EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
dated as of April 17, 1998
among
MEPC PLC,
MEPC NORTH AMERICAN PROPERTIES LIMITED,
U.K.-AMERICAN HOLDINGS LIMITED,
Sellers
and
GGP LIMITED PARTNERSHIP
Buyer
relating to the purchase and sale
of
100% OF THE COMMON STOCK
of
MEPC AMERICAN HOLDINGS INC.,
CALEDONIAN HOLDING COMPANY, INC.,
and
U.K.-AMERICAN PROPERTIES, INC.
TABLE OF CONTENTS
Page
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ARTICLE 1 DEFINITIONS AND INTERPRETATION
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Section 1.01. Definitions 1
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Section 1.02. Interpretation 8
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ARTICLE 2 Purchase and Sale
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Section 2.01. Purchase and Sale 9
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Section 2.02. Base Balance Sheet 9
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Section 2.03. Closing 9
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Section 2.04. Closing Balance Sheet 10
--
Section 2.05. Adjustment to Preliminary Purchase Price 12
--
Section 2.06. Deposit 13
--
Section 2.07. Cost to Completion Adjustments 14
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ARTICLE 3 Representations and Warranties of the Sellers
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Section 3.01. Corporate Existence and Power 16
--
Section 3.02. Corporate Authorization 17
--
Section 3.03. Governmental Authorization 17
--
Section 3.04. Noncontravention 17
--
Section 3.05. Capitalization 17
--
Section 3.06. Subsidiaries 18
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Section 3.07. Financial Statements 19
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Section 3.08. Absence of Certain Changes 20
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Section 3.09. Intercompany Accounts 21
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Section 3.10. Properties 21
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Section 3.11. Other Material Contracts 24
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Section 3.12. Litigation 27
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Section 3.13. Insurance Coverage 27
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Section 3.14. Brokers and Finders 27
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Section 3.15. Employees 27
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Section 3.16. Employee Benefit Plans 27
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Section 3.17. Environmental Matters 29
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Section 3.18. Compliance with Laws and Court Orders 30
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Section 3.19. Rent Roll 30
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Section 3.20. Disclosure Schedules 30
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ARTICLE 4 Representations and Warranties of Buyer
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Section 4.01. Existence and Power 31
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Section 4.02. Authorization 31
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Section 4.03. Governmental Authorization 31
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Section 4.04. Noncontravention 31
--
Section 4.05. Financing 31
--
Section 4.06. Purchase for Investment 32
--
Section 4.07. Litigation 32
--
Section 4.08. Brokers and Finders 32
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Section 4.09. Inspections; No Other Representations 32
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ARTICLE 5 Covenants of the Sellers
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Section 5.01. Conduct of the Company Group 33
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Section 5.02. Tenant Leases 35
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Section 5.03. Access to Properties and Information; Confidentiality 35
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Section 5.04. Notices of Certain Events 36
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Section 5.05. Restructuring 37
--
Section 5.06. Resignations 37
--
Section 5.07. Estoppel Certificates 37
--
Section 5.08. Title Insurance and Surveys 37
--
Section 5.09. Certain Accounts and Agreements 38
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ARTICLE 6 Covenants of Buyer
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Section 6.01. Confidentiality 38
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Section 6.02. Access 39
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Section 6.03. Trademarks; Tradenames 39
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ARTICLE 7 Covenants of Buyer and Seller
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Section 7.01. Commercially Reasonable Efforts; Further Assurances 39
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Section 7.02. Certain Filings 40
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Section 7.03. Public Announcements 40
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Section 7.04. Brokers 40
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ARTICLE 8 Tax Matters
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Section 8.01. Tax Definitions 41
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Section 8.02. Tax Representations 42
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Section 8.03. Tax Covenants 43
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Section 8.04. Termination of Existing Tax Sharing Agreements 44
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Section 8.05. Tax Returns and Cooperation on Tax Matters 44
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Section 8.06. Indemnification by Seller 45
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Section 8.07. Survival 48
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Section 8.08. Withholding 48
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ARTICLE 9 Employee Benefits
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Section 9.01. Employment of Company Group Employees; Service Recognition 48
--
Section 9.02. Stay Sell Agreement 49
--
Section 9.03. Annual Bonuses 49
--
Section 9.04. No Third-Party Beneficiaries 49
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ARTICLE 10 Conditions to Closing
--------------------------------
Section 10.01. Conditions to Obligations of Buyer and Sellers 50
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Section 10.02. Conditions to Obligation of Buyer 50
--
Section 10.03. Conditions to Obligation of the Sellers 52
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ARTICLE 11 Survival; Indemnification
------------------------------------
Section 11.01. Survival 53
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Section 11.02. Indemnification 53
--
Section 11.03. Procedures 54
--
Section 11.04. Calculation of Damages 55
--
Section 11.05. Assignment of Claims 56
--
Section 11.06. Exclusivity 56
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ARTICLE 12 Termination
----------------------
Section 12.01. Grounds for Termination 57
--
Section 12.02. Effect of Termination 57
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ARTICLE 13 Miscellaneous
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Section 13.01. Notices 58
--
Section 13.02. Amendments and Waivers 60
--
Section 13.03. Expenses 60
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Section 13.04. Successors and Assigns 60
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Section 13.05. Third-Party Beneficiaries 60
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Section 13.06. Governing Law 60
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Section 13.07. Jurisdiction 61
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Section 13.08. WAIVER OF JURY TRIAL 61
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Section 13.09. Attorneys' Fees 61
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Section 13.10. No Recording 61
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Section 13.11. Entire Agreement 61
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Section 13.12. Invalid Provisions 61
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Section 13.13. Counterparts 62
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Section 13.14. Binding Effect 62
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Section 13.15. Specific Performance 62
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Section 13.16. Joint and Several Liability 62
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Exhibit A Restructuring Transactions
Exhibit B Accounting Procedures
Exhibit C Form of Escrow Agreement
Exhibit D Industrial Properties
Exhibit E Office Properties
Exhibit F Retail Properties
STOCK PURCHASE AGREEMENT
AGREEMENT dated as of April 17, 1998 among MEPC PLC, an English
company ("PARENT"), MEPC NORTH AMERICAN PROPERTIES LIMITED, an English
company ("NORTH AMERICAN PROPERTIES"), U.K.-AMERICAN HOLDINGS LIMITED, a
company organized under the laws of Jersey ("UK-AMERICAN" and, together
with Parent and North American Properties, the "SELLERS"), and GGP Limited
Partnership, a Delaware limited partnership ("BUYER").
WITNESSETH:
WHEREAS, MEPC American Holdings Inc., a Delaware corporation ("MEPC
HOLDINGS"), Caledonian Holding Company, Inc., a Delaware corporation
("CALEDONIAN HOLDING") and U.K.-American Properties, Inc., a Delaware
corporation ("UK-AMERICAN PROPERTIES" and, together with MEPC Holdings and
Caledonian Holding, the "COMPANIES"), either directly or through their
direct and indirect Subsidiaries (as defined below), are the owners of the
Properties (as defined below);
WHEREAS, the Sellers are the record and beneficial owners of the
Shares (as defined below) and desire to sell the Shares to Buyer, and Buyer
desires to purchase the Shares from the Sellers, upon the terms and subject
to the conditions and provisions hereinafter set forth;
WHEREAS, certain Restructuring (as defined below) will be consummated
on or prior to the Closing;
The parties hereto agree as follows:
ARTICLE 1
Definitions and Interpretation
Section 1.01. Definitions. (a) The following terms, as used herein,
have the following meanings:
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under common control
with such Person; provided that none of the Companies nor any of their
Subsidiaries (after giving effect to the Restructuring) shall be considered
an Affiliate of the Sellers.
"BALANCE SHEET" means the audited combined balance sheet of the
Companies and their Subsidiaries as of September 30, 1997.
"BALANCE SHEET DATE" means September 30, 1997.
"BENEFIT ARRANGEMENT" means any employment, severance or similar
contract or arrangement (whether or not written) or any plan, policy, fund,
program or contract or arrangement (whether or not written) providing for
compensation, bonus, profit-sharing, stock options, or other stock related
rights or other forms of incentive or deferred compensation, vacation
benefits, insurance coverage (including any self-insured arrangements),
health or medical benefits, disability benefits, workers' compensation,
supplemental unemployment benefits, severance benefits and post-employment
or retirement benefits (including compensation, pension, health, medical or
life insurance or other benefits) that (i) is not an Employee Plan, (ii) is
entered into, maintained, administered or contributed to, as the case may
be, by the Sellers, any of their Affiliates or any member of the
Company Group and (iii) covers any employee or former employee of any
member of the Company Group employed in the United States.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended on or prior to the date hereof, and
any rules or regulations promulgated thereunder.
"CLOSING DATE" means the date of the Closing.
"COMPANY GROUP" means the Companies and all of their direct or
indirect Subsidiaries, after giving effect to the Restructuring.
"COMPANY SUBSIDIARIES" means the Subsidiaries of each of the
Companies.
"EMPLOYEE PLAN" means any "employee benefit plan", as defined in
Section 3(3) of ERISA, that (i) is subject to any provision of ERISA, (ii)
is maintained, administered or contributed to by any Seller, any of its
Affiliates or any member of the Company Group and (iii) covers any employee
or former employee of any member of the Company Group.
"ENVIRONMENTAL LAWS" means any and all statutes, laws, regulations and
rules, in each case as in effect on the date hereof, that have as their
principal purpose the protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended and the rules and regulations promulgated thereunder.
"ERISA AFFILIATE" of any entity means any other entity which, together
with such entity, would be treated as a single employer under Section 414
of the Code.
"EXCLUDED ASSETS" means assets and properties, including common stock
and other equity interests, that are or have been disposed of or
transferred prior to Closing by any member of the Company Group to the
Sellers or other Persons that are not members of the Company Group.
"EXCLUDED LIABILITIES" means (i) all liabilities or obligations of the
Company Group that are or have been satisfied or assumed prior to Closing
by the Sellers or other Persons that are not members of the Company Group
or that primarily relate to the Excluded Assets and (ii) all liabilities or
obligations of the Company Group relating to employees, Employee Plans or
Benefit Arrangements that accrued or arose, or are based on acts or events
occurring, prior to the Closing or that arise as the result of the
consummation of the transactions contemplated hereby (including, without
limitation, any liabilities with respect to the Worker Adjustment and
Retraining Notification Act), except as otherwise expressly provided in
Article 9.
-
"FINANCE NOTES" means the notes of one or more members of the Company
Group payable to MEPC Finance evidencing the Finance Receivables.
"FINANCE RECEIVABLES" means the combined obligations of the Company
Group owed to MEPC Finance, including principal and accrued interest, as of
the Closing Date after giving effect to the Restructuring.
"GRAYBAR AGREEMENT" means the Sale and Purchase Agreement, dated as of
March 11, 1998 between Caledonian Holding and Graybar Builders LLC.
"GRAYBAR PROPERTY" means the property that is subject to the Graybar
Agreement.
"HAZARDOUS SUBSTANCES" means any pollutant, contaminant or any toxic,
radioactive or otherwise hazardous substance, as such terms are defined in,
or identified pursuant to, any Environmental Law.
"INDEBTEDNESS" means any indebtedness for borrowed money or any
obligations in connection with any sale-leaseback transaction or similar,
off-balance sheet financing; provided that Indebtedness shall not include
(i) accounts payable (or similar items) arising in the ordinary course of
business consistent with past practices or (ii) the current portion of any
item which constitutes Indebtedness.
"INDUSTRIAL PROPERTIES" means the Properties described in Exhibit D.
"KNOWLEDGE OF THE SELLERS", "SELLERS' KNOWLEDGE" or any other similar
knowledge qualification in this Agreement means to the actual knowledge of
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇ East, ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ or ▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
"LIEN" means, with respect to any property or asset, any mortgage,
deed of trust, deed to secure debt, lien, pledge, charge or encumbrance of
any kind thereon; the interest of a vendor or lessor under conditional sale
agreement, capital lease or other title retention agreement affecting the
title thereto; any covenant, condition, restriction, reservation, easement,
right of way or other right, instrument or document affecting the title
thereto; or any other exception to or defect in the title thereto.
"MEPC FINANCE" means MEPC Finance Inc., a Delaware corporation, and
its Subsidiaries.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on the
business, assets or results of operations of the Company Group, taken as a
whole, except any such effect resulting from or arising in connection with
(i) this Agreement or the transactions contemplated hereby, (ii) changes or
conditions affecting generally the retail real estate markets in the United
States or in any jurisdiction or market where any Property is located, or
(iii) changes in economic, regulatory or political conditions generally.
"MULTIEMPLOYER PLAN" means a multiemployer plan, as defined in Section
3(37) of ERISA.
"NOTES" means the Parent Notes together with the Finance Note.
"OFFICE AND INDUSTRIAL CONTRACT" means the Sale and Purchase Agreement
providing for the sale of the Industrial Properties and the Office
Properties.
"OFFICE PROPERTIES" means the Properties described in Exhibit E.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PARENT NOTES" means the notes of one or more members of the Company
Group payable to Parent, evidencing the Parent Receivables.
"PARENT RECEIVABLES" means the combined obligations of the Company
Group owed to Parent, including principal and accrued interest, as of the
Closing Date after giving effect to the Restructuring.
"PERSON" means an individual, corporation, partnership, limited
liability company, association, trust or other entity or organization,
including a government or political subdivision or an agency or
instrumentality thereof.
"RELATED AGREEMENTS" means (i) the Graybar Agreement; (ii) any
agreement or agreements relating to the sale (either through the sale of
assets or the sale of stock) of certain land located in Broward County and
Orlando County, Florida; (iii) any agreement relating to the sale of the
Company Group's equity interests in ▇.▇. ▇▇▇▇▇▇▇ Realty and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Management Associates; and (iv) the Office and Industrial Contract.
"RESTRUCTURING" means the transactions set forth in Exhibit A hereto.
"RETAIL PROPERTIES" means the Properties described in Exhibit F.
"SHARES" means all of the issued and outstanding shares of common
stock of MEPC Holdings, Caledonian Holding and UK-American Properties.
"STAY SELL AGREEMENT" means that certain Stay and Sell Pay and
Performance Bonus Agreement dated October 9, 1997, among Parent, MEPC
Holdings, UK-American Properties, Caledonian Holding and their affiliates
(as defined therein), as amended.
"SUBSIDIARY" means, as to any Person, any corporation, partnership or
other entity of which securities or other ownership interests having
ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or
indirectly owned by such Person.
"TENANT ALLOWANCE" means all tenant improvement costs required to be
paid by the Company Group under the terms of leases or other agreements and
all cash allowances for tenant improvements required to be made by the
Company Group under such leases or agreements.
"TITLE IV PLAN" means an employee benefit plan subject to Title IV of
ERISA other than any Multiemployer Plan.
"TRANSACTION EXPENSES" means all costs and expenses incurred by the
parties hereto in connection with this Agreement or the transactions
contemplated hereby.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 2.04(c)
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Base Balance Sheet 2.02
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Base Balance Sheet Date 2.02
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Base Receivables Amount 2.05(a)(iv)
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Base Stockholders' Equity Amount 2.05(a)
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Basket 8.01
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Brokerage Agreement 3.10(a)(v)
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Buyer Breach Conditions 2.06
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Buyer Designated Person 2.07(c)(iii)
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Buyer Recitals
Caledonian Holding Recitals
Claim 11.03(a)
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Closing 2.03
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Closing Balance Sheet 2.04(a)
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Closing Permitted Liens 10.02(d)
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Code 8.01
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Companies Recitals
Company Financial Statements 3.07(a)
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Company Group Subsidiary 3.06(a)
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Company Securities 3.05(b)(ii)
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Confidential Information 6.01
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Construction Agreement 3.10(a)(X)
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Construction Completion Amount 2.07(a)(ii)
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▇▇▇▇▇ 3.10(a)(vii)
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Damages 11.02(a)
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Deposit 2.06
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Deposit Amount 2.06
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Designated Committee 2.07(c)(iii)
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Designated Person 2.07(c)
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Development Plans 2.07(a)(ii)
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E&P Report 8.06(i)
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Effective Date 12.01(b)
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Employees 9.01(a)
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Encumbrances 3.05(b)
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Escrow Agent 2.06
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Escrow Agreement 2.06
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Estimated Construction Completion Amount 2.07(c)(iii)
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Existing Survey 3.10(a)(iv)
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Existing Title Report 3.10(a)(iii)
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Expiration Date 11.01
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Federal Tax 8.01
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Final Determination 8.01
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Final Receivables Amount 2.04(c)(iii)(b)
---------------
Final Stockholders' Equity Amount 2.04(c)(iii)
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GGPI 8.06(i)
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Ground Lease 3.10(a)(vi)
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Group Subsidiary Securities 3.06(b)(ii)
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Indemnified Party 11.03(a)
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Indemnifying Party 11.03(a)
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Loss 8.06(a)(ii)
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Management Agreement 3.10(a)(viii)
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MEPC Holdings Recitals
MEPC Holdings Class A Common Stock 3.05(a)(i)
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MEPC Holdings Common Stock 3.05(a)(i)
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Net Partnership Asset Amount Exhibit B
North American Properties Recitals
Note Election 2.01(b)(i)
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Owner 3.10(a)(ii)
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Parent Recitals
Parent Designated Person 2.07(c)(iii)
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Payment Election 2.01(b)(ii)
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Permitted Liens 3.10(b)(vii)
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Post-Closing Tax Period 8.01
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Potential Contributor 11.05
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Pre-Closing Tax Period 8.01
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Preliminary Purchase Price 2.03(a)
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Property 3.10(a)
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Purchase Price 2.05(a)(viii)
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Rate 2.05(b)
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Receivables Amount 2.04(a)
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Retained Employee 9.02(a)
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Returns 8.02(a)(i)
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Seller Group 8.01
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Sellers Recitals
Service Agreement 3.10(a)(ix)
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Stockholders' Equity Amount 2.04(a)
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Straddle Period 8.06(b)
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Surveyors 5.08
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Tax 8.01
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Tax Asset 8.01
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Tax Period 8.01
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Tax Sharing Agreement 8.01
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Taxing Authority 8.01
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Tenant Lease 3.11(a)(ii)
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Third Designated Person 2.07(c)(iii)
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Third Party Claim 11.03(b)
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Title Companies 5.08
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Title Policy 10.02(d)
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UK-American Recitals
UK-American Properties Recitals
Section 1.02. Interpretation. In this Agreement, unless otherwise
specified; (i) singular words include the plural and plural words include
the singular; (ii) words importing any gender include the other genders;
(iii) references to any person include its successors and assigns; (iv) the
word "successors", when it refers to an individual, includes the heirs,
devisees, legatees, executors, administrators and personal representatives
of such individual; (v) references to any statute or other law include all
rules, regulations and orders adopted or made thereunder and all statutes
or other laws amending, consolidating or replacing the statute or law
referred to; (vi) references to any agreement or other document include all
subsequent amendments or other modifications thereof entered into in
accordance with the provisions thereof; (vii) the words "approve",
"consent" or "agree", and any derivations thereof or words of similar
import, mean the prior written approval, consent or agreement of the person
holding the right to approve, consent or agree; (viii) the words "include"
and "including", and words of similar import, shall be deemed to be
followed by the words "without limitation"; (ix) the words "hereto",
"herein", "hereof" and "hereunder", and words of similar import, refer to
this Agreement in its entirety; (x) the Schedules and Exhibits hereto are
part of this Agreement and are incorporated herein by reference; (xi) the
words "Section", "Schedule" or "Exhibit" refer to the sections, schedules
and exhibits of and to this Agreement; (xii) headings of Sections,
Schedules and Exhibits are inserted as a matter of convenience and shall
not affect the construction of this Agreement; and (xiii) this Agreement
shall be construed without regard to any presumption or other rule
requiring construction against the party causing this Agreement to be
drafted.
ARTICLE 2
Purchase and Sale
Section 2.01. Purchase and Sale. (a) Upon the terms and subject to
the conditions of this Agreement, the Sellers agree, jointly and severally,
to sell to Buyer, and Buyer agrees to purchase from the Sellers, the Shares
at the Closing.
(b) Upon the terms and subject to the conditions of this Agreement,
Buyer agrees to either (i) purchase from Parent the Parent Notes and
purchase from MEPC Finance the Finance Notes (a "NOTE ELECTION") or (ii)
provide the Company Group with sufficient cash and cause the Company Group,
at the Closing, to pay to Parent the amount of the Parent Receivables and
to pay to MEPC Finance the amount of the Finance Receivables (a "PAYMENT
ELECTION"). In the event Buyer makes a Note Election, Parent agrees to
sell (or, as appropriate, to cause MEPC Finance to sell) to Buyer the
Notes. Buyer shall give notice to Parent of a Note Election or a Payment
Election no less than five business days prior to the Closing Date.
Section 2.02. Base Balance Sheet. At least five business days prior
to the Closing, Parent shall deliver to Buyer (i) a combined balance sheet
(the "BASE BALANCE SHEET") of the Company Group as of the end of the most
recent month which precedes the Closing Date (the "BASE BALANCE SHEET
DATE"), which Base Balance Sheet will include all adjustments necessary to
give effect to each transaction included in the Restructuring as of the
date of consummation of such transaction, if such transaction is
consummated prior to such month end, or otherwise all pro forma adjustments
necessary to give effect to such transactions as of the Base Balance Sheet
Date; (ii) a statement setting out in reasonable detail the calculation of
the amount of Parent Receivables and the amount of Finance Receivables
based upon the latest available financial information as of the date of the
Base Balance Sheet and, (iii) reasonable supporting documentation for each
pro forma Restructuring adjustment. The Base Balance Sheet shall be
prepared by the Sellers in good faith in accordance with the procedures set
forth in Exhibit B hereto.
Section 2.03. Closing. The closing (the "CLOSING") of the purchase
and sale of the Shares and, in the event of a Note Election, the Notes
hereunder shall take place at the offices of ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇, 450
Lexington Avenue, New York, New York, at 10:00 AM (New York time) on May
31, 1998, or at such other time as Buyer and Parent may agree. At the
Closing:
(a) Buyer shall deliver to Parent (or, as appropriate, MEPC Finance)
an amount (the "PRELIMINARY PURCHASE PRICE") equal to: (i) $871,000,000, as
adjusted pursuant to Section 2.07; plus or minus (ii) stockholders' equity,
----
as set forth on the Base Balance Sheet; plus (iii) in the event of a Note
Election, the sum of the amount of the Parent Receivables and the amount of
the Finance Receivables, in each case as set forth in Parent's statement
delivered pursuant to Section 2.02; minus (iv) the Deposit Amount (as
----
defined below). The Preliminary Purchase Price shall be paid in United
States dollars, in immediately available funds by wire transfer to an
account of Parent with a bank in New York City designated by Parent, by
notice to Buyer, not later than two business days prior to the Closing Date
(or if not so designated, then by certified check of Buyer certified by, or
by an official bank check of a bank which is a member of the New York
Clearing House Association payable in immediately available funds directly
to the order of Parent in such amount). The Preliminary Purchase Price
will be subject to certain adjustments as described below.
(b) Parent shall cause the Sellers (or, as appropriate, MEPC Finance)
to deliver to Buyer (i) certificates for the Shares duly endorsed or
accompanied by stock powers duly endorsed in blank, with any required
transfer stamps affixed thereto and (ii) in the event of a Note Election,
the Notes, duly endorsed to Buyer.
(c) In the event of a Payment Election, Buyer shall transfer as a
capital contribution or loan to the Company Group at Closing cash, payable
in immediately available funds, in an amount sufficient to enable the
Company Group to pay and Buyer and the Sellers will cause the Company Group
to pay at Closing (i) to Parent the amount of the Parent Receivables and
(ii) to MEPC Finance, the amount of the Finance Receivables, in each case
as set forth in Parent's statement delivered pursuant to Section 2.02.
----
(d) The Preliminary Purchase Price shall be allocated first to the
Notes (in the event of a Note Election), in an amount equal to the amount
thereof, and then to the Shares, as set forth in a Schedule to be agreed
upon by Buyer and Parent and delivered at the Closing. Any difference
between the Preliminary Purchase Price and the Purchase Price shall be
allocated to the Notes (in the event of a Note Election) and to the Shares
as set forth in a schedule to be agreed upon by Buyer and Parent at the
time the Purchase Price is determined.
Section 2.04. Closing Balance Sheet. (a) As promptly as practicable,
but no later than 90 days, after the Closing Date, Buyer will cause to be
prepared and delivered to Parent a combined balance sheet of the Company
Group as of the close of business on the Closing Date (the "CLOSING BALANCE
SHEET"), together with a report of Coopers & ▇▇▇▇▇▇▇ or ▇▇▇▇▇ & ▇▇▇▇▇
thereon, and a certificate based on such Closing Balance Sheet setting
forth Buyer's calculation of stockholders' equity (the "STOCKHOLDERS'
EQUITY AMOUNT"), the amount of the Parent Receivables, the amount of the
Finance Receivables (together with the amount of the Parent Receivables,
the "RECEIVABLES AMOUNT"), in each case before giving effect to any payment
thereof pursuant to Section 2.03. The Closing Balance Sheet shall be
----
prepared by Buyer in good faith in accordance with the procedures set forth
in Exhibit B hereto.
(b) If Parent disagrees with Buyer's calculation of the Stockholders'
Equity Amount or Buyer's calculation of the Receivables Amount, in each
case delivered pursuant to Section 2.04(a), Parent may, within 20 days
-------
after delivery of the documents referred to in Section 2.04(a), deliver a
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notice to Buyer disagreeing with such calculation and setting forth
Parent's calculation of such amounts. Any such notice of disagreement
shall specify those items or amounts as to which Parent disagrees, and
Parent shall be deemed to have agreed with all other items and amounts
contained in the Closing Balance Sheet and the Buyer's calculation of the
Stockholders' Equity Amount and the Receivables Amount, in each case
delivered pursuant to Section 2.04(a).
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(c) If a notice of disagreement shall be duly delivered pursuant to
Section 2.04(b), Buyer and Parent shall, during the 30 days following such
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delivery, use their best efforts to reach agreement on the disputed items
or amounts in order to determine, as may be required, the Final
Stockholders' Equity Amount (as defined below) and the Final Receivables
Amount (as defined below) which amounts shall not be less than the amounts
thereof shown in Buyer's calculations delivered pursuant to Section 2.04(a)
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nor more than the amounts thereof shown in Parent's calculation delivered
pursuant to Section 2.04(b). If, during such period, Buyer and Parent are
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unable to reach such agreement, they shall promptly thereafter cause ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇") to promptly to review this Agreement and
the disputed items or amounts for the purpose of calculating the Final
Stockholders' Equity Amount and the Final Receivables Amount. In making
such calculation, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall consider only those items or
amounts in the Closing Balance Sheet or Buyer's calculation of the
Stockholders' Equity Amount and/or Buyer's calculation of the Receivables
Amount as to which Parent has disagreed. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ shall deliver to
Buyer and Parent, as promptly as practicable, a report setting forth such
calculations. Such report shall be final and binding upon Buyer and
Parent. The cost of such review and report shall be borne (i) by Buyer if
the difference between the Final Stockholders' Equity
Amount plus the Final Receivables Amount and Buyer's calculation of the
Stockholders' Equity Amount plus Buyer's calculation of the Receivables
Amount delivered pursuant to Section 2.04(a) is more than the difference
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between the Final Stockholders' Equity Amount plus the Final Receivables
Amount and Parent's calculation of the Stockholders' Equity Amount plus
Parent's calculation of the Receivables Amount delivered pursuant to
Section 2.04(b), (ii) by Parent if the first such difference is less than
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the second such difference and (iii) otherwise equally by Buyer and Parent.
"FINAL STOCKHOLDERS' EQUITY AMOUNT" means the Stockholders Equity
Amount as shown in Buyer's calculation delivered pursuant to Section
2.04(a), if no notice of disagreement with respect thereto is duly
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delivered pursuant to Section 2.04(b); or if such a notice of disagreement
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is delivered, (a) as agreed by Buyer and Parent pursuant to Section 2.04(c)
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or (b) in the absence of such agreement, as shown in ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇'▇
calculation delivered pursuant to Section 2.04(c); provided that in no
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event shall the Final Stockholders' Equity Amount be less than Buyer's
calculation of the Stockholders' Equity Amount delivered pursuant to
Section 2.04(a) nor more than Parent's calculation of the Stockholders'
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Equity Amount delivered pursuant to Section 2.04(b).
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"FINAL RECEIVABLES AMOUNT" means the Receivables Amount as shown in Buyer's
calculation delivered pursuant to Section 2.04(a), if no notice of
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disagreement with respect thereto is duly delivered pursuant to Section
2.04(b); or if such a notice of disagreement is delivered, as agreed by
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Buyer and Parent pursuant to Section 2.04(c) or, in the absence of such
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agreement, as shown in ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇'▇ calculation delivered pursuant to
Section 2.04(c); provided that in no event shall the Final Receivables
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Amount be less than Buyer's calculation of the Receivables Amount delivered
pursuant to Section 2.04(a) nor more than Parent's calculation of the
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Receivables Amount delivered pursuant to Section 2.04(b).
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(d) Buyer and the Sellers agree that they will, and agree to cause
their respective independent accountants and each member of the Company
Group to, cooperate and assist in the preparation of the Closing Balance
Sheet, the calculation of the Final Stockholders' Equity Amount and the
Final Receivables Amount and in the conduct of the reviews referred to in
this Section, including without limitation, the making available to the
extent necessary of books, records, work papers and personnel.
Section 2.05. Adjustment to Preliminary Purchase Price. (a) The
Preliminary Purchase Price will be adjusted as follows: if the sum of (i)
the Final Stockholders' Equity Amount plus (ii) the Final Receivables
Amount exceeds the sum of (iii) the stockholders equity as set forth on the
Base Balance Sheet (the "BASE STOCKHOLDERS' EQUITY AMOUNT") plus (iv) the
Receivables Amount set forth on the Base Balance Sheet (the "BASE
RECEIVABLES AMOUNT"), Buyer shall pay to Parent, as an adjustment to the
Preliminary Purchase Price, in the manner and with interest as provided in
Section 2.05(b), the amount of such excess. If the sum of (v) the Base
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Stockholders' Equity Amount plus (vi) the Base Receivables Amount exceeds
the sum of (vii) the Final Stockholders' Equity Amount plus (viii) the
Final Receivables Amount, Parent shall pay to Buyer, as an adjustment to
the Preliminary Purchase Price, in the manner and with interest as provided
in Section 2.05(b), the amount of such excess. The Preliminary Purchase
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Price as so adjusted is referred to herein as the "PURCHASE PRICE".
(b) Any payment pursuant to Section 2.05(a) shall be made at a
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mutually convenient time and place within 10 days after the Final
Stockholders' Equity Amount has been determined by delivery by Buyer or
Parent, as the case may be, of a certified or official bank check payable
in immediately available funds to the other party or by causing such
payments to be credited to such account of such other party as may be
designated by such other party. The amount of any payment to be made
pursuant to Section 2.05(a) shall bear interest from and including the
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Closing Date to but excluding the date of payment at a rate per annum
equal to the rate of interest announced by ▇▇▇▇▇▇ Guaranty Trust Company of
New York (the "RATE") from time to time as its Base Rate in New York City
in effect from time to time during the period from the Closing Date to the
date of payment. Such interest shall be payable at the same time as the
payment to which it relates and shall be calculated daily on the basis of a
year of 365 days and the actual number of days elapsed.
Section 2.06. Deposit. If this Agreement is not terminated by Buyer
pursuant to Section 12.01(b), on the business day immediately following the
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Effective Date, Buyer shall deposit with Chase Manhattan Bank (the "ESCROW
AGENT") $20,000,000 (the "DEPOSIT") by a certified check of Buyer certified
by, or by an official bank check of, a bank which is a member of the New
York Clearing House Association payable in immediately available funds or
by wire transfer of immediately available funds to such account as the
Escrow Agent may specify. The Deposit Amount (as defined below) shall be
held, invested and disbursed by the Escrow Agent in accordance with the
terms set forth in the agreement attached hereto as Exhibit C (the "ESCROW
AGREEMENT"). The Deposit (and any interest earned thereon) (the "DEPOSIT
AMOUNT") shall be credited against the Preliminary Purchase Price at the
Closing as provided in Section 2.03. If this Agreement is terminated by
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Parent pursuant to Section 12.01(c) and any of the conditions set forth in
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Section 12.02 that would, in accordance with Section 12.02, give rise to
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liability on the part of Buyer (the "BUYER BREACH CONDITIONS") have
occurred, the Sellers shall have the right to retain the Deposit; provided
that, prior to terminating this Agreement, the Sellers will give written
notice to Buyer of such condition and will give Buyer 10 days from the date
of such notice to cure such condition (and if such condition is cured
within such 10-day period, the Sellers may not terminate this Agreement on
account thereof); provided further that retention of the Deposit Amount
shall not affect the availability of any other remedies that may be
available to the Sellers under this Agreement or applicable law. If this
Agreement is terminated pursuant to any other paragraph of Section 12.01 or
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pursuant to Section 12.01(c) under circumstances where no Buyer Breach
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Condition is satisfied, the Deposit Amount shall be returned to Buyer and,
subject to Section 12.02, the Sellers shall not have any liability to
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Buyer.
Section 2.07. Cost to Completion Adjustments. (a) The Preliminary
Purchase Price will be reduced by (i) the amount of all tenant improvement
costs and allowances and brokerage commissions which have been agreed to be
paid by landlord with respect to space leases in effect for the Properties
on the date of this Agreement and which have not been paid by any member of
the Company Group as of the Closing Date and (ii) the amount estimated as
of Closing that will be required, following the Closing Date, to complete
(not including any tenant improvement costs or allowances or any leasing
commissions) the planned development program with respect to Northridge
Fashion Center and Regency Square Mall in accordance with plans and
specifications for each such Property delivered to Buyer not later than 15
days prior to the Closing Date (the "DEVELOPMENT PLANS"), which plans and
specifications shall not be materially different from those made available
to Buyer prior to the date hereof (together, the "CONSTRUCTION COMPLETION
AMOUNT"), the calculation of which shall be without regard to any actions
taken by Buyer or any developments arising after the Closing Date. The
amount calculated pursuant to Section 2.07(a)(ii) shall include the cost of
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paving, grading and other offsite and onsite work; barricades, security,
directional signs and other general conditions; roof, structural and other
shell work; mall and common area finish work; parking, lighting,
landscaping, exterior signage and other developer work; permits and
licenses; architectural, engineering and general contractor's fees and
legal fees, in each case, only to the extent required to complete the
development program set forth under the Development Plans. Notwithstanding
anything to the contrary contained in this Section 2.07(a), for purposes of
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this Section 2.07(a), the parties agree that the
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tenant improvement costs and allowances and brokerage commissions for the
theatre lease at Valley Plaza Mall shall be deemed to be $5,200,000. The
Sellers shall cause the site work for the proposed theatre tenant at Valley
Plaza Mall to be completed prior to Closing (or, to the extent not
completed, Buyer shall be entitled to a credit at Closing for the unpaid
cost thereof).
(b) From and after the date hereof and until Closing, the Sellers
shall cause the members of the Company Group to (i) take, at their own
expense, all actions reasonably necessary to continue the construction,
renovation, development or redevelopment of Northridge Fashion Center and
Regency Square Mall, in each case, substantially in accordance with the
plans and specifications therefor made available to Buyer prior to the date
hereof and to keep a designated representative of Buyer informed with
respect to the progress and implementation of such plans, (ii) use all
reasonable efforts to continue negotiating leases in respect of leasable
space in each of such Properties, including the Valley Plaza Mall theatre
lease, (iii) use all reasonable efforts to obtain the consent of the anchor
tenants to the proposed amendments to the Northridge Fashion Center REA (it
being understood that such consents are not required to be obtained prior
to Closing).
(c) Not later than 15 days prior to the Closing Date, Parent shall
deliver to Buyer in writing its good faith calculation of the Construction
Completion Amount. If Buyer agrees with the Construction Completion Amount
as calculated by Parent, such calculation shall be binding upon Parent and
Buyer and will constitute the Construction Completion Amount for purposes
of calculating the Preliminary Purchase Price. If Buyer disagrees with the
calculation made by Parent, Buyer shall deliver to Parent, within 5 days of
receipt of Parent's calculation, a written notice specifying the basis for
its disagreement and setting forth its calculation of the Construction
Completion Amount. Failure to deliver a notice of disagreement within any
such 5-day period shall be deemed to constitute agreement to such
calculation. If a notice of disagreement is delivered within such 5-day
period, Buyer and Parent shall negotiate in good faith to resolve the
disagreements. If no agreement is reached as to the Construction
Completion Amount, Buyer and Parent shall refer the disputed issues for
resolution to an appropriate Person of recognized national standing who has
been agreed upon by Parent and Buyer (a "DESIGNATED PERSON"). The
Designated Person shall resolve such issues and determine the Construction
Completion Amount. The fees and expenses of the Designated Person shall be
borne (i) by Buyer if the difference between Buyer's calculation of the
Construction Completion Amount and the Construction Completion Amount
determined by the Designated Person is greater than the difference between
Parent's calculation of the Construction Completion Amount and the
Construction Completion Amount determined by the Designated Person, (ii) by
Parent if the first such difference is less than the second such difference
and (iii) otherwise equally by Buyer and Parent.
If Parent and Buyer are unable to agree on a Designated Person, each
of Parent and Buyer will select a Designated Person (the "PARENT DESIGNATED
PERSON" and the "BUYER DESIGNATED PERSON", respectively). The Parent
Designated Person and the Buyer Designated Person will select a third,
independent Designated Person (the "THIRD DESIGNATED PERSON"). The Parent
Designated Person, the Buyer Designated Person and the Third Designated
Person (collectively, the "DESIGNATED COMMITTEE") will resolve the issues
and will determine, by a majority vote of the three, the Construction
Completion Amount. The determination of the Construction Completion Amount
shall be binding upon Parent and Buyer; provided that the Construction
Completion Amount so determined shall not exceed the higher of the
Construction Completion Amount or be less than the lower of the
Construction Completion Amount calculated by Parent and Buyer. The Parent
and Buyer will pay the fees and expenses of its own Designated Person, and
if a Third Designated Person is engaged, the fees and expenses of the Third
Designated Person will be paid one-half by Parent and one-half by Buyer.
If Parent and Buyer are unable to agree on the Construction Completion
Amount or if the Designated Person(s) has (have) not made a determination
as to the Construction Completion Amount, in each case by the Closing Date,
the Construction Completion Amount for purposes of calculating the
Preliminary Purchase Price shall be the calculation originally delivered by
Parent (the "ESTIMATED CONSTRUCTION COMPLETION AMOUNT"). In such event, if
the Estimated Construction Completion Amount is less than the Construction
Completion Amount, determined in accordance with the procedures of this
Section 2.07, Parent shall pay to Buyer the difference between the two
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amounts. Such payment shall be made within 10 days after the Construction
Completion Amount has been determined pursuant to this Section 2.07 and
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shall be made in immediately available funds by wire transfer to an account
of Buyer designated by Buyer, by notice to Parent, (or if not so
designated, then by certified check of Parent certified by, or by an
official bank check of a bank which is a member of the New York Clearing
House Association payable in immediately available funds directly to the
order of Buyer in such amount). The amount of any payment to be made
pursuant to Section 2.07(a) shall bear interest from and including the
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Closing Date to but excluding the date of payment at the Rate in effect
from time to time during the period from the Closing Date to the date of
payment. Such interest shall be payable at the same time as the payment to
which it relates and shall be calculated daily on the basis of a year of
365 days and the actual number of days elapsed.
ARTICLE 3
Representations and Warranties of the Sellers
The Sellers represent and warrant to Buyer as of the date hereof and
as of the Closing Date, except as any of the following may be affected by
the Restructuring, that:
Section 3.01. Corporate Existence and Power. Each Seller is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has all corporate powers and
all governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those
licenses, authorizations, permits, consents and approvals the absence of
which would not have a Material Adverse Effect.
Section 3.02. Corporate Authorization. The execution, delivery and
performance by each Seller of this Agreement and the Escrow Agreement and
the consummation of the transactions contemplated hereby and thereby are
within such Seller's corporate powers and have been duly authorized by all
necessary corporate action on the part of such Seller. This Agreement has
been and the Escrow Agreement, upon the execution thereof, will be, duly
executed and delivered by the Sellers. This Agreement constitutes and the
Escrow Agreement, upon the execution and delivery thereof by the parties
thereto, will constitute, a valid and binding agreement of each Seller,
enforceable against it in accordance with its terms.
Section 3.03. Governmental Authorization. The execution, delivery
and performance by each Seller of this Agreement and the Escrow Agreement
and the consummation of the transactions contemplated hereby and thereby
require no action by or in respect of, or filing with, any governmental
body, agency or official other than any such action or filing where the
failure to make or obtain such action or filing would not have a Material
Adverse Effect.
Section 3.04. Noncontravention. The execution, delivery and
performance by each Seller of this Agreement and the Escrow Agreement and
the consummation of the transactions contemplated hereby and thereby do not
and will not (i) violate the certificate of incorporation, bylaws,
partnership agreement or other organizational documents of any Seller or
any member of the Company Group, (ii) assuming compliance with the matters
referred to in Section 3.03, violate any applicable law, rule, regulation,
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judgment, injunction, order or decree, except for any such violations which
would not have a Material Adverse Effect, (iii) except as disclosed in
Schedule 3.04 or as to matters which would not have a Material Adverse
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Effect, require any consent or other action by any person under, constitute
a default (or would, with the passage of time or giving of notice or both,
constitute a default) under, or give rise to any right of termination,
cancellation or acceleration of any right or obligation of any Seller or
any member of the Company Group or to a loss of any benefit to which any
Seller or any member of the Company Group is entitled under any provision
of any agreement or other instrument binding upon such Seller or such
member of the Company Group or (iv) result in the creation or imposition of
any Lien on the Shares or any asset of any member of the Company Group,
except for any Permitted Liens.
Section 3.05. Capitalization. (a) (i) The authorized capital stock
of MEPC Holdings consists of 1,000 shares of $1.00 par value common stock
(the "MEPC HOLDINGS COMMON STOCK") and 1,000 shares of $1.00 par value
Class A Common Stock (the "MEPC HOLDINGS CLASS A COMMON STOCK"), of which
only 105 shares of the MEPC Holdings Common Stock and 496 shares of the
MEPC Holdings Class A Common Stock are issued and outstanding and owned
beneficially and of record by Parent; (ii) the authorized capital stock of
Caledonian Holding consists of 1,000 shares of $.10 par value common stock,
of which only 1,000 shares are issued and outstanding and owned
beneficially and of record by North American Properties; and (iii) the
authorized capital stock of UK-American Properties consists of 1,500 shares
of $.10 par value common stock, of which only 1,440.038 shares are issued
and outstanding and owned beneficially and of record by UK-American.
(b) The Shares have been duly authorized and validly issued and are
fully paid and non-assessable and the Shares are owned directly by the
Sellers, free and clear of any lien, encumbrance, security interest, pledge
or option or other right to acquire or vote the same or any interest
therein ("ENCUMBRANCES"). The Sellers will transfer and deliver to Buyer
at the Closing valid title to the Shares free and clear of any Encumbrance
other than any Encumbrance arising as a result of actions of Buyer. There
are no outstanding (i) securities of any Company convertible into or
exchangeable for shares of capital stock, voting securities or other equity
interests of that Company or (ii) options or other rights to acquire from
any Company, or other obligations of any Company to issue, any capital
stock, voting securities or other equity interests in that Company or
securities convertible into or exchangeable for capital stock, voting
securities or other equity interests of that Company (the items in Sections
3.05(b)(i) and 3.05(b)(ii) being referred to collectively as the "COMPANY
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SECURITIES"). There are no outstanding obligations of any member of the
Company Group to repurchase, redeem or otherwise acquire any Company
Securities.
(c) Each of the Parent Notes and the Finance Notes are duly
authorized and validly issued and constitute a valid and binding obligation
of each of the Persons issuing such Note. The Parent Notes are owned by
Parent free and clear of any Encumbrance and, in the event of a Note
Election, Parent will transfer and deliver to Buyer at the Closing valid
title to the Parent Notes free and clear of any Encumbrance other than any
Encumbrance arising as a result of actions of Buyer. The Finance Notes are
owned by MEPC Finance free and clear of any Encumbrance and, in the event
of a Note Election, Parent will cause MEPC Finance to transfer and deliver
to Buyer at the Closing valid title to the Finance Notes free and clear of
any Encumbrance other than any Encumbrance arising as a result of actions
of Buyer.
Section 3.06. Subsidiaries. (a) Each member of the Company Group is
a corporation or partnership duly organized or formed, validly existing and
(to the extent applicable) in good standing under the laws of its
jurisdiction of incorporation or formation and has all powers and all
governmental licenses, authorizations, permits, consents and approvals
required to carry on its business as now conducted, except for those
licenses, authorizations, consents and approvals the absence of which would
not have a Material Adverse Effect. Each corporate member of the Company
Group is duly qualified to do business as a foreign corporation and is in
good standing in each jurisdiction where such qualification is necessary,
except for those jurisdictions where the failure to be so qualified would
not, individually or in the aggregate, have a Material Adverse Effect.
Schedule 3.06(a)(i) sets forth, with respect to each Company, after giving
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effect to the Restructuring, a correct and complete list of each material
direct or indirect Subsidiary thereof (each a "COMPANY GROUP SUBSIDIARY"),
and the jurisdiction of organization of such Company Group Subsidiary. The
Companies and the Company Group Subsidiaries, after giving effect to the
Restructuring, own no general partnership interest in any Person other than
the Company Group Subsidiaries and there are no material capital
contribution obligations or other material obligations with respect to any
equity interest that is held by any member of the Company Group and not
disclosed on Schedule 3.06(a)(i).
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(b) All of the issued and outstanding shares of capital stock of or
other equity interests in each Company Group Subsidiary have been duly
authorized and validly issued, and are fully paid and non-assessable. All
of the outstanding capital stock or other equity interests in each Company
Group Subsidiary is owned by the respective Company or Company Group
Subsidiary as designated in 3.06(a)(i), directly or indirectly, free and
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clear of any Encumbrance. Except as set forth in Schedule 3.06(b)(ii),
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there are no outstanding (i) securities of any Company Group Subsidiary
convertible into or exchangeable for shares of capital stock, voting
securities or other equity interests in that Company Group Subsidiary or
(ii) options or other rights to acquire from any Company Group Subsidiary,
or other obligation of such Company Group Subsidiary to issue, any capital
stock, voting securities or other equity interests in that Company Group
Subsidiary or securities convertible into or exchangeable for capital
stock, voting securities or other equity interests of that Company
Subsidiary (collectively the "GROUP SUBSIDIARY SECURITIES"). There are no
outstanding obligations of any of the Companies or any of the Company Group
Subsidiaries to repurchase, redeem or otherwise acquire any Group
Subsidiary Securities.
Section 3.07. Financial Statements. (a) The audited combined balance
sheet as of September 30, 1997 and the related audited combined statements
of income and cash flows for the year ended September 30, 1997 and the
unaudited interim combined balance sheet as of January 31, 1998 and the
related unaudited interim combined statement of income for the four months
ended January 31, 1998 of the Companies and the Company Group Subsidiaries
(together, the "COMPANY FINANCIAL STATEMENTS") fairly present, in
conformity with generally accepted accounting principles applied on a
consistent basis (except as may be indicated in the notes thereto), the
combined financial position of the Company Group as of the dates thereof
and their combined results of operations for the periods then ended
(subject to normal year-end adjustments in the case of any unaudited
interim financial statements).
(b) None of the Companies nor any of the Company Group Subsidiaries
had at January 31, 1998, or has incurred since that date, any liabilities
or obligations (whether absolute, accrued, contingent or otherwise) of any
nature, except liabilities, obligations or contingencies that (i) are
accrued or reserved against in the Company Financial Statements or
reflected in the notes thereto, (ii) are not required under U.S. generally
accepted accounting principles to be shown in the Company Financial
Statements or reflected in the notes thereto, (iii) were
incurred in the ordinary course of business and consistent with past
practices, (iv) have been discharged or paid in full prior to the Closing
Date or (v) are not, individually or in the aggregate, material to the
Company and the Company Group Subsidiaries, taken as a whole.
Section 3.08. Absence of Certain Changes. Except as set forth in
Schedule 3.08 and except in connection with the Restructuring, since the
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Balance Sheet Date, the business of the Company Group has been conducted in
the ordinary course consistent with past practices and there has not been:
(a) any event, occurrence or development which has had or would
reasonably be expected to have a Material Adverse Effect;
(b) except for dividends contemplated by the Restructuring, any
dividends paid by any member of the Company Group or any repurchase,
redemption or other acquisition by any member of the Company Group of any
outstanding shares of capital stock of any of the Companies;
(c) any amendment of any material term of any outstanding security
issued by any member of the Company Group;
(d) any incurrence, assumption or guarantee by any member of the
Company Group of any Indebtedness, other than Indebtedness (i) between or
among members of the Company Group or (ii) between or among a member of the
Company Group, on the one hand, and Parent or any of its Affiliates (other
than members of the Company Group), on the other hand.
(e) any making by any member of the Company Group of any loan,
advance or capital contribution to, or investment in, any Person, other
than a Company Group Subsidiary and other than Tenant Allowances and loans,
advances or capital contributions or investments of the type made in the
ordinary course of business consistent with past practices;
(f) any transaction or commitment made, or any contract or agreement
entered into, by any member of the Company Group relating to its assets or
business, in either case, material to the Company Group, taken as a whole,
other than transactions and commitments in the ordinary course of business
consistent with past practices and those contemplated by this Agreement;
(g) any material change in any method of accounting by any member of
the Company Group except for any such change required by reason of a
concurrent change in generally accepted accounting principles, and except
as set forth in the Company Financial Statements; or
(h) other than in connection with the Stay Sell Agreement and except
as set forth on Schedule 3.08(h), any (i) employment, deferred
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compensation, severance, retirement or other similar agreement entered into
with any director, officer or employee of any member of the Company Group
(or any amendment to any such existing agreement), (ii) grant of any
severance or termination pay to any director, officer or employee of any
member of the Company Group, or (iii) change in compensation or other
benefits payable to any director, officer or employee of any member of the
Company Group, in each case other than in the ordinary course of business
consistent with past practices.
Section 3.09. Intercompany Accounts. Schedule 3.09 reflects all
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intercompany balances (including those evidenced by the Notes) as of the
Balance Sheet Date between Parent and its Affiliates (other than members of
the Company Group), after giving effect to the Restructuring, on the one
hand, and members of the Company Group as of such date, on the other hand.
Since the Balance Sheet Date there has not been any accrual of liability of
the Company Group to Parent or any of its Affiliates (other than members of
the Company Group), or other material transaction between the Company Group
and Parent and any of its Affiliates (other than members of the Company
Group), except (i) in connection with the Restructuring, (ii) changes in
the outstanding principal balance of the Receivables occurring in the
ordinary course of business of the Company Group consistent with past
practices or (iii) as provided in Schedule 3.09.
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Section 3.10. Properties. (a) Schedule 3.10(a) lists all the real
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properties owned by or held, as lessee, by, any member of the Company Group
(each a "PROPERTY") and, with respect to each Property:
(i) whether the Property is owned or leased;
(ii) the Person that owns the Property (each an "OWNER");
(iii) the most recent title commitment/s, certificate/s or
other report/s held by any member of the Company Group with respect to
such Property (collectively with respect to each Property an "EXISTING
TITLE REPORT");
(iv) the most recent surveys held by any member of the Company
Group with respect to such Property (collectively with respect to each
Property an "EXISTING SURVEY");
(v) any leasing or other real estate brokerage agreements
binding upon any member of the Company Group with respect to such
Property, including any material modifications thereof or supplements
thereto (each a "BROKERAGE AGREEMENT");
(vi) any ground or similar lease under which any member of the
Company Group holds such Property or leases such property to another
Person, including any material modifications thereof or supplements
thereto (each a "GROUND LEASE");
(vii) any construction, operation and reciprocal easement
agreements relating to such Property, including any material
modifications thereof or supplements thereto (each a "▇▇▇▇▇");
(viii) any third-party management agreements relating to such
Property, including any material modifications thereof or supplements
thereto (each a "MANAGEMENT AGREEMENT");
(ix) any consulting or other material service agreement binding
upon any member of the Company Group with respect to such Property,
including any material modifications thereof or supplements thereto
(each a "SERVICE AGREEMENT"); and
(x) any material construction, redesign or architectural
agreements binding upon any member of the Company Group with respect
to such Property, including any material modification thereof or
supplements thereto (each a "CONSTRUCTION AGREEMENT").
(b) Each member of the Company Group has good title to each Property
owned by it and a valid leasehold interest in each Property held by it as
lessee, except for any Property sold, leased or otherwise disposed of in
connection with the Restructuring. None of the Properties is subject to
any Lien, except:
(i) any and all Ground Leases, Tenant Leases (as defined
below), ▇▇▇▇▇▇, Management Agreements, Brokerage Agreements,
Construction Agreements and Service Agreements relating to such
Property;
(ii) Liens relating to such Property disclosed or reflected in
or on the relevant Existing Title Reports or the relevant Existing
Surveys (other than Tenant Leases that have expired or been
terminated, Liens for taxes, assessments and similar charges and Liens
that relate to Indebtedness that has been satisfied) and any
additional state of facts which would be disclosed by a survey of such
Property since the date of the relevant Existing Surveys or would be
disclosed by a physical inspection of such Property, so long as such
additional state of facts would not, taken in the aggregate,
reasonably be expected to have a Material Adverse Effect;
(iii) Liens with respect to such Property disclosed or reflected
on the Balance Sheet, the Closing Balance Sheet or notes to either or
securing liabilities reflected on the Balance Sheet or notes to either
and not satisfied, released or otherwise terminated subsequent to the
date of the Balance Sheet;
(iv) Liens with respect to such Property for taxes, assessments
and similar charges that are not yet due or are being contested in
good faith;
(v) mechanic's, materialman's, carrier's, repairer's and other
similar Liens with respect to such Property arising or incurred in the
ordinary course of business or that are not yet due and payable or are
being contested in good faith or that are the obligation of any party
(other than a member of the Company Group) under any ▇▇▇▇▇, any tenant
under any Tenant Lease or any manager or other party (other than a
member of the Company Group) under any Management Agreement, Service
Agreement, Construction Contract or other contract or agreement to
pay, bond or remove;
(vi) Liens with respect to such Property incurred since the
Balance Sheet Date and described on Schedule 3.10(b);
-------
(vii) other Liens with respect to such Property which,
individually or in the aggregate, do not have and would not reasonably
be expected to have a Material Adverse Effect (the Liens with respect
to each Property referred to in Sections 3.10(b)(i) through
----------
3.10(b)(viii) are, collectively, the "PERMITTED LIENS" with respect to
-------------
such Property); or
(viii) Liens with respect to such Property that are between
members of the Company Group.
(c) Each Ground Lease, ▇▇▇▇▇, Brokerage Agreement, Management
Agreement, Construction Agreement and Service Agreement disclosed pursuant
to this Section is a valid and binding agreement of the relevant member of
the Company Group, constitutes the complete agreement of the parties
thereto with respect to the subject matter thereof and is in full force and
effect, and neither the relevant member of the Company Group nor, to
Sellers' knowledge, the other party thereto is in default or breach in any
material respect thereunder or would, with the passage of time or giving of
notice or both, be in default or breach thereunder; nor, to Sellers'
knowledge, has any member of the Company Group received any written notice
from any other party thereto of any such defaults, breaches or conditions
thereunder; in each case except for any such defaults set forth in Schedule
3.10(c), and except for any such defaults, breaches or conditions which do
-------
not have and would not reasonably be expected to have a Material Adverse
Effect. True, correct and complete copies of the Ground Leases, ▇▇▇▇▇▇,
Brokerage Agreements, Management Agreements and Service Agreements have
been made available to Buyer.
(d) Upon execution and delivery of any ▇▇▇▇▇, Management Agreement,
Service Agreement or Construction Agreement described in Schedule 3.10(d)
-------
as pending by any member of the Company Group and the other party or
parties thereto upon the terms contained therein, such ▇▇▇▇▇, Management
Agreement, Service Agreement or Construction Agreement shall constitute a
▇▇▇▇▇, Management Agreement, Service Agreement or Construction Agreement,
as the case may be, and shall be deemed to be disclosed and scheduled
pursuant to this Section.
Section 3.11. Other Material Contracts. (a) Except for the contracts
set forth in Schedule 3.10(a), Schedule 3.11 or Schedule 3.19 and except
------- ---- ----
for contracts entered into in connection with the Restructuring, no member
of the Company Group is a party to or bound by:
(i) any lease of personal property providing for annual rentals
of $50,000 or more that cannot be terminated on not more than 60 days'
notice without payment by the relevant member of the Company Group of
any material penalty;
(ii) any lease of real property under which a member of the
Company Group is lessor (or sublessor) that cannot be terminated by
such member of the Company Group on not more than 60 days notice
without payment by such member of the Company Group of any material
penalty (each, a "TENANT LEASE"); provided that, upon execution and
delivery by a member of the Company Group and the other party or
parties thereto of any lease described in Schedule 3.11(a)(ii) as
-----------
pending or anticipated leases upon substantially the terms described
therein and of the standard retail lease form of the Companies (except
with regard to the Borders Books lease at Northridge Fashion
Center), such lease shall constitute a Tenant Lease and shall be
deemed to be disclosed and scheduled pursuant to this Section.
(iii) any agreement for the purchase of materials, supplies,
goods, services, equipment or other assets providing for either (A)
annual payments by any member of the Company Group of $50,000 or more
or (B) aggregate payments by any member of the Company Group of
$250,000 or more, in each case that cannot be terminated on not more
than 60 days' notice without payment by that member of the Company
Group of any material penalty;
(iv) any material third-party partnership, joint venture or
other similar agreement or arrangement;
(v) any agreement (including without limitation option
agreements) relating to the acquisition or disposition of any material
asset (whether by merger, sale of stock, sale of assets or otherwise);
(vi) any agreement relating to Indebtedness (other than
leases for personal property) or the deferred purchase price of
property (in either case, whether incurred, assumed, guaranteed or
secured by any asset) or the issuance of performance bonds or letters
of credit and any guarantees or other financial accommodations, except
any such agreement entered into subsequent to the date of this
Agreement as permitted by Section 3.08(d);
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(vii) any agreement between a member of the Company Group and
any of its officers, directors or employees which agreement cannot be
terminated currently by such member of the Company Group without a
material penalty;
(viii) any material agreement that limits the freedom of any
member of the Company Group to compete in any line of business or with
any person or in any area; or
(ix) any collective bargaining agreement.
(x) any lease of real property under which a member of the
Company Group is lessee (or sublessee) that cannot be terminated
currently by such member of the Company Group without a material
penalty;
(xi) any notes, contracts or agreements between any members
of the Company Group, on the one hand, and any of the Sellers or their
Affiliates (other than members of the Company Group), on the other
hand, except as set forth in Schedule 3.09; or
----
(xii) any material undertakings or commitments to any
governmental or regulatory authority; or
(xiii) any other material contract, agreement, arrangement or
commitment not made in the ordinary course of business consistent with
past practice.
(b) Each agreement, contract, plan, lease, arrangement or commitment
disclosed pursuant to Sections 3.11(a)(i) through 3.11(a)(xiii) is a valid
---------- -------------
and binding agreement of the relevant member of the Company Group, and is
in full force and effect, and no member of the Company Group nor, to the
Sellers' knowledge, any other party thereto is in default (or, with the
passage of time or giving of notice or both, would be in default) under the
terms of any such agreement, contract, plan, lease, Tenant Lease,
arrangement or commitment, except as are set forth in Schedule 3.11(b), and
-------
except for any such defaults which do not have or would not reasonably be
expected to have a Material Adverse Effect. To the knowledge of the
Sellers, no member of the Company Group has received any written notice
from any other party to any of the agreements, contracts, plans, leases,
arrangements or commitments disclosed pursuant to Sections 3.11(a)(i)
----------
through 3.11(a)(xiii) asserting that such member of the Company is in
-------------
default or breach thereunder. True, correct and complete copies of the
documents disclosed pursuant to Sections 3.11(a)(i) through 3.11(a)(xiii)
---------- -------------
have been made available to Buyer. Each of the agreements, contracts,
plans, leases, arrangements or commitments set forth in Schedule 3.11
----
constitutes the complete agreement of the parties thereto with respect to
the subject matter thereof.
Section 3.12. Litigation. Except as set forth in Schedule 3.12,
----
there is no action, suit, investigation or proceeding (including
condemnation proceedings) pending against or, to the knowledge of the
Sellers, threatened against or affecting, the Sellers, any member of the
Company Group or any of the Properties before any court or arbitrator or
any governmental body, agency or official which, individually or in the
aggregate, would reasonably be expected to have a Material Adverse Effect
or which in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement. None of
the Sellers nor any other member of the Company Group is a party to or is
bound by or in default or, with the passing of time or giving of notice or
both, would be in default with respect to any outstanding order, writ,
injunction, judgment or decree of any court or governmental entity which,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect.
Section 3.13. Insurance Coverage. Schedule 3.13 sets forth a list of
----
all insurance policies and fidelity bonds relating to the assets, business,
operations, employees, officers or directors of the Company Group. Except
as set forth on Schedule 3.13, there are no material claims by any member
----
of the Company Group pending under any of such policies or bonds as to
which coverage has been questioned, denied or disputed by the underwriters
of such policies or bonds or in respect of which such underwriters have
reserved their rights. Such policies and bonds are in full force and
effect and all premiums have been paid through the date hereof. To the
knowledge of the Sellers, no Seller or any other member of the Company
Group has received notice or has knowledge of (a) any material violation
with respect to any of such insurance policies or bonds or (b) any material
request or demand by the underwriters of any such insurance policies and
bonds that any work or alteration be performed or made with respect to any
of the Properties.
Section 3.14. Brokers and Finders. Except for ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.,
whose fees will be paid by the Sellers, there is no investment banker,
broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of the Sellers or any member of the Company
Group who might be entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.
Section 3.15. Employees. Schedule 3.15 sets forth a true and
----
complete list of the names, titles, annual salaries and other compensation
of all officers of the Company Group and all other employees of the Company
Group whose annual base salary exceeds $75,000.
Section 3.16. Employee Benefit Plans. (a) Schedule 3.16 identifies each
----
Employee Plan. Seller has made available to Buyer copies of the Employee
Plans (and, if applicable, related trust agreements) and all amendments
thereto and written interpretations thereof together with the most recent
annual report (Form 5500 including, if applicable, Schedule B thereto) and
the most recent actuarial valuation report prepared in connection with any
Employee Plan.
(b) No Company nor any ERISA Affiliate of any Company has (i) engaged
in, or is a successor or parent corporation to an entity that has engaged
in, a transaction described in Sections 4069 or 4212(c) of ERISA or (ii)
incurred, or reasonably expects to incur prior to the Closing Date, (A) any
liability under Title IV of ERISA arising in connection with the
termination of, or a complete or partial withdrawal from, any plan covered
or previously covered by Title IV of ERISA or (B) any liability under
Section 4971 of the Code that in either case could become a liability of
that Company or any Company Group Subsidiary or Buyer or any of its ERISA
Affiliates after the Closing Date. No Employee Plan is a Multiemployer
Plan or a Title IV Plan.
(c) Each Employee Plan that is intended to be qualified under Section
401(a) of the Code has been determined by the Internal Revenue Service to
be so qualified and, to the knowledge of the Sellers, there has been no
event since the date of such determination which would adversely affect
such qualification; each trust created under any such Plan has been
determined by the Internal Revenue Service to be exempt from tax under
Section 501(a) of the Code and, to the knowledge of the Sellers, there has
been no event since the date of such exemption which would adversely affect
such exemption. The Sellers have provided Buyer with the most recent
determination letter of the Internal Revenue Service relating to each such
Employee Plan. Each Employee Plan has been maintained in substantial
compliance with its terms and with the requirements prescribed by any and
all applicable statutes, orders, rules and regulations, including but not
limited to ERISA and the Code.
(d) Schedule 3.16 identifies each Benefit Arrangement. The Sellers
----
have made available to Buyer copies or descriptions of each Benefit
Arrangement (and, if applicable, related trust agreements) and all
amendments thereto and written interpretations thereof. Each Benefit
Arrangement has been maintained in substantial compliance with its terms
and with the requirements prescribed by any and all applicable statutes,
orders, rules and regulations and has been maintained in good standing with
applicable regulatory authorities.
(e) No member of the Company Group has any current or projected
liability in respect of post-employment or post-retirement health or
medical or life insurance benefits for retired, former or current employees
of the Company Group, except as required to avoid excise tax under Section
4980B of the Code.
(f) Except as would not reasonably be expected to have a Material
Adverse Effect, all contributions, premiums or payments required to be made
with respect to any Employee Plan have been made on or before their due
date or accrued on the unaudited interim combined balance sheet as of
January 31, 1998 of the Companies and the Company Group Subsidiaries and as
a result, there are no underfunded amounts thereunder that have not been
paid or accrued with respect to such Employee Plans. No Employee Plan is
currently subject to an audit or other investigation by the Internal
Revenue Service, the Department of Labor, the PBGC or any other
governmental or regulatory authority. Except as would not reasonably be
expected to have a Material Adverse Effect, no lawsuits, claims (other than
routine claims for benefits) or complaints to, or by, any person or
governmental entity have been filed or are pending and there are no facts
or contemplated events which could be expected to give rise to any such
lawsuit, claim or complaint with respect to any Employee Plan.
Section 3.17. Environmental Matters. Except as disclosed on Schedule
3.17 and except as to matters that would not reasonably be expected to have
----
a Material Adverse Effect:
(a) there has been no written environmental audit of any Property
conducted within the past two years by the Sellers, or any member of the
Company Group, which has not been made available to Buyer prior to the date
hereof;
(b) no written notice, request for information, order, complaint or
penalty has been received, and there are no judicial, administrative or
other actions, suits, investigations or proceedings pending or threatened
which allege a violation of any Environmental Law, in each case relating to
any member of the Company Group arising out of any Environmental Law;
(c) each member of the Company Group has all environmental permits
necessary for the operations of that member of the Company Group to comply
with all applicable Environmental Laws and are in compliance with the terms
of such permits and with all other applicable Environmental Laws; and
(d) no member of the Company Group has discharged, disposed of or
released any Hazardous Substances on or at any of the Properties, other
than the discharge, disposal or release of Hazardous Substances commonly
present at or used in the operation and maintenance of shopping centers in
quantities commonly present at shopping centers and in compliance with
Environmental Laws; and
(e) no member of the Company Group owns or leases any property in New
Jersey or Connecticut.
Section 3.18. Compliance with Laws and Court Orders. Except as
disclosed in Schedule 3.18, no member of the Company Group is in violation
----
of any applicable law, rule, regulation, judgment, injunction, order or
decree, except for violations that have not had and would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse
Effect.
Section 3.19. Rent Roll. The rent roll attached hereto as Schedule
3.19 identifying with respect to each tenant: the lease expiration date,
----
percentage and breakpoint amount, current monthly rent, operating
escalations, current past due amount, amount of security deposits is true,
correct and accurate as of the date of such rent roll, except for any such
inaccuracies which, individually or in the aggregate, would not be material
with respect to the relevant Property.
Section 3.20. Disclosure Schedules. (a) At Closing, the Sellers may
revise the Schedules and Exhibit A to this Agreement by delivering revised
Schedules or a revised Exhibit A to Buyer to reflect any matter hereafter
arising or discovered which, if existing or known at the date hereof, would
have been required to be set forth herein or described thereon (but no such
revision shall relieve the Sellers of liability hereunder for breach of a
representation or warranty except as provided in Section 11.04(c) or modify
--------
the representations and warranties for purposes of determining whether any
condition to closing is satisfied). Buyer shall be reasonably satisfied
with any changes to Exhibit A that are inconsistent with the
representations, warranties and covenants contained herein and that would
materially adversely affect Buyer. Any proposed revision to Exhibit A
shall be provided to Buyer no later than five business days prior to
Closing.
(b) The parties acknowledge and agree that (i) the Schedules to this
Agreement may include certain items and information solely for informational
purposes for the convenience of Buyer; (ii) the disclosure by the Sellers of any
matter in the Schedules shall not be deemed to constitute an acknowledgment by
the Sellers that the matter is required to be disclosed by the terms of this
Agreement or that the matter is material; and (iii) if any Schedule hereto
discloses information that is or may be properly disclosed on another Schedule
or Schedules, the matter shall be deemed to have been disclosed in such other
Schedule or Schedules.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Sellers as of the date hereof and
as of the Closing Date that:
Section 4.01. Existence and Power. Buyer is a limited partnership
duly formed, validly existing and in good standing under the laws of the
state of Delaware and has all powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted.
Section 4.02. Authorization. The execution, delivery and performance
by Buyer of this Agreement and the Escrow Agreement and the consummation of
the transactions contemplated hereby and thereby are within the powers
of Buyer and have been duly authorized by all necessary action on the part
of Buyer. This Agreement has been and the Escrow Agreement, upon the
execution thereof, will be, duly executed and delivered by the Buyer. This
Agreement constitutes and the Escrow Agreement, upon execution and delivery
thereof by the parties thereto, will constitute, a valid and binding
agreement of Buyer, enforceable against it in accordance with its terms.
Section 4.03. Governmental Authorization. The execution, delivery
and performance by Buyer of this Agreement and the consummation of the
transactions contemplated hereby require no material action by or in
respect of, or material filing with, any governmental body, agency or
official.
Section 4.04. Noncontravention. The execution, delivery and
performance by Buyer of this Agreement and the Escrow Agreement and the
consummation of the transactions contemplated hereby and thereby do not and
will not (i) violate the organizational documents of Buyer, (ii) assuming
compliance with the matters referred to in Section 4.03, violate any
----
applicable law, rule, regulation, judgment, injunction, order or decree,
(iii) require any consent or other action by any person under, constitute
a default under, or give rise to any right of termination, cancellation or
acceleration of any right or obligation of Buyer or to a loss of any
benefit to which Buyer is entitled under any provision of any agreement or
other instrument binding upon Buyer or (iv) result in the creation or
imposition of any material Lien on any asset of Buyer.
Section 4.05. Financing. Buyer has, or will have prior to the
Closing, sufficient cash, available lines of credit or other sources of
immediately available funds to enable it to make timely payment of the
Preliminary Purchase Price and any other amounts to be paid by it
hereunder.
Section 4.06. Purchase for Investment. Buyer is purchasing the
Shares and the Notes, in the event of a Note Election, for investment for
its own account and not with a view to, or for sale in connection with, any
distribution thereof. Buyer (either alone or together with its advisors)
has sufficient knowledge and experience in financial and business matters
so as to be capable of evaluating the merits and risks of its investment in
the Shares and the Notes, in the event of a Note Election, and is capable
of bearing the economic risks of such investment.
Section 4.07. Litigation. There is no action, suit, investigation or
proceeding pending against, or to the knowledge of Buyer threatened against
or affecting, Buyer before any court or arbitrator or any governmental
body, agency or official which in any manner challenges or seeks to
prevent, enjoin, alter or materially delay the transactions contemplated by
this Agreement.
Section 4.08. Brokers and Finders. There is no investment banker,
broker, finder or other intermediary which has been retained by or is
authorized to act on behalf of Buyer who might be entitled to any fee or
commission upon consummation of the transactions contemplated by this
Agreement.
Section 4.09. Inspections; No Other Representations. Buyer is an
informed and sophisticated purchaser, and has engaged expert advisors,
experienced in the evaluation and purchase of companies such as the Company
Group as contemplated hereunder. Buyer has undertaken such investigation
and has been provided with and has evaluated such documents and information
as it has deemed necessary to enable it to make an informed and intelligent
decision with respect to the execution, delivery and performance of this
Agreement and the Escrow Agreement. Buyer
acknowledges that the Sellers have given Buyer complete and open access to
the key employees, documents and Properties of the Company Group. Buyer
agrees to accept the Shares and the Properties in the condition they are in
on the Closing Date based upon its own inspection, examination and
determination with respect thereto as to all matters, and without reliance
upon any express or implied representations or warranties of any nature
made by or on behalf of or imputed to the Sellers, except as expressly set
forth in this Agreement. BUYER ACKNOWLEDGES AND AGREES THAT, EXCEPT AS
EXPRESSLY SET FORTH HEREIN, THE SELLERS MAKE NO WARRANTY OR REPRESENTATION,
EXPRESS OR IMPLIED OR ARISING BY OPERATION OF LAW, INCLUDING ANY WARRANTY
OF CONDITION, HABITABILITY, MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE OF ANY OF THE ASSETS OF THE COMPANY GROUP OR OF THE PROPERTIES.
Without limiting the generality of the foregoing, Buyer agrees by acquiring
the Shares, that it is accepting the Properties in their financial,
physical and environmental condition existing on the Closing Date. Further,
without limiting the generality of the foregoing, Buyer acknowledges that
the Sellers are not bound by and have no responsibility for any expressed
or implied warranties, statements or representations made or furnished by
any investment banker, broker, agent, employee or other person representing
or purporting to represent the Sellers, unless such warranties, statements
or representations are expressly set forth herein. Further, without
limiting the generality of the foregoing, Buyer acknowledges that, except
as expressly set forth in this Agreement, the Sellers make no
representation or warranty with respect to (i) any projections, estimates
or budgets delivered to or made available to Buyer of future revenues,
future results of operations (or any component thereof), future cash flows
or future financial condition (or any component thereof) of any member of
the Company Group or the future business and operations of any member of
the Company Group, (ii) any information or documents made available to
Buyer or its advisors concerning the financial, physical or environmental
condition of the Properties, the use to which the Properties may be put,
the expenses of operation or maintenance of the Properties, the rental
income or prospective rental income of the Properties, or anything else
related to the Properties, or (iii) any other information or documents made
available to Buyer or its counsel, accountants or advisors with respect to
any member of the Company Group or their respective businesses or
operations, except as expressly set forth in this Agreement. Nothing
contained in this Section shall be deemed to limit the representations,
warranties and covenants expressly contained in this Agreement.
ARTICLE 5
COVENANTS OF THE SELLERS
The Sellers agree that:
Section 5.01. Conduct of the Company Group. (a) Except in connection
with the Restructuring, from the date hereof until the Closing Date, the
Sellers shall cause each member of the Company Group to conduct its
businesses in the ordinary course consistent with past practices and to use
commercially reasonable efforts to preserve intact its business
organizations and relationships with third parties and to keep available
the services of its present officers and employees. Without limiting the
generality of the foregoing, from the date hereof until the Closing Date,
except as disclosed on Schedule 5.01 and except in connection with the
----
Restructuring, the Sellers will not permit any member of the Company Group
to:
(i) adopt or propose any change in its certificate of
incorporation, bylaws or other organizational documents;
(ii) merge or consolidate with any other Person or acquire the
business or operations of any other Person;
(iii) sell or otherwise dispose of the Properties or any
material portion thereof;
(iv) sell or otherwise dispose of any material assets or
property (other than the Properties) except (A) pursuant to existing
contracts or commitments that are listed on the Schedules hereto or
(B) otherwise in the ordinary course consistent with past practices;
or
(v) make any material alterations to the Properties other than
in connection with and in accordance with the development or
improvement programs described on Schedule 5.01(a)(v) hereto; or
----------
(vi) agree or commit to do any of the foregoing.
Except for actions taken in connection with the Restructuring and except
for the transactions contemplated hereby, the Sellers will not take, and
will not permit any member of the Company Group to take, any action that
would make any representation or warranty of the Sellers hereunder
inaccurate in any material respect at the Closing Date.
(b) Notwithstanding anything to the contrary contained herein, or in
any budget with respect to any Property, subject to the requirements of
Section 2.07, none of the Sellers nor any member of the Company Group will
----
be required to make any repairs, replacements or improvements for existing
conditions at any Property disclosed in any engineering report or in any of
other written information made available to Buyer on or prior to the date
hereof during the period from the date hereof to the Closing Date. If any
such repairs, replacements or improvements are made by any member of the
Company Group because such repairs, replacements or improvements (i) are
required under legally binding agreements, (ii) are necessary to preserve
the value of, or prevent further deterioration to, the relevant Property
or (iii) have been requested to be made by Buyer, then Buyer shall
reimburse the Sellers at Closing for the actual cost of such repairs,
replacements or improvements.
Section 5.02. Tenant Leases. Notwithstanding anything to the
contrary contained herein and except for actions taken in connection with
the Restructuring and pursuant to Section 2.07, the Sellers agree that from
----
the date hereof until the Closing Date:
(a) Without Buyer's consent, Sellers will not, and will not permit
any member of the Company Group to, terminate any Tenant Lease, except by
reason of a material default by the tenant thereunder or as required
thereunder or by applicable law. Buyer agrees that its consent under this
paragraph shall not be unreasonably withheld, delayed or conditioned, and
shall be deemed given if Buyer does not, within five business days after
Buyer's receipt of a request for such consent, give notice to the Sellers
stating that such consent is denied, the reasons for such denial and the
conditions (if any) that would need to be complied with for such consent to
be given (and if such conditions are complied with such consent shall be
deemed given). Any Tenant Lease terminated by the Sellers or the Company
Group pursuant to this paragraph shall be deemed deleted from the
applicable Schedule 3.10; and
----
(b) Except for entering into the pending Tenant Leases disclosed in
Schedule 3.10 on the terms described therein, without Buyer's consent, the
----
Sellers will not, and will not permit any member of the Company Group to,
enter into any new Tenant Lease, for any Property. Buyer's consent under
this paragraph shall not be unreasonably withheld, delayed or conditioned
and shall be deemed given if Buyer does not, within five business days
after Buyer's receipt of a request for such consent (which request shall
include the identity of the proposed tenant, a summary of the proposed
lease terms, including term, options to renew, options to cancel, rents,
rent concessions, improvement allowances, improvement costs, etc., in
reasonable detail and a statement of the amount of any brokerage commission
payable with respect thereto) give notice to the Sellers stating that such
consent is denied, the reasons for such denial
and the conditions (if any) that would need to be complied with for such
consent to be given (and if such conditions are complied with, such consent
shall be deemed given). Any new lease made by the Sellers or the Company
Group pursuant to this paragraph and any related real estate brokerage
agreement shall be deemed added to the applicable Schedule 3.10.
----
Section 5.03. Access to Properties and Information; Confidentiality.
(a) From the date hereof until the Closing Date, the Sellers will (i) give,
and will cause each member of the Company Group to give, Buyer, its
counsel, financial advisors, auditors and other authorized representatives
reasonable access to the Properties, offices, books and records of (and
accounting work papers relating to) the Company Group and to the books and
records of the Sellers relating to the Company Group, (ii) furnish, and
will cause each member of the Company Group to furnish, to Buyer, its
counsel, financial advisors, auditors and other authorized representatives
such financial and operating data and other information relating to any
member of the Company Group as such persons may reasonably request and
(iii) instruct the employees, counsel and financial advisors of the Sellers
and any member of the Company Group to cooperate with Buyer in its
investigation of any member of the Company Group, except, in each case,
where compliance by the Sellers with these provisions would result in the
violation of a confidentiality restriction with a third-party or would
jeopardize the availability of the attorney-client privilege to any member
of the Company Group. Any investigation pursuant to this Section 5.03
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shall be conducted in such manner as not to interfere unreasonably with the
conduct of the business of the Sellers or the Company Group and shall be
limited to matters relating to this Agreement or the transactions
contemplated hereby. Notwithstanding the foregoing, Buyer shall not
conduct any invasive tests or inspections or any tests for the presence of
Hazardous Substances without the consent of the Sellers. Also,
notwithstanding the foregoing, Buyer shall not have access to personnel
records of the Company Group relating to individual performance or
evaluation records, medical histories or other information which in the
Sellers' good faith opinion is sensitive or the disclosure of which could
subject the Company Group to risk of liability.
(b) On and after the Closing Date, the Sellers will afford promptly
to Buyer and its agents reasonable access to their books of account,
financial and other records (including, without limitation, accountant's
work papers), information, employees and auditors to the extent necessary
or useful for Buyer in connection with the performance of any of its
obligations hereunder or in connection with any audit, investigation,
dispute or litigation or any other reasonable business purpose relating to
any member of the Company Group; provided that any such access by Buyer
shall not unreasonably interfere with the conduct of the business of the
Sellers. Buyer shall bear all of the out-of-pocket costs and expenses
(including, without limitation, attorneys' fees, but excluding
reimbursement for general overhead, salaries and employee benefits)
reasonably incurred in connection with the foregoing.
Section 5.04. Notices of Certain Events. The Sellers shall promptly
notify Buyer of:
(a) any notice or other communication from any Person alleging that
the consent of such Person is or may be required in connection with the
transactions contemplated by this Agreement;
(b) any notice or other communication from any governmental or
regulatory agency or authority in connection with the transactions
contemplated by this Agreement; and
(c) any actions, suits, claims, investigations or proceedings
commenced relating to the Seller or any member of the Company Group that,
if pending on the date of this Agreement, would have been required to have
been disclosed pursuant to Section 3.12.
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Section 5.05. Restructuring. The Sellers shall consummate the
Restructuring at or prior to the Closing Date.
Section 5.06. Resignations. The Sellers will deliver to Buyer at the
Closing the resignations of all officers and directors of the members of
the Company Group.
Section 5.07. Estoppel Certificates. As soon as practicable after
the date of this Agreement, the Sellers shall, or shall cause the members
of the Company Group to, distribute to anchor tenants, any party to a
▇▇▇▇▇, any ground lessor, any other major contractors for Northridge
Fashion Center and Regency Square Mall and each other individual tenant
which under its lease occupies 5,000 or more square feet of floor area at
the Properties under Tenant Leases to which any member of the Company Group
is a party estoppel certificates, in Sellers' customary form, which shall
be reasonably satisfactory to Buyer, and shall ask such parties to execute
and return such estoppel certificates to the appropriate member of the
Company Group prior to the Closing. The Sellers shall have no further
obligation to obtain any such estoppel certificates, and the receipt of
such estoppel certificates shall not be considered a condition to the
closing of the transactions contemplated by this Agreement.
If, prior to Closing, the Sellers receive any such estoppel
certificates, the Sellers shall promptly deliver a copy of such estoppel
certificates to Buyer. If the facts set forth in any estoppel certificate
differ from those set forth in the Sellers' representations and warranties
as set forth in this Agreement, then, after the Closing, the Sellers'
representations and warranties shall be deemed amended to conform to the
facts stated in such estoppel certificate.
Section 5.08. Title Insurance and Surveys. Upon the written request
of Buyer, the Sellers shall cooperate (including, without limitation,
through the delivery by Sellers of customary documents to the Title
Companies (as defined below)) with Buyer to cause the title insurance
company that issued the Title Reports: Chicago Title Insurance Company,
National Business Unit, Dollar, TX (or any other nationally recognized
title company selected by Buyer and reasonably acceptable to Sellers) (the
"TITLE COMPANIES") and the surveyors that issued the surveys (or other
surveyors selected by Buyer) (the "SURVEYORS") to issue current title
insurance policies as described in Section 10.02 and/or current surveys
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certified to Buyer. All costs for such current surveys, and all premiums
for and costs related to title insurance obtained by Buyer shall be paid by
Buyer.
Section 5.09. Certain Accounts and Agreements. The Sellers shall
cause all intercompany balances (other than the Receivables Amount) between
Parent or its Affiliates (other than members of the Company Group), on the
one hand, and members of the Company Group, on the other hand, to be paid
in full on or prior to the Closing. The Sellers shall cause all contracts
or agreements between any members of the Company Group, on the one hand,
and any of the Sellers or their Affiliates (other than members of the
Company Group), on the other hand, to be terminated on or prior to the
Closing.
ARTICLE 6
COVENANTS OF BUYER
Buyer agrees that:
Section 6.01. Confidentiality. Prior to the Closing Date and after
any termination of this Agreement, Buyer and its Affiliates will hold, and
will use their best efforts to cause their respective officers, directors,
employees, accountants, counsel, lenders, consultants, advisors and agents
to hold, in confidence, unless compelled to disclose by judicial or
administrative process or by other requirements of law, all confidential
documents and information concerning any of the Sellers, the Companies or
the Company Subsidiaries furnished to Buyer or its Affiliates in connection
with the transactions contemplated by this Agreement (the "CONFIDENTIAL
INFORMATION"), except to the extent that such information can be shown to
have been (i) previously known on a nonconfidential basis by Buyer, (ii) in
the public domain through no fault of Buyer or (iii) later lawfully
acquired by Buyer from sources other than the Sellers, the Companies or the
Company Subsidiaries; provided that Buyer may disclose such Confidential
Information to its officers, directors, employees, accountants, counsel,
lenders, consultants, advisors and agents in connection with the
transactions contemplated by this Agreement so long as such persons are
informed by Buyer of the confidential nature of such information and are
directed by Buyer to treat such information confidentially. Buyer shall be
responsible for any failure to treat the Confidential Information
confidentially by such persons. The obligation of Buyer and its Affiliates
to hold Confidential Information in confidence shall be satisfied if they
exercise the same care with respect to such information as they would take
to preserve the confidentiality of their own similar information. If this
Agreement is terminated, Buyer and its Affiliates will, and will use their
best efforts to cause their respective officers, directors, employees,
accountants, counsel, consultants, advisors and agents to, destroy or
deliver to the Sellers, upon request, all documents and other materials,
and all copies thereof, obtained by Buyer or its Affiliates or on their
behalf from the Sellers, the Companies or the Company Subsidiaries in
connection with this Agreement that are subject to such confidence.
Section 6.02. Access. Buyer will cause each member of the Company
Group, on and after the Closing Date, to afford promptly to the Sellers and
its agents reasonable access to (a) their properties, books, records (and
accounting work papers relating to), employees and auditors to the extent
necessary to permit the Sellers to determine any matter relating to its
rights and obligations hereunder or to any period ending on or before the
Closing Date or to the obligations of the Sellers pursuant to Section 2.07;
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provided that any such access by the Sellers shall not unreasonably
interfere with the conduct of the business of Buyer and (b) the Properties
subject to the provisions of Section 2.07 for the purposes of performing
----
the obligations of the Sellers pursuant to Section 2.07. The Sellers will
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hold, and will direct their officers, directors, employees, accountants,
counsel, consultants, advisors and agents to hold, in confidence, unless
compelled to disclose by judicial or administrative process or by other
requirements of law, all confidential documents and information concerning
any member of the Company Group provided to it pursuant to this Section.
Sellers shall be responsible for any failure to treat such documents and
information confidentially by such persons. The obligation of Sellers and
their respective Affiliates to hold such documents and information in
confidence shall be satisfied if they exercise the same care with respect
to such information as they would take to preserve the confidentiality of
their own similar information.
Section 6.03. Trademarks; Tradenames. After the Closing, Buyer shall
not permit any member of the Company Group to use any of the marks or names
set forth on Schedule 6.03.
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ARTICLE 7
COVENANTS OF BUYER AND SELLER
Buyer and the Sellers agree that:
Section 7.01. Commercially Reasonable Efforts; Further Assurances.
Subject to the terms and conditions of this Agreement, the Sellers and
Buyer will use their commercially reasonable efforts to take, or cause to
be taken, all actions and to do, or cause to be done, all things necessary
or desirable under applicable laws and regulations to consummate the
transactions contemplated by this Agreement. The Sellers and Buyer agree,
and the Sellers, prior to the Closing, and Buyer, after the Closing, agree
to cause each member of the Company Group, to execute and deliver such
other documents, certificates, agreements and other writings and to take
such other actions as may be necessary or desirable in order to consummate
or implement expeditiously the transactions contemplated by this Agreement.
Section 7.02. Certain Filings. The Sellers and Buyer shall cooperate
with one another (i) in determining whether any action by or in respect of,
or filing with, any governmental body, agency, official or authority is
required, or any actions, consents, approvals or waivers are required to be
obtained from parties to any material contracts, in connection with the
consummation of the transactions contemplated by this Agreement and (ii) in
taking such actions or making any such filings, furnishing information
required in connection therewith and seeking timely to obtain any such
actions, consents, approvals or waivers. The Sellers and Buyer shall
provide to the other copies of any filings made pursuant to this Section
7.02 with respect to this Agreement or the transactions contemplated
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hereby.
Section 7.03. Public Announcements. To the extent practicable, the
parties agree to consult with each other, before issuing any press release
or making any public statement with respect to this Agreement or the
transactions contemplated hereby and, except as may be required by
applicable law or any listing agreement with any national securities
exchange, will not issue any such press release or make any such public
statement prior to such consultation.
Section 7.04. Brokers. The Sellers shall pay the fees of any
investment banker, broker, finder or other intermediary which has been
retained by or is authorized to act on behalf of any of them or any member
of the Company Group who is entitled to any fee or commission in connection
with the transactions contemplated by this Agreement. The Buyer shall pay
the fees of any investment banker, broker, finder or other intermediary
which has been retained by or is authorized to act on behalf of it or its
Affiliates who is entitled to any fee or commission in connection with the
transactions contemplated by this Agreement.
ARTICLE 8
TAX MATTERS
Section 8.01. Tax Definitions. The following terms, as used herein,
have the following meanings:
"BASKET" means the amount at any time equal to (a) $100,000 plus the
liabilities for Taxes, if any, provided for on the Closing Balance Sheet,
minus (b) any reductions (in the aggregate) made pursuant to Section 8.06
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hereof.
"CODE" means the United States Internal Revenue Code of 1986, as
amended.
"FEDERAL TAX" means any Tax imposed under Subtitle A of the Code.
"FINAL DETERMINATION" shall mean (i) with respect to Federal Taxes, a
"determination" as defined in Section 1313(a) of the Code or execution of
an Internal Revenue Service Form 870AD and, with respect to Taxes other
than Federal Taxes, any final determination of liability in respect of a
Tax that, under applicable law, is not subject to further appeal, review or
modification through proceedings or otherwise (including the expiration of
a statute of limitations or a period for the filing of claims for refunds,
amended returns or appeals from adverse determinations) or (ii) with
respect to any Tax attributable to an item disallowed or adjusted by a
Taxing Authority, the payment of such Tax by the person responsible
therefore under applicable law; provided that such responsible party
determines that no action should be taken to recoup such payment and the
other party agrees.
"POST-CLOSING TAX PERIOD" means any Tax Period beginning after the
close of business on the Closing Date and that portion of any Straddle
Period (as defined below) beginning after the close of business on the
Closing Date.
"PRE-CLOSING TAX PERIOD" means any Tax Period ending on or before the
close of business on the Closing Date and that portion of any Straddle
Period ending on or before the close of business on the Closing Date.
"SELLER GROUP" means, with respect to Federal Taxes, the affiliated
groups of corporations (as defined in Section 1504(a) of the Code) of which
any of the Companies or the Company Subsidiaries is a member and, with
respect to state income or franchise Taxes, any of the consolidated,
combined or unitary groups of which the Companies or the Company
Subsidiaries is a member.
"TAX" means any tax or similar charge, together with any interest,
penalty, addition to tax or additional amount imposed by any governmental
authority (domestic or foreign) responsible for the imposition of any such
tax (a "TAXING AUTHORITY").
"TAX ASSET" means any net operating loss, net capital loss, investment
tax credit, foreign tax credit, charitable deduction or any other credit or
tax attribute which could reduce Taxes (including, without limitation,
deductions and credits related to alternative minimum Taxes).
"TAX PERIOD" means, in respect of a particular Tax, the taxable year
or other period for which Tax is imposed.
"TAX SHARING AGREEMENT" means the tax sharing agreement between the
members of the Company Group currently in effect.
Section 8.02. Tax Representations. The Sellers represent and warrant
to Buyer as of the date hereof and as of the Closing Date that, except as
set forth in the Base Balance Sheet (including the notes thereto) or on
Schedule 8.02, (i) all material Tax returns, statements, reports and forms
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required to be filed with any Taxing Authority (collectively, the
"RETURNS") on or before the Closing Date (taking into account any extension
of time to file) by, or on behalf of, any Company or any Company Subsidiary
have been filed or will be filed in accordance with all applicable laws;
(ii) all such Returns are true, complete and correct in all material
respects; (iii) all Taxes shown as due and payable on such Returns have
been or will be paid prior to the Closing Date; (iv) there are no
outstanding waivers extending the statutory period of limitations
applicable to any Return required to be filed by any Company or any Company
Subsidiary; (v) the charges, accruals and liabilities for Taxes with
respect to the Companies and the Company Subsidiaries reflected on the Base
Balance Sheet are adequate to cover the Tax liabilities accruing through
the date thereof; (vi) there is no action, suit, proceeding, audit or claim
by any Taxing Authority now pending (or to the Sellers' knowledge proposed)
against or with respect to the Company or any Company Subsidiary; (vii) no
deficiency for any Taxes has been assessed with respect to any Company or
any Company Subsidiary that has not been abated, paid in full or contested;
(viii) no consent has been filed relating to any member or prior member of
the Seller Group pursuant to Section 341(f) of the Code; (ix) none of the
Companies nor the Company Subsidiaries was a member of an affiliated group
(as defined in Section 1504(a) of the Code) except for the affiliated group
of which it is now a member; (x) with respect to state income or franchise
taxes, no Company or Company Subsidiary has been a member of a
consolidated, combined or unitary group other than the group comprising the
group of which it is now a member (no member of which is not a member of
the Seller Group); (xi) prior to the Closing, the Sellers shall have caused
to be eliminated (a) any excess loss account which a member of the Company
Group has in the stock of a Company Subsidiary and (b) any item of a member
of the Company Group which arose as a result of an intercompany transaction
or deferred intercompany transaction in a Pre-Closing Tax Period; and (xii)
the combined earnings and profits of the Companies accumulated for all Tax
Periods through and including the Tax Period ending at the close of
business on the Closing Date (disregarding any Company having net negative
accumulated earnings and profits) will be not more than $5,000,000 (reduced
by any earnings and profits of a Company Subsidiary attributable to a
Taxable Period in which such Company Subsidiary was not a member of the
Company Group, whether or not such Company Subsidiary is a subsidiary of a
Company having negative earnings and profits).
Section 8.03. Tax Covenants. (a) Buyer covenants that it will not
cause or permit any Company, any Company Subsidiary or any Affiliate of
Buyer (i) to take any action on the Closing Date other than in the ordinary
course of business, including but not limited to the distribution of any
dividend or the effectuation of any redemption that could give rise to any
tax liability of the Seller Group or any loss of the Sellers or the Seller
Group under this Agreement (other than as provided in Section 2.03(c)),
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(ii) to make any election or deemed election under Section 338 of the Code
(or any comparable election under state, local or foreign law), or (iii) to
make or change any tax election, amend any Return or take any position on
any Return, take any action, omit to take any action or enter into any
transaction that results in any increased Tax liability or reduction of any
Tax Asset of the Seller Group in respect of any Pre-Closing Tax Period;
provided that the Sellers acknowledge that Buyer or its assignee's election
to be taxed as a REIT pursuant to Subchapter M of the Code, and the
Companies and the Company Subsidiaries' treatment as Qualified REIT
Subsidiaries, shall not be such an action, or omission to act, which
results in an increased Tax liability or reduction of any Tax Asset of a
Pre-Closing Period. Buyer agrees that the Sellers will have no liability
for any Tax resulting from any action, referred to in the preceding
sentence, of any Company, Company Subsidiary, Buyer or any Affiliate of
Buyer on the Closing Date, and agrees to indemnify and hold harmless the
Sellers and their Affiliates against any such liability or reduction. The
Sellers agree to give prompt notice to Buyer of the assertion of any claim,
or the commencement of any action or proceeding, in respect of which
indemnity may be sought under this Section 8.03(a). Buyer may participate
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in and assume the defense of any such suit, action or proceeding at its own
expense. If Buyer assumes such defense, the Sellers shall have the right
(but not the duty) to participate in the defense thereof and to employ
counsel, at their own expense, separate from the counsel employed by Buyer.
Whether or not the Sellers choose to defend
or prosecute any claim, the parties hereto shall cooperate in the defense
or prosecution thereof.
(b) Buyer shall promptly pay or cause to be paid to the Sellers all
refunds of Taxes and interest thereon (to the extent in excess of the
amount recorded in the Final Stockholders' Equity Amount) received by
Buyer, any Affiliate of Buyer, any Company, or any Company Subsidiary
attributable to Taxes imposed on the Sellers, any Company or any Company
Subsidiary (or any predecessor or Affiliate of the Sellers) with respect to
any Pre-Closing Tax Period. The Sellers shall be subrogated to any rights
of Buyer, any Company or any Company Subsidiary against third parties with
respect to Taxes paid by any Seller or for which the Sellers otherwise are
responsible under this Article 8.
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(c) All transfer, documentary, sales, use, stamp, registration and
similar taxes and fees (including any penalties and interest) incurred in
connection with this Agreement and the transactions contemplated hereby
shall be borne and paid by the Sellers and the Sellers will, at their own
expense, file all necessary Returns and other documentation with respect to
all such taxes and fees, and, if required by applicable law, Buyer will,
and will cause its Affiliates to, join in the execution of any such Returns
and other documentation.
Section 8.04. Termination of Existing Tax Sharing Agreements. Any
and all existing Tax sharing agreements between any Company and any member
of the Seller Group (including, without limitation, the Tax Sharing
Agreement) shall be terminated as of the close of business on the Closing
Date. After such date none of the Companies, the Company Subsidiaries, the
Sellers nor any Affiliate of the Sellers shall have any further rights or
liabilities thereunder. This Agreement shall be the sole Tax sharing
agreement relating to any Company or any Company Subsidiary for all Pre-
Closing Tax Periods.
Section 8.05. Tax Returns and Cooperation on Tax Matters. (a) Buyer
and the Sellers agree to furnish or cause to be furnished to each other,
upon request, as promptly as practicable, such information (including
access to books and records) and assistance (including making its employees
available on a mutually convenient basis) relating to the Companies and the
Company Subsidiaries as is reasonably necessary for any determination with
respect to Taxes, including the filing of any Return, the preparation for
any audit, and the prosecution or defense of any claim, suit or proceeding
relating to Taxes. Buyer and the Sellers agree to retain or cause to be
retained all books and records pertinent to the Companies and the Company
Subsidiaries until the applicable period for assessment under applicable
law (giving effect to any and all extensions or waivers) has expired, and
to abide by or cause the abidance with all record retention agreements
entered into with any Taxing Authority. Buyer agrees to give the Sellers
reasonable notice prior to discarding or destroying any such books and
records relating to Tax matters and, if the Sellers so request, Buyer shall
allow the Sellers to take possession of such books and records. Buyer and
the Sellers shall cooperate with each other in the conduct of any audit or
other proceedings involving the Seller Group for any Tax purposes and each
shall execute and deliver such powers of attorney and other documents as
are necessary to carry out the intent of this subsection. Any information
obtained pursuant to Section 8.05 shall be kept confidential, except as may
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be otherwise necessary in connection with the filing of Returns or claims
for refund or in conducting an audit or other proceeding.
(b) Buyer shall prepare and timely file or cause the Companies and
the Company Subsidiaries to prepare and timely file all Returns relating to
the Companies and any of the Company Subsidiaries that are due (taking into
account any applicable extension period) after the Closing Date. Returns
required to be filed by Buyer in respect of a Pre-Closing Period shall be
prepared on a basis consistent with those prepared for prior tax
years unless a different treatment of any item is required by an
intervening change in law. Buyer shall furnish the Sellers (and their
representatives) with a copy of any Return prepared by it for a Pre-Closing
Period at least 20 business days before the anticipated filing date thereof
and, in preparing such Return, shall accept any comments made by the
Sellers with respect to any issue or item which could give rise to a claim
for indemnification; provided that this sentence shall not apply in respect
of any comments for which the Sellers do not provide Buyer, if so requested
in writing to do so, with an opinion of counsel to the effect that there is
a reasonable basis for the Sellers' comments.
Section 8.06. Indemnification by Seller. (a) The Sellers hereby
indemnify Buyer against and agree to hold it harmless from any (i) Tax
imposed on any Company or any Company Subsidiary and (ii) out-of-pocket
costs and expenses (including, without limitation, reasonable expenses of
investigation and attorneys' fees and expenses), arising out of or incident
to the imposition, assessment or assertion of any Tax indemnified under
Section 8.06(a)(i), in each case with respect to any Pre-Closing Tax Period
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and in each case incurred or suffered by Buyer, any of its Affiliates or,
effective for any Post-Closing Tax Period, any Company, or any Company
Subsidiary (the sum of 8.06(a)(i) and 8.06(a)(ii) being referred to as a
---------- -----------
"LOSS"); provided that the Sellers shall have no liability for the payment
of any Loss attributable to or resulting from (i) any action described in
Section 8.03(a) hereof relating to any breach by Buyer, or its Affiliates
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of an obligation under this Agreement, (ii) any transaction occurring after
the close of business on the Closing Date or (iii) a reduction in any Tax
Asset of any member of the Seller Group which would otherwise be available
to the Buyer for a Post-Closing Tax Period; provided further, that the
Sellers shall have no obligation to make any payment to Buyer pursuant to
this Section 8.06(a) until the amount of all claims arising pursuant hereto
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in the aggregate exceeds the Basket, in which case Buyer shall be entitled
to indemnity for the full amount of all claims in excess of the Basket.
(b) Any Taxes for a Tax Period beginning before the Closing Date and
ending after the Closing Date (a "STRADDLE PERIOD") shall be apportioned
between the Pre-Closing Tax Period and the Post-Closing Tax Period on the
basis of the actual operation of the Companies and the Company
Subsidiaries. Each such Pre-Closing Tax Period and Post-Closing Tax Period
shall be deemed to be a Tax Period subject to the provisions of Article 8.
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(c) If as a result of an adjustment the Sellers make a payment to any
Taxing Authority in respect of a Tax of any member of the Seller Group with
respect to any Pre-Closing Tax Period, then Buyer shall promptly pay to the
Sellers an amount equal to such payment made by the Sellers, provided, that
any such payment by Buyer shall not exceed an amount equal to the positive
balance, if any, in the Basket.
(d) The Basket shall be reduced by (i) the amount of any claim of
Buyer under Section 8.06(a) hereof that is not paid in whole or part by the
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Sellers solely by reason of there being a positive balance in the Basket,
and (ii) the amount of any payment of Buyer to the Sellers under Section
8.06(c) hereof.
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(e) Any payment by the Sellers pursuant to this Section 8.06 shall be
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made not later than 30 business days after receipt by the Sellers of
written notice from Buyer stating that any Loss has been paid by Buyer, any
of its Affiliates or, effective upon the Closing, any Company or any
Company Subsidiary and the amount thereof and of the indemnity payment
requested; provided that the Sellers shall not be required to make any
payment hereunder earlier than five days before it is due to the
appropriate Taxing Authority. In the case of a Tax that is contested in
accordance with the provisions of Section 8.06(f), payment of such Tax to
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the appropriate Taxing Authority shall not be considered due earlier than
the date of Final Determination with respect to such Tax.
(f) If any claim or demand for Taxes in respect of which indemnity
may be sought pursuant to this Section 8.06 is asserted in writing against
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Buyer, any of its Affiliates or, effective upon the Closing, any Company or
Company Subsidiary, Buyer shall notify the Sellers of such claim or demand
within 10 business days of receipt thereof, or such earlier time that would
allow the Sellers to timely respond to such claim or demand (but no failure
to so notify Sellers shall preclude indemnification hereunder except to the
extent Sellers were prejudiced by such failure), and shall give the Sellers
such information with respect thereto as the Sellers may reasonably
request. The Sellers may discharge, at any time, their indemnification
obligation under this Section 8.06 by paying to Buyer the amount of the
----
applicable Loss, calculated on the date of such payment. The Sellers may,
at their own expense, participate in and, upon notice to Buyer, assume and
control the defense of any such claim, suit, action, litigation or other
proceeding (including any Tax audit, other than a claim under Section
8.06(i), in which event Sellers may, at their own expense, participate in
the defense of such claim). Buyer shall empower by appropriate powers of
attorney such persons as may be designated by the Sellers from time to time
as its representatives in any such proceeding. If the Sellers assume such
defense, Buyer shall have the right (but not the duty) to participate in
the defense thereof and to employ counsel, at its own expense, separate
from the counsel employed by the Sellers. Whether or not the Sellers choose
to defend or prosecute any claim, Buyer shall use reasonable efforts to
mitigate any Loss and all of the parties hereto shall cooperate in the
defense or prosecution thereof.
(g) The Sellers shall not be liable under this Section 8.06 for (i)
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any settlements effected, without the Sellers' prior written consent;
provided that the Sellers have not affirmatively abandoned the contest of
any such Tax or (ii) or resulting from any claim, suit, action, litigation
or proceeding in which the Sellers were not permitted an opportunity to
participate.
(h) Any amount paid to or by the Sellers in respect of warranties or
indemnities under this Agreement or the Related Agreements shall be treated
as an adjustment to the Purchase Price.
(i) Prior to the Closing, the Sellers shall cause KPMG Peat Marwick
to prepare a report (which shall be reasonably acceptable to Buyer) setting
forth the current and accumulated earnings and profits, if any, of the
Company Group (the "E&P REPORT"). The cost of preparing the E&P Report
shall be borne by the Sellers. As part of the Restructuring, the Sellers
shall take such actions as are reasonably necessary to ensure that the
combined earnings and profits of the Companies accumulated for all Tax
Periods through and including the Tax Period ending at the close of
business on the Closing Date (disregarding any Company having net negative
accumulated earnings and profits) will be not more than $5,000,000 (reduced
by any earnings and profits of a Company Subsidiary attributable to a Tax
Period in which such Company Subsidiary was not a member of the Company
Group, whether or not such Company Subsidiary is a subsidiary of a Company
having negative earnings and profits). The Sellers hereby indemnify Buyer
and General Growth Properties, Inc. ("GGPI"), which shall be a third party
hereof notwithstanding Section 13.05, against any Taxes imposed on Buyer,
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GGPI, any Affiliates of GGPI or any Company or Company Subsidiary as a
result of the combined earnings and profits of the Companies accumulated
for all Tax Periods through and including the Tax Period ending at the
close of business on the Closing Date (disregarding any Company having net
negative accumulated earnings and profits) exceeding $5,000,000 (reduced by
any earnings and profits of a Company Subsidiary attributable to a Tax
Period in which such Company Subsidiary was not a member of the Company
Group, whether or not such Company Subsidiary is a subsidiary of a Company
having negative earnings and profits). In no event, however, shall the
Sellers' liability under this Section 8.06(i) and Section 8.02(xii) exceed
-------
$25,000,000.
(j) This Article 8 shall be the sole provision governing Tax matters
-
and indemnities therefor under this Agreement, except as and to the extent
provided in Section 11.06.
-----
Section 8.07. Survival. Notwithstanding anything in this Agreement
to the contrary, the provisions of this Article shall survive for thirty
days following the full period of all statutes of limitations (giving
effect to any waiver, mitigation or extension thereof).
Section 8.08. Withholding. On or prior to Closing, the Sellers shall
submit an application for a withholding tax certificate and shall provide
Buyer with notice thereof, as provided for in Treasury regulation
(S)1.1445-1(c)(2)(i)(b). Buyer shall withhold 10% of the Purchase Price
allocated to the Shares hereunder, as paid from time to time, pursuant to
Section 1445 of the Code and deposit such amount in an interest-bearing
escrow account to be established by the Sellers and Buyer with a financial
institution designated by the Sellers. On the 20th day following receipt of
a final determination by the Internal Revenue Service with respect to the
Seller's application for the withholding tax certificate, the amount of
such escrow account shall be distributed as follows: (i) to the Internal
Revenue Service, an amount equal to the amount set forth in such final
determination; and (ii) to the Sellers, an amount equal to the balance of
the escrow account (including any accrued interest) after the distribution
provided for in (i) above.
ARTICLE 9
Employee Benefits
Section 9.01. Employment of Company Group Employees; Service
Recognition. (a) Buyer or its Affiliates may, but shall not be obligated
to, offer to employ any or all employees of the Company Group ("EMPLOYEES")
on such terms as it deems advisable. The Sellers shall cause all Employees
of the Company Group to be terminated immediately prior to the Closing
Date.
(b) Buyer and its Affiliates shall, with respect to Employees who are
employed by Buyer or its Affiliates following Closing, recognize service
with the Sellers, the Company Group and their Affiliates as service for all
purposes under any benefit plan maintained by Buyer or its Affiliates in
which such Employees are otherwise eligible to participate, except for
purposes of benefit accrual under any defined benefit pension plan. Buyer
and its Affiliates shall credit the dollar amount of all expenses incurred
by such Employees and their respective eligible dependents during the
applicable plan year in which occurs the Closing Date, to the extent
relevant, for purposes of satisfying such plan year's deductible and co-
payment limitations under any applicable plan in which such Employees
participate after the Closing Date.
(c) Notwithstanding the foregoing, this Section 9.01 shall not apply
----
to any Employee included in a unit of employees covered by a collective
bargaining agreement.
Section 9.02. Stay Sell Agreement. (a) Notwithstanding any
termination of an Employee pursuant to Section 9.01, Buyer shall assume,
----
and shall hold the Sellers and their Affiliates harmless from, all
liability for "Severance Pay", within the meaning of the Stay Sell
Agreements or any other severance plan or policy of any Company, with
respect to any Employee who is employed by Buyer or its Affiliates in any
capacity at any time during the period commencing on the 30th day after the
Closing Date and ending on the second anniversary of the Closing Date (a
"RETAINED EMPLOYEE"). On or prior to the 30th day after the Closing Date,
Buyer shall provide Parent with a written list of those Employees
covered by the Stay Sell Agreements who Buyer does not intend to treat as a
Retained Employee.
(b) Except as provided in paragraph 9.02(a) of this Section, Parent
-------
or its Affiliate shall retain or assume, and shall hold Buyer and its
Affiliates harmless from, all liabilities arising under the Stay Sell
Agreements or any other severance plan or policy of any Company or any
other member of the Company Group.
Section 9.03. Annual Bonuses. The pro rata portion of each Retained
Employee's annual bonus and vacation pay, if any, earned through the
Closing Date for the calendar year in which the Closing Date occurs shall
be calculated by the Sellers as soon as practicable after the Closing Date,
and reflected as a liability on the Closing Balance Sheet.
Section 9.04. No Third-Party Beneficiaries. The provisions of this
Article shall not create any rights in any Employee or any other person who
is not a party to this Agreement, and no such person shall have any rights
as a third party beneficiary hereof.
ARTICLE 10
Conditions to Closing
Section 10.01. Conditions to Obligations of Buyer and Sellers. The
obligations of Buyer and the Sellers to consummate the Closing are subject
to the satisfaction of the following conditions:
(a) No provision of any applicable law or regulation and no judgment,
injunction, order or decree shall prohibit the consummation of the Closing.
(b) All actions by or in respect of or filings with any governmental
body, agency, official or authority required to permit the consummation of
the Closing shall have been taken, made or obtained, except for any such
actions or filings the failure to take, make or obtain would not reasonably
be expected to have a Material Adverse Effect.
(c) No termination of this Agreement by the Sellers or Buyer shall
have occurred pursuant to any other provision hereof.
Section 10.02. Conditions to Obligation of Buyer. The obligation of
Buyer to consummate the Closing is subject to the satisfaction of the
following further conditions:
(a) (i) The Sellers shall have performed in all material respects all
of their obligations hereunder required to be performed by them on or prior
to the Closing Date, (ii) the representations and warranties of the Sellers
contained in this Agreement (without regard to any materiality or Material
Adverse Effect qualifications contained therein) shall be true at and as of
the Closing Date, as if made at and as of such date, with only such
exceptions as are related to or contemplated by the Restructuring or would
not in the aggregate have a Material Adverse Effect and (iii) Buyer shall
have received a certificate signed by a senior officer of each of the
Sellers to the foregoing effect.
(b) The Sellers shall have received all consents, authorizations or
approvals from the governmental agencies referred to in Section 3.03, in
----
each case in form and substance reasonably satisfactory to Buyer, and no
such consent, authorization or approval shall have been revoked.
(c) The Restructuring shall have been consummated on or prior to the
Closing.
(d) The Title Companies shall be willing to issue to Buyer (or, at
Buyer's option, the appropriate member of the Company Group), on and
effective as of the Closing Date, a title insurance policy or policies
(each a "TITLE POLICY") on the 1992 ALTA form owner's policy insuring Buyer
(or, at Buyer's option, the appropriate member of the Company Group) as to
title to each of the Properties as described in the Existing Title Reports
and as to valid easement rights to any property covered by a party to a
▇▇▇▇▇ (i) subject to no exclusions or exceptions other than Closing
Permitted Liens, (ii) limiting the "rights of parties in possession"
exception to "rights of tenants as tenants only" without options to
purchase, and (iii) including comprehensive, zoning 3.1 (with parking),
non-imputation, tax parcel, survey, contiguity, creditor's rights, access,
fairway (Boulevard Mall only), and utility facility endorsements, to the
extent available and appropriate. The aggregate amount of the Title
Policies shall be equal to the Preliminary Purchase Price. For purposes
hereof, "CLOSING PERMITTED LIENS" means:
(i) any and all Ground Leases, Tenant Leases, ▇▇▇▇▇▇, Management
Agreements, Brokerage Agreements, Construction Agreements and Service
Agreements relating to such Property;
(ii) Liens relating to such Property disclosed or reflected in
or on the relevant Existing Title Reports or the relevant Existing
Surveys (other than Tenant Leases that have expired or been
terminated, Liens for taxes, assessments and similar charges and Liens
that relate to Indebtedness that has been satisfied);
(iii) Liens with respect to such Property disclosed or
reflected on the Balance Sheet, the Closing Balance Sheet or notes to
either or securing liabilities reflected on the Balance Sheet or notes
to either and not satisfied, released or otherwise terminated
subsequent to the date of the Balance Sheet;
(iv) Liens with respect to such Property for taxes, assessments
and similar charges that are not yet due or are being contested in
good faith;
(v) mechanic's, materialman's, carrier's, repairer's and other
similar third-party Liens with respect to such Property arising or
incurred in the ordinary course of business or that are not yet due
and payable or are being contested in good faith or that are the
obligation of any party (other than a member of the Company Group)
under any ▇▇▇▇▇, any tenant under any Tenant Lease or any manager or
other party (other than a member of the Company Group) under any
Management Agreement, Service Agreement, Construction Contract or
other contract or agreement to pay, bond or remove;
(vi) third party Liens with respect to such Property incurred
since the Balance Sheet Date and described on Schedule 3.10(b); or
-------
(vii) other Liens with respect to such Property which,
individually or in the aggregate, would not reasonably be expected to
materially restrict the current use of such Property or materially
impair the value of such Property.
(e) Buyer shall have received all documents it may reasonably request
relating to the existence of the Sellers, the members of the Company Group
and the authority of the Sellers for this Agreement, all in form and
substance reasonably satisfactory to Buyer.
(f) Buyer shall have received an opinion of counsel to the Sellers in
form reasonably acceptable to Buyer.
Section 10.03. Conditions to Obligation of the Sellers. The
obligation of the Sellers to consummate the Closing is subject to the
satisfaction of the following further conditions:
(a) (i) Buyer shall have performed in all material respects all of
its obligations hereunder required to be performed by it at or prior to the
Closing Date, (ii) the representations and warranties of Buyer contained in
this Agreement shall be true in all material respects at and as of the
Closing Date, as if made at and as of such date and (iii) the Sellers shall
have received a certificate signed by a senior officer of Buyer to the
foregoing effect.
(b) Buyer shall have received all consents, authorizations or
approvals, including those from governmental agencies referred to in
Section 4.03, in each case in form and substance reasonably satisfactory to
----
the Sellers, and no such consent, authorization or approval shall have been
revoked.
(c) The Sellers shall have received all documents it may reasonably
request relating to the existence of Buyer and the authority of Buyer for
this Agreement, all in form and substance reasonably satisfactory to the
Sellers.
(d) The Buyer shall have deposited with the Escrow Agent the Deposit.
(e) The Sellers shall have received an opinion of counsel to the
Buyer in form reasonably acceptable to Sellers.
ARTICLE 11
Survival; Indemnification
Section 11.01. Survival. Unless otherwise provided herein, the
covenants, agreements, representations and warranties of the parties hereto
contained in this Agreement shall survive the Closing until June 1, 1999
(the "EXPIRATION DATE"); provided that the covenants, agreements,
representations and warranties contained in (i) Section 2.07 and Article 8
---- -
shall survive for the periods set forth therein and; (ii) Sections 2.04,
----
2.05, 3.01 - 3.06, 4.01 - 4.04, 4.09, 5.03(b), 5.05, 5.09, 6.02, 6.03,
---- ---- ---- ---- ---- ---- ------- ---- ---- ---- ----
7.01, 7.03, 7.04, 9.02, 9.03, 9.04, and Articles 11 and 13 shall survive
---- ---- ---- ---- ---- ---- -- --
indefinitely. Notwithstanding the preceding sentence, any covenant,
agreement, representation or warranty in respect of which indemnity may be
sought under this Agreement shall survive the time at which it would
otherwise terminate pursuant to the preceding sentence, if notice of the
inaccuracy or breach thereof giving rise to such right of indemnity shall
have been given to the party against whom such indemnity may be sought
prior to such time.
Section 11.02. Indemnification. (a) From and after Closing, the
Sellers hereby indemnify Buyer and its Affiliates against and agree to hold
each of them harmless from any and all damage, loss, liability and expense
(including, without limitation, reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any action, suit
or proceeding) ("DAMAGES") incurred or suffered by Buyer, the members of
the Company Group or any of their Affiliates (i) arising out of any
misrepresentation or breach of representation or warranty, in each case
made by any of the Sellers pursuant to this Agreement (without regard to
any materiality or Material Adverse Effect qualifications contained in any
representation or warranty other than Section 3.07) and which survives the
----
Closing (other than Article 8), (ii) arising out of any breach of any
-
covenant or agreement made or to be performed by any of the Sellers
pursuant to this Agreement and which survives the Closing (other than
Article 8), (iii) arising out of any Excluded Asset or Excluded Liability,
-
(iv) arising out of any mechanic's, materialman's, carrier's, repairer's
and other similar Liens with respect to any Property to the extent such
Liens result from landlord's acts (or the acts of those acting by, through
or under landlord) taken prior to Closing or relating to acts of tenants
(or those acting by, through or under them), which tenants, are not in
possession of the leased premises to which the Lien relates or have filed
for bankruptcy, in each case as of the Closing Date, or (v) arising out of
any obligation of a member of the Company Group under the Related
Agreements; provided that the Sellers shall not be liable under 11.02(a)(i)
-----------
unless the aggregate amount of Damages with respect to all matters referred
to in Section 11.02(a)(i) exceeds $8,000,000 and then only to the extent of
-----------
such excess and the Sellers' maximum aggregate
liability under Section 11.02(a)(i) shall not exceed $50,000,000. Parent
-----------
shall be entitled to receive and retain any amount, and Buyer shall pay to
Parent any amount it shall receive which is payable to Parent or to any
member of the Company Group under any of the Related Agreements.
(b) From and after Closing, the Sellers hereby indemnify Buyer and
its Affiliates against and agree to hold each of them harmless from any and
all Damages, in excess of the reserve established therefor on the Closing
Balance Sheet, incurred or suffered by Buyer, the members of the Company
Group or any of their Affiliates arising out any of the litigation matters
scheduled on Schedule 11.02(b) hereof. The parties agree that (i) the
--------
reserve to be established on the Closing Balance Sheet in respect of such
litigation matters shall be $40,000 and (ii) Buyer and its Affiliates shall
undertake the defense of the same. Buyer and its Affiliates may not make
any compromise or settlement, or consent to the entry of judgment, in any
such litigation matter without the prior written consent of Parent, which
shall not be unreasonably withheld.
(c) From and after Closing, Buyer hereby indemnifies the Sellers and
their Affiliates against and agrees to hold each of them harmless from any
and all Damages incurred or suffered by the Sellers or any of their
Affiliates arising out of any misrepresentation or breach of warranty,
covenant or agreement made or to be performed by Buyer pursuant to this
Agreement and which survives the Closing (other than pursuant to Article
8); provided that (i) Buyer shall not be liable under this Section 11.02(c)
- --------
unless the aggregate amount of Damages with respect to all matters referred
to in this Section 11.02(c) exceeds $8,000,000 and then only to the extent
--------
of such excess and (ii) Buyer's maximum aggregate liability under this
Section 11.02(c) shall not exceed $50,000,000.
--------
Section 11.03. Procedures. (a) The party seeking indemnification
under Section 11.02 (the "INDEMNIFIED PARTY") agrees to give prompt notice
-----
to the party against whom indemnity is sought (the "INDEMNIFYING PARTY") of
the assertion of any claim, or the commencement of any suit, action or
proceeding ("CLAIM") in respect of which indemnity may be sought under such
Section and will provide the Indemnifying Party such information with
respect thereto that the Indemnifying Party may reasonably request. The
failure to so notify the Indemnifying Party shall not relieve the
Indemnifying Party of its obligations hereunder, except to the extent such
failure shall have adversely prejudiced the Indemnifying Party.
(b) The Indemnifying Party shall be entitled to participate in the
defense of any Claim asserted by any third party ("THIRD PARTY CLAIM") and,
subject to the limitations set forth in this Section, shall be entitled to
control and appoint lead counsel (who shall be reasonably acceptable to the
Indemnified Party) for such defense, in each case at its expense.
(c) If the Indemnifying Party shall assume the control of the
defense of any Third Party Claim in accordance with the provisions of this
Section, (i) the Indemnifying Party shall obtain the prior written consent
of the Indemnified Party (which shall not be unreasonably withheld) before
entering into any settlement of such Third Party Claim or consenting to
entry of any judgment and (ii) the Indemnified Party shall be entitled to
participate in the defense of such Third Party Claim and to employ separate
counsel of its choice for such purpose. The fees and expenses of such
separate counsel shall be paid by the Indemnified Party, except that if the
Indemnifying Party has a conflict of interest with respect to any Third
Party Claim, the Indemnifying Party shall pay the fees and expenses of such
separate counsel for the Indemnified Party.
(d) If the Indemnifying Party shall fail to timely undertake the
defense of any Third Party Claim in accordance with the provisions of this
Section and notify the Indemnified Party thereof, the Indemnified Party
may, but shall not be obligated to, undertake the defense of the same and
make any compromise or settlement thereof and recover the entire cost
thereof from the Indemnifying Party, including without limitation
reasonable attorneys' and expert's fees (but the Indemnified Party shall
not have the right to make any compromise or settlement of, or consent to
the entry of judgment in, any such Third Party Claim without the prior
written consent of the Indemnifying Party, which shall not be unreasonably
withheld).
(e) Each party shall cooperate, and cause their respective Affiliates
to cooperate, in the defense or prosecution of any Third Party Claim and
shall furnish or cause to be furnished such records, information and
testimony, and attend such conferences, discovery proceedings, hearings,
trials or appeals, as may be reasonably requested in connection therewith.
Section 11.04. Calculation of Damages. (a) The amount of any Damages
payable under Section 11.02 by the Indemnifying Party shall be net of any
-----
amounts recovered or recoverable by the Indemnified Party under applicable
insurance policies.
(b) The Indemnifying Party shall not be liable under Section 11.02
-----
for any (i) Damages relating to any matter to the extent that (A) there is
included in the Closing Balance Sheet a specific liability or reserve
relating to such matter or (B) the Indemnified Party had otherwise been
compensated for such matter pursuant to the Purchase Price adjustment under
Section 2.05 or (ii) consequential or punitive Damages. Any calculation of
----
lost profits shall not include a capitalization rate or other earnings
multiplier.
(c) Notwithstanding any other provision of this Agreement to the
contrary, if on the Closing Date the Indemnified Party has actual knowledge
of any information that would cause one or more of the representations and
warranties made by the Indemnifying Party to be inaccurate as of the date
made (other than those contained in Section 8.02(viii) and (xi), the
----
Indemnified Party shall have no right or remedy after the Closing with
respect to such inaccuracy to the extent of the Indemnified Party's actual
knowledge thereof and shall be deemed to have waived its rights to
indemnification in respect thereof.
Section 11.05. Assignment of Claims. If the Indemnified Party
receives any payment from an Indemnifying Party in respect of any Damages
pursuant to Section 11.02 and the Indemnified Party could have recovered
-----
all or a part of such Damages from a third party (a "POTENTIAL
CONTRIBUTOR") based on the underlying Claim asserted against the
Indemnifying Party, the Indemnified Party shall assign such of its rights
to proceed against the Potential Contributor as are necessary to permit the
Indemnifying Party to recover from the Potential Contributor the amount of
such payment; provided that the Indemnified Party shall not be required to
assign any right to proceed against a Potential Contributor if the
Indemnified Party determines in its reasonable discretion that such
assignment would be materially detrimental to its reputation or future
business prospects.
Section 11.06. Exclusivity. Except as specifically set forth in this
Agreement, Buyer waives any rights and claims Buyer may have against the
Sellers, whether in law or in equity, relating to any of the Companies or
the Shares or the transactions contemplated hereby (other than claims for
fraud). The rights and claims waived by Buyer include, without limitation,
claims for contribution or other rights of recovery arising out of or
relating to any Environmental Law, claims for breach of contract, breach of
representation or warranty, negligent misrepresentation and all other
claims for breach of duty (other than claims for breach of this Agreement
or representations or warranties expressly set forth in this Agreement).
After the Closing, Sections 8.06 and 11.02 will provide the exclusive
---- -----
remedy (other than equitable remedies and other than a claim at law for
breach of representation, warranty, or covenant contained in Section
8.02(viii), 8.02(xi), 8.03, 8.04, 8.05 or 8.08) for any misrepresentation,
---- ---- ---- ---- ---- ----
breach of warranty, covenant or other
agreement (other than those contained in Sections 2.05 and 2.07) or other
---- ----
claim arising out of this Agreement or the transactions contemplated
hereby.
ARTICLE 12
Termination
Section 12.01. Grounds for Termination. This Agreement may be
terminated at any time prior to the Closing:
(a) by mutual written agreement of the Sellers and Buyer;
(b) by Buyer, if on or before 5:00 p.m. New York City time on
April 20, 1998 (the "EFFECTIVE DATE") Buyer is not reasonably
satisfied with the disclosure schedules and Exhibit A attached hereto.
(c) by either the Sellers or Buyer if the Closing shall not have
been consummated on or before June 30, 1998; or
(d) by either the Sellers or Buyer if consummation of the
transactions contemplated hereby would violate any nonappealable final
order, decree or judgment of any court or governmental body having
competent jurisdiction.
The party desiring to terminate this Agreement pursuant to Sections
12.01(b), 12.01(c) or 12.01(d) shall give notice of such termination to the
-------- -------- --------
other party.
Section 12.02. Effect of Termination. If this Agreement is
terminated as permitted by Section 12.01; such termination shall be without
-----
liability of either party (or any stockholder, director, officer, employee,
agent, consultant or representative of such party) to the other party to
this Agreement; provided that if such termination shall result from the
willful (i) failure of either party to fulfill a condition to the
performance of the obligations of the other party, (ii) failure to perform
a material covenant of this Agreement or (iii) breach by either party
hereto of any representation or warranty or material agreement contained
herein, such party shall be fully liable for any and all Damages incurred
or suffered by the other party as a result of such failure or breach. The
provisions of Sections 2.06, 6.01, 7.03, 7.04, 9.04, 13.03, 13.06, 13.07,
---- ---- ---- ---- ---- ----- ----- -----
13.08, 13.09, 13.15 and 13.16 shall survive any termination hereof pursuant
----- ----- ----- -----
to Section 12.01.
-----
ARTICLE 13
Miscellaneous
Section 13.01. Notices. All notices, requests, responses and other
communications required or permitted hereunder shall be in writing
(including facsimile transmission), signed by the party giving the same or
by its attorneys, and shall be given:
(a) if to the Sellers:
MEPC plc
Nations House
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Finance Director
Fax number: ▇▇▇-▇▇-▇▇▇-▇▇▇-▇▇▇▇
MEPC North American Properties Limited
▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax number: ▇▇▇-▇▇-▇▇▇-▇▇▇-▇▇▇▇
U.K.American Holdings Limited
c/o MEPC plc
Nations House
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇
▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇
Fax number: ▇▇▇-▇▇-▇▇▇-▇▇▇-▇▇▇▇
with copies to:
MEPC Management Inc.
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇, ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
Fax number: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Fax number: ▇▇▇-▇▇▇-▇▇▇▇
(b) if to Buyer:
General Growth Properties, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
with copy to:
▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
or at such other address or copy address as may be designated by a notice
of change of address given in accordance herewith. Each notice, request,
response or other communication shall be deemed to have been given and to
be effective upon being (i) personally delivered with receipt for delivery,
(ii) deposited with a nationally recognized overnight express delivery
service for next business day delivery with receipt for delivery, (iii)
sent by facsimile transmission with confirmation of delivery, or (iv)
deposited in the United States mail, postage prepaid, registered or
certified with return receipt requested, to the addressee at its address
set forth above or in a change of address notice given in accordance
herewith. The time period in which a response to any such notice, request
or other communication must be given shall commence on the date of receipt
thereof or deemed receipt thereof as provided below. Personal delivery to a
party or any officer, partner or employee of such party at its address
set forth above or in a change of address notice given in accordance
herewith shall be deemed given and received at the time delivered.
Rejection or other refusal shall also be deemed receipt.
Section 13.02. Amendments and Waivers. (a) Any provision of this
Agreement may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed, in the case of an amendment, by each
party to this Agreement, or in the case of a waiver, by the party against
whom the waiver is to be effective.
(b) No failure or delay by any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof nor shall any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights
and remedies herein provided shall be cumulative and not exclusive of any
rights or remedies provided by law.
Section 13.03. Expenses. Except as otherwise provided herein, all
costs and expenses incurred in connection with this Agreement or the
transactions contemplated hereby, other than accounting fees and expenses
payable under Section 2.04(c) and costs of obtaining additional title
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insurance policies and surveys payable under Section 5.08, shall be paid by
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the party incurring such cost or expense.
Section 13.04. Successors and Assigns. Subject to Section 2.04 the
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provisions of this Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and assigns; provided
that no party may assign, delegate or otherwise transfer any of its rights
or obligations under this Agreement without the consent of each other party
hereto, except that Buyer may assign its rights hereunder to any wholly-
owned subsidiary of Buyer without the consent of Sellers, in which case
Buyer will not be relieved of any of its obligations hereunder.
Section 13.05. Third-Party Beneficiaries. The provisions of this
Agreement are for the sole benefit of the parties hereto and their
successors and permitted assigns; and none of the provisions of this
Agreement is intended to or shall be construed as conferring any rights
upon any person other than the parties hereto and their successors and
permitted assigns.
Section 13.06. Governing Law. This Agreement shall be governed by
and construed in accordance with the law of the State of New York, without
regard to the conflicts of law rules of such State which might cause the
laws of any other jurisdiction to govern this Agreement.
Section 13.07. Jurisdiction. Except as otherwise expressly provided
in this Agreement, the parties hereto agree that any suit, action or
proceeding seeking to enforce any provision of, or based on any matter
arising out of or in connection with, this Agreement or the transactions
contemplated hereby may only be brought in the United States District Court
for the Southern District of New York or any other New York State court
sitting in New York City, and each of the parties hereby consents to the
jurisdiction of such courts (and of the appropriate appellate courts
therefrom) in any such suit, action or proceeding and irrevocably waives,
to the fullest extent permitted by law, any objection which it may now or
hereafter have to the laying of the venue of any such suit, action or
proceeding in any such court or that any such suit, action or proceeding
which is brought in any such court has been brought in an inconvenient
forum. Process in any such suit, action or proceeding may be served on any
party anywhere in the world, whether within or without the jurisdiction of
any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 13.01 shall be
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deemed effective service of process on such party.
Section 13.08. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO
HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
Section 13.09. Attorneys' Fees. In the event of any suit, action or
proceeding relating to this Agreement, the prevailing party or parties
shall be entitled to recover reasonable attorneys' fees and disbursements
as a part of its judgment. Any amounts owing hereunder which are not paid
when due shall bear interest at the Rate.
Section 13.10. No Recording. Neither this Agreement nor any
memorandum or other document referring to this Agreement shall be recorded.
Any such recording shall be void and of no force or effect.
Section 13.11. Entire Agreement. This Agreement and the Closing
Documents constitute the entire agreement between the parties with respect
to the subject matter of this Agreement and supersede all prior agreements,
understandings, representations and statements of any kind whatsoever, both
oral and written, between the parties or their representatives with respect
to the subject matter of this Agreement.
Section 13.12. Invalid Provisions. If any provision of this
Agreement or the application of any provision of this Agreement to any
person or circumstance shall to any extent be held invalid or
unenforceable, the remainder of this Agreement or the application of such
provision to any other persons or circumstances shall not be affected
thereby, and this Agreement and each of the provisions hereof shall be
valid and enforceable to the fullest extent permitted by law.
Section 13.13. Counterparts. This Agreement may be signed in any
number of counterparts; the signatures on each counterpart shall be deemed
to be on the same instrument; each of such counterparts shall be deemed to
be an original; all of such counterparts shall be deemed to be a single
instrument; and signatures on any counterpart delivered by facsimile
transmission shall have the same effect as the original signatures.
Section 13.14. Binding Effect. This Agreement shall not be a binding
obligation of the Sellers until it has been fully executed by Buyer and the
Sellers, the Sellers have delivered a fully executed counterpart hereof to
Buyer, and the Sellers have received the proceeds of the Deposit.
Section 13.15. Specific Performance. The Sellers acknowledge that a
failure by the Sellers to close the transactions contemplated by this
Agreement in violation of this Agreement will irreparably harm Buyer and
that money damages may not be adequate and, accordingly, that Buyer shall,
in addition to other available remedies, be entitled to specific
performance in the event of the failure of the Sellers to close the
transactions contemplated by this Agreement in violation of this Agreement.
Section 13.16. Joint and Several Liability. Each of the Sellers
shall be jointly and severally liable for the obligations, representations,
warranties and covenants of one or more of the Sellers hereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed the day and year first above written.
SELLERS:
MEPC PLC
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
MEPC NORTH AMERICAN PROPERTIES LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
U.K.-AMERICAN HOLDINGS LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Director
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Director
BUYER:
GGP LIMITED PARTNERSHIP
By: General Growth Properties,
Inc.,
its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Chairman of the Board of Directors