EXHIBIT 2.1
SETTLEMENT AGREEMENT
dated as of February 14, 2002
by and among
CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP,
CRESCENT REAL ESTATE EQUITIES COMPANY
and
CRESCENT OPERATING, INC.,
ROSESTAR MANAGEMENT LLC,
CANYON RANCH LEASING, L.L.C.,
WINE COUNTRY HOTEL, LLC,
ROSESTAR SOUTHWEST, LLC, and
COI HOTEL GROUP, INC.
This SETTLEMENT AGREEMENT dated as of February 14, 2002 is made and
entered into by and among CRESCENT REAL ESTATE EQUITIES LIMITED PARTNERSHIP, a
Delaware limited partnership ("Crescent"), CRESCENT REAL ESTATE EQUITIES
COMPANY, a Texas real estate investment trust ("Crescent REIT"), CRESCENT
OPERATING, INC., a Delaware corporation ("COPI"), ROSESTAR MANAGEMENT LLC, a
Texas limited liability company, CANYON RANCH LEASING, L.L.C., an Arizona
limited liability company, WINE COUNTRY HOTEL, LLC d/b/a VINTAGE RESORTS, LLC, a
Delaware limited liability company, ROSESTAR SOUTHWEST, LLC, a Texas limited
liability company, and COI HOTEL GROUP, INC., a Texas corporation, all of which
are direct or indirect wholly owned subsidiaries of COPI (the "Transferring
Subsidiaries", and together with COPI, the "Transferors," and each individually,
a "Transferor"). Capitalized terms not otherwise defined herein have the
respective meanings set forth in Section 1.01.
WHEREAS, COPI is in default of its payment obligations under various
loan agreements with Crescent and/or promissory notes made in favor of Crescent;
WHEREAS, the Transferring Subsidiaries are in default of their rental
payment obligations under various lease agreements for hotel properties owned by
Crescent and its subsidiaries;
WHEREAS, COPI has guaranteed the Transferring Subsidiaries' obligations
under the various lease agreements for hotel properties owned by Crescent and
its subsidiaries; and
WHEREAS, in settlement of certain of the Transferors' obligations to
Crescent and its subsidiaries, the parties hereto desire to make various
agreements contained herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
set forth in this Agreement, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
1.01 Defined Terms.
As used in this Agreement, the following defined terms have the
meanings indicated below. The meanings of other defined terms are set forth
elsewhere in this Agreement.
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"Affiliate" means any Person that directly, or indirectly through one
of more intermediaries, controls or is controlled by or is under common control
with the Person specified. For purposes of this definition, control of a Person
means the power, direct or indirect, to direct or cause the direction of the
management and policies of such Person whether by Contract or otherwise. In
addition, any Person owning ten percent (10%) or more of the voting securities
of another Person shall be deemed to control that Person.
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"Agreement" means this Settlement Agreement, together with the Exhibits
and the Annexes hereto, as any or all of the same shall be amended from time to
time.
"Asset Transfer Date" means (i) as soon as practicable after the day on
which the last of the consents, approvals, actions, filings, notices or waiting
periods necessary for any Transferring Subsidiary to transfer, and Crescent to
receive, the Assets owned by such Transferring Subsidiary has been obtained,
made or given or has expired, as applicable, or (ii) such other date as Crescent
shall choose, provided that (x) Crescent shall have provided the Transferors
with three Business Days notice of such date, and (y) the Transferring
Subsidiary will not be required to consummate the transfer of the Assets (other
than the Hotel Property Leases) on such date if the consents, approvals,
actions, filings, notices or waiting periods necessary for such Transferring
Subsidiary to transfer such Assets have not yet been obtained, made or given or
have not yet expired, as applicable.
"Asset Transfer Date Rent Payment" means the total net operating
income, before unpaid rental payment obligations, of the Hospitality Business
for the period from January 1, 2002 through the Asset Transfer Date, up to the
total amount of the unpaid rental payment obligations under the Hotel Property
Leases for such period, which net operating income shall be applied in full or
partial satisfaction, as the case may be, of such unpaid rental payment
obligations.
"Asset Transfer Date Working Capital" means the total value of all
funds used in the day-to-day operations of the Hospitality Business, including,
without limitation, amounts sufficient for the maintenance of change and xxxxx
cash funds, amounts deposited in operating bank accounts, receivables, amounts
deposited in payroll accounts, prepaid expenses and funds required to maintain
inventories, less accounts payable and accrued current liabilities, as
determined using the Asset Transfer Date Financial Statements, but excluding the
Asset Transfer Date Rent Payment.
"Assets and Properties" of any Person means all assets and properties
of every kind, nature, character and description (whether real, personal or
mixed, whether tangible or intangible, whether absolute, accrued, contingent,
fixed or otherwise and wherever situated), including the goodwill related
thereto, operated, owned or leased by such Person, including without limitation
cash, cash equivalents, Investment Assets, accounts, notes receivable, chattel
paper, documents, instruments, general intangibles, real estate, equipment,
inventory, goods and Intellectual Property.
"Associate" means, with respect to any Person, any corporation or other
business organization of which such Person is an officer or partner or is the
beneficial owner, directly or indirectly, of ten percent (10%) or more of any
class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
"Books and Records" of any Person means all files, documents,
instruments, papers, books and records relating to the business, operations and
condition of such Person, including without limitation financial statements, Tax
Returns and related work papers and letters from accountants, budgets, pricing
guidelines, ledgers, journals, deeds, title policies, minute books, stock
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certificates and books, stock transfer ledgers, Contracts, Licenses, customer
lists, computer files and programs, retrieval programs, operating data and plans
and environmental studies and plans.
"Business Day" means a day other than Saturday, Sunday or any day on
which banks located in the State of Texas are authorized or obligated to close.
"Business Combination" means with respect to any Person (i) any merger,
consolidation or combination to which such Person is a party, (ii) any sale,
dividend, split or other disposition of capital stock or other equity interests
of such Person or (iii) any sale, dividend or other disposition of all or
substantially all of the Assets and Properties of such Person.
"CEI/COPI Payments" means all amounts paid, advanced, incurred or
accrued for out-of-pocket expenses by or on behalf of Crescent, Crescent REIT or
their Affiliates in connection with the preparation of this Agreement, the
Operative Agreements and the consummation of the transactions contemplated
hereby and thereby, or relating hereto or thereto, including, without
limitation, all such amounts paid, advanced, incurred or accrued by Crescent or
Crescent REIT pursuant to Sections 2.07 through 2.09, and all fees and expenses
of agents, representatives, counsel and accountants employed by Crescent,
Crescent REIT or any of their Affiliates.
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Condition" means, with respect to any Person, the business, condition
(financial or otherwise), results of operations, Assets and Properties and
prospects of such Person.
"Contract" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract (whether
written or oral).
"Decontrolled Business" means the business and operations of the
Decontrolled Entities and their Subsidiaries.
"Equity Rights" means, with respect to any entity, any options,
warrants, calls, rights of conversion or exchange, or agreements, arrangements,
commitments or undertakings of any kind (whether or not in writing) to which the
entity is either a party or is bound, obligating the entity (with or without
consideration and whether or not presently exercisable or convertible) to issue,
deliver or sell, or cause to be issued, delivered or sold, shares of capital
stock of such entity or obligating such entity to issue, grant, extend or enter
into any such option, warrant, call, right of conversion or exchange, or
agreement, arrangement, commitment or undertaking.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"GAAP" means United States generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"Governmental or Regulatory Authority" means any court, tribunal,
arbitrator, authority, agency, commission, official or other instrumentality of
the United States, any foreign country or any domestic or foreign state, county,
city or other political subdivision.
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"Hospitality Business" means the business and operations of the
Transferring Subsidiaries.
"Indebtedness" of any Person means all obligations of such Person (i)
for borrowed money, (ii) evidenced by notes, bonds, debentures or similar
instruments, (iii) for the deferred purchase price of goods or services (other
than trade payables or accruals incurred in the ordinary course of business and
due within 30 days after the date on which incurred), (iv) under capital leases
and (v) in the nature of guarantees of the obligations described in clauses (i)
through (iv) above of any other Person.
"Intellectual Property" means all patents and patent rights, trademarks
and trademark rights, trade names and trade name rights, service marks and
service xxxx rights, service names and service name rights, brand names,
inventions, processes, formulae, copyrights and copyright rights, trade dress,
business and product names, logos, slogans, trade secrets, industrial models,
processes, designs, methodologies, computer programs (including all source
codes) and related documentation, technical information, manufacturing,
engineering and technical drawings, know-how and all pending applications for
and registrations of patents, trademarks, service marks and copyrights.
"Investment Assets" means all debentures, notes and other evidences of
Indebtedness, stocks, securities (including rights to purchase and securities
convertible into or exchangeable for other securities), interests in joint
ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by Transferor
(other than trade receivables generated in the ordinary course of business of
the Transferor).
"Knowledge" or "Known" means, (i) with respect to any entity other
than the Transferors, the actual knowledge of any officer, director or employee
of such entity, or any officer or director of the managing member or general
partner of such entity, or (ii) with respect to the Transferors, the actual
knowledge of Xxxxxxx X. Xxxxxxx and Xxxxx Xxxxxxx.
"Laws" means any and all laws, statutes, rules, regulations, ordinances
and other pronouncements having the effect of law of the United States, any
foreign country or any domestic or foreign state, county, city or other
political subdivision or of any Governmental or Regulatory Authority.
"Liabilities" means all Indebtedness, obligations and other liabilities
of a Person (whether absolute, accrued, contingent, fixed or otherwise, whether
known or unknown, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of authority,
authorizations, approvals, registrations, franchises and similar consents
granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security interest,
lease, lien, adverse claim, levy, charge or other encumbrance of any kind, or
any conditional sale Contract, title retention Contract or other Contract to
give any of the foregoing.
"Loss" or "Losses" means any and all damages, liabilities, fines, fees,
penalties, deficiencies, losses and expenses (including without limitation
interest, court costs, fees of attorneys,
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accountants and other experts or other expenses of, relating to or arising from,
(i) litigation, (ii) other proceedings or (iii) any claim, default or
assessment).
"Mutual Release" means the Mutual Release, of even date herewith, made
by the Transferors, Crescent and Crescent REIT, and attached hereto as Exhibit
F.
"Operative Agreements" means, collectively, (i) the General Assignment
Agreement (in substantially the form of Exhibit A), (ii) the Assignments,
Assumptions and Amendments of Lease (in substantially the form of Exhibit B) and
the other Assignment Instruments, (iii) the Assumption Agreement (in
substantially the form of Exhibit C) and the other Assumption Instruments, (iv)
the Foreclosure Agreement (in substantially the form of Exhibit D), (v) the Plan
(in substantially the form of Exhibit E), (vi) the Mutual Release (attached
hereto as Exhibit F), (vii) the Termination Agreement (attached hereto as
Exhibit G), (viii) the Promissory Note (in substantially the form of Exhibit H),
(ix) all documents evidencing cancellation and extinguishment of the rental
payment obligations under the Hotel Property Leases and (x) any other agreements
to be entered into in connection with the transaction.
"Order" means any writ, judgment, decree, injunction or similar order
of any Governmental or Regulatory Authority (in each such case whether
preliminary or final).
"Person" means any natural person, corporation, general partnership,
limited partnership, limited liability company, proprietorship, other business
organization, trust, union, association or Governmental or Regulatory Authority.
"Representatives" means, for any Person, their officers, directors,
employees, agents, counsel, accountants, financial advisors, consultants and
other representatives.
"Securities Act" means the Securities Act of 1933, as amended.
"Subsidiary" means, with respect to any Person, any corporation,
partnership, limited liability company, joint venture, trust or other legal
entity of which such Person owns (either directly or indirectly) either (i) a
general partner, managing member or other similar interest, or (ii) 50% or more
of the outstanding voting capital stock of the corporation.
"Tax" (including, with correlative meaning, the terms "Taxes" and
"Taxable") shall mean all forms of taxation, whenever created or imposed,
whether imposed by a local, municipal, state, foreign, federal or other
governmental body or authority, and, without limiting the generality of the
foregoing, shall include income, gross receipts, ad valorem, excise,
value-added, sales, use, amusement, transfer, franchise, license, stamp,
occupation, withholding, employment, payroll, property, unclaimed property,
escheat and other taxes, together with any interest, penalty, addition to tax or
additional amount imposed by any Taxing Authority.
"Taxing Authority" means any Governmental or Regulatory Authority
responsible for the imposition of any Tax.
"Tax Return" shall mean any return, report, statement, information
statement and the like filed or required to be filed with any Taxing Authority,
including any amendment thereof.
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"Termination Agreement" means the Termination Agreement entered into by
and between Crescent and COPI of even date herewith and attached hereto as
Exhibit G.
1.02 Cross References.
Each of the following terms shall have the meaning assigned thereto in
the Section of this Agreement set forth opposite such term:
Term Section
---- -------
Americold Logistics.................................................................................. 2.08(a)
Asset Transfer Date Financial Statements............................................................. 2.01(h)(i)
Assets............................................................................................... 2.01(b)
Assignment Instruments............................................................................... 2.01(i)(iii)
Assignment, Assumption and Amendment of Lease........................................................ 2.01(i)(iii)
Assumed Liabilities.................................................................................. 2.01(d)
Assumption Agreement................................................................................. 2.01(i)(iii)
Assumption Instruments............................................................................... 2.01(i)(iii)
Bankruptcy Code...................................................................................... 2.03(a)
Bankruptcy Court..................................................................................... 2.03(a)
BofA Credit Agreement................................................................................ 2.06(b)
Business Contracts................................................................................... 2.01(b)(ii)
Business License..................................................................................... 2.01(b)(iii)
Canyon Ranch - Tucson Assets......................................................................... 2.01(b)(v)
CMC.................................................................................................. 2.02(f)
Confirmation Date.................................................................................... 2.10(a)
Consideration Amount................................................................................. 2.10(a)
COPI................................................................................................. Forepart
COPI Budget Note..................................................................................... 2.09(a)
COPI Cold Storage.................................................................................... 2.06(a)
COPI Colorado........................................................................................ 2.02(a)(vii)
COPI Colorado GP Interest............................................................................ 2.02(a)(vii)
COPI Common Stock.................................................................................... 2.05
COPI Stockholder Acceptances......................................................................... 2.04(b)
COPI Stockholders Meeting............................................................................ 2.04(b)
CR License........................................................................................... 2.02(a)(ii)
CR License Membership Interest....................................................................... 2.02(a)(ii)
CRE Diversified...................................................................................... 2.02(a)(vi)
CRE Diversified Voting Common Stock.................................................................. 2.02(a)(vi)
Credit Documents..................................................................................... 2.01(a)
Crescent............................................................................................. Forepart
Crescent REIT........................................................................................ Forepart
Crescent REIT Common Shares.......................................................................... 2.10(a)
CRL.................................................................................................. 2.02(a)(i)
CRL Voting Common Stock.............................................................................. 2.02(a)(i)
Decontrolled Entities................................................................................ 2.02(b)
DMDC................................................................................................. 2.02(a)(v)
DMDC Voting Common Stock............................................................................. 2.02(a)(v)
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Effective Date....................................................................................... 2.06(c)
Equipment Sellers.................................................................................... 2.07(a)
Excluded Assets...................................................................................... 2.01(c)
Excluded Liabilities................................................................................. 2.01(e)
Foreclosure.......................................................................................... 2.02(a)
Foreclosure Agreement................................................................................ 2.02(a)
Foreclosure Date..................................................................................... 2.02(e)
General Assignment Agreement......................................................................... 2.01(i)(iii)
Hotel Properties..................................................................................... 2.01(b)(i)
Hotel Property Leases................................................................................ 2.01(b)(i)
Indemnified Party.................................................................................... 8.01(d)
Indemnifying Party................................................................................... 8.01(d)
Initial Rent Reduction Amount........................................................................ 2.01(f)
Investment Company Act............................................................................... 2.06(b)(i)
Newco................................................................................................ 2.06(b)(i)
Newco Registration Statement......................................................................... 2.06(b)(i)
Other Assets......................................................................................... 2.01(b)(x)
Plan................................................................................................. 2.03(a)
Proxy Statement...................................................................................... 2.04(a)
Registration Statement............................................................................... 2.10(b)
SEC.................................................................................................. 2.04(a)
Seller Notes......................................................................................... 2.07(a)
Stock................................................................................................ 2.02(b)
Transferor........................................................................................... Forepart
Transferring Subsidiaries............................................................................ Forepart
TWLC................................................................................................. 2.02(a)(iv)
TWLC Voting Common Stock............................................................................. 2.02(a)(iv)
VOO.................................................................................................. 2.08
WOCOI................................................................................................ 2.02(a)(iii)
WOCOI Common Stock................................................................................... 2.02(a)(iii)
1.03 Usage.
Unless the context of this Agreement otherwise requires, (i) words of
any gender include each other gender; (ii) words using the singular or plural
number also include the plural or singular number, respectively; (iii) the terms
"hereof," "herein," "hereby" and derivative or similar words refer to this
entire Agreement; (iv) the terms "Article" or "Section" refer to the specified
Article or Section of this Agreement; and (v) the phrases "ordinary course of
business" and "ordinary course of business consistent with past practice" refer
to the customary and usual business and practice of Transferors in connection
with the operation of the Hospitality Business. Whenever this Agreement refers
to a number of days, such number shall refer to calendar days unless Business
Days are specified. All accounting terms used herein and not expressly defined
herein shall have the meanings given to them under GAAP.
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ARTICLE II
AGREEMENTS
The parties hereby agree as follows.
2.01 Transfer of Hotel-Related Assets.
(a) Default Acknowledgement. COPI acknowledges that it is in default of
its payment and other obligations under the agreements between COPI and Crescent
listed on Annex A hereto (collectively, the "Credit Documents"), and each of the
Transferring Subsidiaries acknowledges that it is in default of its rental
payment obligations under the Hotel Property Leases (as defined below). COPI
acknowledges that it has guaranteed the Transferring Subsidiaries' obligations
under the Hotel Property Leases. COPI and the Transferring Subsidiaries
acknowledge that Crescent has the right to foreclose on certain assets of COPI,
including the stock, partnership interests or membership interests in the
Transferring Subsidiaries and the Stock (as defined in Section 2.02(b)). COPI
and the Transferring Subsidiaries also acknowledge that Crescent has the right
to terminate the Hotel Property Leases.
(b) Assets Transferred. In lieu of a foreclosure or a termination of
the Hotel Property Leases by Crescent and for valuable consideration, on the
terms and subject to the conditions set forth in this Agreement, each
Transferring Subsidiary will transfer, convey, assign and deliver to Crescent,
and Crescent will accept delivery of, on the Asset Transfer Date, all of the
Transferring Subsidiary's right, title and interest in, to, and under the
following Assets and Properties of the Transferring Subsidiary used or held for
use in connection with the Hospitality Business, except as otherwise provided in
Section 2.01(c) (collectively, the "Assets"):
(i) Hotel Property Leases. The leases and subleases of real
property described in Annex B hereto (the "Hotel Properties") as to
which the Transferring Subsidiary is the lessee or sublessee, together
with any options to purchase the underlying property and leasehold
improvements thereon, and in each case all other rights, subleases,
licenses, permits, deposits and profits appurtenant to or related to
such leases and subleases ("Hotel Property Leases");
(ii) Business Contracts. All Contracts (other than the Hotel
Property Leases) to which the Transferring Subsidiary is a party and
which are utilized in the conduct of the Hospitality Business,
including without limitation Contracts relating to property and asset
management (the "Business Contracts");
(iii) Licenses. All Licenses (including applications therefor)
utilized in the conduct of the Hospitality Business (the "Business
Licenses");
(iv) Books and Records. All Books and Records used or held for
use in the conduct of the Hospitality Business or otherwise relating to
the Assets, other than the minute books, stock or membership interest
transfer books and seal of the Transferring Subsidiary;
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(v) Canyon Ranch - Tucson Assets. With respect to Canyon Ranch
Leasing, L.L.C. only, the assets listed on Annex C (the "Canyon Ranch
-Tucson Assets");
(vi) Cash. Cash, commercial paper, certificates of deposit and
other bank deposits, treasury bills and other cash equivalents of the
Transferring Subsidiary;
(vii) Litigation Claims. Any rights (including
indemnification), claims and recoveries under litigation of the
Transferring Subsidiary against third parties arising out of or
relating to events prior to the Asset Transfer Date;
(viii) Tax Refunds. Any refunds or credits, if any, of Taxes
due to the Transferring Subsidiary.
(ix) Intellectual Property. All Intellectual Property used or
held for use by the Transferring Subsidiary in the operation of the
Hospitality Business (including the Transferring Subsidiary's goodwill
therein); and
(x) Other Assets and Properties. All other Assets and
Properties of the Transferring Subsidiary used or held for use in
connection with the Hospitality Business except as otherwise provided
in Section 2.01(c) (the "Other Assets").
(c) Excluded Assets. Notwithstanding anything in this Agreement to the
contrary, the following Assets and Properties of each Transferring Subsidiary
(the "Excluded Assets") shall be excluded from and shall not constitute Assets:
(i) Insurance. Life insurance policies on officers and other
employees of the Transferring Subsidiary, directors and officers
liability insurance policies of the Transferring Subsidiary and all
other insurance policies relating to the Assets and Properties and
operation of the Hospitality Business, and all refunds or credits, if
any, with respect to such insurance;
(ii) Corporate or Limited Liability Company Records. The
minute books, stock or membership interest transfer books and seal of
the Transferring Subsidiary; and
(iii) Certain Contract Rights. The Transferring Subsidiary's
rights under this Agreement and the Operative Agreements.
(d) Assumed Liabilities. In connection with the transfer, conveyance,
assignment and delivery of the Assets pursuant to this Agreement, on the Asset
Transfer Date, except for the Excluded Liabilities listed in Section 2.01(e)
below, Crescent will assume and agree to pay, perform and discharge when due any
and all obligations of each Transferring Subsidiary arising in connection with
the operation of the Hospitality Business (the "Assumed Liabilities"),
including, but not limited to:
(i) Future Hotel Property Lease Obligations. All obligations
of the Transferring Subsidiary under the Hotel Property Leases
occurring or arising from and after the Asset Transfer Date;
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(ii) Future Obligations under Contracts and Licenses. All
obligations of the Transferring Subsidiary under the Business Contracts
and Business Licenses occurring or arising from and after the Asset
Transfer Date; and
(iii) Certain Existing Obligations under Contracts and
Licenses. All obligations of the Transferring Subsidiary under the
Business Contracts and Business Licenses incurred in the ordinary
course of business and arising prior to the Asset Transfer Date, which
are accurately reflected on the Books and Records of the Transferring
Subsidiary as an account payable.
(e) Excluded Liabilities. Notwithstanding the foregoing, Crescent shall
not assume by virtue of this Agreement or the transactions contemplated hereby,
and shall have no liability for, the following Liabilities of the Transferring
Subsidiaries (the "Excluded Liabilities"):
(i) Existing Hotel Property Lease Obligations. All obligations
of the Transferring Subsidiaries under the Hotel Property Leases
occurring or arising prior to the Asset Transfer Date, provided that
Crescent acknowledges that the obligations of the Transferring
Subsidiaries' under the Hotel Property Leases are reduced by the Rent
Reduction Amount;
(ii) Other Existing Obligations under Contracts and Licenses.
Except as provided in Section 2.01(d)(iii) above, all other obligations
of the Transferring Subsidiaries under the Business Contracts and
Business Licenses occurring or arising prior to the Asset Transfer
Date;
(iii) Tax Obligations. All liabilities and obligations with
respect to the payment of Taxes attributable to periods or events on or
after the Asset Transfer Date; and
(iv) Covered Obligations. All liabilities and obligations
known as of the Asset Transfer Date to the extent that such liabilities
and obligations are covered by the Transferring Subsidiaries' insurance
(the amount of any such liability or obligation ultimately exceeding
such insurance coverage shall not be deemed an Excluded Liability).
(f) Initial Rent Reduction Amount. The aggregate amount of initial
rental payment obligations under the Hotel Property Leases to be cancelled and
extinguished on the Asset Transfer Date is $23,582,000 (the "Initial Rent
Reduction Amount") (subject to adjustment as provided in paragraph (h) below).
Such amounts shall be cancelled and extinguished in the manner provided in
Section 2.01(i)(ii).
(g) Allocation of Initial Rent Reduction Amount.
(i) Annex D sets forth the allocation of the Initial Rent
Reduction Amount, as agreed upon by Crescent and the Transferors.
(ii) The Transferors, on the one hand, and Crescent and
Crescent REIT, on the other hand, hereto agree (i) that such allocation
shall be consistent with the requirements of Section 1060 of the Code
and the regulations thereunder, (ii) to complete jointly and to file
separately Form 8594 with its federal income Tax Return consistent with
such
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allocation for the tax year in which the Asset Transfer Date occurs and
(iii) that neither the Transferors, on the one hand, and Crescent and
Crescent REIT, on the other hand will take a position on any income,
transfer or gains Tax Return, before any Governmental or Regulatory
Authority charged with the collection of any such Tax or in any
judicial proceeding, that is in any manner inconsistent with the terms
of any such allocation without the consent of the other.
(h) Post-Closing Adjustment of Initial Rent Reduction Amount.
(i) Within thirty (30) days after the Asset Transfer Date,
Crescent shall cause to be delivered to COPI and the Transferring
Subsidiaries the financial statements of the Hotel Properties as of the
Asset Transfer Date, which financial statements shall be prepared on
the same basis as the monthly unaudited balance sheets and income
statements of the Hotel Properties previously prepared by COPI and the
Transferring Subsidiaries (the "Asset Transfer Date Financial
Statements"), together with Crescent's calculation of the Asset
Transfer Date Working Capital and the Asset Transfer Date Rent Payment.
COPI, the Transferring Subsidiaries and their Representatives shall
have the right to inspect the Books and Records used to prepare the
Asset Transfer Date Financial Statements. If COPI or any Transferring
Subsidiary disagrees in any respect with the Asset Transfer Date
Financial Statements, COPI or such Transferring Subsidiary shall notify
Crescent within ten (10) Business Days after receipt of the Asset
Transfer Date Financial Statements specifying the areas of
disagreement. If COPI, the Transferring Subsidiary and Crescent are
unable to resolve all such disagreements within a ten (10) Business Day
period, the dispute shall be resolved by the COPI's and Crescent's
respective accounting firms within ten (10) Business Days thereafter.
If such accounting firms cannot agree within such ten (10) Business Day
period, COPI and the Transferring Subsidiary, on the one hand, and
Crescent, on the other hand, shall advise each other in writing of
their position with respect to the Asset Transfer Date Working Capital
or the Asset Transfer Date Rent Payment, as the case may be, and the
dispute shall be resolved by an independent accounting firm mutually
selected by COPI and Crescent. The determination of the independent
accounting firm shall be made as promptly as practicable and shall be
binding and conclusive on the parties hereto for all purposes. Each
party shall be responsible for the expenses of their respective
accountants. The party whose written position on the Asset Transfer
Date Working Capital or the Asset Transfer Date Rent Payment, as the
case may be, deviates in the greatest degree, in the opinion of the
independent accounting firm, from the determination made by the
independent accounting firm shall pay all expenses relating to the
engagement of the independent accounting firm.
(ii) Crescent shall provide COPI and the Transferring
Subsidiaries copies of the Books and Records related to the Hotel
Properties necessary to enable COPI and the Transferring Subsidiaries'
accountants to timely and efficiently review the Asset Transfer Date
Financial Statements. After Closing, Crescent shall provide reasonable
access to COPI, the Transferring Subsidiaries and their Representatives
to the Books and Records necessary for purposes of permitting COPI and
the Transferring Subsidiaries to pay those liabilities of COPI and the
Transferring Subsidiaries that are not Assumed Liabilities.
11
(iii) If the Asset Transfer Date Working Capital is a positive
number, then the Initial Rent Reduction Amount shall be increased by
such positive number on the date of confirmation of the Asset Transfer
Date Working Capital pursuant to this Section 2.01(h)(iii). If the
Asset Transfer Date Working Capital is a negative number, then the
Initial Rent Reduction Amount shall be reduced by such negative number
on the date of confirmation of the Asset Transfer Date Working Capital
pursuant to this Section 2.01(h)(iii). If the Asset Transfer Date
Working Capital is zero, then there shall be no adjustment to the
Initial Rent Reduction Amount under this Section 2.01(h)(iii). If the
Asset Transfer Date Working Capital is a positive or negative number,
Crescent or COPI, as the case may be, shall deliver to the other party
such documents as are necessary to evidence the adjustment of (i) the
Initial Rent Reduction Amount and (ii) the Initial Rent Reduction
Amount previously cancelled and extinguished.
(i) Asset Transfer Date.
(i) The transfer of Assets will take place at the offices of
Xxxx Xxxxxxx LLP, 0000 X Xxxxxx, X.X., Xxxxxxxxxx, XX 00000, or at such
other place as Crescent and the Transferors mutually agree, at 10:00
A.M. local time, on the Asset Transfer Date. The parties acknowledge
that the transfer of the Assets may take place on one or more dates,
each being an Asset Transfer Date, and that the parties shall agree to
take all actions and execute such documents necessary to effectuate
such transfers on such Asset Transfer Dates consistent with the terms
of this Agreement. Notwithstanding anything herein to the contrary, in
the event that not all of the Assets are transferred on a single Asset
Transfer Date, the amount of rental payment obligations to be cancelled
and extinguished at such time shall equal the total of the amounts set
forth on Annex D opposite the name of the Hotel Property or Hotel
Properties to which the Asset or Assets being transferred relates.
(ii) On the Asset Transfer Date, Crescent shall cancel and
extinguish rental payment obligations of each Transferring Subsidiary
under the Hotel Property Leases in the amounts set forth on Annex D
hereto, representing, in the aggregate, the Initial Rent Reduction
Amount. On the Asset Transfer Date, Crescent will deliver to COPI such
documents as are necessary to evidence cancellation and extinguishment
of the Initial Rent Reduction Amount; provided that such amounts shall
not exceed the Initial Rent Reduction Amount with respect to the Assets
being transferred.
(iii) Simultaneously with Crescent's deliveries specified in
Section 2.01(h)(ii) above, (i) each Transferring Subsidiary will assign
and transfer to Crescent all of its right, title and interest in and to
its Assets by delivery of (A) a General Assignment and Conveyance
substantially in the form of Exhibit A hereto (the "General Assignment
Agreement"), duly executed by the Transferring Subsidiary, (B) an
Assignment, Assumption and Amendment of Lease substantially in the form
of Exhibit B hereto (the "Assignment, Assumption and Amendment of
Lease") duly executed by the Transferring Subsidiary and (C) such other
good and sufficient instruments of conveyance, assignment and transfer,
in form and substance reasonably acceptable to Crescent's counsel, as
shall be effective to vest in Crescent all of its rights, title and
interest in and to the Assets (the General Assignment Agreement,
Assignment of Leases and the other instruments referred to in clause
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(C) being collectively referred to herein as the "Assignment
Instruments"), and (ii) Crescent will assume from each Transferring
Subsidiary the due payment, performance and discharge of the Assumed
Liabilities by delivery of (A) the Assumption Agreement substantially
in the form of Exhibit C hereto (the "Assumption Agreement"), duly
executed by Crescent, and (B) such other good and sufficient
instruments of assumption, in form and substance reasonably acceptable
to COPI's counsel, as shall be effective to cause Crescent to assume
the Assumed Liabilities as and to the extent provided in Section
2.01(d) (the Assumption Agreement and such other instruments referred
to in clause (B) being collectively referred to herein as the
"Assumption Instruments").
(j) Further Assurances; Post-Asset Transfer Date Cooperation.
(i) At any time or from time to time after the Asset Transfer
Date, at Crescent's request and without further consideration, each
Transferring Subsidiary shall execute and deliver to Crescent such
other instruments of transfer, conveyance, assignment and confirmation,
provide such materials and information and take such other actions as
Crescent may reasonably deem necessary or desirable in order more
effectively to transfer, convey and assign to Crescent, and to confirm
Crescent's title to, all of the Assets, and, to the full extent
permitted by Law, to put Crescent in actual possession and operating
control of the Hospitality Business and the Assets, and to assist
Crescent in exercising all rights with respect thereto, and otherwise
to cause each Transferring Subsidiary to fulfill its obligations under
this Agreement and the Operative Agreements.
(ii) Following the Asset Transfer Date, each of the parties
will afford to the other parties and its Representatives during normal
business hours, access to the Books and Records relating to the
Hospitality Business and in its possession with respect to periods
prior to the Asset Transfer Date and the right to make copies and
extracts therefrom, to the extent that such access may be reasonably
required by the Representatives in connection with (i) the preparation
of Tax Returns, (ii) the determination or enforcement of rights and
obligations under this Agreement, (iii) compliance with the
requirements of any Governmental or Regulatory Authority, (iv) the
determination or enforcement of the rights and obligations of any
Indemnified Party or (v) in connection with any actual or threatened
Action or Proceeding. Further, each party to the Agreement agrees for a
period extending six (6) years after the Asset Transfer Date not to
destroy or otherwise dispose of any such Books and Records unless such
party shall first offer in writing to surrender such Books and Records
to the other party and such other party shall not agree in writing to
take possession thereof during a period of 10 Business Days after such
offer is made.
(iii) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or
Regulatory Authorities or its financial statements or to fulfill its
obligations hereunder, it is necessary that a party hereto be furnished
with additional information, documents or records relating to the
Hospitality Business not referred to in paragraph (ii) above, and such
information, documents or records are in the possession or control of
the other party, such other party shall use its commercially reasonable
efforts to furnish or make available such information, documents or
records (or copies thereof) at the recipient's request, cost and
expense. Any information obtained by
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any party hereto in accordance with this paragraph shall be held
confidential by the requesting party in accordance with Section 10.05.
(k) Third-Party Consents.
To the extent that any Contract (including any Business Contract) or
License (including any Business License) is not assignable without the consent
of another party, this Agreement shall not constitute an assignment or an
attempted assignment of such Contract or License if such assignment or attempted
assignment would constitute a breach thereof. Each Transferor and Crescent shall
use its commercially reasonable efforts to obtain the consent of such other
party to the assignment of any such Contract or License to Crescent in all cases
in which such consent is or may be required for such assignment. If any such
consent shall not be obtained, each Transferor shall cooperate with Crescent in
any arrangement designed to provide for Crescent the benefits intended to be
assigned to Crescent under the relevant Contract or License, including
enforcement at the cost and for the account of Crescent of any and all rights of
Transferor against the other party thereto arising out of the breach or
cancellation thereof by such other party or otherwise. If and to the extent that
such arrangement cannot be made, Crescent shall have no obligation pursuant to
Section 2.01(d) or otherwise with respect to any such Business Contract or
Business License, and assuming COPI and the Transferring Subsidiaries are not in
breach under this Agreement, they shall have no liability to Crescent or
Crescent REIT for the inability to make such assignment or arrangement.
(l) COPI Consent.
(i) As the sole stockholder of COI Hotel Group, Inc. and as
the sole stockholder of all of the members of the other Transferring
Subsidiaries, COPI hereby consents to the transfer, conveyance,
assignment and delivery to Crescent of all of each Transferring
Subsidiary's right, title and interest in, to, and under, the Assets in
accordance with this Section 2.01.
(ii) COPI acknowledges that Crescent may transfer all or a
portion of its rights, including the right to receive rental payments,
under the Hotel Property Leases to one or more directly or indirectly
owned Subsidiaries prior to each Asset Transfer Date. COPI acknowledges
that such transfer may require the consent of COPI under various
agreements, including the Hotel Property Leases, to which COPI is a
party. Therefore, COPI hereby consents to the sale, transfer,
conveyance, assignment and delivery to any such Subsidiaries of such
rights, provided that no such assignment shall relieve Crescent of its
obligations hereunder or thereunder.
2.02 Retention of Collateral in Partial Satisfaction of Obligations.
(a) On the terms and subject to the conditions set forth in this
Agreement, COPI shall execute one or more Foreclosure Agreements, substantially
in the form of Exhibit D hereto (a "Foreclosure Agreement") pursuant to which
Crescent will retain the following assets in satisfaction of $40,100,000 (which
amount includes $1,600,000 attributable to the tenant interest in The Woodlands
Conference Center owned by a Subsidiary of WOCOI (as defined below)) of
principal
14
and accrued and unpaid interest, representing a portion of the obligations of
COPI to Crescent under the Credit Documents (the "Foreclosure"):
(i) 500 shares of voting common stock ("CRL Voting Common
Stock"), $.01 par value, of CRL Investments, Inc., a
Texas corporation
("CRL"), representing 100% of the issued and outstanding voting capital
stock and 5% of the issued and outstanding capital stock of CRL;
(ii) a 1.5% membership interest ("CR License Membership
Interest") in CR License LLC, an Arizona limited liability company ("CR
License");
(iii) 100 shares of common stock ("WOCOI Common Stock"), $.01
par value, of WOCOI Investment Company, a
Texas corporation ("WOCOI"),
representing 100% of the issued and outstanding capital stock of WOCOI;
(iv) 500 shares of voting common stock ("TWLC Voting Common
Stock"), $.01 par value, of The Woodlands Land Company, Inc., a
Texas
corporation ("TWLC"), representing 100% of the issued and outstanding
voting capital stock and 5% of the issued and outstanding capital stock
of TWLC;
(v) 50 shares of voting common stock ("DMDC Voting Common
Stock"), $.01 par value, of Desert Mountain Development Corporation, a
Delaware corporation ("DMDC"), representing 100% of the issued and
outstanding voting capital stock and 5% of the issued and outstanding
capital stock of DMDC;
(vi) 10 shares of voting common stock ("CRE Diversified Voting
Common Stock"), $.01 par value, of CRE Diversified Holdings, Inc., a
Delaware corporation ("CRE Diversified"), representing 100% of the
issued and outstanding voting capital stock and 1% of the issued and
outstanding capital stock of CRE Diversified; and
(vii) COPI's general partner interest ("COPI Colorado GP
Interest") in COPI Colorado, L.P., a Delaware limited partnership
("COPI Colorado"), representing a 60% economic interest in COPI
Colorado.
(b) The shares of CRL Voting Common Stock, WOCOI Common Stock, TWLC
Voting Common Stock, DMDC Voting Common Stock and CRE Diversified Voting Common
Stock, the COPI Colorado GP Interest and the CR License Membership Interest to
be obtained by Crescent pursuant to paragraph (a) above are collectively
referred hereto as the "Stock". CRL, CRL License, WOCOI, TWLC, DMDC, CRE
Diversified and COPI Colorado are collectively referred to herein as the
"Decontrolled Entities."
(c) COPI, as managing general partner of COPI Colorado, will vote in
favor of the transfer of the COPI Colorado GP Interest to Crescent and shall use
commercially reasonable efforts to obtain consents to the transfer from each
limited partner of COPI Colorado. COPI shall take any and all commercially
reasonable actions necessary to amend the limited partnership agreement of COPI
Colorado to reflect the transfer of the COPI Colorado GP Interest to Crescent.
15
(d) COPI acknowledges that Crescent may transfer all or a portion of
its rights, including the right to receive debt payments, under the Credit
Documents to one or more directly or indirectly owned Subsidiaries prior to the
Foreclosure. COPI acknowledges that such transfer may require the consent of
COPI under certain documents, including some or all of the Credit Documents, to
which COPI is a party. Therefore, COPI hereby consents to the sale, transfer,
conveyance, assignment and delivery to any such Subsidiaries of such rights,
provided that no such assignment shall relieve Crescent of its obligations
hereunder or thereunder.
(e) COPI will cooperate with Crescent and shall execute and deliver all
documents and perform all actions necessary to assist Crescent with the
Foreclosure, provided that the Foreclosure is performed in accordance with the
terms of the Foreclosure Agreement. Any date on which a Foreclosure of some or
all of the Stock takes place shall be referred to as a "Foreclosure Date." The
Foreclosure Date, if any, shall occur on such date as Crescent determines in its
sole discretion.
(f) At Crescent's request, COPI shall also execute a Foreclosure
Agreement pursuant to which Crescent will retain COPI's entire equity interest
in Crescent Machinery Company, a Delaware corporation and a wholly-owned
subsidiary of COPI ("CMC"), in satisfaction of an amount of principal and
accrued and unpaid interest to be mutually agreed upon by Crescent and COPI,
representing a portion of the obligations of COPI to Crescent under the Credit
Documents.
2.03 Prepackaged Bankruptcy.
(a) As soon as practicable following the COPI Stockholders Meeting (as
defined below), regardless of whether the COPI Stockholder Acceptances have been
obtained, and in no event later than five days after the COPI Stockholders
Meeting (as defined herein), COPI shall file a petition under Chapter 11 of the
United States Bankruptcy Code (the "Bankruptcy Code") in the United States
Bankruptcy Court, the District of Delaware or such other jurisdiction as the
parties shall agree (the "Bankruptcy Court"), along with such other documents,
resolutions and motions as COPI deems necessary to effectuate and administer a
bankruptcy case under the Bankruptcy Code. On such date, COPI shall file a Plan
of Reorganization (the "Plan"), in substantially the form attached hereto as
Exhibit E, and the disclosure statement and solicitation materials described in
Section 2.04 below.
(b) Prior to the filing of the petition, COPI shall seek acceptance of
the Plan pursuant to 11 U.S.C. 1126(b) from its stockholders and creditors in
accordance with Section 2.04 below and from its creditors. In the event
acceptance is obtained from less than all classes of claimants and interest
holders under the Plan, COPI shall seek confirmation of the Plan over the
objection of the dissenting class of claimants or interest holders pursuant to
11 U.S.C. 1129.
(c) COPI shall use commercially reasonable efforts to obtain approval
of the disclosure and solicitation materials and the confirmation of the Plan by
the Bankruptcy Court within 45 days of the date of filing of the petition.
2.04 COPI Stockholder Acceptance and Filing of Proxy Statement.
(a) As promptly as practicable after execution of this Agreement, COPI
shall prepare and file with the Securities and Exchange Commission (the "SEC")
under the Exchange Act, one or
16
more proxy statements and forms of proxies (such proxy statement(s) together
with any amendments to supplements thereto, the "Proxy Statement") relating to
the COPI Stockholders Meeting and the COPI Stockholder Acceptances (as defined
below). COPI will cause the Proxy Statement to comply as to form in all material
respects with the applicable provisions of the Securities Act, the Exchange Act
and the rules and regulations thereunder. Crescent shall furnish all information
about itself and its business and operations and all necessary financial
information to COPI as COPI may reasonably request in connection with the
preparation of the Proxy Statement. COPI and Crescent agree to correct promptly
any information provided by it for use in the Proxy Statement if and to the
extent that such information shall have become false or misleading in any
material respect, and COPI further agrees to take all steps necessary to amend
or supplement the Proxy Statement and to cause the Proxy Statement as so amended
or supplemented to be filed with the SEC and to be disseminated to its
stockholders to the extent required by applicable federal and state securities
laws. COPI and Crescent agree that the information provided by them for
inclusion in the Proxy Statement and each amendment or supplement thereto, at
the time of mailing thereof and at the time of the COPI Stockholders Meeting,
will not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. COPI will advise and deliver copies (if any) to Crescent, promptly
after it receives notice thereof, of any request by the SEC for amendment of the
Proxy Statement or comments thereon and responses thereto or requests by the SEC
for additional information (regardless whether such requests relate to COPI or
Crescent). COPI shall use commercially reasonable efforts to timely mail the
Proxy Statement to its stockholders.
(b) COPI will duly call and as soon as practicable following the date
of this Agreement (but in no event sooner than 45 days following the date the
Proxy Statement is mailed to the stockholders of COPI), give notice of, convene
and hold a meeting of its stockholders (the "COPI Stockholders Meeting") for the
purpose of obtaining the COPI Stockholder Acceptances. COPI will, through its
Board of Directors, recommend to its stockholders acceptance of the Plan, and
shall use commercially reasonable efforts to obtain the affirmative vote of the
holders of at least two-thirds of the shares of COPI Common Stock voted at the
COPI Stockholders Meeting (the "COPI Stockholder Acceptances") for acceptance of
the Plan. The COPI Stockholders Meeting shall be held on a day not later than 60
days after the date the Proxy Statement is mailed, unless otherwise agreed to by
COPI and Crescent.
2.05 Distribution of COPI Common Stock by COPI Colorado.
Prior to the Foreclosure Date relating to the COPI Colorado GP
Interest, COPI, as managing general partner of COPI Colorado, shall take any and
all commercially reasonable actions to amend the limited partnership agreement
of COPI Colorado to allow COPI Colorado to make distributions in kind and shall
cause COPI Colorado to distribute all shares of common stock, par value $.01 per
share, of COPI (the "COPI Common Stock") owned by COPI Colorado to its partners
pro rata in accordance with their relative partnership interests. COPI shall
file a Certificate of Cancellation with the Secretary of State of Delaware to
cancel the shares of COPI Common Stock received by COPI in the COPI Colorado
distribution and to add such shares into the authorized but unissued shares of
COPI Common Stock.
17
2.06 Bank of America Loan.
(a) Crescent consents to COPI's grant to Bank of America, N.A. of a
first priority security interest in COPI's equity interest in COPI Cold Storage,
LLC, a Delaware limited liability company and a wholly owned subsidiary of COPI
("COPI Cold Storage"). In connection therewith, Crescent shall execute any and
all documents reasonably necessary for Crescent to subordinate its rights with
respect to COPI's equity interest in COPI Cold Storage under the Credit
Agreements to Bank of America, N.A.
(b) Crescent and Crescent REIT shall use commercially reasonable
efforts to work with COPI to arrange for the repayment in full of all
outstanding amounts (including accrued and unpaid interest) under the Credit
Agreement dated August 27, 1997, as amended, between COPI and Bank of America,
N.A. (the "BofA Credit Agreement") and cancellation of the related promissory
note. In addition, it is anticipated that all outstanding amounts under the BofA
Credit Agreement will be repaid through the following arrangement, if available.
(i) As soon as practicable following the date hereof, Crescent
REIT shall prepare and file with the SEC under the Securities Act a
registration statement on Form S-1 (the "Newco Registration Statement")
relating to the spin-off to Crescent REIT's shareholders and Crescent's
limited partners of a new company ("Newco"). Crescent or Crescent REIT
shall capitalize Newco at the time of the spin-off with at least an
amount necessary to purchase all of COPI's equity interests in COPI
Cold Storage. Crescent REIT will cause the Newco Registration Statement
to comply as to form in all material respects with the applicable
provisions of the Securities Act and the rules and regulations
thereunder. Crescent REIT agrees to correct promptly any information
provided by it for use in the Newco Registration Statement if and to
the extent that such information shall have become false or misleading
in any material respect, and Crescent REIT further agrees to take all
steps necessary to amend or supplement the Newco Registration Statement
and to cause the Registration Statement as so amended or supplemented
to be filed with the SEC. Crescent REIT agrees that the information
provided by Crescent REIT for inclusion in the Newco Registration
Statement and each amendment or supplement thereto will not include an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading. Crescent REIT will respond to any comments of the SEC and
will use its reasonable efforts to have the Newco Registration
Statement declared effective under the Securities Act as promptly as
practicable after filing. Crescent REIT acknowledges that Newco may be
deemed an "investment company" under the Investment Company Act of
1940, as amended (the "Investment Company Act"). In the event that
Newco is deemed to be an "investment company," Crescent and Crescent
REIT will use its reasonable efforts to make all necessary filings with
the SEC to consummate the spin-off in accordance with the Securities
Act and the Investment Company Act.
(ii) In connection with the spin-off, Crescent REIT and
Crescent shall cause Newco to acquire, and COPI shall sell, all of
COPI's equity interests in COPI Cold Storage. The purchase price for
the equity interests in COPI Cold Storage shall be an amount to be
agreed upon between Crescent and COPI, which shall be not less than
$15,000,000
18
and not more than $15,500,000. COPI shall use all of the proceeds as
are necessary to repay the full principal balance (including accrued
and unpaid interest) under the BofA Credit Agreement.
(c) Notwithstanding the foregoing, Crescent and Crescent REIT shall
have no obligations to consummate any of the arrangements referred to in this
Section until the date the confirmation order entered by the Bankruptcy Court
shall have become final and non-appealable (the "Effective Date")
2.07 Seller Notes.
(a) Crescent shall use commercially reasonable efforts to arrange for
the satisfaction or resolution of the notes payable by COPI to various persons
(the "Equipment Sellers") with a current aggregate principal amount of
$2,627,989 and listed on Annex E hereto (the "Seller Notes"). Crescent shall
work with COPI and negotiate in good faith with the Equipment Sellers for the
payment or, as appropriate, the purchase of the Seller Notes, at an appropriate
discount. Crescent shall work with COPI and shall undertake to purchase or
resolve the Seller Notes.
(b) Notwithstanding the foregoing, Crescent and Crescent REIT shall
have no obligations to consummate any of the arrangements referred to in this
Section until the Effective Date.
2.08 Vornado Claim.
(a) COPI acknowledges that Vornado Operating, Inc., a Delaware
corporation ("VOO") has asserted a claim against it or COPI Cold Storage, LLC in
the amount of $4,000,000. COPI acknowledges that it disputes such claim and that
it shall vigorously defend against such claim. Crescent shall cooperate with
COPI in connection with the dispute of any claims by VOO, including a claim that
COPI or COPI Cold Storage is obligated to make a $4,000,000 capital contribution
to Vornado Crescent Logistics Operating Partnership, a Delaware general
partnership ("Americold Logistics"). Crescent shall work with COPI to negotiate
a resolution of the claim with VOO in good faith, and absent a resolution with
COO, in the event that the Bankruptcy Court ultimately determines that any such
claim by COO is valid either in whole or in part, Crescent shall work with COPI
to determine the best method for seeking confirmation of the Plan over the
objection of VOO.
(b) Notwithstanding the foregoing, Crescent and Crescent REIT shall
have no obligations to consummate any of the arrangements referred to in this
Section until the Effective Date.
2.09 Payment of Cash Flow Shortage.
(a) Subject to Section 5.05, Crescent agrees to advance funds to COPI
sufficient for COPI to pay the reasonable and necessary documented out-of-pocket
operating expenses of COPI and its Subsidiaries (other than expenses attributed
to, related to or incurred by CMC and its Subsidiaries), to the extent COPI and
such Subsidiaries are unable to do so from their own resources, in accordance
with a promissory note in the form attached as Exhibit H, in the original
principal amount of up to $3,200,000 (the "COPI Budget Note").
19
(b) Crescent also agrees to advance additional funds to COPI of up to
$5,375,000 in accordance with the COPI Budget Note for the purposes, and in the
amounts, specified therein.
(c) COPI shall seek the approval of the Bankruptcy Court to provide
Crescent with a priority claim and lien under 11 U.S.C. 364 for any funds
advanced by Crescent under this Section after the filing of the petition with
the Bankruptcy Court.
(d) The provisions of (i) this Section 2.09 and the COPI Budget Note,
and (ii) Section 2.01(e) are mutually exclusive.
2.10 Issuance of Common Shares of Crescent REIT to COPI Stockholders and
Filing of Registration Statement.
(a) In the event that the COPI Stockholder Acceptances are obtained,
then on the Effective Date, each person who is a holder of shares of COPI Common
Stock on the date the confirmation order has been entered by the Bankruptcy
Court (the "Confirmation Date") shall be entitled to receive the number of
common shares of beneficial interest, par value $.01 per share, of Crescent REIT
(the "Crescent REIT Common Shares"), equal to the product of (i) (A) the number
of shares of COPI Common Stock owned by such holder on the Confirmation Date,
divided by (B) the total number of shares of COPI Common Stock outstanding on
the Confirmation Date, and (ii) the quotient of (A) the Consideration Amount (as
defined below), and (B) the average of the daily closing prices per Crescent
REIT Common Share as reported on the New York Stock Exchange Composite
Transactions reporting system for the 10 consecutive trading days immediately
preceding the Confirmation Date. For purposes of this section, the
"Consideration Amount" shall be $10,828,497, less an amount, if any, equal to
the amount by which the CEI/COPI Payments exceed $5,200,000. No certificate or
scrip representing fractional Crescent REIT Common Shares shall be issued, and
all fractional shares shall be rounded up or down to the nearest whole Crescent
REIT Common Share.
(b) As promptly as practicable after the execution of this Agreement,
Crescent REIT shall prepare and file with the SEC under the Securities Act a
registration statement on Form S-4 relating to the issuance of the Crescent REIT
Common Shares (the "Registration Statement"), in which the Proxy Statement will
be included as a prospectus, provided that Crescent REIT may delay the filing of
the Registration Statement until approval of the Proxy Statement by the SEC.
Crescent REIT will cause the Registration Statement to comply as to form in all
material respects with the applicable provisions of the Securities Act and the
rules and regulations thereunder. COPI shall furnish all information about
itself and its business and operations and all necessary financial information
to Crescent REIT as Crescent REIT may reasonably request in connection with the
preparation of the Registration Statement. COPI and Crescent REIT agree to
correct promptly any information provided by it for use in the Registration
Statement if and to the extent that such information shall have become false or
misleading in any material respect, and Crescent REIT further agrees to take all
steps necessary to amend or supplement the Registration Statement and to cause
the Registration Statement as so amended or supplemented to be filed with the
SEC. COPI and Crescent REIT agree that the information provided by them for
inclusion in the Registration Statement and each amendment or supplement
thereto, at the time of the COPI Stockholders Meeting , will not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in light of
20
the circumstances under which they were made, not misleading. Crescent REIT will
advise and deliver copies (if any) to COPI, promptly after it receives notice
thereof, of any request by the SEC for amendment of the Registration Statement
or comments thereon and responses thereto or requests by the SEC for additional
information (regardless whether such requests relate to COPI or Crescent REIT).
Each of COPI and Crescent REIT will respond to any comments of the SEC and will
use its respective reasonable efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
filing.
(c) COPI agrees that, as of the Confirmation Date, it shall close the
stock books and stock transfer ledgers of COPI.
2.11 Crescent and Crescent REIT Consent.
Each of Crescent and Crescent REIT hereby consent to the transactions
contemplated by this Agreement and the Operative Agreements and hereby waives
compliance with any and all conditions, covenants or agreements of the
Transferors contained in any and all agreements (other than this Agreement or
the Operative Agreements) by and between any of the Transferors, on the one
hand, and Crescent and/or Crescent REIT, on the other hand, that are affected by
the transactions contemplated by this Agreement or the Operative Agreements.
2.12 Cooperation.
Each party shall fully cooperate with the other parties hereto and
shall take all actions and do all things reasonably necessary, proper and
advisable in order for the other parties to satisfy their obligations hereto.
2.13 Mutual Release.
The Transferors, Crescent and Crescent REIT acknowledge that they have
executed the Mutual Release in the form of Exhibit F attached hereto
2.14 Termination Agreement.
COPI and Crescent acknowledge that they have executed the Termination
Agreement in the form of Exhibit G attached hereto.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF TRANSFERORS
COPI, on behalf of itself and each of the Transferring Subsidiaries,
and each Transferring Subsidiary, on behalf of itself where applicable, hereby
represent and warrant to Purchaser as follows:
3.01 Organization and Qualification of COPI.
COPI is a corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware and has full corporate power
and authority to conduct its business
21
as and to the extent now conducted. COPI is duly qualified or licensed to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the nature of its business (including acting as general partner of COPI
Colorado) makes such qualification or licensing necessary, except where the
failure to be so qualified or licensed, individually or in the aggregate, would
not have a material adverse effect on the Condition of COPI.
3.02 Organization and Qualification of Transferring Subsidiaries.
Transferring Subsidiary is either a corporation, limited liability
company or limited partnership, as the case may be, duly organized, validly
existing and in good standing under the Laws of its respective state of
incorporation or organization and has full power and authority to conduct its
business as and to the extent now conducted. Transferring Subsidiary is duly
qualified or licensed to do business as a foreign corporation, limited liability
company or limited partnership, as the case may be, and, if a corporation, is in
good standing in each jurisdiction in which the nature of its business makes
such qualification or licensing necessary, except where the failure to be so
qualified or licensed, individually or in the aggregate, would not have a
material adverse effect on the Condition of the Transferring Subsidiary.
3.03 COPI Authority.
COPI has requisite corporate power and authority to execute and deliver
this Agreement and the Operative Agreements to which it is a party, to perform
its obligations hereunder and thereunder and to consummate the transactions
contemplated hereby. The execution and delivery by COPI of this Agreement and
the Operative Agreements to which it is a party, and the performance by COPI of
its obligations hereunder and thereunder, have been duly and validly authorized
by the Board of Directors of COPI and no other corporate action on the part of
COPI or its stockholders is necessary, other than confirmation by the Bankruptcy
Court. This Agreement has been duly and validly executed and delivered by COPI
and constitutes, and upon the execution and delivery by COPI of the Operative
Agreements to which it is a party, such Operative Agreements will constitute,
legal, valid and binding obligations of COPI enforceable against COPI in
accordance with their terms.
3.04 Transferring Subsidiary Authority.
Transferring Subsidiary has requisite corporate or limited liability
company power and authority to execute and deliver this Agreement and the
Operative Agreements to which it is a party, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby, including without limitation to sell and transfer (pursuant to this
Agreement) the Assets. The execution and delivery by Transferring Subsidiary of
this Agreement and the Operative Agreements to which it is a party, and the
performance by Transferring Subsidiary of its obligations hereunder and
thereunder, have been duly and validly authorized by the Board of Directors,
managing member or general partner of Transferring Subsidiary, as the case may
be, no other corporate or limited liability company action on the part of
Transferring Subsidiary or its stockholders, members or partners, as the case
may be, being necessary. This Agreement has been duly and validly executed and
delivered by Transferring Subsidiary and constitutes, and upon the execution and
delivery by Transferring Subsidiary of the Operative Agreements to which it is a
party, such Operative Agreements will constitute, legal, valid and binding
obligations
22
of Transferring Subsidiary enforceable against Transferring Subsidiary in
accordance with their terms.
3.05 Ownership of CRL Voting Common Stock.
The authorized capital stock of CRL consists of 500 shares of CRL
Voting Common Stock and 9,500 shares of nonvoting common stock, $.01 par value.
500 shares of CRL Voting Common Stock, representing 100% of the issued and
outstanding shares of CRL Voting Common Stock, are owned beneficially and of
record by COPI free and clear of any Liens, other than Liens in favor of
Crescent or any of its Affiliates or Associates. All of the issued and
outstanding shares of CRL Voting Common Stock have been duly and validly issued,
are fully paid and nonassessable, and are not subject to any preemptive rights.
No Person (other than COPI, Crescent or any of Crescent's Affiliates or
Associates) holds any Equity Rights in CRL. There are no voting trusts,
stockholder agreements, proxies or other similar agreements in effect with
respect to the voting or transfer of the CRL Voting Common Stock. There is no
liability for dividends declared or accumulated but unpaid with respect to any
shares of CRL Voting Common Stock.
3.06 Ownership of CR License Membership Interests.
Membership interests representing a 1.5% ownership interest in CR
License are owned beneficially and of record by COPI free and clear of any
Liens, other than Liens in favor of Crescent or any of its Affiliates or
Associates.
3.07 Ownership of WOCOI Common Stock.
The authorized capital stock of WOCOI consists of 1,000 shares of WOCOI
Common Stock. 100 shares of WOCOI Common Stock, representing 100% of the issued
and outstanding shares of WOCOI Common Stock, are owned beneficially and of
record by COPI free and clear of any Liens, other than Liens in favor of
Crescent or any of its Affiliates or Associates. All of the issued and
outstanding shares of WOCOI Common Stock have been duly and validly issued, are
fully paid and nonassessable, and are not subject to any preemptive rights. No
Person (other than COPI) holds any Equity Rights in WOCOI. There are no voting
trusts, stockholder agreements, proxies or other similar agreements in effect
with respect to the voting or transfer of the WOCOI Common Stock. There is no
liability for dividends declared or accumulated but unpaid with respect to any
shares of WOCOI Common Stock.
3.08 Ownership of TWLC Voting Common Stock.
The authorized capital stock of TWLC consists of 500 shares of TWLC
Voting Common Stock and 9,500 shares of nonvoting common stock, $.01 par value.
500 shares of TWLC Voting Common Stock, representing 100% of the issued and
outstanding shares of TWLC Voting Common Stock, are owned beneficially and of
record by COPI free and clear of any Liens, other than Liens in favor of
Crescent or any of its Affiliates or Associates. All of the issued and
outstanding shares of TWLC Voting Common Stock have been duly and validly
issued, are fully paid and nonassessable, and are not subject to any preemptive
rights. No Person (other than COPI, Crescent or any of Crescent's Affiliates or
Associates) holds any Equity Rights in TWLC. There are no voting trusts,
stockholder agreements, proxies or other similar agreements in effect with
respect to the voting or transfer of the TWLC Voting Common Stock. There is no
liability for
23
dividends declared or accumulated but unpaid with respect to any shares of TWLC
Voting Common Stock.
3.09 Ownership of DMDC Voting Common Stock.
The authorized capital stock of DMDC consists of 50 shares of DMDC
Voting Common Stock and 950 shares of nonvoting common stock, $.01 par value. 50
shares of DMDC Voting Common Stock, representing 100% of the issued and
outstanding shares of DMDC Voting Common Stock, are owned beneficially and of
record by COPI free and clear of any Liens, other than Liens in favor of
Crescent or any of its Affiliates or Associates. All of the issued and
outstanding shares of DMDC Voting Common Stock have been duly and validly
issued, are fully paid and nonassessable, and are not subject to any preemptive
rights. No Person (other than COPI, Crescent or any of Crescent's Affiliates or
Associates) holds any Equity Rights in DMDC. There are no voting trusts,
stockholder agreements, proxies or other similar agreements in effect with
respect to the voting or transfer of the DMDC Voting Common Stock. There is no
liability for dividends declared or accumulated but unpaid with respect to any
shares of DMDC Voting Common Stock.
3.10 Ownership of CRE Diversified Voting Common Stock.
The authorized capital stock of CRE Diversified consists of 10 shares
of CRE Diversified Voting Common Stock and 990 shares of nonvoting common stock,
$.01 par value. 10 shares of CRE Diversified Voting Common Stock, representing
100% of the issued and outstanding shares of CRE Diversified Voting Common
Stock, are owned beneficially and of record by COPI free and clear of any Liens,
other than Liens in favor of Crescent or any of its Affiliates or Associates.
All of the issued and outstanding shares of CRE Diversified Voting Common Stock
have been duly and validly issued, are fully paid and nonassessable, and are not
subject to any preemptive rights. No Person (other than COPI, Crescent or any of
Crescent's Affiliates or Associates) holds any Equity Rights in CRE Diversified.
There are no voting trusts, stockholder agreements, proxies or other similar
agreements in effect with respect to the voting or transfer of the CRE
Diversified Voting Common Stock. There is no liability for dividends declared or
accumulated but unpaid with respect to any shares of CRE Diversified Voting
Common Stock.
3.11 Ownership of COPI Colorado GP Interests.
Partnership interests representing an 100% general partner interest and
a 60% ownership interest in COPI Colorado are owned beneficially and of record
by COPI free and clear of any Liens, other than Liens in favor of Crescent or
any of its Affiliates or Associates. No Person (other than COPI, Xxxx X. Xxxx
and Xxxxx X. Xxxxxxxx III) holds any Equity Rights in COPI Colorado. Other than
the limited partnership agreement of COPI Colorado, there are no voting trusts,
stockholder agreements, proxies or other similar agreements in effect with
respect to the voting or transfer of the COPI Colorado GP Interest.
3.12 Claims Against COPI.
Other than the claims referred to in Sections 2.06 through 2.09, to
COPI's Knowledge, there are no obligations or claims existing or assertable
against COPI.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CRESCENT AND CRESCENT REIT
Crescent and Crescent REIT hereby represents and warrants to COPI and
each of the Transferring Subsidiaries as follows:
4.01 Organization.
(a) Crescent is a limited partnership duly organized, validly existing
and in good standing under the Laws of the State of Delaware.
(b) Crescent REIT is a real estate investment trust duly organized and
validly existing under the Laws of the State of
Texas.
4.02 Authority.
(a) Crescent has requisite partnership power and authority to enter
into this Agreement and the Operative Agreements to which it is a party, to
perform its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
Crescent of this Agreement and the Operative Agreements to which it is a party,
and the performance by Crescent of its obligations hereunder and thereunder,
have been duly and validly authorized by the general partner of Purchaser, no
other action on the part of Crescent or its partners being necessary. This
Agreement has been duly and validly executed and delivered by Crescent and
constitutes, and upon the execution and delivery by Crescent of the Operative
Agreements to which it is a party, such Operative Agreements will constitute,
legal, valid and binding obligations of Crescent enforceable against Crescent in
accordance with their terms.
(b) Crescent REIT has full trust power and authority to enter into this
Agreement and the Operative Agreements to which it is a party, to perform its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. The execution and delivery by Crescent REIT of
this Agreement and the Operative Agreements to which it is a party, and the
performance by Crescent REIT of its obligations hereunder and thereunder, have
been duly and validly authorized by the Board of Trust Managers of Crescent
REIT, no other action on the part of Crescent REIT being necessary. This
Agreement has been duly and validly executed and delivered by Crescent REIT and
constitutes, and upon the execution and delivery by Crescent REIT of the
Operative Agreements to which it is a party, such Operative Agreements will
constitute, legal, valid and binding obligations of Crescent REIT enforceable
against Crescent REIT in accordance with their terms.
4.03 Crescent REIT Common Share Issuance.
The Crescent REIT Common Shares to be issued pursuant to Section 2.10
hereof have been duly authorized for issuance and sale to the COPI stockholders
pursuant to this Agreement and, when issued and delivered by Crescent REIT in
consideration of the execution and delivery of this Agreement and the Operative
Agreements by the Transferors, will be validly issued, fully paid and
non-assessable. Upon delivery of the Crescent REIT Common Shares, the COPI
25
stockholders will receive good, valid and marketable title to the Crescent REIT
Common Shares, free and clear of any Liens.
ARTICLE V
COVENANTS OF TRANSFERORS
Each Transferor covenants and agrees with Crescent that it will comply
with all covenants and provisions of this Article V from the date hereof until
the last Asset Transfer Date or Foreclosure Date, except to the extent Crescent
may otherwise consent in writing.
5.01 Regulatory and Other Approvals.
Each Transferor will (i) proceed diligently and in good faith and use
its commercially reasonable efforts to obtain all consents, approvals or actions
of, to make all filings with and to give all notices to Governmental or
Regulatory Authorities or any other Person required to consummate the
transactions contemplated hereby and by the Operative Agreements, (ii) provide
such other information and communications to such Governmental or Regulatory
Authorities or other Persons as Crescent or such Governmental or Regulatory
Authorities or other Persons may reasonably request in connection therewith and
(iii) cooperate with Crescent as promptly as practicable in obtaining all
consents, approvals or actions of, making all filings with and giving all
notices to Governmental or Regulatory Authorities or other Persons required of
Crescent to consummate the purchase of the Assets and the Foreclosure
contemplated hereby and by the Operative Agreements. Each Transferor will
provide prompt notification to Crescent when any such consent, approval, action,
filing or notice referred to in clause (i) above is obtained, taken, made or
given, as applicable, and will advise Crescent of any communications (and,
unless precluded by Law, provide copies of any such communications that are in
writing) with any Governmental or Regulatory Authority or other Person regarding
any of the transactions contemplated by this Agreement or any of the Operative
Agreements.
5.02 Investigation by Crescent.
Each Transferor will (i) provide Crescent and its Representatives with
full access, upon reasonable prior notice and during normal business hours, to
such officers, employees and agents of Transferor who have any responsibility
for the conduct of the Hospitality Business and the Decontrolled Business, to
Transferor's accountants and to the Assets and the Stock, and (ii) furnish
Crescent and such other Persons with all such information and data (including
without limitation copies of Contracts, Licenses and other Books and Records)
concerning the Hospitality Business, the Decontrolled Business, the Assets, the
Stock and the Assumed Liabilities as Crescent or any of its Representatives may
reasonably request in connection with such investigation.
5.03 No Solicitation.
(a) No Transferor will take, nor will it permit any Affiliate of
Transferor (or authorize or permit any investment banker, financial advisor,
attorney, accountant or other Person retained by or acting for or on behalf of
Transferor or any such Affiliate) to take, directly or indirectly, any action to
initiate, assist, solicit, receive, negotiate, encourage or accept any offer or
inquiry from any Person (i) to reach any agreement or understanding (whether or
not such agreement or
26
understanding is absolute, revocable, contingent or conditional) for, or
otherwise attempt to consummate, the sale of any portion of the Hospitality
Business, the Decontrolled Business, the Assets or the Stock to any Person,
other than Crescent or its Affiliates or (ii) to furnish or cause to be
furnished any information with respect to the Hospitality Business, the
Decontrolled Business, the Assets or the Stock to any Person (other than
Crescent or its Affiliates) who Transferor or such Affiliate (or any such Person
acting for or on their behalf) knows or has reason to believe is in the process
of considering any acquisition of any portion of the Hospitality Business, the
Decontrolled Business, the Assets or the Stock. If the Transferor or any such
Affiliate (or any such Person acting for or on their behalf) receives from any
Person (other than Crescent or its Affiliates) any offer, inquiry or
informational request referred to above, the Transferor will promptly advise
such Person, by written notice, of the terms of this Section 5.03 and will
promptly, orally and in writing, advise Crescent of such offer, inquiry or
request and deliver a copy of such notice to Crescent.
5.04 Conduct of Business.
Except as otherwise contemplated by this Agreement or as reasonably
necessary in connection with the COPI bankruptcy case, each Transferor will, and
COPI will cause the Decontrolled Entities and their Subsidiaries to,
(a) operate the Hospitality Business and the Decontrolled Business only
in the ordinary course consistent with past practice;
(b) use commercially reasonable efforts to (i) preserve intact the
present business organization and reputation of the Hospitality Business and the
Decontrolled Business, (ii) keep available (subject to dismissals and
retirements in the ordinary course of business consistent with past practice)
the services of the employees of the Decontrolled Business, (iii) maintain the
Assets in good working order and condition, ordinary wear and tear excepted,
(iv) maintain the good will of customers, suppliers, lenders and other Persons
to whom Transferor sells goods or provides services or with whom Transferor
otherwise has significant business relationships in connection with the
Hospitality Business and the Decontrolled Business, and (v) continue all
reasonable current asset and property management, real estate development,
sales, marketing and promotional activities relating to the Hospitality Business
and the Decontrolled Business, unless Crescent reasonably requests otherwise;
(c) except to the extent required by applicable Law, (i) cause the
Books and Records to be maintained in the usual, regular and ordinary manner
(and, for COPI, in accordance with GAAP consistently applied and not change in
any material manner any of its methods, principles or practices of accounting in
effect as of December 31, 2001, except as may be required by the SEC, applicable
law or GAAP), and (ii) not permit any material change in any pricing,
investment, accounting, financial reporting, inventory, credit, allowance or Tax
practice or policy of Transferor that would materially adversely affect the
Hospitality Business, the Decontrolled Business, the Assets, the Stock or the
Assumed Liabilities;
(d) comply, in all material respects, with all Laws and Orders
applicable to the Hospitality Business and the Decontrolled Business, and
promptly following receipt thereof to give Crescent
27
copies of any notice received from any Governmental or Regulatory Authority or
other Person alleging any violation of any such Law or Order;
(e) promptly notify Crescent of any material emergency or other
material change in the Condition of the Transferor, the Hospitality Business or
the Decontrolled Business, or of any material governmental complaints,
investigations or hearings (or communications indicating that the same may be
contemplated);
(f) promptly notify Crescent of (i) any material action, suit,
proceeding, arbitration or Governmental or Regulatory Authority investigation or
audit commenced or, to the Knowledge of Transferor, threatened against, relating
to or affecting the Transferor with respect to the Hospitality Business, the
Decontrolled Business, the Assets or the Stock, or (ii) any facts or
circumstances which become Known to the Transferor that could reasonably be
expected to give rise to any material action, suit, proceeding, arbitration or
Governmental or Regulatory Authority investigation or audit that would be
required to be disclosed pursuant to clause (i) above; and
(g) duly and timely file all reports, Tax Returns and other documents
required to be filed with Governmental or Regulatory Authorities, subject to
extensions permitted by law, provided Transferor notifies Crescent that it is
availing itself of such extension.
5.05 Certain Restrictions.
Except as otherwise contemplated by this Agreement or provided for in
the COPI Budget, without Crescent's prior written consent, each Transferor will,
and will cause the Decontrolled Entities and their Subsidiaries to, refrain
from:
(a) acquiring or disposing of any Assets and Properties used or held
for use in the conduct of the Hospitality Business or the Decontrolled Business,
other than in the ordinary course of business consistent with past practice, or
creating or incurring any Lien, other than a Lien in favor of Crescent or any of
its Affiliates or Associates or created in the ordinary course of business
consistent with past practice, on any Assets and Properties used or held for use
in the conduct of the Hospitality Business or the Decontrolled Business;
(b) entering into, amending, modifying, terminating (partially or
completely), granting any waiver under or giving any consent with respect to any
material Contract or any material License, other than in the ordinary course of
business consistent with past practice;
(c) violating, breaching or defaulting under, or taking or failing to
take any action that (with or without notice or lapse of time or both) would
constitute a violation or breach of, or default under, any term or provision of
any material Contract (to which Crescent or any of its Affiliates or Associates
is not a party) or any material License;
(d) incurring, purchasing, canceling, prepaying or otherwise providing
for a complete or partial discharge in advance of a scheduled payment date with
respect to, or waiving any right of Transferor, any Decontrolled Entity or any
Subsidiary of a Decontrolled Entity under, any Liability owing to Transferor,
any Decontrolled Entity or any Subsidiary of a Decontrolled Entity in connection
with the Hospitality Business, other than in the ordinary course of business
consistent with past practice;
28
(e) engaging with any Person (other than with Crescent, CEI and any of
their Affiliates) in any Business Combination, unless such Person agrees in a
written instrument in form and substance reasonably satisfactory to Crescent to
adopt and comply with the terms and conditions of this Agreement as though such
Person was an original signatory hereto;
(f) engaging in any transaction with respect to the Hospitality
Business or the Decontrolled Business with any officer, director, Affiliate or
Associate of Transferor (other than Crescent or any Affiliate or Associate
thereof), or any Associate of any such officer, director or Affiliate, either
outside the ordinary course of business consistent with past practice or other
than on an arm's-length basis;
(g) amending the certificate or articles of incorporation, certificate
or articles of organization or operating agreement, or certificate or articles
of limited partnership or limited partnership agreement, as the case may be, of
any Decontrolled Entity or Subsidiary of any Decontrolled Entity;
(h) selling, transferring, disposing, pledging or otherwise encumbering
the Stock, or agreeing to any restrictions on transfer of the Stock;
(i) increasing the salary, bonus or other compensation of any employee
of COPI or its Subsidiaries;
(j) other than in the ordinary course of business consistent with past
practice, borrowing money and/or issuing evidences of Indebtedness, including
increases in any Indebtedness;
(k) guaranteeing any obligations of any Person or assuming any
liability or other obligation of any Person;
(l) making capital expenditures or commitments for additions to
property, plant or equipment constituting capital assets on behalf of the
Hospitality Business in an aggregate amount exceeding $75,000;
(m) making any payments or commitments to any Person not provided for
in the COPI Budget if the amount of such payments or commitments exceed
$100,000, or
(n) entering into any Contract to do or engage in any of the foregoing.
5.06 Delivery of Books and Records, etc.; Removal of Property.
(a) On each Asset Transfer Date, the Transferor will deliver or make
available to Crescent at the locations at which the Hospitality Business is
conducted all of the Books and Records related to the Hospitality Business and
such other Assets as are in Transferor's possession at other locations, and if
at any time after each Asset Transfer Date, Transferor discovers in its
possession or under its control any other Books and Records or other Assets, it
will forthwith deliver such Books and Records or other Assets to Crescent.
(b) On any Foreclosure Date, COPI will deliver or make available to
Crescent at the locations at which the Decontrolled Business relating to the
foreclosed Stock is conducted all of the
29
Books and Records related to the Decontrolled Business relating to the
foreclosed Stock, and if at any time after the Foreclosure Date, COPI discovers
in its possession or under its control any other Books and Records relating to
the foreclosed Stock or the Decontrolled Business, it will forthwith deliver
such Books and Records to Crescent.
5.07 Resignations.
On any Foreclosure Date, COPI shall cause Xxxxxxx X. Xxxxxxx and any
other COPI officer, director or employee (other than Xxxx X. Xxxx) to resign,
effective as of such date, from all director and officer positions of the
Decontrolled Entity or Entities, of which the Stock is being retained in
satisfaction of obligations, as well as of any Subsidiaries of such Decontrolled
Entity or Entities.
5.08 Fulfillment of Conditions.
Transferor will execute and deliver at each Asset Transfer Date each
Operative Agreement that Transferor is required hereby to execute and deliver as
a condition to each Asset Transfer Date, will take all commercially reasonable
steps necessary or desirable and proceed diligently and in good faith to satisfy
each other condition to the obligations of Crescent contained in this Agreement
and will not take or fail to take any action that could reasonably be expected
to result in the nonfulfillment of any such condition.
ARTICLE VI
CRESCENT AND CRESCENT REIT COVENANTS
Each of Crescent and Crescent REIT covenants and agrees with each of
the Transferors that it will comply with all covenants and provisions of this
Article VI, except to the extent that the Transferors may otherwise consent in
writing.
6.01 Regulatory and Other Approvals.
Crescent and Crescent REIT will (i) proceed diligently and in good
faith and use its commercially reasonable efforts, as promptly as practicable to
obtain all consents, approvals or actions of, to make all filings with and to
give all notices to Governmental or Regulatory Authorities or any other Person
required of Crescent or Crescent REIT to consummate the transactions
contemplated hereby and by the Operative Agreements, (ii) provide such other
information and communications to such Governmental or Regulatory Authorities or
other Persons as the Transferors or such Governmental or Regulatory Authorities
or other Persons may reasonably request in connection therewith and (iii)
cooperate with the Transferors as promptly as practicable in obtaining all
consents, approvals or actions of, making all filings with and giving all
notices to Governmental or Regulatory Authorities or other Persons required of
the Transferors to consummate the transactions contemplated hereby and by the
Operative Agreements. Crescent and Crescent REIT will provide prompt
notification to COPI when any such consent, approval, action, filing or notice
referred to in clause (i) above is obtained, taken, made or given, as
applicable, and will advise COPI of any communications (and, unless precluded by
Law, provide copies of any such communications that are in writing) with any
Governmental or Regulatory Authority or other Person regarding any of the
transactions contemplated by this Agreement or any of the Operative Agreements.
30
6.02 Fulfillment of Conditions.
Crescent will execute and deliver at each Asset Transfer Date each
Operative Agreement that Crescent is hereby required to execute and deliver as a
condition to each Asset Transfer Date, will take all commercially reasonable
steps necessary or desirable and proceed diligently and in good faith to satisfy
each other condition to the obligations of the Transferors contained in this
Agreement and will not take or fail to take any action that could reasonably be
expected to result in the nonfulfillment of any such condition.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
7.01 Survival of Representations, Warranties, Covenants and Agreements.
Subject to the provisions of Section 8.01 below, each Transferor,
Crescent and Crescent REIT have the right to rely fully upon the
representations, warranties, covenants and agreements of the other contained in
this Agreement. The representations, warranties, covenants and agreements of
each Transferor, Crescent and Crescent REIT will survive indefinitely.
ARTICLE VIII
INDEMNIFICATION
8.01 Indemnification.
(a) Subject to paragraph (e) of this Section and the other Sections of
this Article VIII, each Transferor shall indemnify Crescent, Crescent REIT and
their respective officers, directors, employees, agents and Affiliates in
respect of, and hold each of them harmless from and against, any and all Losses
suffered, incurred or sustained by any of them or to which any of them becomes
subject, resulting from, arising out of or relating to (i) any misrepresentation
or breach of warranty contained in this Agreement, (ii) any nonfulfillment of or
failure to perform any covenant or agreement on the part of such Transferor
contained in this Agreement if such Transferor has failed to use commercially
reasonable efforts to fulfill or perform such covenants or agreements, or (iii)
an Excluded Liability.
(b) Subject to paragraph (e) of this Section and the other Sections of
this Article VIII, Crescent shall indemnify each Transferor and its officers,
directors, employees, agents and Affiliates in respect of, and hold each of them
harmless from and against, any and all Losses suffered, incurred or sustained by
any of them or to which any of them becomes subject, resulting from, arising out
of or relating to (i) any misrepresentation or breach of warranty contained in
this Agreement, (ii) any nonfulfillment of or failure to perform any covenant or
agreement on the part of Crescent contained in this Agreement if Crescent has
failed to use commercially reasonable efforts to fulfill or perform such
covenants or agreements, or (iii) all Assumed Liabilities.
(c) Subject to paragraph (e) of this Section and the other Sections of
this Article VIII, Crescent REIT shall indemnify COPI and its officers,
directors, employees, agents and Affiliates
31
in respect of, and hold each of them harmless from and against, any and all
Losses suffered, incurred or sustained by any of them or to which any of them
becomes subject, resulting from, arising out of or relating to (i) any
misrepresentation or breach of warranty contained in this Agreement or (ii) any
nonfulfillment of or failure to perform any covenant or agreement on the part of
Crescent REIT contained in this Agreement if Crescent REIT has failed to use
commercially reasonable efforts to fulfill or perform such covenants or
agreements.
(d) In the event that any claim is asserted against any party hereto,
or any party hereto is made a party defendant in any Action or Proceeding, and
such claim, Action or Proceeding involves a matter which is the subject of a
claim for indemnification under Sections 8.01(a) through (c), then such party
(an "Indemnified Party") shall give written notice to Crescent, Crescent REIT or
Transferor, as the case may be (the "Indemnifying Party"), of such claim, Action
or Proceeding, and such Indemnifying Party shall have the right to join in the
defense of said claim, Action or Proceeding at such Indemnifying Party's own
cost and expense and, if the Indemnifying Party agrees in writing to be bound by
and to promptly pay the full amount of any final judgment from which no further
appeal may be taken and if the Indemnified Party is reasonably assured of the
Indemnifying Party's ability to satisfy such agreement, then at the option of
the Indemnifying Party, such Indemnifying Party may take over the defense of
such claim, Action or Proceeding, except that, in such case, the Indemnified
Party shall have the right to join in the defense of said claim, Action or
Proceeding at its own cost and expense, provided, however, that the Indemnifying
Party shall not agree to settle any claim, Action or Proceeding relating to
Taxes if such settlement could aversely affect the Tax liability of the
Indemnified Party or an Affiliate thereof and such adverse effect would not be
included in the Indemnified Party's entitlement to indemnification pursuant to
this Article VIII, without the prior written consent of the Indemnified Party,
which consent shall not be unreasonably withheld.
(e) The indemnification obligations of each Transferor pursuant to this
Article VIII shall be subject to the following limitations and other provisions:
(i) The amount of any Losses required to be paid by Transferor
to indemnify any Indemnified Party pursuant to this Article VIII as a
result of any indemnity claim shall be reduced to the extent of any
amounts actually received by such Indemnified Party pursuant to the
terms of any insurance policies (if any) covering such claim.
(ii) The amount of any Losses required to be paid by
Transferor to indemnify any Indemnified Party pursuant to this Article
VIII as a result of any indemnity claim shall be reduced by the amount
of any federal, state or local tax benefit actually realized by the
Indemnified Party as a result of such claim.
(iii) The indemnification obligations of the parties pursuant
to this Article VIII shall be limited to actual damages, losses,
liabilities and expenses and shall not include incidental,
consequential, indirect, punitive or exemplary damages, losses,
liabilities and expenses.
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8.02 Exclusivity.
The parties hereto agree that, in relation to any breach, default or
nonperformance of any representation, warranty, covenant or agreement made or
entered into by a party hereto pursuant to this Agreement or any instrument or
document delivered pursuant hereto, the sole and only relief and remedy
available to the other party hereto in respect of said breach, default or
nonperformance shall be:
(a) termination, but only if said termination is expressly permitted
under the provisions of Article IX;
(b) Losses, but only to the extent properly claimable hereunder and as
limited pursuant to this Article VIII;
(c) specific performance if a court of competent jurisdiction in its
discretion grants the same; or
(d) injunctive or declaratory relief if a court of competent
jurisdiction in its discretion grants the same.
ARTICLE IX
TERMINATION
9.01 Termination.
This Agreement may be terminated, and the transactions contemplated
hereby and not yet commenced may be abandoned:
(a) by mutual written agreement of each Transferor, Crescent and
Crescent REIT; or
(b) by each Transferor, Crescent or Crescent REIT, in the event (i) of
a material breach hereof by a non-terminating party if such non-terminating
party fails to cure such breach within 10 Business Days following notification
thereof by the terminating party or (ii) upon notification to all
non-terminating parties by the terminating party that the satisfaction of any
condition to the terminating party's obligations under this Agreement becomes
impossible or impracticable with the use of commercially reasonable efforts if
the failure of such condition to be satisfied is not caused by a breach hereof
by the terminating party; provided, however that (x) no Transferor shall have
the right to terminate this Agreement pursuant to clause (i) of this paragraph
if the non-terminating party is another Transferor, and not Crescent or Crescent
REIT, (y) neither Crescent nor Crescent REIT shall have the right to terminate
this Agreement pursuant to clause (i) of this paragraph if the non-terminating
party is either Crescent or Crescent REIT, and (z) Crescent and/or Crescent REIT
shall not have the unilateral right to terminate this Agreement pursuant to
clause (ii) of this subsection if Crescent or Crescent REIT has received any or
all of the Assets or Stock. Notwithstanding the continuation of this Agreement
after the occurrence of an event specified in clause (ii) of this subsection,
the nonperforming party shall have no further obligation to satisfy any such
impossible or impracticable conditions.
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9.02 Effect of Termination.
(a) If this Agreement is validly terminated pursuant to Section 9.01,
this Agreement will forthwith become null and void, and there will be no
liability or obligation on the part of any Transferor, Crescent or Crescent REIT
(or any of their respective officers, directors, employees, agents or other
representatives or Affiliates), except as provided in the following paragraph
and except that the provisions with respect to confidentiality in Section 10.05
will continue to apply following any such termination.
(b) Notwithstanding any other provision in this Agreement to the
contrary, upon termination of this Agreement pursuant to Section 9.01(b), each
Transferor will remain liable to Crescent and Crescent REIT for any willful
breach of this Agreement by Transferor existing at the time of such termination,
and Crescent or Crescent REIT will remain liable to Transferor for any willful
breach of this Agreement by Crescent or Crescent REIT, respectively, existing at
the time of such termination, and Transferor, Crescent or Crescent REIT may seek
such remedies, including damages and fees of attorneys, against the other with
respect to any such breach as are provided in this Agreement or as are otherwise
available at Law or in equity.
ARTICLE X
MISCELLANEOUS
10.01 Notices.
All notices, requests and other communications hereunder must be in
writing and will be deemed to have been duly given only if delivered personally
or by facsimile transmission or mailed (first class postage prepaid) to the
parties at the following addresses or facsimile numbers:
If to Crescent or Crescent REIT, to:
Crescent Real Estate Equities Limited Partnership
000 Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxx X. Xxxx, Executive Vice President,
Law and Administration
with a copy to:
Xxxx Xxxxxxx LLP
0000 X Xxxxxx, X.X.
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx X. Xxxxxxxx
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If to the Transferors, to:
Crescent Operating, Inc.
000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxxx X. Xxxxxxx, Chief Operating Officer
with a copy to:
Xxxxxx and Xxxxx, LLP
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
Attn: Xxxxxx Xxxxxxxxxx
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt by the sender of
confirmation of delivery (including confirmation by electronic means), and (iii)
if delivered by mail in the manner described above to the address as provided in
this Section, be deemed given upon receipt (in each case regardless of whether
such notice, request or other communication is received by any other Person to
whom a copy of such notice is to be delivered pursuant to this Section). Any
party from time to time may change its address, facsimile number or other
information for the purpose of notices to that party by giving notice in
accordance with this Section 10.01 specifying such change to the other party
hereto.
10.02 Bulk Sales Act.
The parties hereby waive compliance with the bulk sales act or
comparable statutory provisions of each applicable jurisdiction. Each Transferor
shall indemnify Crescent and its officers, directors, employees, agents and
Affiliates in respect of, and hold each of them harmless from and against, any
and all Losses suffered, occurred or sustained by any of them or to which any of
them becomes subject, resulting from, arising out of or relating to the failure
of each Transferor to comply with the terms of any such provisions applicable to
the transactions contemplated by this Agreement.
10.03 Entire Agreement.
This Agreement and the Operative Agreements supersede all prior
discussions and agreements between the parties with respect to the subject
matter hereof and thereof, and contain the sole and entire agreement between the
parties hereto with respect to the subject matter hereof and thereof.
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10.04 Public Announcements.
At all times at or before the Effective Date, each Transferor, Crescent
and Crescent REIT will not issue or make any reports, statements or releases to
the public with respect to this Agreement or the transactions contemplated
hereby without the consent of the other, which consent shall not be unreasonably
withheld, unless required by Law.
10.05 Confidentiality.
Each party hereto will hold, and will use its best efforts to cause its
Affiliates, and their respective Representatives to hold, in strict confidence
from any Person (other than any such Affiliate or Representative), unless (i)
compelled to disclose by judicial or administrative process (including without
limitation in connection with obtaining the necessary approvals of this
Agreement and the transactions contemplated hereby of Governmental or Regulatory
Authorities) or by other requirements of Law or (ii) disclosed in an Action or
Proceeding brought by a party hereto in pursuit of its rights or in the exercise
of its remedies hereunder, all documents and information concerning the other
parties or any of its Affiliates furnished to it by the other parties or such
other parties' Representatives in connection with this Agreement or the
transactions contemplated hereby, except to the extent that such documents or
information can be shown to have been (i) previously known by the party
receiving such documents or information, (ii) in the public domain (either prior
to or after the furnishing of such documents or information hereunder) through
no fault of such receiving party or (iii) later acquired by the receiving party
from another source if the receiving party is not aware that such source is
under an obligation to another party hereto to keep such documents and
information confidential; provided that (y) following each Asset Transfer Date
the foregoing restrictions will not apply to Crescent's use of documents and
information concerning the Hospitality Business, the Assets or the Assumed
Liabilities furnished by any Transferor hereunder and (z) following any
Foreclosure Date the foregoing restrictions will not apply to Crescent's use of
documents and information concerning the Decontrolled Business relating to any
foreclosed Stock furnished by COPI hereunder. In the event the transactions
contemplated hereby are not consummated, upon the request of a party, each other
party hereto will, and will cause its Affiliates and their respective
Representatives to, promptly redeliver or cause to be redelivered all copies of
documents and information furnished by the other party in connection with this
Agreement or the transactions contemplated hereby and destroy or cause to be
destroyed all notes, memoranda, summaries, analyses, compilations and other
writings related thereto or based thereon prepared by the party furnished such
documents and information or its Representatives.
10.06 Waiver.
Any term or condition of this Agreement may be waived at any time by
the party that is entitled to the benefit thereof, but no such waiver shall be
effective unless set forth in a written instrument duly executed by or on behalf
of the party waiving such term or condition. No waiver by any party of any term
or condition of this Agreement, in any one or more instances, shall be deemed to
be or construed as a waiver of the same or any other term or condition of this
Agreement on any future occasion. All remedies, either under this Agreement or
by Law or otherwise afforded, will be cumulative and not alternative.
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10.07 Amendment.
This Agreement may be amended, supplemented or modified only by a
written instrument duly executed by or on behalf of each party hereto.
10.08 No Third Party Beneficiary.
The terms and provisions of this Agreement are intended solely for the
benefit of each party hereto and their respective successors or permitted
assigns, and it is not the intention of the parties to confer third-party
beneficiary rights upon any other Person other than any Person entitled to
indemnity under Article VIII.
10.09 No Assignment; Binding Effect.
Neither this Agreement nor any right, interest or obligation hereunder
may be assigned by any party hereto without the prior written consent of the
other parties hereto and any attempt to do so will be void, except (i) for
assignments and transfers by operation of Law and (ii) that Crescent may assign
any or all of its rights, interests and obligations hereunder (including without
limitation its rights under Article VII) to (A) one or more Subsidiaries of
Crescent (who may make the subsequent assignment referred to in (B)), or (B) any
future purchaser of the Hospitality Business, the Decontrolled Business, any of
the Stock or a substantial part of the Assets, but no such assignment shall
relieve Crescent of its obligations hereunder. Subject to the preceding
sentence, this Agreement is binding upon, inures to the benefit of and is
enforceable by the parties hereto and their respective successors and assigns.
10.10 Headings.
The headings used in this Agreement have been inserted for convenience
of reference only and do not define or limit the provisions hereof.
10.11 Invalid Provisions.
If any provision of this Agreement is held to be illegal, invalid or
unenforceable under any present or future Law, and if the rights or obligations
of any party hereto under this Agreement will not be materially and adversely
affected thereby, (i) such provision will be fully severable, (ii) this
Agreement will be construed and enforced as if such illegal, invalid or
unenforceable provision had never comprised a part hereof, (iii) the remaining
provisions of this Agreement will remain in full force and effect and will not
be affected by the illegal, invalid or unenforceable provision or by its
severance herefrom and (iv) in lieu of such illegal, invalid or unenforceable
provision, there will be added automatically as a part of this Agreement a
legal, valid and enforceable provision as similar in terms to such illegal,
invalid or unenforceable provision as may be possible.
10.12 Governing Law.
This Agreement shall be governed by and construed in accordance with
the Laws of the State of
Texas applicable to a contract executed and performed
in such State, without giving effect to the conflicts of laws principles
thereof.
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10.13 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which will be deemed an original, but all of which together will constitute one
and the same instrument.
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officer of each party as of the date first above written.
CRESCENT REAL ESTATE EQUITIES
LIMITED PARTNERSHIP
By: Crescent Real Estate Equities, Ltd.,
its general partner
By: /s/ XXXXX X. XXXX
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Executive Vice President, Law
and Administration
CRESCENT REAL ESTATE EQUITIES COMPANY
By: /s/ XXXXX X. XXXX
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Executive Vice President, Law
and Administration
CRESCENT OPERATING, INC.
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Executive Vice President
ROSESTAR MANAGEMENT LLC
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Manager
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CANYON RANCH LEASING, L.L.C.
By: Rosestar Management, LLC, its manager
By: /s/ XXXXXXX X. XXXXXXX
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Manager
WINE COUNTRY HOTEL, LLC
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Manager
ROSESTAR SOUTHWEST, LLC
By: RSSW Corp., its manager
By: /s/ XXXXXXX X. XXXXXXX
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
COI HOTEL GROUP, INC.
By: /s/ XXXXXXX X. XXXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chairman
39