OMM DRAFT
DATED AS OF 2/1/98
CONTRIBUTION AGREEMENT
CASTLE & XXXXX COMMERCIAL-CA, INC.
CASTLE & XXXXX RETAIL, INC.
HORIZON/XXXX OUTLET CENTERS LIMITED PARTNERSHIP
RELATING TO THE FORMATION
OF
CASTLE & XXXXX OUTLET CENTERS, LLC
Dated as of February 1, 1998
TABLE OF CONTENTS
PAGE
SECTION 1. DEFINITIONS -1-
SECTION 2. COMPANY FORMATION AND CONTRIBUTIONS -1-
2.1 Formation of the Company -1-
2.2 Capital Contribution by C&C and CCR -2-
2.3 Capital Contribution by Horizon/Xxxx -2-
SECTION 3. CLOSING -2-
3.1 The Closing -2-
3.2 The Closing Date -2-
3.3 Termination Rights; Certain Closing Costs -3-
3.4 Possession, Notification of Tenants and Management -4-
SECTION 4. CLOSING PRORATIONS
-5-
SECTION 5. REPRESENTATIONS AND WARRANTIES -6-
5.1 All Parties -6-
(a) Organization, Power and Authority -6-
(b) Authority Relative to this Agreement -6-
(c) Binding Obligation -7-
(d) No Violation -7-
(e) Bankruptcy -7-
(f) Knowledge and Experience -7-
(g) No Distribution -8-
(h) Tax and Securities Issues -8-
(i) Disclosure -8-
(j) Non-Foreign Person -8-
(k) Existing Xxxx Lease -8-
(a) Compliance with Laws -8-
(b) Environmental Matters -9-
(c) Physical Condition -9-
(d) Licenses; Rights of Way; Access -9-
(e) Leases -10-
(f) No Litigation or Adverse Events -11-
(g) Contracts, Agreements and Liens -11-
(h) No Other Agreements -11-
(i) Security Deposits -12-
(j) Financial Condition -12-
i
(k) Second Horizon Group Financing -12-
(l) Other Second Horizon Properties -12-
SECTION 6. CONTINUATION AND SURVIVAL -13-
6.1 Continuation and Survival -13-
SECTION 7. INDEMNITY -13-
7.1 Indemnification by Horizon/Xxxx -13-
7.2 Indemnification by C&C and CCR -14-
7.3 Limitation on Indemnity -14-
7.4 Mitigation -14-
7.5 Matters Involving Third Parties -15-
SECTION 8. CONDITIONS PRECEDENT TO CLOSING -16-
8.1 Conditions to Obligations of C&C -16-
(a) Performance of Obligations -16-
(b) Amended and Restated Partnership Agreement -16-
(c) Lake Elsinore Land -17-
(d) Xxxx Leasehold Interest -17-
(e) Second Horizon Group Financing -17-
(f) Casualty or Condemnation -17-
(g) Contribution of Cash -17-
8.2 Conditions to Obligations of Horizon/Xxxx -18-
(a) Performance of Obligations -18-
(b) Landlord Consent and Release -18-
(c) Series B Pledge -18-
(d) Second Horizon Group Financing -18-
SECTION 9. CLOSING DELIVERIES -19-
9.1 Closing Deliveries By Horizon/Xxxx -19-
(a) Transaction Documents -19-
(b) Corporate and Partnership Proceedings -19-
(c) Organizational Documents -19-
(d) Incumbency Certificates -19-
(e) Opinions -19-
9.2 Closing Deliveries of C&C and CCR -19-
(a) Transaction Documents -19-
(b) Corporate and Partnership Proceedings -19-
(c) Organizational Documents -19-
(d) Incumbency Certificates -20-
(e) Opinion -20-
(f) Series B Pledge -20-
(g) Guaranty -20-
SECTION 10. INTENTIONALLY OMITTED -20-
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SECTION 11. CONFIDENTIALITY -20-
11.1 Confidentiality -20-
SECTION 12. COVENANTS -21-
12.1 Maintenance of Horizon/Xxxx Properties -21-
12.2 Insurance -22-
12.3 Horizon/Xxxx Deliveries -22-
(a) Files Relating to Horizon Properties -22-
(b) Rent Roll -22-
(c) Notice of Change -22-
(d) Estoppel Certificates -22-
(e) [Intentionally Omitted] -23-
(f) Financial Statements -23-
(g) Title Policies -23-
12.4 Compliance With Second Horizon Group Financing. -23-
12.5 Tax Reporting -23-
12.6 Updating Schedules -23-
SECTION 13. MISCELLANEOUS -24-
13.1 Notices -24-
13.2 Successors and Assigns -26-
13.3 Amendments -26-
13.4 Governing Law -26-
13.5 Severability -26-
13.6 Counterparts -26-
13.7 No Waiver -26-
13.8 Enforcement -26-
13.9 Exclusive Remedies -27-
13.10 Exhibits -27-
13.11 Legal Representation -27-
13.12 Entire Agreement -27-
13.13 Further Assurances and Cooperation -27-
SECTION 14. BROKERS AND FINDERS -29-
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CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (this "AGREEMENT") is made and entered
into as of the 1st day of February, 1998, by and between CASTLE & XXXXX
COMMERCIAL-CA, INC., a California corporation ("C&C"), CASTLE & XXXXX RETAIL,
INC., a California corporation ("CCR"), and HORIZON/XXXX OUTLET CENTERS
LIMITED PARTNERSHIP, a Delaware limited partnership ("HORIZON/XXXX").
RECITALS
A. C&C, CCR, and Horizon/Xxxx desire to form Castle & Xxxxx
Outlet Centers, LLC, a California limited liability company (the "COMPANY")
to own and operate certain commercial real estate projects or interests
therein.
B. On the Closing Date, C&C, CCR and Horizon/Xxxx shall make
their respective capital contributions set forth in Sections 2.2 and 2.3.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
SECTION 1. DEFINITIONS
Capitalized terms set forth in this Agreement, unless otherwise
defined herein, shall have the meaning set forth in APPENDIX "1" attached
hereto and made a part hereof. The parties agree and acknowledge that CCR is
an entity affiliated with C&C, and that when reference is made herein to "the
other party" or words or phrases of similar import, the reference is to
Horizon/Xxxx on the one hand, and C&C and CCR on the other hand. C&C and CCR
agree that all references herein to C&C shall include CCR unless the context
otherwise requires.
SECTION 2. COMPANY FORMATION AND CONTRIBUTIONS
SECTION 2.1 FORMATION OF THE COMPANY. C&C, CCR, and Horizon/Xxxx
shall duly form the Company on or before the Closing Date, and in connection
therewith, each of such parties shall (i) cause the execution and delivery of
the Company's Organizational Documents and Operating Agreement, and (ii) take
such other actions as may be necessary to effect the formation of the
Company. Provisions regarding the governance and operation of the Company are
more fully set forth in the Operating Agreement.
SECTION 2.2 CAPITAL CONTRIBUTION BY C&C AND CCR. On the Closing
Date, C&C shall contribute or cause to be contributed to the Company cash in
the amount of $283,333.33. On the Closing Date, CCR shall contribute or
cause to be contributed to the Company cash in the amount of $283,333.33.
SECTION 2.3 CAPITAL CONTRIBUTION BY HORIZON/XXXX. On the Closing
Date, Horizon/Xxxx shall contribute or cause to be contributed to the Company
(i) the Lake Elsinore Land, (ii) the Horizon Cannery Leasehold Interest,
(iii) the Lake Elsinore Project Class B Partnership Interest (collectively,
the "HORIZON/XXXX INTERESTS") and (iv) if required, cash in an amount
determined pursuant to Sections 8.1(f) and 8.1(g). The contribution of the
Horizon/Xxxx Interests shall be evidenced by the execution and delivery of
the Horizon/Xxxx Contribution Documents and shall be subject to all Permitted
Exceptions.
SECTION 3. CLOSING
SECTION 3.1 THE CLOSING.
(a) The consummation of the Transactions (the "CLOSING") shall take
place on the Closing Date (as defined below) and shall include, but shall not
be limited to, (i) the formation of the Company, (ii) the capital
contributions as provided in Section 2, (iii) the execution and delivery of
the Operating Agreement and the Amended and Restated Partnership Agreement,
(iv) the execution and delivery of all other documents and agreements
referred to herein and (v) the satisfaction of all conditions precedent
thereto set forth in Section 8 (except as otherwise provided in Section 3.3).
(b) The Closing shall be held at the Century City, Los Angeles
offices of O'Melveny & Xxxxx LLP, or such other location upon which the
parties shall agree.
SECTION 3.2 THE CLOSING DATE. As used herein, the "CLOSING DATE"
shall mean the first to occur of (a) the Business Day upon which the closing
of the merger of Horizon Group, Inc. ("HGI") or its successor with Prime
Retail, Inc. (or its designated affiliate) (the "MERGER") occurs pursuant to
the Merger Agreement, (b) ten (10) Business Days after the termination of the
Merger Agreement or (c) July 31, 1998. Horizon/Xxxx shall notify C&C of the
closing of the Merger at least five (5) Business Days prior to the closing of
the Merger and shall promptly notify C&C Properties if the Merger Agreement
is terminated. Notwithstanding the foregoing, Horizon/Xxxx may set a Closing
Date which is prior to the first to occur of the above described dates,
provided that such date shall not be earlier than March 31, 1998 and provided
further that, Horizon/Xxxx shall have delivered to C&C at least ten (10)
Business Days notice of its election of such Closing Date. C&C shall use
commercially reasonable efforts to obtain the consent contemplated by Section
5.1(b)(ii) as soon as practicable after the date hereof. In the event C&C
obtains such consent prior to March 31, 1998, it shall notify Horizon/Xxxx
and, at Horizon/Glen's election and upon 10 Business Days notice to C&C, the
Closing Date may occur on a date prior to March 31, 1998. The date for any
scheduled Closing shall be extended (including beyond July 31,
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1998) to the extent necessary to accommodate the ten-day notice period
contemplated by Section 3.3(c).
SECTION 3.3 TERMINATION RIGHTS; CERTAIN CLOSING COSTS.
(a) If (i) the Closing has not occurred by July 31, 1998, (subject
to the extension pursuant to the last sentence of Section 3.2) by reason of
the breach of a representation or warranty or default by C&C or Horizon/Xxxx,
as the case may be, of its obligations hereunder and (ii) such breach or
default shall continue uncured for a period of 30 days after notice thereof
from the other parties and (iii) if, in the case of a breach or default by
Horizon/Xxxx, Horizon/Xxxx shall have failed to make the cash contribution
contemplated by Section 8.1(f) or 8.1(g), then the party who is in breach or
default or who is otherwise not prepared to close shall have no right to
terminate this Agreement and the other party shall have the right, at its
option, to (x) subject to the provisions of Section 3.3(c) below, terminate
this Agreement or (y) exercise its rights under Section 3.3(c) below to
proceed with the Closing of the Transactions. Such election to terminate or
proceed shall not constitute a waiver of any condition precedent or any such
breach or default. If such non-breaching party is entitled to terminate this
Agreement pursuant to the provisions of this Section 3.3 and elects to do so,
such party shall notify the other parties in writing and the party who is in
breach or default or who is otherwise not prepared to close shall pay all
Losses and Liabilities incurred by the terminating party as a result of such
breach or default, including all costs of enforcement pursuant to Section
13.8 hereof.
(b) Upon the Closing, the following costs and expenses, to the
extent incurred or otherwise applicable, shall be allocated as follows:
(i) Horizon/Xxxx shall pay for the Preliminary Title Reports
and the premium for the Title Policies and any sales taxes, transfer taxes
and recording fees applicable to the contribution of the Lake Elsinore Land
and the Lake Elsinore Class B Partnership Interest. In addition,
Horizon/Xxxx shall be liable for any prepayment fee or other charge payable
in connection with any payoff of any monetary encumbrances related to the
Lake Elsinore Land.
(ii) In addition to the provisions set forth in paragraph (i)
above, each party shall pay its own legal, accounting and advisors' fees,
costs and expenses associated with the preparation of this Agreement and the
consummation of the Transactions. Horizon/Xxxx shall pay all costs, fees,
and expenses associated with its analysis of the tax, economic, securities
law compliance or the impact of the Transactions upon any of Horizon/Glen's
related entities, and C&C shall pay all costs, fees, and expenses associated
with its analysis of the tax, economic, securities law compliance or other
impact of the Transactions upon any of C&C's related entities.
(c) Neither C&C nor Horizon/Xxxx shall have the right to terminate
this Agreement or refuse to consummate the Transactions if the failure of the
conditions precedent set forth in Sections 8.1 and 8.2 hereof to be satisfied
either (i) can be cured at
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Closing in full by the payment of money and are so cured in accordance with
Section 8.1(g) and this Section 3.3(c) prior to the expiration of the 30-day
cure period referred to in Section 3.3(a) or, (ii) in the case of a breach or
default by Horizon/Xxxx which results in a failure of a condition precedent
set forth in Section 8.1, such breach or default will not have a material
adverse effect upon the value of the Horizon/Xxxx Interests or the current
use and operation of the contributed Horizon/Xxxx Properties. Notwithstanding
the preceding sentence, if any such breach or default by Horizon/Xxxx or
failure of a condition precedent set forth in Section 8.1 results in a
failure or other inability of Horizon/Xxxx to contribute the Lake Elsinore
Class B Partnership Interest to the Company, then, in addition to any Losses
and Liabilities required to be paid by Horizon/Xxxx with respect thereto, C&C
shall not be required to accept the Lake Elsinore Land and, at its option,
C&C may require Horizon/Xxxx to contribute cash to the Company in an amount
equal to the Company's Losses and Liabilities with respect to the Lake
Elsinore Land in lieu of the contribution of Lake Elsinore Land. If any such
breach or default can be reasonably anticipated prior to the scheduled
Closing Date, the breaching party shall provide the non-breaching party with
written notice of such breach at least ten (10) days prior to the Closing
Date (which Closing Date shall be delayed, if necessary, in order to allow
the breaching party to comply with the notice requirements of this Section
3.3). Such notice shall include a description of the breach, the amount of
damages caused thereby and the anticipated remedy. The party in breach
shall, on the Closing Date, contribute to Company the amount necessary (if
the exact amount cannot be readily determined, then an estimate reasonably
satisfactory to the non-breaching party shall be initially used until the
exact amount is known at which point the party in breach shall pay Company
the difference or the non-breaching party shall refund any excess, as the
case may be) to cure the same and agree to indemnify and hold the
non-breaching party harmless from any Losses and Liabilities the
non-breaching party may suffer arising from such failure, as applicable. The
indemnity referred to in the immediately preceding sentence shall not be
subject to the limitations set forth in clauses (i) and (ii) of Section 7.3.
The breaching party, subject to the non-breaching party's reasonable
approval, may contribute such amount to the Company in the form of a letter
of credit or other security in lieu of cash.
SECTION 3.4 POSSESSION, NOTIFICATION OF TENANTS AND MANAGEMENT.
(a) Possession of the Xxxx Cannery Project and the Lake Elsinore
Land shall be transferred to the Company as of the Closing Date and such
properties shall thereafter be managed by the Manager of the Company pursuant
to the Operating Agreement.
(b) Possession of the Lake Elsinore Project shall remain with
Second Horizon Partnership and such project shall thereafter be operated and
managed in accordance with the provisions of the Amended and Restated
Partnership Agreement and the Loan Documents.
(c) Concurrently with the Closing, Horizon/Xxxx shall mail (or
cause to be mailed) via certified mail (postage prepaid) or personally
deliver to each Tenant of the Xxxx Cannery Project a letter in substantially
the form attached hereto as EXHIBIT C advising each
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Tenant of the applicable change of ownership and the holding of security
deposits. If the notice to the Tenant is made by personal delivery, a
representative of the Tenant shall acknowledge receipt of the notice and sign
his or her name on Horizon/Glen's copy of the notice.
SECTION 4. CLOSING PRORATIONS
(a) Except as set forth in paragraph (e) hereof, Horizon/Xxxx or
Second Horizon Partnership, as applicable, shall be entitled to all rents and
income and shall be liable for all costs and expenses relating to the
Horizon/Xxxx Properties arising out of or related to (i) the period prior to
the Closing Date with respect to the Lake Elsinore Land and the Lake Elsinore
Project and (ii) the period of its tenancy under the Existing Xxxx Lease with
respect to the Xxxx Cannery Project (other than matters for which the
landlord is responsible thereunder). Upon the Closing Date and thereafter,
the Company shall be entitled to all rents and income relating to the Xxxx
Cannery Project (except for the rental payments due to Castle & Xxxxx
Properties, Inc. ("C&C Properties") as the landlord under the Existing Xxxx
Lease, which shall be reserved to C&C Properties) and shall be liable for all
costs and expenses relating to the Xxxx Cannery Project (except for those
costs and expenses allocated to the landlord under the Existing Xxxx Lease,
which shall continue to be borne by C&C Properties) and the Lake Elsinore
Land arising out of or related to the period on and after the Closing Date.
Notwithstanding that the Lake Elsinore Project shall continue to be owned by
the Second Horizon Partnership, allocation of income and expense with respect
to the Lake Elsinore Project shall be pro rated on the Closing Date on the
same basis as the Lake Elsinore Land as if the Lake Elsinore Project were to
be transferred to the Company on the Closing Date. Thereafter, with respect
to the Lake Elsinore Project, all income and expense shall be allocated to
the Lake Elsinore Project Class B Partnership Interest in accordance with the
Amended and Restated Partnership Agreement.
(b) Except as set forth in paragraph (e) hereof, all proration
items shall be apportioned as of 12:01 AM on the Closing Date on an accrual
basis in accordance with GAAP. No prorations, credits or transfer of
deposits shall be considered a capital contribution or advance by
Horizon/Xxxx to the Company, and the Company shall not be obligated to pay or
reimburse Horizon/Xxxx for such amounts, except to the extent of a proration
credit in favor of Horizon/Xxxx. All prorations shall be settled at Closing,
subject to subsequent reconciliation and adjustment as hereinafter set forth.
(c) Prior to Closing, Horizon/Xxxx and C&C shall jointly prepare
and approve a preliminary closing statement on the basis of the Leases and
other sources of income and expenses.
(d) If any prorations cannot be definitely calculated on the
Closing Date, then they shall be estimated at the Closing and definitely
calculated by C&C and Horizon/Xxxx as soon after the Closing Date as
feasible. If the parties are unable to agree on such definitive calculation,
they shall resolve such dispute in accordance with the
5
provisions of Section 4.6(f) of the Amended and Restated Partnership
Agreement. Either party owing the other party a sum of money based on such
subsequent resolution shall promptly pay said sum to the other party,
together with interest thereon at the rate of two percent (2%) over the
"prime rate" (as announced from time to time in the Wall Street Journal) per
annum from the date of presentment of the xxxx therefor to the date of
payment if payment is not made within ten (10) days after delivery of such
xxxx.
(e) Notwithstanding the provisions of paragraphs (a) and (b) above,
the following items shall be allocated on the Closing Date as follows:
(i) Horizon/Xxxx shall be entitled to a credit with respect to
the amount then on deposit in the Capital Reserve Sub-Account pursuant to
Section 2.12 of the Loan Agreement;
(ii) Tenant improvement costs incurred in connection with new
Leases entered into between the date hereof and the Closing Date shall be pro
rated over the term of such Lease provided that such Lease complies with the
leasing parameters or is otherwise approved by C&C;
(iii) leasing commissions due and payable after the date hereof
in connection with the renewal or extension of any existing Lease in
accordance with its terms shall be pro rated over the renewal or extended
term of the Lease; and
(iv) leasing commissions due and payable after the date hereof
incurred in connection with a Lease entered into after the date hereof and
prior to the Closing Date shall be pro rated over the term of such Lease
provided that such Lease complies with the leasing parameters or is otherwise
approved by C&C and such leasing commissions are reasonable and customary in
amount.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
SECTION 5.1 ALL PARTIES. Horizon/Xxxx makes the following
representations and warranties to C&C and CCR, and each of C&C and CCR
jointly and severally make the following representations and warranties to
Horizon/Xxxx:
(a) ORGANIZATION, POWER AND AUTHORITY. It is an entity, duly
organized, validly existing, and in good standing under the laws of the
jurisdiction in which it was formed, and has the requisite corporate or
partnership power and authority to own its respective properties and all of
its assets and to carry on its business as presently conducted.
(b) AUTHORITY RELATIVE TO THIS AGREEMENT. On the date hereof, it
has obtained all necessary corporate or partnership approvals to carry out
the Transactions and has taken all action necessary to authorize the
execution, delivery and performance of the Transactions and this Agreement
except (i) in the case of Horizon/Xxxx, for the requisite
6
notices and deliveries pursuant to the Loan Documents with respect to the
contribution by Horizon/Xxxx of the Lake Elsinore Project Class B Partnership
Interest to the Company and (ii) in the case of C&C, for the consent or
approval of The Chase Manhattan Bank as agent with respect to a credit
agreement affecting certain Affiliates of C&C. On the Closing Date, it shall
have given any notice or obtained any required consent and complied with any
applicable requirements relating to the matters referred to in clauses (i)
and (ii) of the preceding sentence to the extent applicable to it. No other
proceedings, consents or approvals are needed to authorize the execution and
delivery of this Agreement and the consummation by it of the Transactions.
(c) BINDING OBLIGATION. This Agreement and the Transaction
Documents to which it is a party have been duly and validly executed and
delivered and constitute valid and binding agreements, enforceable against it
in accordance with their respective terms.
(d) NO VIOLATION. Except for the matters referred to in clauses
(i) and (ii) of paragraph (b) above, which matters shall be satisfied on the
Closing Date, the execution, delivery and all actions to be undertaken by it
pursuant to this Agreement and the consummation of the Transactions will not
result in or constitute any of the following: (i) a default, breach, or
violation, or an event that, with notice or lapse of time or both, would be a
default, breach, or violation, of any existing agreement, contract, document,
instrument, legal or regulatory requirement to which it is a party or by
which it or any of its properties, or any portion thereof, is bound; (ii) a
violation or conflict with any term or provision of any judgment, decree,
order, statute, injunction, rule or regulation of a governmental unit
applicable to it or its properties; or (iii) the creation or imposition of
any lien, charge or encumbrance on its properties; except for such as would
not, in the case of (i), (ii) and (iii), individually or in the aggregate,
have a material adverse effect on the Transactions or values of the
Horizon/Xxxx Interests.
(e) BANKRUPTCY. There are no attachments, executions or
assignments for the benefit of creditors, or voluntary or involuntary
proceedings in bankruptcy, or under any other debtor relief laws,
contemplated by or pending or, to its Knowledge, threatened against it.
Without limiting the generality of the foregoing, none of the following have
been done by, or to its Knowledge, against or with respect to it: (i) the
commencement of a case under Title 11 of the U.S. Code, as now constituted or
hereafter amended, or under any other applicable federal or state bankruptcy
law of other similar law; (ii) the appointment of a trustee or receive of any
property interest; (iii) an assignment for the benefit of creditors; (iv) an
attachment, execution or other judicial seizure of a substantial property
interest; (v) the taking of, failure to take, or submission to, any action
indicating an inability to meet its financial obligations as they accrue; or
(vi) a dissolution or liquidation.
(f) KNOWLEDGE AND EXPERIENCE. It has such knowledge and experience
in financial and business matters that it is capable of evaluating the merits
and risks of an investment in the Company. It acknowledges that it has the
financial ability to bear the economic risk of its investment in the Company,
has adequate means for providing for its
7
current needs and personal contingencies and has no need for liquidity with
respect to the investment in the Company.
(g) NO DISTRIBUTION. It is not acquiring its membership interest
with a view to the distribution thereof or any present intention of offering
or selling such membership interest in a transaction that would violate the
Securities Act of 1933, as amended, or the securities laws of any State or
any other applicable jurisdiction.
(h) TAX AND SECURITIES ISSUES. It acknowledges that all Tax
Issues, and all Securities Issues applicable to it are solely the
responsibility of it. It further acknowledges that none of the other parties
to this Agreement or the agents or representatives thereof (including their
legal counsel and accountants) has provided advice, representations, or
guidance to it regarding the Tax Issues or the Securities Issues, and it has
not relied nor will rely on any other parties or the agents or
representatives of such parties with regard thereto, but instead will rely on
its own securities, tax, business and legal advisors therefor and with
respect to them.
(i) DISCLOSURE. To its Knowledge, any and all documents delivered
by it to any other party hereto or made available to any other party hereto
for review in connection with the Transactions are true, correct and complete
copies of such documents. To its Knowledge, all of Horizon/Glen's material
files in connection with the Horizon/Xxxx Properties are located at
Horizon/Glen's offices and all such material files have been made available
or copies provided to the other parties or their representatives for review.
(j) NON-FOREIGN PERSON. It is not a "foreign person" as such term
is defined in Section 1445(f) of the Internal Revenue Code of 1986, as
amended. With respect to C&C and Horizon/Xxxx, only, it has not been
organized solely for the purpose of acquiring a membership interest in the
Company.
(k) EXISTING XXXX LEASE. To the Knowledge of Horizon/Xxxx and C&C,
respectively, the Existing Xxxx Lease is in full force and effect as of the
date hereof and as of the Closing Date.
SECTION 5.2 HORIZON/XXXX. Subject to the matters listed in
Schedule 5.2 hereof, Horizon/Xxxx makes the following representations and
warranties to C&C and CCR as of the date of this Agreement and as of the
Closing Date, provided that the representations and warranties contained
herein with respect to the Xxxx Cannery Project shall not be applicable to
those matters which are the obligations, or are exclusively within the
control, of the landlord under the Existing Xxxx Lease.
(a) COMPLIANCE WITH LAWS. The use and operation of the
Horizon/Xxxx Properties are in compliance in all material respects with all
Laws and Permits which are material to the construction, ownership and
operation of the Horizon/Xxxx Properties as
8
currently operated. All material Permits necessary for the current use of
the Horizon/Xxxx Properties have been obtained and are in full force and
effect.
(b) ENVIRONMENTAL MATTERS. Except as disclosed in any
environmental report or summary provided to C&C or its representatives and
listed on Schedule 5.2, (i) to the Knowledge of Horizon/Xxxx, the use and
operation of the Lake Elsinore Project and the Lake Elsinore Land are in
compliance in all material respects with all Environmental Requirements, (ii)
neither Horizon/Xxxx nor, to the Knowledge of Horizon/Xxxx, any previous
owner or tenant or any other person, has engaged in or permitted any
operations or activities in any way involving the handling, manufacture,
treatment, storage, use, generation, release, discharge, refining, dumping or
disposal of any Hazardous Materials on, under, in or about the Lake Elsinore
Project or the Lake Elsinore Land, or transported any Hazardous Materials to,
from or across the Lake Elsinore Project or the Lake Elsinore Land, except in
all cases in material compliance with Environmental Requirements; (iii) to
Horizon/Glen's Knowledge, no Hazardous Materials are presently constructed,
deposited, stored, discharged, released or otherwise located on, under, in or
about the Lake Elsinore Project or the Lake Elsinore Land, except in all
cases in material compliance with Environmental Requirements and (iv) neither
Horizon/Xxxx nor, to the Knowledge of Horizon/Xxxx, any subtenant of
Horizon/Xxxx, has engaged in or permitted any operations or activities in any
way involving the handling, manufacture, treatment, storage, use, generation,
release, discharge, refining, dumping or disposal of any Hazardous Materials
on, under, in or about the Xxxx Cannery Project, or transported any Hazardous
Materials to, from or across the Xxxx Cannery Project, except in all cases in
material compliance with Environmental Requirements.
(c) PHYSICAL CONDITION. To Horizon/Glen's Knowledge, there are no
material structural defects or deficiencies in the Improvements which
individually or in the aggregate would have a material adverse effect on any
of the Horizon/Xxxx Properties. To Horizon/Glen's Knowledge, the
Improvements located at or on the Horizon/Xxxx Properties and Personal
Property located thereon or used in connection therewith are in good working
order and condition (ordinary wear and use excepted) and are sufficient for
the current use of the Horizon/Xxxx Properties. Each of the Lake Elsinore
Project and, to the Knowledge of Horizon/Xxxx, the Xxxx Cannery Project is
served by all water, sewer, gas, electric, telephone, and drainage facilities
and all other utilities required by law or by the current use and operation
of such projects. Horizon/Xxxx has not received any notice from any insurance
carrier, nor to Horizon/Glen's Knowledge are there any physical defects or
inadequacies in the Improvements on the Horizon/Xxxx Properties that if not
corrected would result in termination of insurance coverage or a material
increase in insurance costs.
(d) LICENSES; RIGHTS OF WAY; ACCESS. Horizon/Xxxx or Second
Horizon Partnership, as the case may be, has obtained all material licenses,
permits, easements and rights of way, including offerings for dedication,
required from all governmental authorities having jurisdiction over the Lake
Elsinore Project or the Lake Elsinore Land or from private parties for (i)
the current use and operation of the Lake Elsinore Project or the Lake
Elsinore Land and (ii) to ensure vehicular and pedestrian ingress to and
egress from
9
the Lake Elsinore Project. To its Knowledge, (a) the Lake Elsinore Project
has full and free access to and from public streets and roads, (b) there are
no facts or conditions that could reasonably be expected to result in the
termination of the present access from or to the Lake Elsinore Project to or
from any such existing highways and roads, or (c) there are no facts or
conditions that could result in the termination or expiration of any
conditional use permits, sign permits or other governmental permits or
approvals necessary for the respective uses and operations of the Lake
Elsinore Project as a retail outlet mall and the Lake Elsinore Land as vacant
land.
(e) LEASES. The Rent Rolls for the Lake Elsinore Project and the
Xxxx Cannery Project are true, complete and accurate as of the respective
dates thereof. Except for the Leases and Licenses, there are no other
material leases, subleases, licenses or other agreements with Horizon/Xxxx or
Second Horizon Partnership providing for the occupancy of any of the
Horizon/Xxxx Properties (including the Lake Elsinore Land). With respect to
each Lease: (i) it has been duly and validly executed and delivered by
Horizon/Xxxx or its predecessors-in-interest or by Second Horizon Partnership
or its predecessors-in-interest, as the case may be, as landlord, and, to
Horizon/Glen's Knowledge, by the other parties thereto (or by one of their
respective predecessors-in-interest); (ii) [it is in full force and effect
except for any Leases terminated after the date hereof and prior to the
Closing Date in accordance with their terms or following a material
default by the Tenant thereunder;](iii) the copy thereof delivered to C&C is
true, accurate and complete and is unmodified; (iv) with respect to the
obligations of the landlord under any such Lease, all amounts to be paid by
landlord, including amounts for Tenant allowances or Improvements have been
paid in accordance with the terms of each Lease, (v) with respect to any
Lease of the Lake Elsinore Project, no material default or event of default
by the Landlord exists thereunder and, with respect to the obligations of the
Tenant under any such Lease, to Horizon/Glen's Knowledge, no material default
or event of default beyond applicable cure periods exists thereunder, nor to
Horizon/Glen's Knowledge, has any event occurred which, with the passage of
time or the giving of notice or both, would become a material default
thereunder; (vi) with respect to the Xxxx Cannery Project, each Lease may
validly be assigned to and assumed by the Company, and any and all consents
to such assignment and assumption have been obtained by Horizon/Xxxx; and
(vii) all of the Leases were negotiated at arm's length, and neither
Horizon/Xxxx nor any Affiliate of Horizon/Xxxx (a) has any beneficial or
other ownership interest, directly or indirectly, in any Tenant, or (b) has
guaranteed in whole or in part, directly or indirectly, any obligation of a
Tenant under any Lease. Horizon/Xxxx (i) is the present tenant under the
Existing Xxxx Lease, (ii) has not assigned, pledged or contracted to assign
or pledge any of its rights under the Existing Xxxx Lease except pursuant to
this Agreement, and (iii) has the right, power and authority to contribute
the Existing Xxxx Lease to the Company pursuant to the Horizon Cannery
Leasehold Assignment and Assumption Agreement subject to the consent of
Landlord pursuant to the Landlord Consent and Assignment and Assumption of
Lease and Release of Assignor.
10
(f) NO LITIGATION OR ADVERSE EVENTS. There are no investigations,
actions, suits, proceedings or claims pending or, to the Knowledge of
Horizon/Xxxx, threatened against or affecting Horizon/Xxxx, Second Horizon
Partnership, any Affiliate of Horizon/Xxxx or any of the Horizon/Xxxx
Properties, at law or in equity or before or by any federal, state, municipal
court or other governmental department, commission, board, agency, or
instrumentality, domestic or foreign, which, if determined adversely, would
be likely to have a material adverse effect on Horizon/Xxxx, Second Horizon
Partnership or any Horizon/Xxxx Property. Horizon/Xxxx has not received
notice of any, and to Horizon/Glen's Knowledge, neither it nor Second Horizon
Partnership is subject to any, order, writ, injunction or decrees of any
court or federal, state, municipal or other governmental agency or
department, commission, board, agency or instrumentality with respect to any
Horizon/Xxxx Property which would have a material adverse effect on the
value, use or operation thereof.
(g) CONTRACTS, AGREEMENTS AND LIENS. All Contracts which have a
material effect on (a) the value of any Horizon/Xxxx Property or (b) the use
and operation thereof are listed on Schedule 5.2(g). With respect to each
Contract identified in Schedule 5.2(g), except as disclosed thereon, (i) it
has been duly and validly executed and delivered by Horizon/Xxxx or Second
Horizon Partnership and to its Knowledge the other parties thereto; (ii) it
is in full force and effect; (iii) the copy thereof delivered by Horizon/Xxxx
to C&C is true, accurate and complete and is unmodified; (iv) Horizon/Xxxx or
Second Horizon Partnership, as the case may be, is not in material default
thereunder beyond applicable cure periods and, to Horizon/Glen's Knowledge,
no event exists which, with the passage of time or the giving of notice or
both, would become a material default thereunder, (v) to Horizon/Glen's
Knowledge, no other party thereto is in material default thereunder, nor has
any event occurred which, with the passage of time or the giving of notice or
both, would become a material default thereunder and (vi) to the extent it is
to be assigned to the Company, it may validly be assigned to and assumed by
the Company, and any and all consents to such assignment and assumption have
been obtained by Horizon/Xxxx. There is no Contract for the construction of
any Improvement to any of the Horizon/Xxxx Properties to which Horizon/Xxxx
is a party which is not being paid for in accordance with its terms. There
are no liens or encumbrances, including mechanics' and materialmen's liens,
filed against the Lake Elsinore Project, the Lake Elsinore Land or the
Horizon Cannery Leasehold Interest, except for Permitted Exceptions.
(h) NO OTHER AGREEMENTS. Except for (i) the Lake Elsinore Project
Docu ments, (ii) the Leases and Licenses, (iii) the Contracts referred to in
Section 5.2(g) above, (iv) Permitted Exceptions, (v) Contracts terminable on
not more than 30 days notice and (vi) the Transaction Documents to be
executed and delivered pursuant to this Agreement and agreements and
obligations contemplated thereby, there are no obligations, Contracts or
agreements to which Horizon/Xxxx or Second Horizon Group is a party or, to
its Knowledge, in connection with any of the Horizon/Xxxx Properties by which
they are bound which will be binding upon C&C, its Affiliates or the Company
or which affect the Horizon/Xxxx Properties after the Closing Date which
individually or in the aggregate will have a material adverse effect on the
financial condition or operation of the Horizon/Xxxx
11
Properties. There are no assessments or bonds assessed or, to Horizon/Glen's
Knowledge, proposed to be assessed, against any of the Horizon/Xxxx
Properties, except Permitted Exceptions. To Horizon/Glen's Knowledge, there
are no existing or proposed easements, covenants, restrictions, agreements or
other documents which affect title to any of the Horizon/Xxxx Properties and
which are not disclosed by the Preliminary Title Report for such Horizon/Xxxx
Property (other than Leases).
(i) SECURITY DEPOSITS. All security deposits from each Tenant are
as reflected on each Rent Roll or schedule of security deposits attached
thereto as of the date thereof. There are no other Tenant deposits held by
Horizon/Xxxx in connection with any of the Horizon/Xxxx Properties.
(j) FINANCIAL CONDITION. Horizon/Xxxx has furnished to C&C true
and complete copies of unaudited Statements of Operations for the Lake
Elsinore Project and the Xxxx Cannery Project for certain periods in 1996 and
1997, as indicated therein, copies of which are attached hereto as Exhibits
D-1 and D-2, respectively. The information contained in such Exhibits and
the Financial Statements fairly and accurately present in all material
respects the respective financial positions and cash flows of the Lake
Elsinore Project and the Xxxx Cannery Project, as the case may be, for the
periods indicated. Since the date of the most recent of the Exhibits D-1 and
D-2 or the Financial Statements, there have been no material adverse changes
in the condition, financial or otherwise, of the Lake Elsinore Project.
(k) SECOND HORIZON GROUP FINANCING. There is no material breach or
default under, nor to Horizon/Glen's Knowledge, any event or circumstance
which with notice or lapse of time or both would constitute a material breach
or default under, the Second Horizon Group Financing and, immediately after
giving effect to the Transactions and the consummation of the Merger, the
Second Horizon Group Financing will remain in full force and effect and no
breach or default will exist thereunder. Except for the notice and the
Series B Pledge referred to in Section 8.1(e) hereof which will have been
duly and properly given as of the Closing Date as required by the Loan
Documents, no consent or approval is required under the Second Horizon Group
Financing with respect to the Transactions or the Merger, or if such consent
or approval is required, it will have been obtained prior to the consummation
of the Transactions or the Merger, as the case may be.
(l) OTHER SECOND HORIZON PROPERTIES. With respect to the
properties owned by Second Horizon Partnership (other than the Lake Elsinore
Project), to Horizon/Glen's Knowledge, no material default or event of
default exists with respect to any material contract, lease or other
agreement of or binding upon Second Horizon Partnership and, to
Horizon/Glen's Knowledge, no other material event or circumstance exists
(except for general market conditions and other conditions affecting factory
outlet malls or retail or other real estate projects in the general area of
such properties which are generally known by operators of commercial real
estate) which has or could reasonably be expected to have a material adverse
effect on the financial condition of Second Horizon Partnership or result in
a Default Loan as defined in the Amended and Restated Partnership Agreement.
12
(m) SECURITY INTERESTS. Except for security interests which (i)
relate to the Second Horizon Group Financing and are listed in Schedule 5.2
(m) hereto or (ii) encumber the Lake Elsinore Project or the Xxxx Cannery
Project incurred in the ordinary course of business which individually or in
the aggregate do not have a material adverse effect on the Second Horizon
Partnership or the value of the Lake Elsinore Project or the value of the
Xxxx Cannery Project, as of the Closing Date, there are no filings against
Horizon/Xxxx or any Affiliate of Horizon/Xxxx under the California or Hawaii
Uniform Commercial Codes (or any other applicable law of any applicable
jurisdiction) which would be a lien on any Personal Property owned by
Horizon/Xxxx or Second Horizon Partnership located on or used in connection
with the Lake Elsinore Project or the Xxxx Cannery Project.
(n) KNOWLEDGE. The persons identified in Appendix I hereto in the
definition of Knowledge (i) are officers or employees of Horizon/Xxxx or its
Affiliates, (ii) would, in the ordinary course of their respective duties,
have knowledge of the matters covered by the representations and warranties
of Horizon/Xxxx or its Affiliates contained herein, and (iii) have reviewed
such representations and warranties and conducted such investigation and
inquiry as they deem appropriate under the circumstances.
SECTION 6. CONTINUATION AND SURVIVAL
SECTION 6.1 CONTINUATION AND SURVIVAL. All representations,
warranties and covenants by the respective parties contained herein, and all
indemnity obligations, are intended to and shall be deemed made as of the
date of this Agreement and on the Closing Date unless expressly provided to
the contrary, and shall, subject to the provisions of Section 7.3 hereof,
survive the execution and delivery of this Agreement, the recordation of any
deed and the Closing.
SECTION 7. INDEMNITY
SECTION 7.1 INDEMNIFICATION BY HORIZON/XXXX. Horizon/Xxxx shall
save, hold harmless, indemnify and defend C&C, CCR, their Affiliates, and the
Company, their respective successors and assigns and their respective
officers, directors, employees, partners, agents and representatives, from
and against any and all Losses and Liabilities resulting from (a) each of the
claims or other matters more fully described on Schedule 7.1, (b) any claim
by any Tenant or other third party which relates to any allegation that
Horizon/Xxxx or any of its Affiliates is liable for fraudulent conduct or
negligent misrepresentation arising out of or relating to the execution and
delivery of any Lease or the management and operation of the Xxxx Cannery
Project prior to the Closing Date, except as provided in Schedule 7.1, (c)
any misrepresentation or inaccuracy in or breach of any representation,
warranty or covenant by Horizon/Xxxx in this Agreement and (d) any claim or
cause of action, by or against Horizon/Xxxx or any Affiliate of Horizon/Xxxx
or by any representative, shareholder, successor or assign of Horizon/Xxxx or
any Affiliate of Horizon/Xxxx (other than C&C Properties and its Affiliates)
or by any party holding an interest in Horizon/Xxxx or any Affiliate of
Horizon/Xxxx and/or any successor entity
13
(whether made individually, as a class, or derivatively, or any other way) as
a result of this Agreement, the Transactions, or the Merger. Notwithstanding
anything else herein stated to the contrary, Horizon/Xxxx shall have no
obligation to indemnify any Person under clause (a), (b) or (c) of subsection
7.1 for any claim involving or arising out of or in connection with a matter
which was or is the responsibility or obligation of the landlord under the
Existing Xxxx Lease.
SECTION 7.2 INDEMNIFICATION BY C&C AND CCR. C&C and CCR shall
jointly and severally save, hold harmless, indemnify, and defend
Horizon/Xxxx, its affiliated entities, the Company, and their respective
successors and assigns (including without limitation Prime Retail L.P., as
successor to Horizon/Xxxx pursuant to the Merger), and their respective
officers, directors, employees, partners, agents and representatives, from
and against any and all Losses and Liabilities, resulting from (a) any
misrepresentation or inaccuracy in or breach of any representation, warranty
or covenant by C&C in this Agreement, including, without limitation, any
claim of unpaid fees or costs, including, without limitation, termination
fees and costs and (b) any claim or cause of action, by or against C&C or any
Affiliate of C&C or by any representative shareholder, successor or assign of
C&C or any Affiliate of C&C, or by any party holding an interest in C&C or
any Affiliate of C&C and/or any successor entity (whether made individually,
as a class or derivatively, or any other way) as a result of this Agreement
or the Transactions and (c) any claim by any Tenant or other third party
which arises out of or relates to the management or operation of the Xxxx
Cannery Project after the Closing Date but only to the extent such claim does
not arise out of or relate to any act or omission of Horizon/Xxxx with
respect to the Xxxx Cannery Project prior to the Closing Date.
SECTION 7.3 LIMITATION ON INDEMNITY. The provisions of this
Section 7 shall survive the Closing; provided that (i) notwithstanding
Section 6.1, no party shall have any liability to another party hereunder
unless and until the aggregate amount of damages to such party exceeds
$100,000; and (ii) no claim for a breach of any representation, warranty, or
covenant may be maintained by any party hereto unless such party shall have
notified the other party in writing asserting a claim for such alleged breach
on or before the first anniversary of the Closing Date; and provided that
with respect to the Xxxx Cannery Project, the limitations set forth in
Section 7.3 shall not apply to any claim by any Tenant or other third party
which relates to any allegation that Horizon/Xxxx or any of its Affiliates is
liable for fraudulent conduct or negligent misrepresentation arising out of
or relating to the execution and delivery of any Lease or the management and
operation of the Xxxx Cannery Project prior to the Closing Date.
SECTION 7.4 MITIGATION. With respect to any matter or claim which
is the subject of an indemnity obligation pursuant to this Agreement, each
party hereto agrees to use commercially reasonable efforts to mitigate its
Losses and Liabilities.
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SECTION 7.5 MATTERS INVOLVING THIRD PARTIES.
(a) If any third party shall notify any party (the ``Indemnified
Party'') with respect to any matter (a ``Third Party Claim'') which may give
rise to a claim for indemnification against the other Party (the
``Indemnifying Party'') under this Section 7, then the Indemnified Party
shall promptly notify the Indemnifying Party thereof in writing; PROVIDED,
HOWEVER, that no delay on the part of the Indemnified Party in notifying the
Indemnifying Party shall relieve the Indemnifying Party from any obligation
hereunder unless (and then solely to the extent) the Indemnifying Party
thereby is prejudiced.
(b) Except as set forth in paragraph (c) below, the Indemnifying
Party will have the right to assume the defense of the Third Party Claim,
including conduct of settlement talks and settlement of such claim, with
counsel of its choice reasonably satisfactory to the Indemnified Party;
PROVIDED, HOWEVER:
(i) the Indemnifying Party will not consent to the entry of
any judgment or enter into any settlement with respect to the Third Party
Claim without the prior written consent of the Indemnified Party (which
consent shall not be unreasonably withheld or delayed) unless the judgment or
proposed settlement involves only the payment of money damages by the
Indemnifying Party and does not impose an injunction or other equitable
relief upon the Indemnified Party;
(ii) in the event the Indemnifying Party does not assume and
conduct the defense of the Third Party Claim in accordance with this Section
7.5, the Indemnified Party may defend against, and consent to the entry of any
judgment or enter into any settlement with respect to, the Third Party Claim in
any manner it reasonably may deem appropriate; and
(iii) if the Indemnified Party reasonably determines that it has
claims, defenses or interests which are materially different than those of
the Indemnifying Party, the Indemnified Party shall have the right to engage
at its expense, separate counsel reasonably acceptable to the Indemnified
Party, and to participate in the defense of such claim; the Indemnifying
Party shall control any settlement negotiations and the Indemnified Party
shall not make any offer of settlement to the third party without the
Indemnifying Party's consent, which consent shall not be unreasonably
withheld or delayed. The Indemnifying Party agrees to keep the Indemnified
Party advised of any settlement discussions.
(c) Notwithstanding the provisions of Section 7.5(b), in the event
that any Third Party Claim arises under or in connection with an existing
Lease with respect to the Xxxx Cannery Project, the following provisions
shall apply:
(i) Promptly after the delivery of the notice of such Third
Party Claim pursuant to Section 7.5(a), C&C and Horizon/Xxxx shall meet to
discuss such Third Party Claim and shall use reasonable efforts to determine
the merits of any such claim and,
15
to the extent determinable, the probable amount of any Losses and Liabilities
incurred or likely to be incurred in connection therewith. C&C and
Horizon/Xxxx shall cooperate and attempt in good forth to agree on an amount
(the "Settlement Limit") relating thereto. If C&C and Horizon/Xxxx are able
to agree on a Settlement Limit, C&C, acting alone, shall thereafter be
authorized and permitted to negotiate with such Tenant and to defend and
settle any such claim so long as (i) the aggregate amount payable by
Horizon/Xxxx does not exceed the Settlement Limit and (ii) in connection
therewith, C&C shall provide Horizon/Xxxx with a release from the Tenant
and/or an indemnity from C&C, in each case reasonably satisfactory to
Horizon/Xxxx.
(ii) If C&C and Horizon/Xxxx are unable to agree on a Settlement
Limit or in the event that C&C is unable to settle such Third Party Claim as
set forth in Section 7.5(c)(i) above, C&C and Horizon/Xxxx shall jointly defend
such claim in the manner set forth in Section 7.5(b)(iii) except that neither
shall have the right to settle such claim without the consent of the other
party, which consent shall not be unreasonably withheld or delayed except to
the extent a settlement complies with the criteria set forth in Section
7.5(b)(i). Each party shall initially bear its own costs and expenses of such
joint defense; provided however, to the extent that only one party is
determined to be liable for such claim, the costs and expenses incurred by the
other party with respect thereto shall be included within its Losses and
Liabilities covered by the indemnification provisions of this Section 7.
SECTION 8. CONDITIONS PRECEDENT TO CLOSING
SECTION 8.1 CONDITIONS TO OBLIGATIONS OF C&C. Subject to the
provisions of Section 3.3, the obligations of C&C to consummate the
Transactions are subject to and conditioned upon satisfaction of each of the
following conditions:
(a) PERFORMANCE OF OBLIGATIONS. Horizon/Xxxx shall have performed
in all material respects each of its respective obligations and covenants
hereunder, including without limitation, the execution and delivery of the
Transaction Documents listed on Exhibit E hereto and the other instruments
required to be executed and delivered by Horizon/Xxxx or by any of its
Affiliates pursuant to Section 9.1 hereof.
(b) AMENDED AND RESTATED PARTNERSHIP AGREEMENT. The Amended and
Restated Partnership Agreement shall have been executed and delivered by each
of the parties thereto in a form not materially different from the form
attached hereto as Exhibit F and the Amended and Restated Partnership
Agreement shall be in full force and effect, and the Company shall have been
admitted to the Second Horizon Partnership as a Class B Limited Partner (as
defined in the Amended Partnership Agreement) pursuant to the Lake Elsinore
Project Class B Partnership Interest Assignment in the form attached hereto
as Xxxxxxx X.
00
(x) XXXX XXXXXXXX LAND. Horizon/Xxxx shall have contributed to the
Company the Lake Elsinore Land as provided in Section 2.3 by execution and
delivery of the Lake Elsinore Land Deed in the form attached hereto as
Exhibit H.
(d) XXXX LEASEHOLD INTEREST. Horizon/Xxxx shall have contributed
to the Company the Horizon Cannery Leasehold Interest as provided in Section
2.3 by execution and delivery of the Horizon Cannery Leasehold Assignment and
Assumption Agreement in the form attached hereto as Exhibit J and the Horizon
Cannery Xxxx of Sale and Assignment in the form attached hereto as Exhibit K.
(e) SECOND HORIZON GROUP FINANCING. (i) C&C shall have received a
copy of all required notices with respect to the Second Horizon Group
Financing arising out of the Amended and Restated Partnership Agreement and
the assignment of the Lake Elsinore Project Class B Limited Partnership
Interest to the Company, (ii) Second Horizon Partnership shall have duly
noted the Series B Pledge on its books and records as required by such
financing, (iii) no default or event of default shall exist under the Second
Horizon Group Financing and (iv) neither Horizon/Xxxx nor the Second Horizon
Partnership shall have received any notice pursuant to the Loan Documents
that, after giving effect to the Transactions and the Merger, a default or an
event of default will exist under the Loan Documents.
(f) CASUALTY OR CONDEMNATION. Horizon/Xxxx shall promptly notify
C&C of any casualty damage to any Horizon/Xxxx Property or any condemnation
proceeding proposed or commenced prior to the Closing Date with respect to
any Horizon/Xxxx Property. In the event of such a casualty or condemnation
then upon the Closing Date, Horizon/Xxxx shall contribute to the Company (i)
any insurance or condemnation proceeds or awards received by Horizon/Xxxx
resulting from such a condemnation or casualty or its rights to receive any
such proceeds or awards, subject to the rights of the Lender under the Loan
Documents and the Landlord under the Existing Xxxx Lease and (ii) cash in an
amount sufficient to compensate the Company for any Losses and Liabilities
caused by such casualty or condemnation, provided that, subject to C&C's
reasonable approval, Horizon/Xxxx may, in lieu of cash, contribute to the
Company a letter of credit or other form of security.
(g) CONTRIBUTION OF CASH. Each of the representations and
warranties of Horizon/Xxxx contained in Section 5 hereof shall have been true
and correct in all material respects as of the date hereof and as of the
Closing Date. In the event of any breach of a representation or warranty by
Horizon/Xxxx or default by Horizon/Xxxx of any of its obligations hereunder,
Horizon/Xxxx shall have contributed to the Company a sum of cash in an amount
sufficient to compensate the Company for any Losses and Liabilities caused by
such breach or default, provided that subject to C&C's reasonable approval,
Horizon/Xxxx may, in lieu of cash, contribute to the Company a letter of
credit or other form of security.
17
SECTION 8.2 CONDITIONS TO OBLIGATIONS OF HORIZON/XXXX. The
obligations of Horizon/Xxxx hereunder are subject to and conditioned upon
satisfaction of each of the following conditions:
(a) PERFORMANCE OF OBLIGATIONS. C&C and CCR shall have performed
in all material respects each of its respective obligations and covenants
hereunder, including without limitation, the execution and delivery of the
Transaction Documents and the other instruments to be executed and delivered
by it or the Company pursuant to Section 9.2 hereof.
(b) LANDLORD CONSENT AND RELEASE. C&C Properties shall have
executed and delivered the Landlord Consent to Assignment and Assumption of
Lease and Release of Assignor substantially in the form attached hereto as
Exhibit L; provided, however, that such Consent and Release shall not release
Horizon/Xxxx from any indemnity or for any liability for breach of any
representation, warranty or covenant contained herein with respect thereto.
(c) SERIES B PLEDGE. The Company shall have entered into a pledge
agreement and executed or delivered any other related documents necessary to
effect the Series B Pledge as additional collateral for the Mortgage
Financing as required pursuant to the Loan Documents or reasonably requested
by the Lender (as such terms are defined in the Amended and Restated
Partnership Agreement).
(d) SECOND HORIZON GROUP FINANCING. (i) Horizon/Xxxx shall have
received evidence reasonably satisfactory to it that no default or event of
default exists under the Second Horizon Group Financing, and (ii) neither
Horizon/Xxxx nor the Second Horizon Partnership shall have received any
notice that the Transactions will cause a default under the Loan Documents.
(e) THE EXISTING XXXX LEASE. The Existing Xxxx Lease shall not
have been terminated as the result of a total condemnation of the Xxxx
Cannery Project. In the event the Existing Xxxx Lease is terminated by its
terms as a result of a total condemnation or a total casualty prior to the
Closing Date, then notwithstanding the provisions of Section 3.3 to the
contrary, either party may elect to terminate this Agreement and the rights
and obligations of the parties hereto shall be void and of no further force
and effect, except that the terminating party shall be obligated to pay the
non-terminating party Losses and Liabilities (including legal and accounting
fees) in connection with the negotiation, due diligence and documentation
regarding the Transactions.
(f) GUARANTY. C&C shall have delivered the Castle & Xxxxx Guaranty
to Horizon/Xxxx.
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SECTION 9. CLOSING DELIVERIES
9.1 CLOSING DELIVERIES BY HORIZON/XXXX. At the Closing,
Horizon/Xxxx shall execute and deliver to C&C and CCR, or cause to be
delivered, the following:
(a) TRANSACTION DOCUMENTS. Each Transaction Document listed
on Exhibit E hereto to which Horizon/Xxxx or any of its Affiliates is a party
or for which Horizon/Xxxx or any of its Affiliates is responsible.
(b) CORPORATE AND PARTNERSHIP PROCEEDINGS. Copies of any
board resolutions or shareholder, partner or member consents, as applicable,
of Horizon/Xxxx authorizing the execution, delivery and performance of this
Agreement, each of the Transaction Documents, and all of the transactions
contemplated thereby.
(c) ORGANIZATIONAL DOCUMENTS. True and complete copies of the
Organizational Documents of each of Horizon/Xxxx, Second Horizon Partnership,
and Prime Retail, L.P., certified as complete and correct copies thereof by the
secretary of the respective parties.
(d) INCUMBENCY CERTIFICATES. A certificate of an officer of
each of Horizon/Xxxx, Second Horizon Partnership, and any Affiliate and Prime
Retail, L.P., dated as of the Closing Date, as to the incumbency and
signature of the officers executing any Transaction Document.
(e) OPINIONS. Opinions of counsel for Horizon/Xxxx and Prime
Retail L.P. substantially in the forms of Exhibit O-1 and O-2 attached hereto.
9.2 CLOSING DELIVERIES OF C&C AND CCR. At the Closing, each
of C&C and CCR shall execute and deliver to Horizon/Xxxx, or cause to be
executed and delivered to Horizon/Xxxx, the following:
(a) TRANSACTION DOCUMENTS. Each Transaction Document listed
on Exhibit E hereto to which it or any of its Affiliates is a party or for
which it or any of its Affiliates is responsible.
(b) CORPORATE AND PARTNERSHIP PROCEEDINGS. Copies of any
Board resolutions or shareholder, partner or member consents, as applicable,
of C&C and CCR authorizing the execution, delivery and performance of this
Agreement, each of the Transaction Documents, and all of the transactions
contemplated thereby.
(c) ORGANIZATIONAL DOCUMENTS. True and complete copies of
the Organizational Documents of each of C&C and CCR, certified as complete
and correct copies thereof by the secretary of the respective parties.
19
(d) INCUMBENCY CERTIFICATES. A certificate of an officer of
each of C&C and CCR, dated as of the Closing Date, as to the incumbency and
signature of the officers thereof executing any Transaction Document.
(e) OPINIONS. Opinions of counsel for C&C, CCR and Company
substantially in the forms of Exhibits N-1, N-2 and N-3 attached hereto.
(f) SERIES B PLEDGE. A pledge agreement and UCC financing
statement, in substantially the form attached hereto as Exhibit O, and any
other document or instrument reasonably necessary to effect a pledge (the
"Series B Pledge") by the Company of the Lake Elsinore Project Class B
Partnership Interest as collateral for the Second Horizon Group Financing in
accordance with the requirements of the Loan Documents.
(g) GUARANTY. A guaranty substantially in the form attached
hereto as Exhibit I (the "Castle & Xxxxx Guaranty") from Castle & Xxxxx, Inc.
or one or more of its Affiliates and such Guarantor or Guarantors shall have
an aggregate net worth not less than $100,000,000.
SECTION 10. INTENTIONALLY OMITTED
SECTION 11. CONFIDENTIALITY
11.1 CONFIDENTIALITY. Each of the parties hereto agrees that
it will (a) use reasonable commercial efforts to keep confidential (except
(x) for such disclosure to (i) attorneys, accountants, bankers, underwriters,
agents, and employees as may be appropriate in the furtherance of the
Transactions (ii) the agent, servicer or trustee with respect to the Second
Horizon Group Financing, (iii) The Chase Manhattan Bank with respect to
certain financing secured in part by the Xxxx Cannery Project or (iv) such
other persons as required by law or (y) such information as has been publicly
disclosed, including any information that is the subject of a press release
in connection with the Merger which has been delivered to and reviewed by C&C
) all information of a confidential nature obtained by it from the other
party (including the terms of this Agreement) in connection with the
Transactions and (b) return to the other all documents and other materials
obtained from the other in connection herewith should this Agreement be
terminated. No party hereto will issue any press release or make any other
public announcement relating to the transaction contemplated hereby without
the prior consent of the other party hereto, except that any party may make
any disclosure required to be made by it under applicable law (including
without limitation the federal securities laws) or stock exchange rules and
regulations if such party determines in good faith that it is appropriate to
do so and gives prior notice to the other party hereto, and affords to the
other party a reasonable opportunity to comment on the proposed disclosure
and makes a commercially reasonable effort to incorporate any comments or
requested revisions. Notwithstanding the foregoing, the restrictions
contained in this Section 11.1 are expressly subject to the terms and
conditions of Section 13.13 hereof.
20
SECTION 12. COVENANTS
12.1 MAINTENANCE OF HORIZON/XXXX PROPERTIES.
(a) From the date hereof until the Closing Date, Horizon/Xxxx
shall maintain, or cause to be maintained, the Xxxx Cannery Project and the
Lake Elsinore Land in good order, condition and repair, reasonable wear and
tear excepted, shall perform or cause to be performed all work required to be
performed by the landlord under the terms of any Lease, perform all Contracts
and make all payments thereunder, in accordance with their terms, and shall
make all repairs, maintenance and replacements of the Improvements and any
tangible Personal Property located at such properties and otherwise operate
such properties in the same manner as before the execution of this Agreement,
as if Horizon/Xxxx were retaining such properties. With respect to the Xxxx
Cannery Project and the Lake Elsinore Land, Horizon/Xxxx shall not amend,
modify or terminate any lease, contract or other agreement, enter into any
new lease, contract or other agreement, incur any indebtedness (whether
secured or unsecured), settle any litigation or other claim or incur any
obligation or liability, except in the ordinary course of business or in
accordance with a project budget or leasing parameters approved by C&C.
Notwithstanding the foregoing, Horizon/Xxxx shall retain responsibility for
the agreement with AJC Properties, Inc. referred to in Schedule 5.2(h) as of
the Closing Date and shall indemnify C&C with respect to any Losses and
Liabilities arising thereunder. In connection therewith, Horizon/Xxxx may
take the position that the Transactions constitute an event described in
Section 5 of such agreement.
(b) From the date hereof until the Closing Date, Horizon/Xxxx
shall maintain, or cause to be maintained, the Lake Elsinore Project in good
order, condition and repair, reasonable wear and tear excepted, shall perform
or cause to be performed all work required to be performed by the landlord
under the terms of any Lease, perform or caused to be performed all Contracts
and make or cause to be made payments thereunder, in accordance with their
terms, and shall make all repairs, maintenance and replacements of the
Improvements and any tangible Personal Property and otherwise operate the
Lake Elsinore Project in the same manner as before the execution of this
Agreement and in accordance with the Loan Documents. With respect to the
Lake Elsinore Project (unless in its reasonable judgment such action is
required to avoid a breach of or default under the Loan Documents),
Horizon/Xxxx shall cause the Second Horizon Partnership to not amend, modify
or terminate any lease, contract or other agreement, enter into any new
lease, contract or other agreement, incur any indebtedness (whether secured
or unsecured), settle any litigation or other claim or incur any obligation
or liability, except (i) in the ordinary course of business, (ii) Licenses or
(iii) in accordance with the Project Budget or leasing parameters approved by
C&C. Notwithstanding the foregoing, the Second Horizon Partnership may make
any replacements or repairs or perform such other services as are necessary
as a result of an emergency directly affecting the Lake Elsinore Project so
long as such actions are taken in accordance with the Amended and Restated
Partnership Agreement as if such agreement were in effect.
21
(c) Prior to the Closing Date, Horizon/Xxxx will promptly
inform C&C in writing of any fact which would indicate that any Tenant
occupying the Horizon/Xxxx Properties is in material default of its Lease
obligations, is insolvent or is not able to pay rent or perform its other
obligations under the relevant Lease when due.
(d) With respect to the Xxxx Cannery Project, Horizon/Xxxx
shall permit C&C or its Affiliates to remove a wall in the Xxxx Cannery
Project in order to connect a movie theater facility or other similar
facility to the Xxxx Cannery Project provided that C&C (i) provides
reasonable notice to Horizon/Xxxx and an opportunity to review the plans and
specifications for such connection, (ii) obtains all licenses and permits and
complies with all applicable laws relating thereto, (iii) pays all costs and
expenses incurred in connection therewith including any damage to or
destruction of the Xxxx Cannery Project and (iv) indemnifies Horizon/Xxxx
from all Losses and Liabilities incurred by Horizon/Xxxx in connection
therewith.
12.2 INSURANCE. Through the Closing Date, Horizon/Xxxx shall
maintain or cause to be maintained, at Horizon/Glen's sole cost and expense,
and each in the amount and form maintained by Horizon/Xxxx prior to the date
of this Agreement, for each Horizon/Xxxx Property a policy or policies of
insurance in accordance with all requirements of the Existing Xxxx Lease and
the Second Horizon Group Financing, as applicable.
12.3 HORIZON/XXXX DELIVERIES.
(a) FILES RELATING TO HORIZON PROPERTIES. From the date
hereof until the Closing Date, Horizon/Xxxx shall make available for review
by C&C all files in its possession or control relating to the Horizon/Xxxx
Properties.
(b) RENT ROLL. Five (5) business days prior to Closing Date,
Horizon/Xxxx shall deliver to C&C a current Rent Roll for each Horizon/Xxxx
Property certified to be complete and accurate in all material respects by
Horizon/Xxxx.
(c) NOTICE OF CHANGE. Horizon/Xxxx will inform C&C in
writing of any material adverse change in the condition, financial, legal or
otherwise, of the Horizon/Xxxx Properties, or the operation thereof, which
occurs at any time after the date hereof and prior to the Closing Date.
(d) ESTOPPEL CERTIFICATES. Horizon/Xxxx shall obtain and
deliver to C&C Estoppel Certificates from Tenants of the Lake Elsinore
Project which in the aggregate constitute tenants leasing not less than 70%
of the square footage under lease thereof as of the date of this Agreement.
The Estoppel Certificates ("Estoppel Certificates") shall be substantially in
the form attached hereto as Exhibit P. In lieu of providing Estoppel
Certificates from such Tenants, Horizon/Xxxx may deliver to C&C a landlord's
Estoppel Certificate covering the information which would otherwise have been
included in the Tenant's Estoppel Certificate; PROVIDED, HOWEVER, that (i)
C&C shall not be obligated to accept or approve any Estoppel Certificate
provided by Horizon/Xxxx if C&C has reason to
22
believe any statement contained therein would be disputed or denied by the
applicable Tenant; and (ii) C&C shall not be obligated to accept or approve
Estoppel Certificates provided by Horizon/Xxxx representing more than 30% of
the rentable square footage of space occupied by Tenants in the Lake Elsinore
Project. Said Estoppel Certificates shall be delivered at least five (5) day
prior to the Closing and shall be dated no earlier than seventy-five (75)
days prior to Closing.
(e) [Intentionally Omitted]
(f) FINANCIAL STATEMENTS. Horizon/Xxxx shall deliver to C&C
true and complete copies of unaudited Statements of Operations for 1997 and
monthly statements for each month during 1998 to and including the month in
which the Closing occurs. Such monthly statements shall be delivered not
later than the 15th day of the following month (collectively, the "Financial
Statements").
(g) TITLE POLICIES. On the Closing Date, Horizon/Xxxx shall
deliver or cause to be delivered the Title Policies.
12.4 COMPLIANCE WITH SECOND HORIZON GROUP FINANCING. From the
date hereof until the Closing Date, Horizon/Xxxx shall comply and shall cause
Second Horizon Partnership to comply with all applicable requirements of the
Second Horizon Group Financing, including but not limited to, requirements
relating to the execution and delivery of the Amended and Restated
Partnership Agreement, the assignment of the Lake Elsinore Project Class B
Partnership Interest to the Company and the pledge of such interest in
accordance with the Series B Pledge. Upon the request of Horizon/Xxxx, C&C
shall use reasonable commercial efforts to assist Horizon/Xxxx and to cause
the Company to assist Horizon/Xxxx, in complying with such requirements.
12.5 TAX REPORTING. Each party hereto agrees to report its
transfers pursuant to Article II hereof as a non-taxable contribution
pursuant to Section 721 of the Code.
12.6 UPDATING SCHEDULES. As of the Closing Date, Horizon/Xxxx
shall update all schedules attached to this Agreement with respect to any
material change in the information contained therein; provided, however, such
updated schedule shall not constitute a waiver of any breach of any
representation and warranty contained herein except that any breach or
default by a Tenant under any Lease or by any counterparty to any Contract
shall not be deemed to be a breach by Horizon/Xxxx so long as Horizon/Xxxx
notifies the parties hereto with respect to such breach or default promptly
after Horizon/Xxxx has Knowledge thereof and uses commercially reasonable
efforts to enforce any such Lease or Contract.
23
SECTION 13. MISCELLANEOUS
13.1 NOTICES. Any notice, consent or approval required or
permitted to be given under this Agreement shall be in writing and shall be
deemed to have been given upon (i) hand delivery or facsimile transmission,
(ii) one business day after being deposited with Federal Express or another
reliable overnight courier service for next day delivery, or (iii) the date
of receipt or refusal of delivery if deposited in the United States mail,
registered, or certified mail, postage prepaid, return receipt required, and
addresses as follows:
IF TO C&C: Castle & Xxxxx
Commercial-CA, Inc.
0000 Xxxxxxxx Xxxx.
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Mr. Xxxxx Xxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Attention: Xxxxx Xxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
WITH A COPY TO: Castle & Xxxxx, Inc.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxx
Attention: Xxxxx Xxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
AND WITH A COPY TO: O'Melveny & Xxxxx LLP
Citicorp Center
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
24
IF TO CCR: Castle & Xxxxx Retail, Inc.
c/o Castle & Xxxxx, Inc.
00000 Xxxxxxxx Xxxxxxxxx
Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xx. Xxxxxx Xxxxxx
Attention: Xxxxx Xxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
WITH A COPY TO: O'Melveny & Xxxxx LLP
Citicorp Center
000 X. 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxx, Esq.
Phone: (000) 000-0000
Fax: (000) 000-0000
IF TO HORIZON/XXXX: Horizon Group, Inc.
0000 Xxxxx Xxxxx
Xxxxxx Xxxxxx, XX 00000
Attention: Xxxxxx Xxxxxxxxxx
Xxxxx Xxxxxx
Fax.: (000) 000-0000
WITH A COPY TO: Xxxxxxx & Xxxxx
000 Xxxxx XxXxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Xxxxx X. Xxxxxxxx. Esq.
Xxx X. Xxxxx, Esq.
Fax No.: (000) 000-0000
AND WITH A COPY TO: Prime Retail, Inc.
000 Xxxx Xxxxx Xxxxxx
00xx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Attention: C. Xxxx Xxxxxxxxx, Esq.
Fax No.: (000) 000-0000
AND WITH A COPY TO Winston & Xxxxxx
00 Xxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. XxXxxxxxx, Esq.
Fax No.: (000) 000-0000
25
or such other address as either party may from time to time specify in
writing to the other.
13.2 SUCCESSORS AND ASSIGNS. Neither party shall have the right
to assign this Agreement without the consent of the others. Notwithstanding
the foregoing, C&C hereby expressly consents to the assignment of this
Agreement by Horizon/Xxxx to Prime Retail, L.P. pursuant to the Merger provided
that, upon the Closing Date, Prime shall assume and be bound by all
obligations, covenants, representations and warranties of Horizon/Xxxx
hereunder; and provided further that C&C's approval of such assignment in
connection with the Merger does not constitute its approval of any other
merger, business combination or other transaction which is not substantially as
set forth in the Merger Agreement in all material respects. Subject to the
foregoing, this Agreement shall be binding upon, and inure to the benefit of,
the parties hereto and their respective successors and permitted assigns.
Horizon/Xxxx hereby agrees that in the event that the Merger occurs, Prime
Retail, L.P., or such other entity which survives the merger, shall expressly
assume all of Horizon/Glen's obligations under this Agreement, and all such
obligations shall be deemed joint and several.
13.3 AMENDMENTS. This Agreement may be amended or modified
only by a written instrument executed by all of the parties hereto.
13.4 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
13.5 SEVERABILITY. If any provision of this Agreement, or the
application thereof to any person, place, or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable or void, the
remainder of this Agreement and such provisions as applied to other persons,
places and circumstances shall remain in full force and effect.
13.6 COUNTERPARTS. This Agreement, and any document executed
in connection with this Agreement, may be executed in any number of
counterparts each of which shall be deemed an original and all of which shall
constitute one and the same agreement.
13.7 NO WAIVER. No delay or failure on the part of any party
hereto in exercising any right, power or privilege under this Agreement or
under any other instrument or document given in connection with or pursuant
to this Agreement shall impair any such right, power or privilege or be
construed as a waiver of any default or any acquiescence therein. No single
or partial exercise of any such right, power or privilege shall preclude the
further exercise of such right, power or privilege. No waiver shall be valid
against any party hereto unless made in writing and signed by the party
against whom enforcement of such waiver is sought and then only to the extent
expressly specified herein.
13.8 ENFORCEMENT. In the event of an action under Section
13.9 or if a dispute arises concerning the performance, meaning or
interpretation of any provision of this Agreement, the defaulting party or
the party not prevailing in such dispute shall pay any and
26
all costs and expenses incurred by the other party in enforcing or
establishing its rights hereunder, including, without limitation, court costs
and attorneys' fees. In addition to the foregoing award of attorneys' fees
to the prevailing party, the prevailing party in any lawsuit on this
Agreement shall be entitled to its attorneys' fees incurred in any post
judgment proceedings to collect or enforce the judgment. This provision is
separate and several and shall survive the merger of this Agreement into any
judgment on this Agreement.
13.9 EXCLUSIVE REMEDIES. The parties agree that in the event
of a breach or default by Horizon/Xxxx, on the one hand, and by C&C and CCR
on the other hand, the sole and exclusive remedies of the non breaching party
shall be as follows:
(a) the non breaching party may require the breaching party
to specifically perform its obligations hereunder in accordance with the
provisions of Exhibit V hereto and to compensate the non breaching party for
all Losses and Liabilities (including costs of enforcement pursuant to
Section 13.8 hereof measured in connection therewith) or;
(b) terminate this Agreement to the extent permitted by
Section 3.3 and recover from the breaching party all Losses and Liabilities
incurred in connection therewith (including costs of enforcement pursuant to
Section 13.8 hereof).
13.10 EXHIBITS. All exhibits and schedules attached hereto are
incorporated herein as though fully set forth herein.
13.11 LEGAL REPRESENTATION. Each party has been represented by
legal counsel in connection with the negotiation of the Transactions and the
drafting and negotiation of this Agreement and the other agreements referred
to herein. The normal rule of construction that ambiguities are to be
resolved against the drafting party shall not be employed in the
interpretation of this Agreement.
13.12 ENTIRE AGREEMENT. This Agreement and the Transaction
Documents are intended by the parties as a final expression of their
agreement and intended to be the complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein and therein. There are no covenants, agreements,
promises, warranties or understandings other than those set forth or referred
to herein, with respect to subject matter. Except as otherwise expressly
provided herein, this Agreement, together with its exhibits and the other
documents and agreements referred to herein, shall supersede all prior
agreements and understandings between the parties with respect to the subject
matter hereof and thereof.
13.13 FURTHER ASSURANCES AND COOPERATION.
(a) Until the Closing Date, Horizon/Xxxx will cause Second
Horizon Partnership to continue to participate in the proposed formation of a
community facilities district to fund the Temescal Water Pipeline Project.
During this interim period of time, Horizon/Xxxx shall cooperate with C&C,
notify it of all meetings, provide it with all
27
relevant information and take no position on any issue without written
authorization from C&C.
(b) Horizon/Xxxx shall permit authorized representatives of
C&C and/or C&C Properties access to the Horizon/Xxxx Properties for purposes
of all due diligence activities including, but not limited to, commercially
reasonable environmental and engineering inspections (upon reasonable notice
from C&C), surveys and other investigation for the purpose of satisfying C&C
and C&C Properties with respect to the truth and accuracy of the
representations, warranties and covenants of Horizon/Xxxx contained herein
and the satisfaction of any conditions precedent to the Closing contained in
Section 8.1. Such due diligence activities shall be conducted in a manner
which does not unreasonably interfere with the operations of the Horizon/Xxxx
Properties. Horizon/Xxxx shall be entitled to have one of its
representatives present to accompany any representative of C&C or C&C
Properties performing environmental or engineering inspections. C&C hereby
agrees to indemnify and hold Horizon/Xxxx harmless from any Losses and
Liabilities to persons or property caused by C&C, C&C Properties or their
authorized representatives during their entry and investigations prior to
Closing, which indemnification obligation shall survive the Closing for a
period of one year.
(c) Each party hereto shall cooperate with the other parties
hereto and their respective authorized representatives to carry out the
purposes of this Agreement and to consummate the Transactions as contemplated
hereby. Horizon/Xxxx agrees upon request to make available to C&C for review,
or to promptly deliver to C&C or its designee copies of, all applicable
records, Leases, Contracts, Permits and other documents and information
relating to each of the Horizon/Xxxx Properties.
(d) Prior to the Closing Date, Horizon/Xxxx shall permit C&C
and its Affiliates to contact any person (including, but not limited to,
prospective tenants managers, lenders, investors and other persons) in
connection with the Company's operation of the Xxxx Cannery Project on and
after the Closing Date.
(e) Prior to the Closing Date, Horizon/Xxxx and C&C shall
cooperate in jointly contacting the existing Tenants of the Xxxx Cannery
Project regarding the operation of such project by the Company after the
Closing Date. In the event that any Lease at the Xxxx Cannery Project shall
be terminated or modified at the request of C&C, then any representation
contained herein made by Horizon/Xxxx with respect to such Lease shall be
deemed automatically amended to reflect such a change.
(f) With respect to Horizon/Glen's liability for mitigation
of a wetlands located on a portion of the Lake Elsinore Project (the
"Wetlands"), Horizon/Xxxx shall contribute to the Company on the Closing Date
cash in the amount of $200,000.00 less any sums theretofore paid by
Horizon/Xxxx after the date hereof to cure and/or mitigate the Wetlands as
required by applicable law and such payment shall be deemed to satisfy
Horizon/Glen's obligations with respect to the Wetlands. Notwithstanding the
foregoing, Horizon/Xxxx shall cooperate with C&C and shall not take any
action with respect to the
28
Wetlands without C&C's prior consent, except as maybe required by applicable
law or existing agreements.
(g) In the event that after the date hereof and prior to the
Closing Date, C&C has actual knowledge of any event or circumstance that
could reasonably be expected to constitute a breach of any representation or
warranty set forth in Section 5.2 hereof and if C&C reasonably believes that
Horizon/Xxxx or its Affiliates do not have actual Knowledge of such event or
circumstances, C&C shall promptly notify Horizon/Xxxx in writing and provide
Horizon/Xxxx with a reasonable opportunity to mitigate or cure any such
breach or potential breach of such representation or warranty prior to the
Closing Date.
SECTION 14. BROKERS AND FINDERS
Neither party has had any contact or dealings regarding the Xxxx
Cannery Project or the Horizon/Xxxx Properties, or any communication in
connection with the subject matter of this transaction, through any real estate
broker or other person who can claim a right to a commission or finder's fee in
connection with the Transactions contemplated hereby. In the event that any
broker or finder claims a commission or finder's fee based upon any contact,
dealings or communication, the party through whom the broker or finder makes
its claim shall be responsible for said commission or fee and all costs and
expenses (including, without limitation, reasonable attorneys' fees) incurred
by the other party in defending against the same. The party through whom any
other broker or finder makes a claim shall hold harmless, indemnify and defend
the other party hereto, its successors and assigns, agents, employees, officers
and directors, and the respective properties from and against any and all
obligations, liabilities, claims, demands, liens, encumbrances and losses
(including, without limitation, attorneys' fees), whether direct, contingent or
consequential, arising out of, based on, or incurred as a result of such claim.
The provisions of this Section shall survive the termination of this Agreement.
[Signatures on Following Page]
29
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered on its behalf as of the date
first above written.
CASTLE & XXXXX COMMERCIAL-CA, INC.,
a California corporation
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx
Vice President and Treasurer
--------------------------------
(Print Name and Title)
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx
Assistant Secretary
--------------------------------
(Print Name and Title)
CASTLE & XXXXX RETAIL, INC.,
a California corporation
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------
Xxxxxx X. Xxxxxx
Vice President and Treasurer
--------------------------------
(Print Name and Title)
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx
Vice President and Secretary
--------------------------------
(Print Name and Title)
HORIZON/XXXX OUTLET CENTERS
LIMITED PARTNERSHIP, a Delaware
limited partnership
By: HORIZON GROUP, INC., a
Michigan corporation
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Xxxxx X. Xxxxxx
President
----------------------------
(Print Name and Title)
By: ____________________________
____________________________
(Print Name and Title)
S-1
Consent and Assumption of Obligations
By their signatures below, Horizon/Group, Inc. ("HGI") and Prime
Retail, L.P. hereby expressly acknowledge and approve the terms, provisions,
and conditions of this Agreement. HGI hereby agrees to be bound by, and
perform all of Horizon/Glen's obligations under, this Agreement and further
agrees that its obligations and the obligations of Horizon/Xxxx shall be
joint and several. Upon the effective date of the Merger, Prime Retail,
L.P., expressly agrees to be bound by the provisions hereof and assumes all
obligations of Horizon/Xxxx and HGI under this Agreement and further agrees
that all such obligations shall be joint and several and shall not limit or
affect any right or remedy which C&C or the Company may have under the
Operating Agreement or the Amended and Restated Partnership Agreement. HGI
and Prime Retail, L.P. each acknowledge that if it should default in
performing its obligations hereunder, the remedies to which C&C shall be
entitled are as set forth in Section 13.9, which include the remedy of
specific performance as set forth in Section 13.9 hereof.
HORIZON GROUP, INC., a Michigan corporation
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx
President
--------------------------------
(Print Name and Title)
By: ________________________________
(Print Name and Title)
PRIME RETAIL, L.P., a Delaware
limited partnership
By: Prime Retail, Inc.
_____________________
(Print Name and Title)
By: /s/ C. Xxxx Xxxxxxxxx
--------------------------------
C. Xxxx Xxxxxxxxx
Senior Vice President, General
Counsel and Secretary
---------------------------------
(Print Name and Title)
S-2
Consent and Assumption of Obligations
By its signature below, Castle & Xxxxx Properties, Inc. ("C&C
Properties") hereby expressly acknowledges and approves the terms, provisions
and conditions of this Agreement. C&C Properties hereby agrees to deliver on
or prior to the Closing Date, each Transaction Document to which it is a
party, including the Landlord Consent to Assignment and Assumption of Lease
and Release of Assignor in the form attached hereto as Exhibit L. C&C
Properties further acknowledges and agrees that if it should default in
performing its obligations hereunder, the remedies to which Horizon/Xxxx
shall be entitled are as set forth in Section 13.9, which include the remedy
of specific performance as set forth in Section 13.9 hereof.
CASTLE & XXXXX PROPERTIES, INC.,
a Hawaii corporation
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Sr. Vice President & Treasurer
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Sr. Vice President & Secretary
S-3
APPENDIX "I"
DEFINITIONS
"AFFILIATE" (and, with correlative meaning, "Affiliated") shall
mean with respect to any Person, any other Person that, directly or
indirectly, controls, is under common control with, or is controlled by such
Person. For purposes of this definition, "control" (and, with correlative
meaning, "under common control with" and "controlled by") means, with respect
to any Person, the possession, directly or indirectly, of the power to direct
and cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise.
"AMENDED AND RESTATED PARTNERSHIP AGREEMENT" shall mean the Amended
and Restated Agreement of Limited Partnership of Second Horizon Group Limited
Partnership, to be dated the Closing Date, a form of which is attached hereto
as Exhibit F.
"BUSINESS DAY " shall mean any day other than a Saturday, Sunday or
other day on which commercial banks in Los Angeles, California or Chicago,
Illinois are authorized or required by law to close.
"C&C" means Castle & Xxxxx Commercial-CA, Inc., a California
corporation.
"C&C PROPERTIES" means Castle & Xxxxx Properties, Inc., a Hawaii
corporation.
"CASTLE AND XXXXX GUARANTY" has the meaning set forth in Section
9.2(g).
"CCR" means Castle & Xxxxx Retail, Inc., a California corporation.
"CLOSING" has the meaning set forth in Section 3.1.
"CLOSING DATE" has the meaning set forth in Section 3.2.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY" means Castle & Xxxxx Outlet Centers LLC, a California
limited liability company.
"CONTRACTS" shall mean all written or oral management,
architectural, engineering, leasing, brokerage, commission, insurance,
bonding, construction, guarantee, indemnity, service, utility, maintenance,
operating, repair, collective bargaining, employment, equipment leasing,
supply, warranty, purchase, consulting, professional service, advertising,
promotion, public relations and other contracts and agreements (excluding the
Leases) to which Horizon/Xxxx or Second Horizon Partnership is party in any
way relating to the Lake
A-1
Elsinore Project, the Lake Elsinore Land or the Horizon Cannery Leasehold
Interest, but exclusive of any such matters entered into by a Tenant.
"XXXX CANNERY PROJECT" shall mean that certain real property
described in the Existing Xxxx Lease, along with the Improvements thereon and
appurtenances thereto, and all fixtures, equipment, Personal Property,
Contracts, Leases, Permits and other rights owned or acquired by C&C
Properties or by Horizon/Xxxx, as the case may be, all of which are commonly
referred to as the Xxxx Cannery located in Honolulu, Hawaii.
"ENVIRONMENTAL REQUIREMENTS" shall mean all applicable statutes,
regulations, rules, ordinances, codes, licenses, permits, orders, approvals,
or obligations and authorizations of all governmental agencies, departments,
commissions, boards, bureaus or instrumentalities of the United States,
states and political subdivisions thereof and all applicable judicial and
administrative and regulatory decrees, judgments and orders relating to the
protection of human health or the environment, including, without limitation:
all requirements, including but not limited to those pertaining to reporting,
licensing, permitting, investigation and remediation of emissions,
discharges, releases or threatened releases of Hazardous Materials (as such
term is defined below).
"EXISTING XXXX LEASE" shall mean the Xxxx Factory Stores Retail
Space Lease between C&C Properties, as present Landlord, and Horizon/Xxxx as
present tenant, dated July 1, 1994, as amended, with respect to Xxxx Cannery
Project.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
12.3(f).
"GAAP" means generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment
of the accounting profession, in each case as the same are applicable to the
circumstances as of the date of determination.
"GOVERNMENTAL AUTHORITY" means any national or federal government,
any state, regional, local or other political subdivision thereof with
jurisdiction and any person or entity with jurisdiction exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"HAZARDOUS MATERIALS" shall mean (i) any flammable, explosive or
radioactive materials, contaminants or hazardous or toxic wastes, materials
or substances or related materials whether solid, liquid or gaseous in
nature, including, without limitation, substances defined as "hazardous
substances," "hazardous materials," "toxic substances" or "solid waste" in
the Comprehensive Environmental Response, Compensation and Liability Act of
1980, as amended, 42 U.S.C. Sec. 9601, ET SEQ.; the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801, ET SEQ.; the Toxic Substances
Control Act, 15 U.S.C., Section 2601 ET SEQ.; the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Section 6901 ET SEQ.;
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and in the regulations adopted by any Governmental Authority pursuant to said
laws; (ii) those substances listed by the Environmental Protection Agency (or
any successor agency) as hazardous substances (40 C.F.R. Part 302 and
amendments thereto); (iii) those substances defined as "hazardous wastes,"
"hazardous substances" or "toxic substances" in any state or local laws or in
the regulations adopted pursuant to any of the foregoing laws; (iv) petroleum
or any by-products thereof; (v) any radioactive material, including any
source, special nuclear or by-product material as defined at 42 U.S.C.
Sections 2011 ET SEQ., as amended, and in the regulations adopted pursuant to
said law; (vi) asbestos in any form or condition; and (vii) polychlorinated
biphenyls.
"HGI" means Horizon Group, Inc., a Michigan corporation.
"HORIZON CANNERY XXXX OF SALE AND ASSIGNMENT" shall mean a Xxxx of
Sale and an Assignment of all of Horizon/Glen's right, title and interest in
all Personal Property, and other rights associated with Xxxx Cannery Project
in the form attached hereto as Exhibit K.
"HORIZON CANNERY LEASEHOLD ASSIGNMENT AND ASSUMPTION AGREEMENT"
shall mean an assignment to the Company of all of Horizon/Glen's right, title
and interest in the Existing Xxxx Lease and the Contracts, Leases, Permits
(to the extent assignable) and other rights associated with the Xxxx Cannery
Project and an assumption by Company of certain obligations of Horizon/Xxxx
thereunder in the form attached hereto as Exhibit J.
"HORIZON CANNERY LEASEHOLD INTEREST" shall mean all of the right,
title and interest of Horizon/Xxxx in, to and under the Existing Xxxx Lease;
including all Improvements thereon and all Personal Property, Contracts,
Leases, Permits (to the extent such Permits are assignable) and other rights
associated therewith.
"HORIZON/XXXX" means Horizon/Xxxx Outlet Centers Limited
Partnership, a Delaware limited partnership.
"HORIZON/XXXX CONTRIBUTION DOCUMENTS" shall mean the Horizon
Cannery Leasehold Assignment and Assumption Agreement, the Horizon Cannery
Xxxx of Sale and Assignment, the Lake Elsinore Land Deed, and the Lake
Elsinore Project Class B Partnership Interest Assignment.
"HORIZON/XXXX INTERESTS" has the meaning set forth in Section 2.3.
"HORIZON/XXXX PROPERTIES" shall mean (i) the Xxxx Cannery Project,
(ii) the Lake Elsinore Project and (iii) the Lake Elsinore Land.
"IMPROVEMENTS" shall mean all buildings, improvements and
structures located on real property.
"IMPOSITIONS" means all taxes (including, without limitation, all
ad valorem, sales (including those imposed on lease rentals), use, single
business, gross receipts, value
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added, intangible transaction privilege, privilege, license or similar
taxes), assessments (including, without limitation, to the extent not
discharged prior to the date hereof, all assessments for public improvements
or benefits, ground rents, water, sewer or other rents and charges, excises,
levies, fees (including, without limitation, license, permit, inspection,
authorization and similar fees), and all other governmental charges, in each
case whether general or special, ordinary or extraordinary, foreseen or
unforeseen, of every character in respect of a Horizon/Xxxx Property.
"KNOWLEDGE" shall mean (i) with respect to Horizon/Xxxx and its
Affiliates, the actual knowledge of Xxxxx Xxxxxx (Chief Executive Officer and
President), Xxxxx Xxxxxx (Executive Vice President), Xxxxxx Xxxxxx, (Vice
President - Real Estate), Xxxx Xxxxxxxx (Vice President - Operations), Xxxxx
Xxxxxx (Finance Manager), Xxx Xxxxxxxxx (Vice President - Leasing), Xxxx
Xxxxx (manager of the Lake Elsinore Project), Xxxxx Xxxxxxx (manager of the
Xxxx Cannery Project), Xxxxxxxx Xxxx (Regional Manager), and Xxxxxxxx
Xxxxxxxxxx (Administrative Assistant); and (ii) with respect to C&C and C&R,
the actual knowledge of Xxxxxxx Xxxxxx (Vice President and Assistant
Treasurer of CCR), Xxxxx Xxxxxxxx (Vice President and Assistant Treasurer of
CCR and Vice President of C&C) and Xxxxxx X. Xxxxxx (Vice President and
Treasurer of C&C and CCR) and Xxxxx Xxxxxxxx (Controller of C&C) and Xxxxx
Xxxx Xxxxxx (project manager for C&C Properties).
"LAKE ELSINORE LAND" shall mean that certain vacant land located in
Lake Elsinore, California, and described in the Lake Elsinore Land Deed.
"LAKE ELSINORE LAND DEED" shall mean a recordable grant deed in the
form attached hereto as Exhibit H conveying the Lake Elsinore Land to the
Company.
"LAKE ELSINORE PROJECT" shall mean that certain retail factory
outlet center located in Lake Elsinore, California and commonly known as Lake
Elsinore Outlet Center.
"LAKE ELSINORE PROJECT CLASS B PARTNERSHIP INTEREST" shall mean the
Class B limited partnership interest in Second Horizon Partnership created by
the Amended and Restated Partnership Agreement.
"LAKE ELSINORE PROJECT CLASS B PARTNERSHIP INTEREST ASSIGNMENT"
shall mean an assignment of the Lake Elsinore Project Class B Partnership
Interest by Horizon/Xxxx to the Company in the form attached hereto as
Exhibit G.
"LAKE ELSINORE PROJECT DOCUMENTS" means the documents and
agreements listed in Exhibit Q hereto relating to or affecting the Lake
Elsinore Project.
"LANDLORD CONSENT TO ASSIGNMENT AND ASSUMPTION OF LEASE AND RELEASE
OF ASSIGNOR" shall mean a consent by C&C Properties to the assignment of
Horizon/Glen's interest in the Existing Xxxx Lease to the Company and the
assumption by Company of Horizon/Glen's obligations thereunder and a release
by C&C Properties of Horizon/Xxxx
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with respect to its obligations under the Existing Xxxx Lease in the form
attached hereto as Exhibit L.
"LAWS" shall mean all applicable building codes, environmental and
life safety laws, rules and regulations including, without limitation,
Section 404 of the Clean Water Act, 33 U.S.C. 1341, those related to
handicapped or disabled Persons (including, without limitation, the American
with Disabilities Act) and land use and zoning laws and regulations, and
other applicable local, state and federal laws and regulations.
"LEASE" shall mean, with respect to each Horizon/Xxxx Property,
each lease and sublease with a Tenant identified in the most recent Rent Roll
therefor and in effect on the Closing Date and shall expressly exclude the
Licenses.
"LICENSES" shall mean with respect to each Horizon/Xxxx Property,
all agreements for temporary occupancy thereof which are be terminable on not
more than 90 days notice.
"LOAN DOCUMENTS" shall mean the documents evidencing the Second
Horizon Group Financing, as more particularly described in Exhibit Q.
"LOSSES AND LIABILITIES" shall mean any and all obligations,
liabilities, claims, liens or encumbrances, demands, losses, damages
(including loss in value to any property contributed by the parties hereto to
the Company), causes of action, judgments, costs, and expenses (including
attorneys' fees, but excluding indirect, contingent or consequential damages
and lost profits) provided, however, that (a) the aggregate amount of Losses
and Liabilities due to C&C, C&C Properties, CCR, the Company and their
respective Affiliates, shall not be greater than (i) an amount equal to
$35,000,000 less the value of the Lake Elsinore Project Class B Partnership
Interest and the Lake Elsinore Land (to the extent contributed to the
Company) plus (ii) the direct costs of enforcing its claim to such Losses and
Liabilities and (b) the aggregate amount of Losses and Liabilities due to
Horizon/Xxxx, Second Horizon Partnership, HGI, Prime Retail, L.P. and their
respective Affiliates, shall not be greater than (i) an amount equal to the
value to Horizon/Xxxx of the assumption of the Existing Xxxx Lease by the
Company and the release of liability from C&C Properties, as the landlord
thereunder, as contemplated by the Horizon Cannery Leasehold Assignment and
Assumption Agreement and the Landlord Consent to Assignment and Assumption
and Release of Assignor (taking into account Horizon/Glen's liability as
tenant thereunder and the present value of projected cash flow for the Xxxx
Cannery Project for the balance of the term of the Existing Xxxx Lease) less
(to the extent not contributed to the Company) the value of Lake Elsinore
Project Class B Partnership Interest (taking into account the present value
of projected cash flow for the Lake Elsinore Project for a period equal to
the balance of the term of the Existing Xxxx Lease) and the Lake Elsinore
Land plus (ii) the direct costs of enforcing its claim to such Losses and
Liabilities.
"MERGER" has the meaning set forth in Section 3.2.
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"MERGER AGREEMENT" shall mean the Amended and Restated Agreement
and Plan of Merger among Prime Retail, Inc., Prime Retail, L.P., Horizon
Group, Inc., Sky Merger Corp., Sky Newco, L.P., Horizon Properties, L.P. and
Horizon/Xxxx Outlet Centers Limited Partnership dated as of the date hereof,
as amended.
"OPERATING AGREEMENT" shall mean the limited liability company
operating agreement of the Company in the form attached hereto as Exhibit R.
"ORGANIZATIONAL DOCUMENTS" shall mean, with respect to any entity,
the collective reference to such entity's certificate of formation,
certificate of incorporation, certificate of limited partnership, bylaws,
partnership agreement, operating agreement and/or other similar documents or
agreements, as applicable.
"PERMITS" shall mean all licenses, franchises, certifications,
authorizations, approvals, rights, privileges, entitlements and permits
issued or approved by any governmental or quasi-governmental authority or
other person or entity, and all applications, filings and submittals
therefor, required in connection with the construction, use, or occupancy of
real property.
"PERMITTED EXCEPTIONS" shall mean (a) each exception shown in the
Preliminary Title Reports with respect to the Horizon/Xxxx Properties,
including but not limited to, (i) all covenants, conditions and restrictions
of record, (ii) private, public and utility easements, (iii) non-delinquent
real estate taxes and assessments, (iv) zoning ordinances and building laws
and restrictions, (v) subleases, (vi) existing liens and encumbrances
securing the Second Horizon Group Financing on the Lake Elsinore Project,
(vii) leases of Personal Property in the ordinary course, (b) each of the
following: (i) liens, if any, for Impositions imposed by any Governmental
Authority not yet due or delinquent or being contested in good faith and by
appropriate proceedings; (ii) with respect to the Lake Elsinore Land and the
Lake Elsinore Project, any mechanics or materialmen's liens deleted from the
exceptions to, or affirmatively insured against collection in the applicable
Title Insurance Policy or any mechanics' lien or materialmen's lien being
contested in good faith and by appropriate proceedings, (iii) any and all
governmental, public utility and private restrictions, covenants,
reservations, easements, licenses or other agreements of an immaterial nature
which do not materially and adversely affect (x) the marketability of title
of the encumbered Horizon/Xxxx Property, (y) the fair market value thereof
and (z) the use or operation thereof as of the Closing Date and (iv) rights
of existing and future Tenants, as Tenants only, pursuant to Leases and
Licenses and (c) matters consented to or created by, through or under C&C,
CCR, any of their respective Affiliates or Company.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts,
business trusts or other organizations, whether or not legal entities, and
governments and agencies and political subdivisions thereof.
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"PERSONAL PROPERTY" shall mean all tangible and intangible rights
and property hereof located in or on real property or used in connection
therewith excluding (i) the names "Horizon" or "Horizon/Xxxx", (ii) cash and
(iii) personal property located at offsite administrative offices but
including any rights of Horizon/Xxxx in and to the names "Xxxx," "Xxxx
Cannery" and "Xxxx Centre".
"PRELIMINARY TITLE REPORT" shall mean a current ALTA extended
coverage preliminary title report or pro forma policy issued by Commonwealth
Land Title Insurance Company with respect to each of the Lake Elsinore Land,
the Lake Elsinore Project and the Xxxx Cannery Project, copies of which are
attached hereto as Exhibit U.
"PROJECT BUDGET" shall mean that certain Standard of Operations
1998 Business Plan, a copy of which if attached hereto as Exhibit T.
"PROJECT INFORMATION" means, with respect to each Horizon/Xxxx
Property, information reasonably requested by C&C in connection with its due
diligence activities.
"RENT ROLL" shall mean, for each Horizon/Xxxx Property, a current
rent roll certified by Horizon/Xxxx to be accurate and complete, listing for
each tenant (i) the tenant's name, and location of leased premises, (ii) the
commencement and expiration dates of each lease, (iii) rent and rent
escalation clauses, if any, (iv) the date on which rent is payable, (v) the
last date on which rent has been paid and (vi) the amount of any security
deposit, prepaid rent, and whether landlord is obligated to pay interest on
the same.
"SECOND HORIZON GROUP FINANCING" shall mean the secured financing
encumbering the Lake Elsinore Project and other properties owned by the
Second Horizon Partnership as evidenced by the documents listed in Exhibit Q.
"SECOND HORIZON GROUP FINANCING LOAN AGREEMENT" shall mean the Loan
Agreement dated as of September 12, 1997 by and between Second Horizon
Partnership, as Borrower and Nomura Asset Capital Corporation, as Lender
which has been assigned to LaSalle National Bank, as Trustee under that
certain Pooling and Servicing Agreement dated as of December 17, 1996 among
Asset Securitization Corporation, LaSalle National Bank, ABN AMRO N.V. and
the servicers named therein.
"SECOND HORIZON GROUP FINANCING DEED OF TRUST" shall mean that
certain Deed of Trust, Assignment of Rents and Security Agreement and Fixture
Filing by Second Horizon Group Limited Partnership, as grantor, to
Commonwealth Land Title Company, as trustee for the benefit of Nomura Asset
Capital Corporation, as beneficiary dated as of September 17, 1996.
"SECOND HORIZON PARTNERSHIP" shall mean Second Horizon Group
Limited Partnership, a Delaware limited partnership.
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"SECOND HORIZON PLEDGE AGREEMENT" shall mean that certain Pledge
and Security Agreement among Second HGI, Inc. and Horizon/Xxxx Outlet Centers
Limited Partnership, each as pledgor, and Nomura Asset Capital Corporation,
as Pledgee dated as of September 17, 1996.
"SECURITIES ISSUES" shall mean all state and federal securities law
considerations, issues, analyses, and consequences.
"SERIES B PLEDGE" has the meaning set forth in Section 9.2(f).
"TAX ISSUES" shall mean all state and federal income tax
considerations, issues, analyses, and consequences.
"TENANT" shall mean any lessee or tenant occupying any portion of
the Horizon/Xxxx Properties.
"TITLE POLICIES" shall mean the following policies of title
insurance issued as of the Closing Date:
(i)with respect to the Lake Elsinore Land, an ALTA owner's policy of
title insurance issued by Commonwealth Land Title Insurance Company, or such
other title insurance company as shall be acceptable to C&C, in substantially
the same form as Exhibit U-2, with liability in the amount of $2,500,000
showing title to the Lake Elsinore Land vested in the Company subject only to
Permitted Exceptions and such other exceptions for which Company shall be
compensated pursuant to Section 8.1(f) or (g) and with the following
endorsements if reasonably obtainable at customary rates (without payment of
any amount to third parties other than the issuer) from the issuer of such
policy: (i) CLTA 100, modified for Owner's Policy coverage (unimproved land);
(ii) CLTA 103.3, CLTA 103.5, modified (insuring against damage to existing or
proposed improvements by reason of exercise of any rights of surface entry in
connection with water rights; (iii) CLTA 103.7 (insuring that the Lake
Elsinore Land abuts and has physical and legal access to a physically open
public street designated as Xxxxxxx Road); (iv) CLTA 116.1 (only if there is
a survey provided by C&C); (v) CLTA 116.7 (insuring that the Lake Elsinore
Land complies with the Subdivision Map Act); and (vi) CLTA 123.1
(zoning-unimproved land); and
(ii)with respect to the Lake Elsinore Project, an ALTA owner's policy of
title insurance (or an endorsement to the existing policy issued to Second
Horizon Partnership) issued by Commonwealth Land Title Insurance Company, or
such other title insurance company as shall be acceptable to C&C, in
substantially the same form as Exhibit U-1, with liability in the amount of
$32,500,000, naming the Company as insured, showing title to the Lake
Elsinore Project vested in Second Horizon Partnership, subject only to
Permitted Exceptions and such other exceptions for which Company shall be
compensated for pursuant to Section 8.1(f) or (g), and together with a
non-imputation of knowledge endorsement.
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"TRANSACTION DOCUMENTS" shall mean this Agreement and the documents
and agreements listed on Exhibit E hereto.
"TRANSACTIONS" shall mean the formation of the Company, the
contribution of capital and the execution and delivery of all Transaction
Documents.
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