purchase Price . The purchase price for the Properties (the “ Purchase Price ”) means the sum of THREE HUNDRED FIFTY SEVEN MILLION TWO HUNDRED SEVENTY EIGHT THOUSAND TWO HUNDRED NINETEEN AND 91/100 DOLLARS ($357,278,219.91). The Purchase Price for each Property Group is as follows (and any reference herein to the Purchase Price for a Property Group shall mean the amount set forth below for such Property Group):
Section 3.2 Earnest Money Deposits .
(a) Payment of First Deposit . Within three (3) Business Days after the Effective Date and as a condition precedent to the effectiveness of this Agreement, Buyer shall make an initial earnest money deposit (the “ First Deposit ”) with the Escrow Agent in an amount equal to EIGHT MILLION NINE HUNDRED THIRTY ONE THOUSAND NINE HUNDRED FIFTY FIVE AND 50/100 DOLLARS ($8,931,955.50) [Note: This amount is equal to Two and one half percent (2.5%) of the Purchase Price for all Properties - i.e., both First Property Group and Second Property Group]. Notwithstanding any provision in this Agreement to the contrary, if Buyer fails to timely make the First Deposit as provided herein, then Seller shall have the right to terminate this Agreement by written notice to Buyer given at any time prior to the time Buyer makes the First Deposit, and following any such termination, the parties shall have no further rights or obligations hereunder except for obligations which expressly survive the termination of this Agreement(4).
(b) Payment of Second Deposit . At the First Closing and as a requirement of such First Closing, (i) the Escrow Agent shall retain the First Deposit (which shall not be applied to the Purchase Price for the First Closing) and (ii) Buyer shall make an additional earnest money deposit (the “ Second Deposit ”) with the Escrow Agent in an amount equal to TWO MILLION SIX HUNDRED TWENTY NINE THOUSAND SEVEN HUNDRED TWENTY TWO AND 04/100 DOLLARS ($2,629,722.04) [Note: This amount will be sufficient to bring the aggregate of the First Deposit and the Second Deposit to Five percent (5%) of the Purchase Price for the Second Property Group]. As used herein, “ Deposit ” means, (i) prior to the First
(4) The Property Schedule includes columns entitled “First Deposit” and “Second Deposit”. Such columns refer to the First Deposit and Second Deposit as described herein and are provided solely at the request of Buyer as a convenience for Buyer for administrative purposes. The inclusion of such columns in the Property Schedule is not intended in any way to provide for an allocation of the Deposit among the Properties, and there shall be no allocation of the Deposit (or any allocation of liquidated damages) among the Properties for any reason, other than as expressly provided with respect to a Deferred Property, if any, in Section 4.2(a)(iv) and with respect to any Deposit Reimbursement Amount pursuant to Section 8.5 .
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Closing, the First Deposit, to the extent the same is deposited by Buyer in accordance with the terms of this Section 3.2 , and (ii) following the First Closing, the sum of the First Deposit and the Second Deposit.
(c) Application of Entire Deposit at Second Closing . Each installment of the Deposit shall be paid to Escrow Agent in immediately available funds by wire transfer. Except as expressly otherwise set forth herein, the Deposit shall be held and delivered by Escrow Agent in accordance with the provisions of Article 13 . No portion of the Deposit shall be applied to the Purchase Price for the First Property Group at the First Closing. Except as expressly otherwise set forth herein, at the Second Closing the entire Deposit (i.e. the First Deposit and the Second Deposit) shall be applied against the Purchase Price for the Second Property Group.
Section 3.3 Cash at Closing . On the Closing Date for each Property Group, Buyer shall pay to Seller through Escrow Agent an amount equal to the Purchase Price for such Property Group in immediately available funds by wire transfer as more particularly set forth in Section 7.2 , as prorated and adjusted as set forth in Article 6 , Section 7.2 , or as otherwise provided under this Agreement.
Section 3.4 Allocated Purchase Price . Seller and Buyer hereby agree that (i) the Purchase Price shall be allocated between the First Property Group and the Second Property Group as set forth in Section 3.1 , and (ii) the Purchase Price shall be allocated among the Properties as set forth on the Property Schedule (the portion of the Purchase Price so allocated to each Property being identified as “Sales Price” in the Property Schedule and referred to herein as the “ Allocated Purchase Price ” for such Property). Such allocations shall apply for federal, state, local and foreign tax purposes in accordance with applicable U.S. federal tax Laws and analogous provisions of foreign, state or local Laws. Seller and Buyer shall file all tax returns and related tax documents consistent with the allocations set forth in Section 3.1 on the Property Schedule as such allocations may be adjusted by agreement of Seller and Buyer.
Section 3.5 Independent Consideration . If Buyer is entitled to have the Deposit returned to it pursuant to any provision of this Agreement, then One Hundred Dollars ($100.00) of the Deposit shall nevertheless be paid to Seller as good and sufficient consideration for entering into this Agreement. In addition, Seller and Buyer acknowledge and agree that Buyer will devote internal resources and incur expenses in evaluating the Properties and Seller will devote internal resources and incur expenses in connection with this Agreement, and that such efforts and expenses of Buyer and Seller also constitute good, valuable and sufficient consideration for this Agreement.
Section 4.1 Title to Real Property . Seller has made available to Buyer pursuant to the Portfolio Website copies of the Title Commitments, the Title Documents, and the Surveys for each of the Properties.
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(a) Buyer’s Objections to Title; Seller’s Obligations and Rights .
(i) Buyer acknowledges and agrees that all of the Title Documents other than Required Cure Exceptions are Permitted Exceptions. Buyer shall have the right to object in writing to any title matters which are not Permitted Exceptions and which materially and adversely affect Buyer’s title to any Property that may first appear on any supplemental title reports or updates to the Title Commitment or Survey made available to Buyer or obtained by Buyer after the Effective Date so long as such objection is made by Buyer within five (5) Business Days after Buyer becomes aware of the same (but, in any event, prior to the applicable Closing Date).
(ii) To the extent that any Title Objection does not constitute a Required Cure Exception, Seller may elect (but shall not be obligated) to Remove or cause to be Removed any such Title Objection and Seller shall notify Buyer in writing within five (5) Business Days after receipt of Buyer’s notice of Title Objections (but, in any event, prior to the applicable Closing Date) whether Seller elects to Remove the same. Failure of Seller to respond in writing within such period shall be deemed an election by Seller not to Remove such Title Objections. Any Title Objection that Seller elects in writing to Remove shall be deemed a Required Cure Exception. If Seller elects not to Remove any Title Objection, then, within five (5) Business Days after Seller’s election (but, in any event, prior to the applicable Closing Date), Buyer may elect in writing either (A) to terminate this Agreement with respect to the applicable Property, in which event such Property shall be an Excluded Property and the parties shall have no further rights or obligations hereunder with respect to such Excluded Property except for obligations which expressly survive the termination of this Agreement, or (B) waive such Title Objection and proceed to the applicable Closing. Failure of Buyer to respond in writing within such period shall be deemed an election by Buyer to waive such Title Objection and proceed to the Closing. Any Title Objection so waived (or deemed waived) by Buyer shall be deemed to constitute a Permitted Exception and the applicable Closing shall occur as herein provided without any reduction of or credit against the Purchase Price.
(iii) If this Agreement is not terminated as to a Property by Buyer in accordance with the provisions hereof, Seller shall, at the applicable Closing, Remove or cause to be Removed any Required Cure Exceptions with respect to such Property. Seller may use any portion of the Purchase Price to satisfy any Required Cure Exceptions that exist as of the applicable Closing Date, provided Seller shall cause the Title Company to Remove the same.
(iv) Seller shall be entitled to a reasonable adjournment of the applicable Closing (not to exceed thirty (30) days) for the purpose of the Removal of any exceptions to title. Further, if Buyer elects to terminate this Agreement with respect to any Property pursuant to clause (A) of Section 4.2(a)(ii) , then Seller may elect, within ten (10) days after receipt of such notice of termination, to adjourn the applicable Closing for up to thirty (30) days solely with respect to such Property (in such case, a “ Deferred Property ”) for the purpose of Removing the applicable Title Objections with respect to such Deferred
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Property, in which event, the Parties shall proceed to the Closing with respect to all other Properties in such Property Group, the Allocable Deposit shall be retained by Escrow Agent as earnest money solely with respect to the Deferred Property (with the balance of the Deposit to be retained by Escrow Agent at the First Closing or applied to the Purchase Price at the Second Closing as provided herein) and, if Seller is able to Remove the applicable Title Objections with respect to the Deferred Property, then the Deferred Property shall not be an Excluded Property and the parties shall conduct a separate closing with respect to the Deferred Property. (“ Allocable Deposit ” means, for any Deferred Property, a portion of the Deposit equal to (i) at any time prior to the First Closing, 2.5% of the Allocated Purchase Price for such Deferred Property, and (ii) at any time after the First Closing, 5.0% of the Allocated Purchase Price for such Deferred Property.) At any time after the applicable Closing Date, to the extent the Closing with respect to a Deferred Property has been adjourned for up to thirty (30) days, the maximum aggregate liability of the Seller Parties, and the maximum aggregate amount which may be awarded to and collected by Buyer, solely in connection with any such Deferred Property during such thirty (30) days and until the time of Closing with respect to such Deferred Property, shall be no more than the greater of (i) One Hundred Thousand Dollars ($100,000) or (ii) 2.5% of the Allocated Purchase Price for such Deferred Property).
(b) No New Exceptions . From and after the Effective Date, and except with respect to easements and other matters necessary for the operation of any Property, Seller shall not execute any deed, easement, restriction, covenant or other matter affecting title to any Property unless Buyer has received a copy thereof and has approved the same in writing. If Buyer fails to object in writing to any such proposed instrument within five (5) Business Days after receipt of the aforementioned notice, Buyer shall be deemed to have approved the proposed instrument. Buyer’s consent shall not be unreasonably withheld, conditioned or delayed with respect to any such instrument that is proposed by Seller.
Section 4.3 Title Insurance . If Buyer elects to obtain title insurance with respect to the Properties, Buyer shall be required to obtain such title insurance from the Title Company. If Buyer makes such election, then at each Closing, the Title Company shall issue an Owner’s Title Policy to Buyer with respect to each Property in the applicable Property Group, insuring that fee simple title each Property is vested in Buyer subject only to the Permitted Exceptions. Buyer shall be entitled to request that the Title Company provide such endorsements (or amendments) to the Owner’s Title Policy as Buyer may reasonably require, provided that (a) such endorsements (or amendments) shall be at no cost to, and shall impose no additional liability on, Seller, (b) Buyer’s obligations under this Agreement shall not be conditioned upon Buyer’s ability to obtain such endorsements and, if Buyer is unable to obtain such endorsements, Buyer shall nevertheless be obligated to proceed to close the Transaction without reduction of or set off against the Purchase Price, and (c) such Closing shall not be delayed as a result of Buyer’s request.
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ARTICLE 5. BUYER’S DUE DILIGENCE/CONDITION OF THE PROPERTY
Section 5.1 Buyer’s Due Diligence .
(a) Access to Documents and the Properties . Commencing prior to the Effective Date and continuing to the Closing Date for each Property Group, Seller has made and will continue to make or cause to be made available to Buyer on the Portfolio Website, Consultant Reports, Title Commitments, Title Documents, Surveys and any other Documents located on the Portfolio Website with respect to the Properties in such Property Group. In addition, commencing prior to the Effective Date and continuing to the applicable Closing Date, Seller has allowed and will continue to allow Buyer’s Representatives access to the Properties upon the terms and conditions set forth in the Access Agreement Addendum. The terms and conditions of the Access Agreement Addendum, including without limitation all indemnification provisions and insurance requirements, are incorporated in this Agreement in their entirety and shall govern access to and inspection of the Properties by Buyer and Buyer’s Representatives.
(b) Limit on Government Contacts . Seller shall be entitled to have a representative present when any Buyer’s Representatives has any contact with any governmental official or representative relating to the Properties. Where practical, Buyer shall provide reasonable advance notice to Seller of contact with any governmental official or representative relating to the Properties, so as to enable Seller to make a determination of whether it wishes to be present for such contact.
(c) Other Inspection Obligations of Buyer . All inspections by Buyer’s Representatives shall be at Buyer’s sole expense and shall be in accordance with applicable Laws, including without limitation, Laws relating to worker safety and the proper disposal of discarded materials. Buyer shall cause each of Buyer’s Representatives to be aware of the terms of this Agreement as it relates to the conduct of Buyer’s inspections and the obligations of such parties hereunder.
(d) Waiver and Release . Buyer, for itself and all of the other Buyer’s Representatives, hereby waives and releases Seller and each of Seller Parties from all claims resulting directly or indirectly from access to, entrance upon, or inspection of any Property or Properties by Buyer’s Representatives.
Section 5.2 As-Is Sale . Buyer acknowledges and agrees as follows:
(a) Buyer has previously conducted, or has waived its right to conduct, such Due Diligence as Buyer has deemed or shall deem necessary or appropriate. Buyer acknowledges and agrees that its obligation to perform under this Agreement is not contingent upon any further Due Diligence.
(b) The Properties shall be sold, and Buyer shall accept possession of the Properties in each Property Group on the applicable Closing Date, “AS IS, WHERE IS, WITH ALL FAULTS”, with no right of setoff or reduction in the Purchase Price.
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(c) Except for Seller’s Warranties, none of Seller Parties have or shall be deemed to have made any verbal or written representations, warranties, promises or guarantees (whether express, implied, statutory or otherwise) to Buyer with respect to any Property or Properties, any matter set forth, contained or addressed in the Documents (including, but not limited to, the accuracy and completeness thereof), the adequacy of the design or construction of any improvements, or the results of Buyer’s Due Diligence.
(d) Buyer expressly understands and acknowledges that it is possible that unknown Liabilities may exist with respect to the Properties and that Buyer explicitly took that possibility into account in determining and agreeing to the Purchase Price, and that a portion of such consideration, having been bargained for between parties with the knowledge of the possibility of such unknown Liabilities shall be given in exchange for a full accord and satisfaction and discharge of all such Liabilities.
(e) Buyer understands that Seller, as tenant under each Property Lease, will provide Buyer, as landlord thereunder, with environmental indemnities as set forth in Section 5.3 of such Property Lease.
ARTICLE 6. ADJUSTMENTS AND PRORATIONS; CLOSING COSTS
Section 6.1 Prorations . The operating and utility expenses associated with the Properties and the real estate taxes and assessments levied against the Properties shall not be prorated at either Closing. Seller shall be responsible for the payment of such operating and utility expenses and taxes and assessments for the period prior to the applicable Closing and, as provided in each Property Lease, for the term of such Property Lease. The first monthly installment of Annual Basic Rent under each Property Lease (or a prorated portion thereof if the applicable Closing Date is not the first day of a calendar month) shall be paid by Seller to Buyer at such Closing.
Section 6.2 Transaction Taxes and Closing Costs .
(a) Seller and Buyer 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) Seller shall pay the fees of any counsel representing Seller in connection with this transaction. Seller shall also pay the following costs and expenses:
(i) the cost of all Surveys and Title Commitments included on the Portfolio Website, but not the costs of any updates or revisions of the Surveys and Title Commitments that Buyer may elect to obtain (provided, however, that Seller will cooperate with Buyer to require that the Surveys are updated and revised by the survey company to the extent of Seller’s negotiated agreement with such survey company, at no additional cost to Seller);
(ii) the costs of all Consultant Reports included on the Portfolio Website, including the certification of such Consultant Reports to Buyer in the same form as
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currently certified to Seller (or by means of reliance letters containing the same certification provided to Seller and otherwise reasonably acceptable to Buyer), but not any additional costs for additional reports or updates commissioned by Buyer or for any other form of certification of the Consultant Reports to Buyer;
(iii) transfer, documentary stamp or similar taxes, if applicable, which become payable by reason of the transfer of the Properties located in the following States: Florida, Georgia, Maryland, North Carolina, South Carolina, Virginia (Grantor tax only) and the District of Columbia (Seller portion of DC transfer tax only);
(iv) the cost of all recording fees for the Deeds and documents, if any, recorded to satisfy the Required Cure Exceptions and the costs of all recording fees and, if applicable, transfer taxes for the Memoranda of Lease (provided, however, that the decision to record any Memorandum of Lease shall be at the sole and absolute discretion of Seller);
(v) any advisory fees payable to STRH; and
(vi) one half of the escrow or closing fee, if any, which may be charged by the Escrow Agent or Title Company.
(c) Buyer shall pay the fees of any counsel representing Buyer in connection with this transaction. Buyer shall also pay the following costs and expenses:
(i) one half of the escrow or closing fee, if any, which may be charged by the Escrow Agent or Title Company;
(ii) the premium for the Owner’s Title Policies to be issued to Buyer at such Closing, together with the cost of any premiums or additional costs attributable to endorsements or additional title insurance coverage;
(iii) the cost of any updates or revisions to the Surveys (other than as provided in Section 6.2(b)(i) above) or Title Commitments that Buyer may obtain;
(iv) all Due Diligence costs incurred by Buyer, including, without limitation, costs incurred to obtain any new environmental reports, property condition assessment reports or engineering reports or to update the Consultant Reports included on the Portfolio Website;
(v) transfer, documentary stamp, deed recording or similar tax which becomes payable by reason of the transfer of the Properties located in the following jurisdictions: Tennessee, Virginia (Grantee tax only) and the District of Columbia (recordation tax);
(vi) any mortgage tax, documentary stamp tax, intangibles tax or similar tax which becomes payable by reason of any security instrument caused by Buyer to be recorded on any Property or Properties;
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(vii) all costs and expenses related to or arising from any financing obtained by Buyer, including but not limited to rate lock fees, commitment fees, loan fees, attorney fees, Lender’s title insurance costs, appraisals, and other loan transaction costs;
(viii) costs of any consultants, advisors, brokers and other agents or independent contractors engaged by Buyer; and
(ix) recording fees for any and all documents to be recorded other than those set forth in Section 6.2(b)(v) hereof.
(d) All costs and expenses incident to the Transaction for such Property Group and such Closing, and not specifically described above, shall be paid by the party inclining same.
(e) The provisions of this Section 6.2 shall survive each Closing.
Buyer and Seller hereby agree that the Transaction shall be consummated as follows:
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