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EXHIBIT 2
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CONTRIBUTION AND EXCHANGE
AGREEMENT
Among
NASHLAND ASSOCIATES,
HRE ALTAMONTE, INC.
ALTAMONTE SPRINGS MALL, L.P.,
and
GGP LIMITED PARTNERSHIP
July 10, 1998
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TABLE OF CONTENTS
ARTICLE IDefinitions
SECTION 1.01. Definitions1
SECTION 1.02. Terms Generally13
ARTICLE IIAgreement To Contribute the Joint Venture
Interests
ARTICLE IIIAgreed ValueSECTION 3.01. Agreed Value14
SECTION 3.02. Escrow Provisions15
SECTION 3.03. Terms Regarding Existing Nashland Debt17
SECTION 3.04. Agreements Regarding the Partnership17
SECTION 3.05. Certain Tax Matters19
ARTICLE IVPermitted EncumbrancesSECTION 4.01.
Definition21
SECTION 4.02. Mall Subject to Permitted Encumbrances22
ARTICLE VThe ClosingSECTION 5.01. Closing Date22
SECTION 5.02. Actions at Closing23
SECTION 5.03. Escrow Closing23
ARTICLE VIApportionmentsSECTION 6.01. Rents24
SECTION 6.02. Leasing Costs29
SECTION 6.03. Additional Items30
SECTION 6.04. Partnership Distributions.32
SECTION 6.05. Distribution of Cash.32
SECTION 6.06. Adjustment Statement32
SECTION 6.07. Final Settlement33
SECTION 6.08. Survival33
ARTICLE VIIDocuments To Be Delivered at the
ClosingSECTION 7.01.
Transferors' Deliveries33
SECTION 7.02. Transferees' Deliveries36
SECTION 7.03. Partnership Deliveries37
SECTION 7.04. Access to Records38
ARTICLE VIIIRepresentations and Warranties of
Transferors
SECTION 8.01. No Implied Representations39
SECTION 8.02. "As-Is" Transaction39
SECTION 8.03. Representations and Warranties of Transferors40
SECTION 8.04. No Independent Investigation48
SECTION 8.05. Effect of Estoppels48
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SECTION 8.06. Survival of Transferors'
Representations and Warranties, etc.49
ARTICLE IXRepresentations and Warranties of
TransfereesSECTION 9.01. Transferees' Representations
and
Warranties50
SECTION 9.02. Remaking of Representations and
Warranties; Survival53
ARTICLE XConditions to Closing; Risk of Loss
SECTION 10.01. Conditions to the Obligation of
Transferors To Close53
SECTION 10.02. Conditions to the Obligation of
Transferees To Close54
SECTION 10.03. Risk of Loss55
ARTICLE XIOperation of the Mall Until ClosingSECTION
11.01. Standard of Operation57
SECTION 11.02. Notice Requirements57
SECTION 11.03. Transferors' Rights and Covenants57
SECTION 11.04. Noncomplying New Leases58
SECTION 11.05. Survival59
ARTICLE XIITitle to the PropertySECTION 12.01. Title
Defects59
SECTION 12.02. Waiver by Transferees60
SECTION 12.03. Affirmative Insurance60
ARTICLE XIIIBrokers, etc.SECTION 13.01. Transferors'
Representation and
Warranty61
SECTION 13.02. Transferees' Representation and
Warranty61
SECTION 13.03. Survival62
ARTICLE XIVDefault; Remedies; Indemnification SECTION
14.01. Transferees' Default62
SECTION 14.02. Transferors' Default62
SECTION 14.03. Limitation on Post-Closing
Liability of Transferors63
SECTION 14.04. Transferors' Partners and Affiliates
Not Liable64
SECTION 14.05. Escrow Fund64
SECTION 14.06. General Provisions Regarding Survival67
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SECTION 14.07. Indemnification by Transferors68
SECTION 14.08. Indemnification by Transferees.69
SECTION 14.09. Prevailing Party's Attorneys' Fees.70
SECTION 14.10. Survival70
ARTICLE XVEstoppelsSECTION 15.01. Required Estoppels70
SECTION 15.02. Transferors' Estoppels71
SECTION 15.03. Variance Between Estoppels and
Forms Annexed as Exhibits71
SECTION 15.04. All Estoppels To Be Delivered72
ARTICLE XVIMiscellaneousSECTION 16.01. Notices72
SECTION 16.02. Further Assurances73
SECTION 16.03. Captions74
SECTION 16.04. Governing Law; Construction74
SECTION 16.05. Entire Agreement; No Third Party
Beneficiary, etc.74
SECTION 16.06. Waivers; Extensions75
SECTION 16.07. Publicity75
SECTION 16.08. Transaction Expenses; Fees and
Disbursements of Counsel, etc.75
SECTION 16.09. Assignment76
SECTION 16.10. Counterparts77
SECTION 16.11. No Recording77
SECTION 16.12. Obligations of Transferors and
Transferees are Joint and Several.77
SECTION 16.13. Waiver of Rights to Jury Trial77
Schedule 1 Schedule of Delinquencies
Schedule 2 Default Notices Relating to Leases,
Operating Agreements and Other
Agreements
Schedule 3 Rent Roll
Schedule 6.02 Proposed Leases and Lease Amendments
Schedule 8.03(i) Schedule of Litigation
Schedule 8.03(k) Description of Environmental Reports
Schedule 8.03(l) Schedule of Obligations to
Promotional Association
Schedule 8.03(m) Real Estate Tax Bills
Exhibit A Description of Land
Exhibit B List of Documents Comprising the Leases
Exhibit C List of Documents Comprising the
Operating Agreements
Exhibit D List of Documents Comprising the
Other Agreements
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Exhibit E Permitted Encumbrances
Exhibit F Form of Redemption Rights Agreement
Exhibit G [intentionally omitted]
Exhibit H Form of Assignment of Joint Venture Interest
Exhibit I Form of FIRPTA Certificate
Exhibit J Form of Legal Opinion of Transferors' Counsel
Exhibit K Form of Legal Opinion of Transferees' Counsel
Exhibit L-1 Forms of Adjoining Owner Estoppel Letters
Exhibit L-2 Form of Anchor Estoppel Letter
Exhibit M Form of Tenant Estoppel Letter
Exhibit N Form of Transferors' Estoppel Letter
Exhibit O Form of Joint and Several Guarantee
THIS CONTRIBUTION AND EXCHANGE AGREEMENT (this
"Agreement") is made as of the 10th day of July,
1998, among NASHLAND ASSOCIATES, a Tennessee general
partnership, HRE ALTAMONTE, INC., a Delaware
corporation, ALTAMONTE SPRINGS MALL, L.P., a Delaware
limited partnership, and GGP LIMITED PARTNERSHIP, a
Delaware limited partnership.
W I T N E S S E T H :
WHEREAS, each Transferor (which term and other capitalized terms
used but not defined in these recitals have the meanings assigned thereto
in Article I of this Agreement) owns a fifty percent interest in the
Joint Venture, which is the owner (other than the portions thereof owned
by Anchors) of Altamonte Mall, a regional shopping center located in
Altamonte Springs, Florida, which is more particularly described in and
is the subject of this Agreement; and
WHEREAS, Transferors desire to contribute their Joint Venture
Interests to Transferees, and
Transferees desire to acquire such Joint Venture Interests from
Transferors, subject to and upon all of the terms, covenants and
conditions of this Agreement.
WHEREAS, in exchange for such contribution Partnership will issue
the Units to Transferors,
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subject to and upon all of the terms, covenants and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
undertakings in this Agreement, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.01. Definitions. The following terms shall have the
following meanings for the purposes of this Agreement.
"Adjoining Owners" shall mean all owners of stores on sites at the
Mall which are owned or ground leased by such owners, which stores are
operated in conjunction with the Mall pursuant to an Operating Agreement
and have an entrance or entrances that open into the enclosed,
air-conditioned common area of the Mall.
"Adjoining Properties" shall mean the land and/or the improvements
thereon of Adjoining Owners which are not part of but are operated in
conjunction with the Mall under the terms of an Operating Agreement.
"Adjustment Point" shall have the meaning set forth in Article VI.
"Affiliate" shall mean a Person that directly, or indirectly through
one or more intermediaries, controls, is controlled by, or is under
common control with the Person specified. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of a Person, whether through the
ownership of voting securities or general partnership or managing member
interests, by contract or otherwise. "Controlling" and "controlled" shall
have meanings correlative thereto. Without limiting the generality of the
foregoing, a Person shall be deemed to control any other Person in which
it owns, directly or indirectly, a majority of the ownership interests.
"Agreed Value" shall mean (i) $169,000,000 minus (ii) the aggregate
amounts payable by Transferees
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pursuant to Section 16.08(b)(i) and 16.08(b)(ii) (excluding the cost of
any endorsements not expressly referred to in the definition of Title
Policy set forth in this Article I) minus (iii) all taxes and fees paid
by Transferees pursuant to clause (v) of Section 16.08(b), minus (iv) all
amounts paid by Transferees to Broker and counsel for Transferors
pursuant to clauses (vii) and (viii) of Section 16.08(b), minus (v) 50%
of all amounts paid by Transferees pursuant to clause (x) of Section
16.08(b), minus (vi) the cost (as documented to the reasonable
satisfaction of Transferees prior to the Closing), up to a maximum of
$15,000, of the Phase I environmental audit and asbestos survey obtained
by Transferees with respect to the Mall, all subject to further
adjustment pursuant to the first paragraph of Article VI, Section 10.03
and as otherwise expressly provided herein.
"Agreement" shall mean this Contribution and Exchange Agreement, as
amended or modified from time to time hereafter in accordance with the
terms hereof.
"Anchor" shall mean (i) any Tenant of the Mall leasing an aggregate
amount of space in the Mall in excess of 30,000 square feet of gross
leasable area with an entrance or entrances that open into the enclosed,
air-conditioned common area of the Mall or (ii) any Adjoining Owner
owning or leasing a site at the Mall on which is erected a store in
excess of 30,000 square feet of gross leasable area.
"Annual Unaudited Statements" shall mean the unaudited annual
financial statements for the Mall consisting of a cash flow statement of
actual results of operations for the calender years ending December 31,
1995, 1996 and 1997.
"Appurtenances" shall mean, with respect to the Land, all right,
title and interest, if any, of the Joint Venture in and to the following:
(i) all land lying in the bed of any street, highway, road or avenue, open
or proposed, public or private, in front of or adjoining the Land, to the
center line thereof; (ii) all rights of way, highways, public places,
easements, appendages, appurtenances, sidewalks, alleys, strips and gores
of land adjoining or appurtenant to the Land which are now or hereafter
used in connection with the Mall; (iii) all awards to be made in lieu of
any of the foregoing, or for damages to the Land by reason of the change
of grade of any
▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇; and (iv) all easements, rights and
privileges benefiting the applicable Land, including those under the
applicable Operating Agreement or Agreements.
"Assignment of Joint Venture" shall mean an assignment of the Joint
Venture Interest of either Transferor, substantially in the form of
Exhibit M annexed hereto.
"Audited Financial Statements" shall mean the audited financial
statements (consisting of balance sheets and income statements) for the
Mall as of, and for the calendar years ended December 31, 1995, 1996 and
1997.
"Books and Records" shall mean, to the extent in the Joint Venture's
or the Managing Agent's possession prior to the Closing, all records,
books of account and papers relating to the Joint Venture, all records,
books of account and papers relating to the construction, ownership and
operations of the Mall, including architect's drawings, blueprints and
as-built plans, maintenance logs, copies of warranties and guaranties,
licenses and permits, instruction books, employee manuals, records and
correspondence relating to insurance claims, financial statements,
operating budgets, paper and electronic media copies of data and other
information relating to the Mall available from personal computers,
structural, mechanical, geotechnical or other engineering studies, soil
test reports, environmental reports, underground storage tank reports,
feasibility studies, appraisals, surveys or reports prepared pursuant to
the Americans with Disabilities Act, asbestos surveys prepared pursuant
to the Occupational Safety and Health Act, marketing studies, mall
documents and compilations, lease summaries and originals and/or copies
of the Leases, the Operating Agreements and the Other Agreements and
correspondence related thereto; provided, however, that "Books and
Records" shall not include attorney-client privileged documents, records,
books of account and papers relating to the Transferors, personnel files,
past business plans or projections or documents related to agreements
that have been fully performed or terminated prior to January 1, 1998.
"Broker" shall have the meaning set forth in Section 13.01.
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"Business Day" shall mean any day other than a Saturday, a Sunday or
a day on which national banking institutions in New York City are
authorized or required to close.
"Closing" shall mean the closing of the contribution of the Joint
Venture Interests by Transferors to Transferees provided for in Article
V.
"Closing Date" shall have the meaning set forth in Section 5.01.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall mean the common stock, $.10 par value per
share, of the General Partner.
"Deposit" shall have the meaning set forth in Section 3.01(c).
"Environmental Laws" shall mean all applicable federal, state and
local statutes, ordinances, codes, rules, regulations, guidelines, orders
and decrees regulating, relating to or imposing liability or standards
concerning or in connection with the environment or the impact of the
environment on human health or safety, as any of the same may be amended
from time to time.
"Escrow Agent" shall have the meaning set forth in Section 3.02(a).
"Escrow Fund" shall have the meaning set forth in Section 14.05.
"Escrow Income" shall have the meaning set forth in Section 14.05.
"Excepted Items" shall mean, with respect to the Mall: (i) all items
of personal property owned by the Managing Agent, Tenants, subtenants,
independent contractors, business invitees, utilities or Adjoining Owners;
(ii) all items of personal property not owned but leased by the Joint
Venture; (iii) all cash on hand, checks, money orders, prepaid postage in
postage meters and, subject to Article VI, accounts receivable and (iv)
all software, operating manuals, marketing materials and other items
proprietary to the Managing Agent.
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"Existing Nashland Debt" shall mean that portion (approximately $24
million, including principal and contingent interest based on the proceeds
of the transactions contemplated hereby, together with all other interest,
prepayment premiums, fees and other amounts related thereto) of the debt
secured by, among other things, a pledge of Nashland's Joint Venture
Interest incurred pursuant to the terms of the Loan Agreement dated as of
June 21, 1984 between Nashland and The State Street Bank and Trust Company
(as trustee of the Telephone Real Estate Equity Trust), as predecessor in
interest to The State Street Bank and Trust Company (as trustee for the
AT&T Master Pension Trust), as amended, the precise amount of which
allocable portion shall be set forth in the Payoff Letter.
"Family Member" shall mean a spouse, a child (natural or adopted), a
spouse of any such child, a grandchild, a sister, a brother, a parent, a
lineal descendant of any of the foregoing or a trust for the benefit of
any of the foregoing, but if any such Person is less than 21 years of age
at the time of any proposed transfer, then such transfer may only be made
to a trustee of a valid trust for the benefit of such Person, which trust
shall not terminate prior to the beneficiary of such trust (or
beneficiaries if there is more than one) attaining the age of 21.
"Financial Statements" shall mean, collectively, the Unaudited
Financial Statements and the Audited Financial Statements.
"General Partner" shall mean General Growth Properties, Inc., a
Delaware corporation, and its successors and assigns.
"Governmental Authorities" shall mean all agencies, bureaus,
departments and officials of federal, state, county, municipal and local
governments and public authorities.
"Guarantee" shall mean the guarantee of ORILP and Rodamco North
America BV in substantially the form of Exhibit O hereto.
"Hazardous Substances" shall mean any substance, material, waste,
gas or particulate matter
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which is prohibited, controlled or regulated by any Environmental Law.
"HRE" shall mean HRE Altamonte, Inc., a Delaware corporation, and
its successors and assigns.
"HRE Transferee" shall mean (i) the Partnership, as the transferee
hereunder of 49.99999% of HRE's Joint Venture Interest, and its
successors and assigns, and (ii) Altamonte Springs Mall, L.P., a Delaware
limited partnership, as the transferee hereunder of the remaining .00001%
of HRE's Joint Venture Interest, and its successors and assigns.
"Impositions" shall mean all real estate and personal property
taxes, general and special assessments, water and sewer charges, license
fees and other fees and charges assessed or imposed by Governmental
Authorities upon the Property, Intangible Personal Property and/or
Personal Property.
"Improvements" shall mean all buildings, facilities, structures and
improvements now located or hereafter erected on the Land, and all
fixtures constituting a part thereof, other than those owned by Adjoining
Owners.
"Income" shall have the meaning set forth in Section 3.02(a).
"Indemnified Transferee Persons" shall have the meaning set forth in
Section 14.07.
"Indemnified Transferor Persons" shall have the meaning set forth in
Section 14.08.
"Intangible Personal Property" shall mean all right, title and
interest of the Joint Venture in and to all telephone numbers, names,
trade names, designations, logos and service marks, and the appurtenant
goodwill, used in connection with operation of the Mall (other than the
names or variations thereof of The ▇'▇▇▇▇▇▇ Group, the Managing Agent,
Adjoining Owners and Tenants), agreements to operate for specific periods,
radius restriction agreements and similar agreements made by Tenants and
Anchors, whether in their Leases or Operating Agreements or in separate
agreements, and all similar items of intangible personal property owned by
the Joint Venture and
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utilized solely in connection with the operation of the Mall (excluding
Excepted Items).
"Interim Financial Statements" shall mean the unaudited financial
statements for the Mall consisting of a cash flow statement of actual
results of operations for the quarterly periods ended June 30, 1997,
September 31, 1997, December 31, 1997 and March 31, 1998.
"Joint Venture" shall mean Altamonte Mall, a Florida joint venture.
"Joint Venture Agreement" shall mean the Amended and Restated Joint
Venture Agreement of the Joint Venture, dated as of July 2, 1992.
"Joint Venture Interest" shall mean, with respect to either
Transferor, the interest of such Transferor in the Joint Venture.
"Joint Venture's Copy" shall mean an executed counterpart of the
instrument in question or, if an executed counterpart is not in
Transferors', the Joint Venture's or the Managing Agent's possession,
such conformed or photostatic copy as may be in Transferors', the Joint
Venture's or the Managing Agent's possession which, in the case of
instruments executed by the Joint Venture or either Transferor (as
opposed to their predecessors in interest) shall be certified by
Transferors to be an exact copy of the executed counterpart of such
instrument.
"knowledge" or "notice" when used in respect of Transferors shall
mean, without independent investigation other than inquiry of the
Managing Agent, the actual knowledge of or written notice received by any
of ▇▇▇▇▇▇▇▇ ▇. ▇'▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ or
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
"Land" shall mean all those certain lots, pieces or parcels of land
situate, lying and being in the County of Seminole, State of Florida, more
particularly described in Exhibit A annexed hereto and made a part hereof,
together with the Appurtenances.
"Leases" shall mean all leases, licenses, concessions and other
forms of agreement, written or oral, however denominated, wherein the
Joint Venture (as a party named therein or the successor thereto)
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grants to any party or parties, other than the Managing Agent, the right
of use or occupancy of any portion of the Mall, and all renewals,
modifications, amendments, guaranties and other agreements affecting the
same, but expressly excluding the Operating Agreements and the Other
Agreements.
"Leasing Costs" shall have the meaning set forth in Section 6.02.
"Legal Requirements" shall mean all statutes, laws, ordinances,
rules, regulations, executive orders and requirements of all Governmental
Authorities which are applicable to the Mall or any part thereof or the
use or manner of use thereof, or to the owners, Tenants or occupants
thereof in connection with such ownership, occupancy or use.
"Losses" shall mean with respect to any obligation to indemnify any
Person, any and all claims, actions, suits, demands, losses, damages,
liabilities, obligations, judgments, settlements, awards, penalties,
costs or expenses incurred by such Person, including reasonable
attorneys' fees and expenses.
"Mall" shall mean, with respect to the premises described in Exhibit
A hereto, collectively, the Land, the Improvements, the Personal
Property, the Intangible Personal Property, the Leases, the Operating
Agreements and the Other Agreements.
"Managing Agent" shall mean WellsPark Group, Limited Partnership, a
Delaware limited partnership.
"Material Adverse Effect" shall mean a material adverse effect (i)
on the condition (financial or otherwise), business, liabilities,
properties, assets, or results of operations of the General Partner or
the Partnership and its subsidiaries, taken as a whole, or (ii) on the
ability of any of Transferees or General Partner to perform their
respective obligations under or to consummate the transactions
contemplated by this Agreement.
"Nashland" shall mean Nashland Associates, a Tennessee general
partnership, and its successors and assignors.
"Nashland Transferee" shall mean the Partnership, in its capacity as
the transferee of
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Nashland's Joint Venture Interest, and its successors and assigns.
"New Lease Notice" shall have the meaning set forth in Section
11.04.
"Operating Agreements" shall mean all agreements and/or ground or
operating leases, as amended or supplemented, by and between the Joint
Venture or its predecessors in title to the Mall and the Adjoining
Owners.
"ORILP" shall mean ▇'▇▇▇▇▇▇ Realty Investors II L.P., a Tennessee
limited partnership.
"Other Agreements" shall mean all contracts, agreements and
documents pertaining to the Mall to which the Joint Venture or its
predecessor in interest is a party and by which the Joint Venture is
bound, other than the Operating Agreements and the Leases, and including
all service contracts, construction contracts, leases of personal
property and utility agreements, together with all amendments,
supplements and modifications thereto.
"Other Charges" shall mean all items which are included in Rents
other than fixed, minimum, percentage and overage rents.
"Partnership" shall mean GGP Limited Partnership, a Delaware limited
partnership, and its successors and assigns.
"Partnership Agreement" shall mean the Second Amended and Restated
Agreement of Limited Partnership of the Partnership dated as of April 1,
1998, as amended by the First Amendment thereto dated as of June 10,
1998, and as the same may be amended hereafter.
"Partnership Agreement Amendment" means, at the Partnership's
election, either (i) an amendment to the Partnership Agreement, in form
and substance reasonably satisfactory to Transferors and General
Partner, providing for Transferors' admission as limited partners of the
Partnership or (ii) a signature page to the Partnership Agreement
pursuant to which the signatories thereto are joined as parties to the
Partnership Agreement.
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"Payoff Letter" shall have the meaning set forth in Section 3.03.
"Percentage Interest" shall mean 50% in the case of HRE and 50% in
the case of Nashland.
"Permitted Encumbrances" shall have the meaning set forth in Section
4.01.
"Permitted Investments" shall mean investments in (i) United States
government securities or securities of agencies of the United States
government which are guaranteed by the United States government and
having a maturity of one year or less, (ii) certificates of deposit,
banker's acceptances and time deposits and money market deposit accounts
issued or offered by commercial banks having a combined capital and
surplus in excess of $1 billion organized under the laws of the United
States or any political subdivision thereof and having a maturity of one
year or less, (iii) commercial or finance company paper of companies
organized under the laws of any state of the United States or any
political subdivision thereof having a rating assigned to such commercial
paper of one of the two highest unsecured debt ratings by Standard &
Poor's Corporation or ▇▇▇▇▇'▇ Investors Service, Inc. and having a
maturity of one year or less, (iv) repurchase obligations with respect to
any security described in clause (i) above entered into with a depository
or trust company, and (v) such other investments as Transferees and
Transferors may agree upon in writing.
"Permitted Transferee" shall have the meaning set forth in Section
3.04(b).
"Person" shall mean an individual, a corporation, a limited
liability company, a partnership, an association, a trust or any other
entity or organization.
"Personal Property" shall mean the Books and Records and all
apparatus, machinery, computer and peripheral equipment, data contained in
hard drives and on diskette, devices, appurtenances, equipment, furniture,
furnishings, advertising materials, seasonal decorations and other items
of personal property (other than Intangible Personal Property and the
Excepted Items), in each case owned by the Joint Venture and
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located at and used in connection with the ownership, operation or
maintenance of the Mall.
"PPM" shall mean that certain Private Placement Memorandum dated
July 9, 1998 relating to, inter alia, the issuance of the Units pursuant
to this Agreement.
"Prohibited Disposition" shall have the meaning set forth in Section
3.05.
"Property" shall mean the Land and the Improvements.
"Redemption Rights Agreement" shall mean the Redemption Rights
Agreement among the General Partner and Transferors to be executed as of
the Closing Date in substantially the form of Exhibit F.
"Regulations" shall mean the final, temporary or proposed Income Tax
Regulations promulgated under the Code, as such regulations may be
amended from time to time (including corresponding provisions of
succeeding regulations).
"Rent Roll" means a rent roll with respect to the Mall in the form
of Schedule 3.
"Rents" shall mean all fixed, minimum, additional, percentage,
overage and escalation rents, common area and/or mall maintenance
charges, advertising and promotional charges, insurance charges, rubbish
removal charges, sprinkler charges, shoppers aid charges, water charges,
utility charges, HVAC charges, amounts payable by Tenants or Adjoining
Owners with respect to real estate or other taxes and other amounts
payable under the Leases or the Operating Agreements.
"Required Estoppel Letters" shall have the meaning set forth in
Section 15.01.
"Section 3.04(b) Certificate" shall have the meaning set forth in
Section 3.04(b).
"SEC" means the Securities Exchange Commission.
"Successor Property" shall mean a property acquired by the
Partnership upon the disposition of the
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Mall in a Section 1031 like-kind exchange or any other non-recognition
transaction under the Code.
"Survey" shall mean the preliminary survey of the Real Property
received by Transferors on January 21, 1998, Job No. 127-97, and made by
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ of ▇▇▇▇▇▇▇ Surveyors Inc.
"Tenants" shall mean the tenants, licensees, concessionaires or
other users or occupants under Leases.
"Termination Date" shall mean the first anniversary of the Closing
Date.
"Title Company" shall mean First American Title Insurance Company,
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
"Title Policy" shall mean an ALTA 1992 form of Owner's Policy of
Title Insurance in the amount of the Agreed Value issued by the Title
Company, dated the date and time of the Closing, insuring the Joint
Venture as the owner of the Property subject only to the Permitted
Encumbrances with FL-14 (change of partners/fairway), FL-15 (contiguity,
including contiguity to a public street) and FL-16 (land same as survey)
endorsements. Schedule A to the Title Policy shall include the easement
rights benefitting the Land created by Trustee's Deed recorded in O.R.
Book 1054, page 820, the Memorandum of Operating Agreement recorded in
0.R. Book 987, page 1394 and the first amendment thereto recorded in O.R.
Book 1014, page 1305, the Encroachment Agreement recorded in O.R. Book
1014, page 1301, the Reciprocal Parking Easement recorded in O.R. Book
1054, page 831 (less and except certain property conveyed to the City of
Altamonte Springs) and the Easement recorded in O.R. Book 1402, page 952.
"Trading Day" shall mean a day on which the New York Stock Exchange
is open for business.
"Transfer Premium" shall mean $1,200,000; provided, however, that on
the fifth anniversary of the Closing Date and on each subsequent
anniversary of the Closing Date through the tenth anniversary of the
Closing Date, the Transfer Premium shall be reduced by $200,000 so that
after the tenth anniversary of the Closing Date the Transfer Premium
shall be zero.
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"Transferees" shall mean the collective reference to HRE Transferee
and Nashland Transferee.
"Transferors" shall mean the collective reference to Nashland and
HRE.
"Transferors' Estoppel Letter" shall have the meaning set forth in
Section 15.02.
"Unaudited Financial Statements" shall mean, collectively, the
Interim Financial Statements and the Annual Unaudited Statements.
"Unit" shall mean one Common Unit (as defined in the Partnership
Agreement).
"Unit Holder" shall mean Transferors (and/or their designated
Permitted Transferees as provided in Section 3.01) and any Permitted
Transferee to whom Units are transferred in accordance with Section 3.04
or in accordance with the terms and conditions of the Partnership
Agreement.
"Unit Value" shall mean, with respect to each Unit as of a
particular date, an amount equal to the average of the closing sale
prices for a share of the Common Stock on the New York Stock Exchange, as
reported in The Wall Street Journal, Northeastern edition, for each of
the 10 consecutive Trading Days ending with the complete Trading Day
immediately prior to such date.
"Violations" shall mean violations of Legal Requirements existing
with respect to the Mall.
SECTION 1.02. Terms Generally. Definitions in this Agreement apply
equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the
corresponding masculine, feminine and neuter forms. All references
herein to Articles, Sections, Exhibits and Schedules shall be deemed to
be references to Articles and Sections of, and Exhibits and Schedules
to, this Agreement unless the context shall otherwise require. The words
"include", "includes" and "including" shall be deemed to be followed by
the phrase "without limitation". The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to this Agreement as
a whole and not to any particular section, paragraph or subdivision.
19
ARTICLE II
Agreement To Contribute the Joint Venture Interests
Upon and subject to the terms and conditions of this Agreement, (i)
Nashland agrees to contribute its Joint Venture Interest to Nashland
Transferee and Nashland Transferee agrees to accept such Joint Venture
Interest from Nashland, subject only to the Existing Nashland Debt (but
without assuming any obligations thereunder), and in exchange therefor
Partnership shall issue to Nashland (or its designated Permitted
Transferees as provided in Section 3.01) the Units as provided in Article
III and (ii) HRE agrees to contribute its Joint Venture Interests to HRE
Transferee free and clear of all liens and encumbrances and HRE
Transferee agrees to accept such Joint Venture Interests from HRE and in
exchange therefor Partnership shall issue to HRE (or its designated
Permitted Transferees as provided in Section 3.01) the Units as provided
in Article III. For Federal income tax purposes, such transactions
(other than cash received in lieu of fractional shares) shall be treated
by the parties as tax-free capital contributions pursuant to Section 721
of the Code, and the parties agree to file all tax reports, returns,
claims and other statements consistent with such treatment and agree not
to make any inconsistent written statement or take any inconsistent
position on any returns, on any refund claim, during the course of any
Internal Revenue Service or other tax audit, for any financial or
regulatory purpose, or in any litigation or investigation or otherwise,
unless in the good faith view of counsel for the party in question (after
consultation with the other party) there is no reasonable basis to
maintain such position, as a result of a change in applicable law after
the date hereof; provided, however, that the foregoing treatment is not
intended to apply to (i) payments of cash for prorations and adjustments
pursuant to Article VI and (ii) payments of Units in exchange for the
.0001% HRE Joint Venture Interest transferred to Altamonte Springs
Mall, L.P. The provisions of this Article II shall survive the Closing.
ARTICLE III
Agreed Value
20
SECTION 3.01. Agreed Value. (a) In consideration of the
contribution by Nashland of its Joint Venture Interest as provided in
Article II, Partnership agrees (i) to issue to Nashland (or any Permitted
Transferee(s) designated by Nashland at least five days prior to Closing)
at the Closing Units having an aggregate Unit Value as of the Closing
Date equal to 50% of the Agreed Value minus the sum of (A) the amount
paid or required to be paid by Nashland Transferee to prepay the Existing
Nashland Debt pursuant to Section 5.02 (and to pay all interest,
prepayment premiums, fees and other amounts related thereto) and (B)
without duplication, the amount deposited into the Escrow Fund pursuant
to Section 5.02(c) and (ii) to prepay the Existing Nashland Debt as
provided in Section 5.02. No fractional Units shall be issued pursuant
to this Section 3.01 and in lieu thereof on the Closing Date Nashland
Transferee shall pay Nashland cash.
(b) In consideration of the contribution by HRE of its Joint
Venture Interest as provided in Article II, Partnership agrees to issue
to HRE (or any Permitted Transferee(s) designated by HRE at least five
days prior to Closing) at the Closing Units having an aggregate Unit
Value as of the Closing Date equal to 50% of the Agreed Value; provided,
however, that no fractional Units shall be issued and in lieu thereof on
the Closing Date HRE Transferee shall pay HRE cash.
(c) In order to secure their obligations under this Agreement,
within two Business Days after this Agreement has been executed and
delivered by Transferors and Transferees, Transferees shall deposit in an
account designated by Escrow Agent the sum of $3,000,000 by wire transfer
of immediately available Federal funds. The amount so deposited (the
"Deposit") shall be subject to the provisions of Section 3.02.
(d) Transferors shall not, and shall cause their respective
Affiliates not to, buy or sell (including short sell) any shares of
Common Stock during the 10 Trading Days prior to the Closing Date,
whether in the open market or in a negotiated transaction.
SECTION 3.02. Escrow Provisions. (a) The Title Company (referred
to in this Section and sometimes in other sections hereof as "Escrow
Agent")
21
shall hold the Deposit in escrow in an interest-bearing bank account at
The Chase Manhattan Bank, N.A., or in such other type or types of
investments as may be agreed to in writing by Transferors and
Transferees, until the Closing or such other time as is specified herein,
and shall pay over or apply the Deposit in accordance with the terms of
this Section 3.02. All interest or other income earned on the Deposit
(the "Income") shall be paid to or applied for the benefit of Transferees
unless the Deposit is to be paid to Transferors as provided in Sections
14.01 and 16.11, in which case the Income shall be paid to Transferors
(pro rata in accordance with their respective Percentage Interests). The
party that receives the Income or the benefit thereof shall be
responsible for paying any income taxes thereon. The tax identification
numbers of the parties hereto shall be furnished to Escrow Agent upon
request.
(b) If the Closing occurs, the Deposit shall be paid to the order
of Transferees. If this Agreement is terminated pursuant to Section
14.01 or 16.11, the Deposit and the Income shall be paid to Transferors
(pro rata in accordance with their respective Percentage Interests) as
liquidated damages and, in case of the termination of this Agreement
pursuant to Section 14.01, as Transferors' sole and exclusive remedy. If
the Closing does not occur for any reason other than termination pursuant
to Section 14.01, then the Deposit and the Income shall be paid to the
order of Transferees.
(c) Escrow Agent shall not make any disposition of the Deposit and
the Income unless (i) Escrow Agent is directed to do so in writing by
Transferors and Transferees or (ii) Escrow Agent is directed to do so in
writing by the party or parties which claim to be entitled to receive the
Deposit and the Income and the other party or parties do not object to
such disposition within 10 days after notice thereof from Escrow Agent or
(iii) Escrow Agent is directed to do so by a final order or judgment of a
court as hereinafter provided. The notice given by Escrow Agent pursuant
to clause (ii) above shall state in capital letters that failure of the
addressee or addressees to object to the disposition of the Deposit
described in such notice within 10 days after the giving thereof shall
constitute a waiver of the addressee's right to contest or object to such
disposition. In the event that any dispute shall arise with respect to
the
22
entitlement of either party to the Deposit and the Income, Escrow Agent
shall continue to hold the Deposit and the Income until otherwise directed
by written instruction from Transferors and Transferees or a final order
or judgment of a court of competent jurisdiction entered in an action or
proceeding to which Escrow Agent is a party. In addition, in the event of
any such dispute, Escrow Agent shall have the right at any time to
commence an action in interpleader and to deposit the Deposit and the
Income with the clerk of a court of appropriate jurisdiction in the State
of New York. Upon the commencement of such action and the making of such
deposit, Escrow Agent shall be released and discharged from and of all
further obligations and responsibilities hereunder.
(d) The parties hereto acknowledge that Escrow Agent is acting
solely as a stakeholder at their request and for their convenience, that
with respect to the Deposit and the Income Escrow Agent shall not be
deemed to be the agent of any of the parties hereto and that Escrow Agent
shall not be liable to any party hereto for any act or omission on its
part unless taken or suffered in bad faith, in willful disregard of this
Agreement or involving gross negligence on the part of Escrow Agent.
Escrow Agent may act upon any instrument or other writing and upon
signatures believed by it to be genuine, without any duty of independent
verification. Escrow Agent shall not be bound by any modification of
this Agreement unless the same is in writing and signed by the parties
hereto and a counterpart thereof is delivered to Escrow Agent and, if
Escrow Agent's duties, rights or liabilities hereunder are affected,
unless Escrow Agent shall have given its prior consent thereto in
writing. Escrow Agent shall not be required or obligated to determine
any questions of law or fact. The parties hereto shall
jointly and severally indemnify and hold harmless Escrow Agent from and
against all costs, claims and expenses, including reasonable attorneys'
fees and litigation costs, incurred by Escrow Agent in connection with
the performance of its duties under this Section 3.02 (including in an
interpleader action or other litigation regarding the disposition of the
Deposit and the Income), except with respect to acts or omissions taken
or suffered by Escrow Agent in bad faith, in willful disregard of this
Agreement or involving gross negligence on the part of Escrow Agent.
23
(e) Escrow Agent shall have no liability for the selection of any
particular account or investment made by the parties hereto, for
fluctuations in the value of said account or investment, for the amount
of Income earned on said account or investment or for any loss incurred
in connection therewith.
(f) Escrow Agent has acknowledged its agreement to the provisions
of this Section 3.02 and Section 14.05 by signing this Agreement, and
Escrow Agent has executed this Agreement solely for such purpose.
(g) References in succeeding provisions of this Agreement to the
Deposit shall be deemed to be references both to the Deposit and the
Income.
SECTION 3.03. Terms Regarding Existing Nashland Debt. At the
Closing, (i) Nashland's Joint Venture Interest will be contributed to
Nashland Transferee subject to the Existing Nashland Debt and (ii) the
Existing Nashland Debt will be prepaid in accordance with Section 5.02
immediately upon the contribution of Nashland's Joint Venture Interest to
Nashland Transferee. At least two Business Days prior to the Closing
Nashland will deliver to Nashland Transferee a payoff letter (the "Payoff
Letter") from the lender holding the Existing Nashland Debt setting forth
all amounts that would be due to such lender assuming the Existing
Nashland Debt is prepaid in full on the Closing Date. The Payoff Letter
(or other documentation obtained by Nashland from such lenders) shall
expressly acknowledge that Transferees and the Joint Venture shall not
have any liability in respect of the Existing Nashland Debt following
payment of the amounts set forth in the Payoff Letter.
SECTION 3.04. Agreements Regarding the Partnership. (a) Subject to
the satisfaction of all conditions contained in Sections 10.01 and 10.02,
at the Closing, each Transferor and the Partnership shall execute and
deliver the Partnership Agreement Amendment pursuant to which (i) the
Partnership shall issue to each Transferor (and/or its designated
Permitted Transferees provided in Section 3.01) the number of Units to be
issued to it in accordance with this Agreement (and the Partnership shall
deliver to Transferors certificates representing such Units) and (ii) each
Transferor (and/or such designees) shall be admitted as a limited partner
of the Partnership and
24
shall agree to be bound by the terms of the Partnership Agreement, as
amended by the Partnership Agreement Amendment. Subject to Section
3.04(b), any Unit Holder shall also be permitted to transfer the Units in
accordance with the terms and conditions of the Partnership Agreement as
amended by the Partnership Agreement Amendment, except that the
Partnership confirms and agrees that clause (ii) of Section 8.4 of the
Partnership Agreement shall have no application to any transfer of the
Units issued pursuant to this Agreement.
(b) The Units issued pursuant hereto may not be sold, conveyed,
pledged or otherwise transferred to any Person other than a Permitted
Transferee until the earlier of (i) the first anniversary of the Closing
Date and (ii) the occurrence of any transaction that gives rise to an
obligation of Transferees to pay the Transfer Premium. In addition, a
Transferor may only sell, convey, or otherwise transfer Units issued to it
pursuant hereto if the transferee receiving such Units (including any
Permitted Transferee) delivers a certificate (the "Section 3.04(b)
Certificate") to the Partnership certifying that (x) such transferee is a
Person whose ownership of the Units would not cause such Units to be
treated as Units owned by a "foreign person" within the meaning of Treas.
Reg. Section 1.897-1(c)(2)(i) and (y) such transferee shall cause a
Section 3.04(b) Certificate to be delivered to the Partnership in
connection with any subsequent sale, conveyance or other transfer by it of
such Units. Upon delivery of a Section 3.04(b) Certificate in connection
with its sale, conveyance or other transfer of Units, a Transferor shall
have no further obligation pursuant to the preceding sentence with respect
to such Units. In addition, there shall be no more than 25 record owners
of all the Units issued pursuant hereto at any time. "Permitted
Transferee" shall mean (i) any Person which owns or holds a direct or
indirect interest in Transferor and, in the case of any such Person who is
an individual, such individual's Family Members or trusts created for
their benefit, (ii) any entity controlled by or under common control with
an entity referred to in clause (i), and (iii) any bona fide pledgee of
Units issued pursuant hereto after a default on an obligation secured by
the pledge or to a bona fide purchaser for value following such default.
Any permitted record holder of a Unit issued pursuant to this Agreement is
hereinafter referred to as a "Unit Holder".
25
(c) The Partnership agrees (i) the Partnership Agreement shall not
be amended or modified prior to the Closing Date in a manner that would
have required the consent of Transferors had Transferors been limited
partners in the Partnership at the time of such amendment and the
provisions of the Partnership Agreement regarding amendment remained the
same as on the date hereof and (ii) to deliver to each Transferor at
least five Business Days prior to the Closing certified copies of any
amendments to the Partnership Agreement effected after the date of this
Agreement and prior to the Closing Date.
(d) The provisions of this Section 3.04 shall survive the Closing.
SECTION 3.05. Certain Tax Matters. (a) Except as provided in
Section 3.05(d) below, at no time prior to the fifth anniversary of the
Closing Date may the Partnership (i) dispose of any direct or indirect
interest in the Mall or any Successor Property (including any interest in
the Joint Venture), directly or indirectly, in a single transaction or a
series of related transactions if the result would be that any Unit
Holder would recognize gain for Federal income tax purposes or (ii)
enter into any other transaction if the result would be that any Unit
Holder would recognize gain for federal income tax purposes due to an
actual or deemed transfer of the Mall or any Successor Property (any such
disposition or other transaction, a "Prohibited Disposition").
(b) During the period from the fifth anniversary of the Closing
Date to the tenth anniversary of the Closing Date, the Partnership may
make a disposition of the Mall or any Successor Property that would
otherwise be a Prohibited Disposition only if it complies with Section
3.05(d).
(c) The Partnership shall not transfer any direct or indirect
interest in the Mall to any Person, including a subsidiary of the Joint
Venture, unless either (i) Transferees receive a Successor Property in
return or (ii) such transfer does not violate this Section 3.05 and such
transferee of the Property agrees in writing to be bound by the terms of
this Section 3.05 for the remaining period, which agreement shall be for
the express benefit of the Unit Holders (and, where applicable, their
direct and indirect
26
partners) and copies of which shall be delivered to each Unit Holder. In
the case of any such transfer, Transferees shall not be released from any
liability or obligations under this Section 3.05.
(d) In the event that the Partnership proposes to make a Prohibited
Disposition that would be prohibited by Section 3.05(a) or 3.05(b) then,
notwithstanding such provision, the Partnership may make such Prohibited
Disposition if (i) the Partnership shall have delivered to both
Transferors written notice of its intention to take such action no more
than 90 and no less than 30 days prior to taking such action, which
notice shall set forth a reasonably complete description of the proposed
action and (ii) the Partnership shall give written notice to both
Transferors of the actual occurrence of such action, and shall make a
cash payment of the Transfer Premium to Nashland, within 10 days after
the date of such action. If the Partnership completes a Prohibited
Disposition and failed to give Transferors the notice required pursuant
to this Section 3.05(d), the Partnership will pay on demand all interest
and penalties related to any tax imposed on ORILP or its direct or
indirect partners and their successors and assigns with respect to the
action that gave rise to the requirement to deliver such notice that
accrue until 30 days after such notice is given.
(e) Nashland's partners, by their execution hereof, agree that any
payment of any Transfer Premium shall be for the exclusive benefit of
ORILP and its direct or indirect partners and their successors and
assigns, and that promptly after receipt of any Transfer Premium, Nashland
will distribute the entire amount thereof to the order of ORILP. HRE
acknowledges and agrees that the Transfer Premium shall be paid only to
Nashland. HRE, for itself and on behalf of its Affiliates and Permitted
Transferees, waives any right to any payment or other remedy with respect
to any transfer or disposition by the Partnership of any direct or
indirect interest in the Mall. Nashland, for itself and on behalf of its
Affiliates and Permitted Transferees, acknowledges and agrees that receipt
of the Transfer Premium (together with such other amounts as may be
required to be paid under the express terms of this Section 3.05 and such
other amounts as may be payable to Transferors pursuant to Section 14.09
to the extent related to any enforcement of their rights under this
Section 3.05) in accordance with this Section 3.05
27
shall be the exclusive remedy of Transferors and the Unit Holders for a
breach by Transferees of Section 3.05(a),(b) or (c).
(f) In the event (i) a transaction occurs which requires payment of
the Transfer Premium pursuant to this Section 3.05 and (ii) within 60
days after the payment thereof ORILP (or its permitted successors and
assignees) shall exercise its Redemption Rights (as defined in the
Redemption Rights Agreement) with respect to any of the Units issued
pursuant to this Agreement in which it shall own a direct or indirect
interest, the Partnership agrees that the purchase price for such Units
shall be paid exclusively in cash.
(g) The provisions of this Section 3.05 shall survive the Closing.
ARTICLE IV
Permitted Encumbrances
SECTION 4.01. Definition. As used in this Agreement, "Permitted
Encumbrances" shall mean the collective reference to the following
matters:
(a) the matters set forth in Exhibit E annexed hereto and made a
part hereof;
(b) liens for Impositions which are not due and payable as of the
Closing Date and which are apportioned in accordance with Article VI;
(c) liens for Impositions which are paid directly by Tenants in
occupancy on the Closing Date or Adjoining Owners to the entity imposing
same;
(d) the state of facts shown on the Survey (and on an update of the
Survey to be provided to Transferees prior to the Closing Date, provided
that any additional matter shown on such update of the
Survey shall be a Permitted Encumbrance only if it does not materially
and adversely affect the value, access to or utility of the Mall);
(e) all the Leases, any extensions or renewals of the Leases
pursuant to options contained therein, extensions, renewals or amendments
of the Leases or additional or substituted Leases made between
28
the date hereof and the Closing Date in each case only if same have been
exercised, entered into or executed in accordance with the provisions of
Section 11.03 and/or Section 11.04, as applicable, or if the landlord's
consent or agreement is not required;
(f) mechanics' liens against (i) any Tenants in occupancy under
Leases which are in full force and effect on the Closing Date and which
obligate the Tenants thereunder to remove and discharge such liens at
their expense, or (ii) any Adjoining Owner; provided, however, that a
mechanic's lien with respect to leasehold improvements made by a Tenant
shall not be a Permitted Encumbrance if the Joint Venture is required to
pay for or fund such leasehold improvements, by direct payment, credit,
allowance or otherwise, pursuant to the terms of the applicable Lease
unless (i) prior to the Closing Date the Joint Venture has paid, credited
or has otherwise provided for the discharge of all amounts due and owing
to the Tenant under such Lease in respect of such leasehold improvements
in a manner that will not be a liability or obligation of the Joint
Venture after the Closing Date, or (ii) the Transferees have received a
payment or credit in an amount equal to the total amount due and owing to
the Tenant under such Lease in respect of such leasehold improvements in
accordance with Section 6.02 hereof;
(g) all the Operating Agreements, as the same may be modified,
terminated or additional Operating Agreements entered into, in any such
case, in compliance with the provisions of Section 11.03; and
(h) all other matters affecting title to the Property which are
hereafter approved in writing by Transferees, accepted or deemed accepted
in accordance with the terms of this Agreement or waived by Transferees
as provided in Article XII.
SECTION 4.02. Mall Subject to Permitted Encumbrances. Transferees
acknowledge and agree that the Joint Venture owns the Mall subject to the
Permitted Encumbrances.
ARTICLE V
The Closing
29
SECTION 5.01. Closing Date. The Closing shall be held at 10:00
a.m. on July 21, 1998 (as the same may be adjourned or advanced pursuant
to the terms of this Agreement, the "Closing Date"), at the offices of
Cravath, Swaine & ▇▇▇▇▇, Worldwide Plaza, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇. Time shall be of the essence with respect to the Closing
Date, subject to the following: (i) either Transferor shall have the
right to adjourn the Closing Date one or more times for an aggregate of
not more than 25 days to cure exceptions to title, obtain estoppel
letters, facilitate the prepayment of the Existing Nashland Debt or
satisfy other closing conditions and (ii) such other extensions as are
expressly provided for in this Agreement. If a Transferor elects to
adjourn the Closing Date pursuant to this Section 5.01, it shall do so on
notice to Transferees given on or before the Closing Date, as the same
may have been previously adjourned.
SECTION 5.02. Actions at Closing. At the Closing the following
transactions will be consummated in the order set forth below; provided,
however, that none of such transactions will be consummated on the
Closing Date unless all such transactions are consummated:
(a) Transferors will contribute the Joint Venture Interests to
Transferees in accordance with Article II, subject, in the case of
Nashland's Joint Venture Interest, to the Existing Nashland Debt;
(b) the Partnership will issue to Transferors Units in accordance
with Section 3.01;
(c) Nashland Transferee will pay off the Existing Nashland Debt on
the Closing Date (including all principal, interest, prepayments fees and
other amounts) as set forth in the Payoff Letter; provided, however, that
Nashland Transferee shall deduct $875,000 from the amount of such
prepayment (which deduction shall be authorized by the Payoff Letter) and
deposit the amount so deducted in the Escrow Fund;
(d) Transferors will deposit a portion of their Units in the Escrow
Fund in accordance with Section 14.05; and
30
(e) the parties will deliver and accept the documents and
instruments and take all other action required of them pursuant to this
Agreement.
SECTION 5.03. Escrow Closing. Notwithstanding anything to the
contrary contained in this Agreement, the Closing shall take place
through a "New York Style" escrow with Escrow Agent, which escrow shall
be upon terms and conditions reasonably acceptable to Transferors and
Transferees.
ARTICLE VI
Apportionments
At the Closing (except where a later date is specifically provided
for in this Article), the parties hereto shall adjust the items set forth
below as of 11:59 p.m. on the day preceding the Closing Date (the
"Adjustment Point"), and the net amount thereof shall be borne by
Transferors or Transferees, as applicable, through a decrease or increase
in the Agreed Value as of the Closing Date.
SECTION 6.01. Rents. Rents shall be apportioned as and when
collected and paid to Transferor or Transferee, as applicable, as provided
in this Article VI. Any Rents collected by the Joint Venture (which, for
purposes of this Section 6.01, shall include Rents collected by any
property manager or other agent acting for the Joint Venture) subsequent
to the Closing (whether due and payable prior to or subsequent to the
Adjustment Point) shall be adjusted as of the Adjustment Point, and any
portion thereof properly allocable to periods prior to the Adjustment
Point, net of costs of collection properly allocable thereto, if any,
shall be paid by Transferees to Transferors (pro rata in accordance with
their respective Percentage Interests) after the Closing Date not less
than 30 days after the close of the month in which such amount was
received by the Joint Venture, but subject to the further provisions of
this Section 6.01 in the case of Rents due prior to the Adjustment Point.
If prior to the Closing the Joint Venture shall have collected, or if
subsequent to the Closing either Transferor shall collect, any Rents
(which, for the purposes of this Section 6.01, shall include Rents
collected by any Managing Agent or other agent acting directly or
indirectly for Transferors)
31
which are properly allocable in whole or in part to periods subsequent to
the Adjustment Point, the portion thereof so allocable to periods
subsequent to the Adjustment Point, net of costs of collection properly
allocable thereto, if any, shall be credited to Transferees by
Transferors at the Closing or, if collected after the Closing, promptly
remitted by the Transferor collecting the same to Transferees. As used
in this Section 6.01 the term "costs of collection" shall mean and
include reasonable attorneys' fees and other costs incurred by the Joint
Venture, Transferees or Transferors in collecting any Rents, but shall
not include the regular fees payable to any property manager for the
Mall, the payroll costs of any employees or any other internal costs or
overhead of Transferors, Transferees or their respective Affiliates.
(a) One week prior to the Closing Transferors shall deliver to
Transferees (i) a list of all Tenants and Adjoining Owners which are
delinquent in payment of Rents as at the Adjustment Point, which list
shall set forth the amount of each such delinquency, the period to which
each such delinquency relates and the nature of the amount due and (ii) a
list of each Tenant and Adjoining Owner which paid percentage or overage
rent based on sales or gross income during the fiscal year in which the
Closing Date occurs and the amount so paid by each such Tenant or
Adjoining Owner through the Adjustment Point. All amounts collected by
the Joint Venture from each delinquent Tenant or Adjoining Owner within 30
days after the Closing, net of costs of collection, if any, shall be
deemed to be in payment of Rents (or the specific components of Rents) for
the month in which the Closing occurs, next in payment of Rents (or the
specific components of Rents) then due on account of any month after the
month in which the Closing occurs and finally in payment of delinquent
Rents (or the specific components of Rents) which are in arrears as of the
first day of the month in which the Closing occurs, as set forth on such
list. All amounts collected by the Joint Venture from each delinquent
Tenant or Adjoining Owner more than 30 days after the Closing, net of
costs of collection, if any, shall be deemed to be in payment of Rents (or
the specific components of Rents) then due on account of each month after
the month in which the Closing occurs, next in payment of Rents (or the
specific components of Rents) due for the month in which the Closing
occurs and
32
finally in payment of delinquent Rents (or the specific components of
Rents) which are in arrears as of the first day of the month in which the
Closing occurs, as set forth on the aforesaid list. Any amounts collected
by the Joint Venture from each delinquent Tenant or Adjoining Owner which,
in accordance with the preceding two sentences, are allocable to the month
in which the Closing occurs (as adjusted as of the Adjustment Point) or
any prior month, net of costs of collection properly allocable thereto, if
any, shall be paid promptly by Transferees to Transferors (pro rata in
accordance with their respective Percentage Interests) not less than 30
days after the close of the month in which such amount was received by the
Joint Venture.
(b) Transferees shall use commercially reasonable efforts to cause
the Joint Venture to ▇▇▇▇ and collect any delinquencies set forth on the
list delivered by Transferors pursuant to Section 6.01(a) for a period of
18 months after the Closing and the amount thereof, as, when and to the
extent collected by the Joint Venture, shall, if due to Transferors
pursuant to the provisions of Section 6.01(a), be paid by Transferees to
Transferors (pro rata in accordance with their respective Percentage
Interests), net of costs of collection, if any, properly allocable
thereto, not less than 30 days after the close of the month in which such
amount was received by the Joint Venture. In no event shall the Joint
Venture be obligated to institute any actions or proceedings or to seek
the eviction of any Tenant or Adjoining Owner in order to collect any
such delinquencies.
(c) Following the Closing, Transferees shall submit or cause to be
submitted to Transferors, within 30 days after the end of each calendar
month up to and including the calendar month ending on December 31, 1999,
but only so long as any delinquencies shall be owed to Transferors, a
statement which sets forth all collections made by the Joint Venture from
the Tenants and Adjoining Owners which owe such delinquencies through the
end of such calendar quarter. Transferors shall have the right upon prior
written notice and not more than once per quarter, following the Closing
until 90 days after receipt by Transferor of the last monthly statement
required hereunder, at Transferors' expense, to examine and audit so much
of the books and records of the Joint Venture as relate to such
delinquencies in order to verify the collections reported in such monthly
statements.
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(d) Transferees agree not to permit the Joint Venture to waive or
settle any delinquency owed in whole or in part to Transferors without
the prior written consent of Transferors, which consent may be granted or
withheld in Transferors' sole discretion.
(e) With respect to that portion of the Rents which constitute
percentage or overage rents, or other amounts payable by Tenants or
Adjoining Owners based upon the sales or gross receipts of such entities,
the following shall apply: (i) at the Closing and/or, in the case of
percentage or overage rents which are in arrears or are payable in other
than monthly installments, subsequent to the Closing, percentage or
overage rents shall be apportioned as provided in the other paragraphs of
this Section 6.01 in the case of Rents generally provided that such
amounts shall only be credited or paid to the party entitled thereto upon
receipt of such amounts by the Joint Venture or Transferors, as the case
may be, from the Tenant or Adjoining Owner; and (ii) following the end of
the fiscal year or lease year, as appropriate, on account of which such
percentage or overage rents are payable by each Tenant or Adjoining Owner
and receipt by the Joint Venture of any final payment on account thereof
due from such Tenant or Adjoining Owner (including any amount due as a
result of an audit conducted by Transferors or Transferees), Transferees
shall pay to Transferors (pro rata in accordance with their respective
Percentage Interests), net of costs of collection and audit, if any, the
excess, if any, of (A) the amount of percentage or overage rents actually
paid by such Tenant or Adjoining Owner on account of such entire fiscal
year or lease year, as appropriate, multiplied by a fraction, the
numerator of which is the number of months (including any fraction of a
month expressed as a fraction) of such fiscal or lease year, as
appropriate, which occurred prior to the Adjustment Point and the
denominator of which is 12 or such lesser number of months (including any
fraction of a month expressed as a fraction) as may have elapsed in such
fiscal year or lease year, as appropriate, prior to the expiration of the
Lease or Operating Agreement in question over (B) all amounts theretofore
received by Transferors (directly or through the Joint Venture) on account
of the percentage or overage rents in question for such fiscal year or
lease year, as appropriate. If in any case the amount provided for in (B)
above exceeds the amount provided for in (A) above,
34
Transferors jointly and severally agree to pay the amount of such excess
to Transferees promptly upon demand. Any delinquent amounts shall be paid
promptly upon receipt. If on the Closing Date the Joint Venture shall be
conducting any audits of payments of percentage or overage rents
previously made by Tenants or Adjoining Owners for fiscal years or lease
years, as appropriate, prior to the ones in effect on the Closing Date,
Transferors shall have the right to require the Joint Venture to continue
all such audits at Transferors' expense until completion thereof and to
collect and retain any amounts payable by reason thereof. In addition,
Transferors shall have the right to require the Joint Venture to initiate
any such audit at Transferors' expense within eighteen months subsequent
to the Closing.
(f) With respect to that portion of Rents which are payable on an
annual, semiannual or other nonmonthly basis, Transferees shall cause the
Joint Venture to use commercially reasonable efforts to ▇▇▇▇ and collect
all such payments which become due after the Closing, which payments, to
the extent allocable to periods prior to the Adjustment Point, shall be
paid by Transferees to Transferors (pro rata in accordance with their
respective Percentage Interests) not less than 30 days after the close of
the month in which such amount was received by the Joint Venture, subject
to costs of collection, if any, properly allocable thereto. With respect
to that portion of Rents that are attributable to payments of expenses
such as common area/mall maintenance changes, merchants' or other
association charges or advertising and promotional charges, such Rents
shall be apportioned based on which parties directly or indirectly paid or
will pay the correlating expenses for the relevant period. With respect
to that portion of Rents which are billed on an index-based formula or on
an estimated basis during the fiscal or other period for which paid, at
the end of such fiscal or other period Transferees shall cause the Joint
Venture to determine whether the items in question have been overbilled or
underbilled. If there has been an overbilling and an overbilled amount has
been received, Transferors jointly and severally agree to pay to
Transferees, promptly after request by Transferees, the portion of such
overbilled amount which is properly allocable to the period prior to the
Adjustment Point, and promptly thereafter Transferees shall cause the
Joint Venture to reimburse the entire overbilled amount to the Tenants
and/or Adjoining
35
Owners which paid the same. If there has been an underbilling,
Transferees shall cause the additional amount to be billed by the Joint
Venture to the Tenants and Adjoining Owners, as applicable, and any amount
received by the Joint Venture, net of costs of collection, if any, to the
extent properly allocable to periods prior to the Adjustment Point shall
be paid by Transferees to Transferors (pro rata in accordance with their
respective Percentage Interests) not less than 30 days after the close of
the month in which such amount was received by the Joint Venture.
(g) Notwithstanding anything to the contrary set forth in this
Section 6.01, Transferors shall be entitled to receive, and Transferees
shall pay to Transferors (pro rata in accordance with their respective
Percentage Interests) not less than 30 days after the close of the month
in which such amount was received by the Joint Venture, net of costs of
collection, if any, properly allocable thereto, (i) all amounts payable
by Tenants and Adjoining Owners on account of Impositions which, pursuant
to the terms of Section 6.03(a), it is Transferors' obligation to pay and
discharge, which amounts shall be apportioned between Transferors and
Transferees in the same manner as the Impositions to which they relate
and (ii) all amounts payable by Tenants and Adjoining Owners on account
of utilities which, pursuant to the terms of Sections 6.03(b) and/or
6.03(c), it is Transferors' obligation to pay and discharge, which
amounts shall he apportioned between Transferors and Transferees in the
same manner as the utilities to which they relate.
(h) Any advance rental deposits or payments held by the Joint
Venture on the Closing Date and applicable to periods of time subsequent
to the Adjustment Point, and any security deposits held by the Joint
Venture on the Closing Date, together with interest thereon, if any,
which, under the terms of the applicable Leases, is payable to the Tenants
thereunder, shall be paid or credited to Transferees at the Closing.
SECTION 6.02. Leasing Costs. (a) Transferors jointly and
severally agree to pay and indemnify Transferees in respect of all
leasing commissions, costs of tenant alterations and improvements
performed or to be performed for Tenants at the expense of the landlord
thereof (or allowances payable by the landlord in lieu thereof), moving
and
36
other allowances and inducements, if any, fees and disbursements of
architects, engineers and attorneys and any other inducements, allowances
or credits (collectively "Leasing Costs") in respect of (i) all Leases
and Lease amendments which were fully executed and delivered on or prior
to the date hereof and (ii) all proposed leases and lease amendments
identified on Schedule 6.02 that are executed and delivered after the
date hereof; provided, however, that (A) if a proposed lease or lease
amendment identified on Schedule 6.02 is executed and delivered after the
Closing Date, Transferors shall not be obligated to pay any Leasing Costs
associated therewith in excess of the Leasing Costs set forth on Schedule
6.02 unless such excess Leasing Costs are provided for in a written
agreement executed by either Transferor prior to the Closing Date and
such written agreement was not approved or deemed approved by Transferees
as provided in Section 11.04 and (B) Transferees, rather than
Transferors, shall be responsible for all Leasing Costs in respect of any
Lease renewal or extension which occurs pursuant to the exercise after
the date hereof of any Tenant's renewal or extension option under any
Lease which was fully executed and delivered on or prior to the date
hereof provided such renewal or extension did not require the Joint
Venture's consent.
(b) If the Closing shall occur, Transferees shall and hereby do
assume and agree to pay and indemnify Transferors in respect of (i) all
Leasing Costs payable by Transferees pursuant to Section 6.02(a) and (ii)
all Leasing Costs payable in respect of any Leases or Lease amendments
which are fully executed and delivered in accordance with Sections 11.03
or 11.04 after the date hereof, except for Leasing Costs associated
therewith that are Transferors' responsibility under Section 6.02(a). If
any Leasing Costs shall be paid by the Joint Venture prior to the Closing
which in accordance with this Section 6.02(b) it is Transferees'
obligation to pay, Transferees shall reimburse Transferors (pro rata in
accordance with their respective Percentage Interests) for the documented
amount thereof at the Closing.
SECTION 6.03. Additional Items. At the Closing, the following
additional items shall be apportioned between Transferors and Transferees
as of the Adjustment Point, with Transferors to be obligated for or
entitled to amounts apportioned to the period
37
through the Adjustment Point and Transferees to be obligated for or
entitled to amounts apportioned to the period following the Adjustment
Point:
(a) Impositions payable in respect of the Mall. Such Impositions
shall be apportioned on the basis of the fiscal year for which the same
are imposed, whether or not yet due and payable as of the Closing Date.
If an Imposition is not due and payable until after the Closing Date and
the assessed valuation or the tax rate or any other factor upon which the
amount of the Imposition will be based has not been fixed at the Closing
Date, then the parties shall at the Closing apportion such Imposition
based on the most recently available assessed valuation and tax rate, and
shall make a final adjustment of such item within 30 days following the
date on which the actual assessed valuation and tax rate becomes known.
If any Tenant in occupancy at the Closing Date or Adjoining Owner is
obligated to pay any Impositions directly to the applicable taxing
authority, such Impositions shall not be apportioned. Any refund after
the Closing of real estate taxes for which an apportionment is made
pursuant to this Section 6.03(a), net of the costs of obtaining such
refund and the amount thereof payable to Tenants and Adjoining Owners,
shall be apportioned as of the Adjustment Point. Transferees shall have
the right to control and/or settle all tax protest proceedings.
Notwithstanding the foregoing, no settlement with respect to the tax
fiscal year in which the Adjustment Point occurs shall be made without
the prior written approval of Transferor, such approval not to be
unreasonably withheld or delayed. Any refunds of Impositions resulting
from any such tax protest proceedings shall be paid to Transferees.
Transferees shall pay any portion of any such refund due to Tenants
and/or Adjoining Owners to such Tenants or Adjoining Owners and shall
apportion any balance of any such refund between Transferors and
Transferees in the same manner as Impositions and pay any portion thereof
relating to the period prior to the Adjustment Date to Transferor, in
each case promptly after such refund is received. The apportionments for
Impositions shall be calculated based on the maximum available discount
for early payment.
(b) Water and sewer charges, if any, payable by the Joint Venture on
the basis of the period or periods for which the same are payable. If
there are water meters at the Property, Transferors shall furnish readings
to a date not more than 30 days prior to the
38
Closing Date, and the unfixed meter charges and the unfixed sewer charges,
if any, based thereon for the intervening time shall be apportioned on the
basis of such last readings. Any water and sewer charges payable by
Tenants in occupancy on the Closing Date or Adjoining Owners directly to
the entity or entities furnishing such services shall not be apportioned.
(c) Utilities and fuel payable by the Joint Venture, including
electricity and gas. Transferors shall endeavor to have the meters for
such utilities read the day on which the Adjustment Point occurs and will
pay the bills rendered to it on the basis of such readings. If
Transferors do not obtain such a meter reading with respect to any such
utility, the adjustment therefor shall be made on the basis of the most
recently issued bills therefor which are based on meter readings not
earlier than 30 days prior to the Adjustment Point. Transferors shall
receive a credit in the full amount of any security deposits held by
utility companies (with interest thereon, if any, in the amount accrued
on such security deposits). Transferees will make their own arrangements
for any security bonds required by any utility companies by the Closing
Date, and Transferors will be entitled to cancel any bonds previously
furnished. If fuel oil, propane or other fuel is used at the Mall,
Transferors shall deliver to Transferees at the Closing statements of the
suppliers of such fuel dated within three days of the Adjustment Point
setting forth the quantity of fuel on hand and the cost paid by the Joint
Venture therefor, and Transferees shall pay to Transferors (pro rata in
accordance with their respective Percentage Interests) at the Closing the
cost of such fuel (including taxes thereon, if any) as shown on such
statements. Charges for any utilities payable by Tenants in occupancy on
the Closing Date and Adjoining Owners directly to the utility companies
furnishing the same shall not be apportioned.
(d) Charges payable by the Joint Venture and the cost of performing
the Joint Venture's obligations under the Operating Agreements and the
Other Agreements.
(e) Ancillary income receivable by the Joint Venture in connection
with the licensing of the name of the Mall to third parties, the
furnishing of utilities from the Mall to third parties, the leasing of
kiosks, antennae, baby strollers and other items and the like.
39
(f) Contributions payable by the Joint Venture to merchants' and
other associations and to promotional activities at the Mall.
(g) Items of deduction for Federal income tax purposes with respect
to contingent interest on debt that economically accrued before the
Closing shall be allocated to the Transferors. For the avoidance of
doubt, all contingent interest deductions that arise upon the prepayment
of the Existing Nashland Debt shall be allocated to the Transferors.
(h) Any other items of income or expense of the Mall which, in
accordance with generally accepted business practices, should be
apportioned between Transferors and Transferees as of the Adjustment
Point.
SECTION 6.04. Partnership Distributions. Regular quarterly
distributions paid in respect of the Units issued pursuant to this
Agreement (i) for fiscal quarters ended prior to Closing shall be
apportioned to and retained by the Partnership and (ii) for the fiscal
quarter in which such Units were issued shall be apportioned as of the
Adjustment Point, with the Partnership retaining the portion thereof
apportioned to the portion of such fiscal quarter through the Adjustment
Point and Transferors to be entitled to the portion thereof apportioned
to the portion of such fiscal quarter following the Adjustment Point.
Notwithstanding anything to the contrary contained in the Partnership
Agreement, the Partnership shall pay to Transferors only the portion of
such distributions to which Transferors are entitled pursuant to this
Section 6.04.
SECTION 6.05. Distribution of Cash. Transferees acknowledge that
all cash, certificates of deposit, investments and other liquid assets of
the Joint Venture will be distributed to Transferors as of the Closing
Date, except for any items credited to Transferors as a closing
adjustment.
SECTION 6.06. Adjustment Statement. Transferors will deliver to
Transferees not less than five Business Days prior to the Closing Date a
copy of a proposed adjustment statement showing all adjustments to be
made at the Closing. The parties shall then endeavor to agree upon such
statement or any modification thereof so that it or such modification
40
can be executed by them at the Closing. To the extent that there is an
error or omission in any of the adjustments made pursuant to such
statement and the same is discovered following the Closing, the parties
agree to rectify the same as promptly as possible following such
discovery. Transferors and Transferees acknowledge that it may be
difficult to calculate, as of the day immediately preceding the Closing
Date, certain of the adjustments, apportionments and payments to be made
pursuant to this Article VI. Accordingly, Transferors and Transferees
hereby agree that any adjustments, apportionments and payments otherwise
required to be made as of the Closing Date may to the extent necessary or
desirable be estimated by Transferees and Transferors based on the most
recent available data, and, as soon as practicable and if necessary from
time to time between the Closing Date and December 31, 1999, additional
adjustments, apportionments and payments shall be made to adjust for any
differences between the actual apportionment or adjustment and the amount
thereof estimated as of the Closing Date. Any such corrective adjustment
made in favor of Transferors shall be paid in cash and any such
corrective adjustment made in favor of Transferees shall be effected by
application of a portion of the Escrow Fund pursuant to Section 14.05.
SECTION 6.07. Final Settlement. Notwithstanding anything to the
contrary contained herein, a final determination of the amounts owing
under this Article VI shall be made as of December 31, 1999 and the
amounts determined as of such date to be owing settled in cash no later
than 10 days thereafter. No further adjustments or payments shall be
required to be made under this Article VI thereafter. Any amounts
required to be paid under the terms of this Agreement that are not paid
as and when due (or if no due date is specified, then not paid within 10
days after demand therefor) shall bear interest at the rate of 10% per
annum.
SECTION 6.08. Survival. The provisions of this Article VI shall
survive the Closing.
ARTICLE VII
Documents To Be Delivered at the Closing
41
SECTION 7.01. Transferors' Deliveries. At or prior to the Closing,
Transferors jointly and severally agree to deliver or cause to be
delivered to Transferees (either directly or under the terms of a closing
escrow agreement) each of the instruments and documents listed in this
Section 7.01, executed and acknowledged where appropriate by Transferors
and/or the other party or parties thereto, but none of such instruments
and documents shall be deemed delivered or any other action taken until
all Closing deliveries and actions are complete:
(a) An Assignment of Joint Venture Interest with respect to the
Joint Venture Interest of each Transferor.
(b) A Rent Roll dated within 15 days of the Closing Date.
(c) The estoppel letters provided for in Article XV.
(d) The Joint Venture's Copies of the Operating Agreements, the
Leases and the Other Agreements. Delivery of such materials shall be
effectuated pursuant to arrangements made by Transferors, the Managing
Agent, Transferees and the property manager or managers retained by the
Joint Venture to operate the Property after the Closing Date.
(e) An executed copy of an agreement between the Joint Venture and
the Managing Agent terminating its services as of the Closing Date and
waiving any right to commissions, leasing fees or other fees except for
amounts included in Leasing Costs.
(f) A schedule which shows all Leases terminated and/or amended and
all new Leases and Other Agreements entered into between the date of this
Agreement and the Closing Date, together with Transferors' Copy of each
such new Lease or Other Agreement or amendment to an existing Lease or
Other Agreement.
(g) The schedule described in Section 6.01(a).
(h) The certificate(s) of Transferors provided for in Section
8.06(b).
42
(i) An affidavit that neither Transferor is a "foreign person"
within the meaning of Section 1445 of the Code in the form of Exhibit I
annexed hereto.
(j) A counterpart of the adjustment statement provided for in
Section 6.06 showing all adjustments in respect of the Agreed Value to be
made at the Closing.
(k) All sales tax, transfer tax and other tax returns, if any,
which Transferors are required by law to execute and deliver, either
individually or together with Transferees, to any Governmental Authority
as a result of the conveyance of the Joint Venture Interests contemplated
hereby.
(l) All records and files of the Joint Venture which are in the
possession or control of the Joint Venture, either of the Transferors or
the Managing Agent relating to the operation and maintenance of the Mall
prior to the Closing, including to the extent in the possession of such
parties, (i) current tax bills, current water, sewer, utility and fuel
bills, payroll records, billing records for Tenants and Adjoining Owners,
(ii) repair and maintenance records and the like which affect or relate
to the Property, (iii) plans, drawings, blue prints and specifications
for the Mall, all warranties and guaranties of manufacturers, suppliers
and contractors in effect on the Closing Date, (iv) certificates of
occupancy and other licenses and permits and (v) keys to the Property.
Delivery of such materials shall be effectuated pursuant to arrangements
made by Transferors, the Managing Agent and the property manager or
managers retained by the Joint Venture to operate the Property after the
Closing Date.
(m) An opinion dated as of the Closing Date of counsel to each
Transferor substantially in the form of Exhibit J.
(n) A copy of the partnership agreement of Nashland and any
amendments thereto, certified by the managing general partner of Nashland,
to the effect that the attached copy of such partnership agreement and the
amendments thereto is true, correct and complete.
(o) A copy of the Articles of Incorporation of HRE and any
amendments thereto, certified by the
43
Secretary of State of the State of Delaware as of a date not more than 10
days prior to the Closing Date, together with a certificate of an officer
of HRE to the effect that such Articles of Incorporation, as so certified,
have not been further amended, revised, restated, canceled or rescinded up
to and including the Closing Date and that the attached copy of the
Articles of Incorporation and the amendments thereto is true, correct and
complete.
(p) A copy of the amended and restated joint venture agreement of
the Joint Venture and any amendments thereto, certified by each
Transferor, to the effect that the attached copy of such joint venture
agreement and the amendments thereto is true, correct and complete.
(q) An ALTA Owner's statement in a form reasonably requested by the
Title Company in order to enable the Joint Venture to obtain the Title
Policy, together with such organizational documents and evidence of
authority as the Title Company shall reasonably request provided that
such documents do not expose Transferors to any material expense or
liability not already provided for in this Agreement. Notwithstanding
the foregoing, Transferors shall provide any indemnity required by the
Title Company to omit mechanics' liens that are not Permitted
Encumbrances.
(r) An executed counterpart of the Partnership Agreement Amendment
and the Redemption Rights Agreement.
(s) The Guarantee and evidence reasonably satisfactory to
Transferees of the authority of the parties thereto to execute, deliver
and perform the Guarantee, including an opinion or opinions of counsel
reasonably acceptable to Transferee and in a form corresponding to that
set forth in Exhibit J. Transferees agree that Cravath, Swaine & ▇▇▇▇▇ and
▇▇▇ ▇▇▇▇▇▇, general counsel of Rodamco North America BV, are acceptable
counsel for such purposes with respect to ORILP and Rodamco North America
BV, respectively.
(t) A good standing certificate issued in respect of each of HRE
and ▇.▇. ▇'▇▇▇▇▇▇ and Co. Incorporated by the Secretary of State of the
State of Delaware, dated within 15 days of the Closing Date.
44
(u) Notices to Tenants and Adjoining Owners notifying each of them
of the conveyance of the Joint Venture Interests to Transferees as of the
Closing Date, each in a form reasonably satisfactory to Transferees and
executed by Transferors.
(v) An acknowledgment by Broker that all amounts due to it in
respect of the transactions contemplated by this Agreement have been paid
in full.
(w) A UCC-3 Termination Statement and a release of the pledge of
the Nashland Joint Venture Interest from the holder of the Existing
Nashland Debt.
(x) All other instruments and documents, if any, to be executed,
acknowledged and/or delivered by Transferors pursuant to any of the other
provisions of this Agreement.
SECTION 7.02. Transferees' Deliveries. At or prior to the Closing,
Transferees will deliver or cause to be delivered to Transferors or the
other parties indicated below (either directly or under the terms of the
closing escrow agreement) each of the instruments and documents listed in
this Section 7.02, executed and acknowledged where appropriate by
Transferees and/or the other party or parties thereto, but none of such
instruments and documents shall be deemed delivered or any other action
taken until all Closing deliveries and actions are complete:
(a) All sales tax, transfer tax and other tax returns, if any,
certificates of value and similar documents which Transferees are
required by law to execute and deliver, either individually or together
with Transferors, to any Governmental Authority as a result of the
transactions contemplated hereby.
(b) A counterpart of the adjustment statement provided for in
Section 6.06 showing all adjustments in respect of the Agreed Value to be
made at the Closing.
(c) An opinion dated as of the Closing Date of counsel to
Transferees substantially in the form of Exhibit K (provided that any
opinion as to the enforceability of this Agreement, the Redemption Rights
Agreement or any other document executed by Transferees at the Closing
shall be based on the assumption that the laws of the State of New York
(or Delaware (except
45
for the Delaware General Corporation Law and the Delaware Revised
Uniform Limited Partnership Act), with respect to the Redemption Rights
Agreement) with respect to enforceability are identical to the laws of
the State of Illinois, without regard to conflicts of law rules.
(d) A good standing certificate issued in respect of each
Transferee by the Secretary of State of the State of Delaware, dated
within 15 days of the Closing Date.
(e) Certificates representing the Units issued pursuant hereto.
(f) All other payments, instruments and documents, if any, to be
executed, acknowledged and/or delivered by Transferees pursuant to any of
the other provisions of this Agreement.
SECTION 7.03. Partnership Deliveries. At or prior to the Closing,
the Partnership will deliver or cause to be delivered to Transferors
(either directly or under the terms of a closing escrow agreement) each
of the instruments and documents listed in this Section 7.03, executed
and acknowledged where appropriate by the Partnership and/or the other
party or parties thereto, but none of such instruments and documents
shall be deemed delivered or any other action taken until all Closing
deliveries and actions are complete:
(a) A counterpart of the Partnership Agreement Amendment and the
Redemption Rights Agreement.
(b) A copy of the Partnership Agreement, certified by an officer of
the General Partner, to the effect that the attached copy of the
Partnership Agreement is true, accurate and complete.
(c) A copy of the Articles of Incorporation of the General Partner,
and any amendments thereto, certified by the Secretary of State of the
State of Delaware as of a date not more than 10 days prior to the Closing
Date, together with a certificate of an officer of the General Partner to
the effect that the Articles of Incorporation thereof, as certified by
the Secretary of State aforesaid, have not been further amended, revised,
restated, canceled or rescinded up to
46
and including the Closing Date and that the attached copy of the
Articles of Incorporation and amendments thereto is true, correct and
complete.
(d) All other instruments and documents, if any, to be executed,
acknowledged and/or delivered by the Partnership pursuant to any other
provisions of this Agreement.
SECTION 7.04. Access to Records. Transferees agree for a period of
three years following the Closing Date to retain and make available to
Transferors for inspection and copying, at Transferors' expense, on
reasonable advance written notice at reasonable times at the place in the
continental United States where Transferees then maintain their records
in respect of the Mall or the Joint Venture, all documents and records
concerning the Mall or the Joint Venture delivered by Transferors to
Transferees, actually or constructively, in connection with the Closing.
If Transferees desire to destroy any such records relating to the Mall
prior to the expiration of the third anniversary of the Closing Date, or
any such records relating to the Joint Venture prior to the expiration of
the seventh anniversary of the Closing Date, Transferees shall first
notify Transferors and permit Transferors to take delivery of the records
in question; and if Transferors decline to do so, Transferees shall then
be free to destroy the same. The provisions of this Section 7.04 shall
survive the Closing.
ARTICLE VIII
Representations and Warranties of Transferors
SECTION 8.01. No Implied Representations. Transferees acknowledge
that except as expressly set forth in this Agreement and in the documents
and instruments delivered by Transferors at the Closing, neither
Transferor nor any agent or representative or purported agent or
representative of either Transferor has made, and neither Transferor is
liable for or bound in any manner by, any express or implied warranties,
guaranties, promises, statements, inducements, representations or
information (including any information set forth in offering materials
heretofore furnished to Transferees) pertaining to the Mall or any part
thereof, the physical condition thereof,
47
environmental matters, income, expenses or operation thereof or of the
Personal Property or Intangible Personal Property, the uses which can be
lawfully made of the same under applicable zoning or other laws or any
other matter or thing with respect thereto, including any existing or
prospective Leases, Operating Agreements or Other Agreements or
obligations which may arise hereunder after the Closing Date. Without
limiting the foregoing, Transferees acknowledge and agree that, except as
expressly set forth in this Agreement and in the documents delivered by
Transferors at the Closing, neither Transferor is liable for or bound by
(and Transferees have not relied upon) any verbal or written statements,
representations, real estate brokers' "set-ups" or offering materials or
any other information respecting the Mall furnished by either Transferor
or any broker, employee, agent, consultant or other person representing
or purportedly representing either Transferor. Nothing contained in this
Section 8.01 shall be deemed to impair, limit or otherwise affect
Transferees' rights under this Agreement in respect of the
representations, warranties and covenants of Transferors set forth in
this Agreement and the other provisions hereof binding upon Transferors.
The provisions of this Section 8.01 shall survive the Closing.
SECTION 8.02. "As-Is" Transaction. Transferees represent that they
have inspected the Mall, the physical and environmental condition and the
uses thereof to their satisfaction, that they have independently
investigated, analyzed and appraised the value and profitability thereof,
the creditworthiness of Tenants and Adjoining Owners and the presence of
hazardous materials, if any, in or on the Mall, that they have received
copies of and/or have reviewed the Leases, the Operating Agreements, the
Other Agreements and all other documents referred to herein, that they
are thoroughly acquainted with all of the foregoing and that Transferees,
in acquiring the Joint Venture Interests, will rely upon their own
investigations, analyses, studies and appraisals and not upon any
information provided to Transferees by or on behalf of either Transferor
with respect thereto (except in each case to the extent covered by any
warranties or representations of Transferors set forth in this Agreement
or in any Transferors' Estoppel Letter). Subject to Section 10.03 and
Article XII, Transferees agree to acquire the Joint Venture Interests
based on the Mall "as is" and in its condition as at the date
48
hereof, reasonable wear and tear and damage by fire or other casualty
between the date hereof and the Closing Date excepted, and Transferees
shall assume the risk that adverse matters (including adverse physical
and environmental conditions, latent or patent construction defects or
physical conditions, violations of applicable laws (including
Environmental Laws) and any and all other acts, omissions, events,
circumstances or matters with respect to the Mall) may not have been
revealed by Transferees' investigations. Nothing contained in this
Section 8.02 shall be deemed to impair, limit or otherwise affect
Transferees' common law rights under any Environmental Laws or
Transferees' rights under this Agreement in respect of the
representations, warranties and covenants of Transferors set forth in
this Agreement, including Transferors' indemnity set forth in Section
14.07, and the other provisions hereof binding on Transferors. The
provisions of this Section 8.02 shall survive the Closing.
SECTION 8.03. Representations and Warranties of Transferors.
Transferors hereby jointly and severally represent and warrant to
Transferees as follows:
(a) The Joint Venture is a general partnership organized,
validly existing and in good standing under the laws of the State of
Florida. HRE is a corporation organized, validly existing and in good
standing under the laws of the State of Delaware. Nashland is a general
partnership organized and validly existing under the laws of the State of
Tennessee. Each Transferor has full power and authority to enter into
this Agreement and to perform its obligations hereunder in accordance
with the terms hereof. The execution, delivery and performance by each
Transferor of this Agreement and the documents to be executed by each
Transferor pursuant hereto have been duly and validly authorized by all
necessary parties and no other proceeding on the part of either
Transferor is necessary in order to permit Transferors to consummate the
transaction contemplated hereby. This Agreement has been duly executed
and delivered by each Transferor. This Agreement constitutes the legal,
valid and binding obligation of each Transferor, enforceable against each
Transferor in accordance with its terms, subject to the effect of
applicable bankruptcy, insolvency, reorganization, arrangement,
moratorium, fraudulent conveyance or other similar laws
49
affecting the rights of creditors generally and to general principles
of equity. No bankruptcy, insolvency, reorganization, liquidation,
arrangement or moratorium proceeding or allegation of fraudulent
conveyance is now pending or, to Transferors' knowledge, threatened
against Transferors or the Joint Venture.
(b) Neither Transferor is a "foreign person" as defined in Section
1445 of the Code.
(c) Execution by Transferors of this Agreement and all documents
provided for herein to be executed by Transferors, and performance by
Transferors of the provisions hereof and thereof, will not (i) violate or
result in any breach of, or constitute a default under, any law,
regulation, rule, order or judgment of any Governmental Authority to
which either Transferor is subject, or any agreement, indenture,
mortgage, deed of trust, bank loan, credit agreement or other instrument
to which either Transferor is a party or by which either Transferor is
bound, where such breach or default might adversely affect either
Transferor's ability to perform its obligations hereunder or under such
other documents or (ii) require any approval or consent of any
Governmental Authority.
(d) With respect to the Leases:
(i) Exhibit B annexed hereto is a list of all Leases in effect
on the date of this Agreement (and all documents comprising the Leases,
provided that without affecting Transferees' right to refuse to
consummate the Closing under this Agreement as a result thereof,
Transferors shall not be deemed to be in breach of this representation
and warranty solely because Exhibit B fails to list one or more
amendments to a Lease if the cumulative effect thereof does not
materially modify the Lease in question) and Transferors have made true,
correct and complete originals or copies of all Leases in effect as of
the date of this Agreement available to Transferees for their review. No
Tenant or Anchor has any rights, options or rights of first refusal of
any kind that are currently in effect to purchase or to otherwise acquire
the Property or any part thereof or interest therein (except for the
acquisition of leasehold interests pursuant to the Leases). Except as
set forth in the Rent Roll
50
or in Schedule 6.02, there are no rent abatements or other tenant
concessions or inducements, including lease assumptions or buy-outs,
applicable to any of the Leases or any rights to extend or renew any
Leases.
(ii) Schedule 1 annexed hereto is a true, correct and complete
list of Tenants and Adjoining Owners that are delinquent in the payment
of Rents as of the date of said schedule, which schedule sets forth the
information specified in clause (x) of Section 6.01(a).
(iii) Except as set forth in Schedule 2 the Joint Venture has not
received written notice which is still outstanding from any Tenant under
a Lease (A) that the Joint Venture has defaulted in performing any of its
material obligations under such Lease or (B) that such Tenant is entitled
to any reduction in, refund of or counterclaim or offset against, or is
otherwise disputing, any Rents paid, payable or to become payable by such
Tenant thereunder or is entitled to cancel or terminate such Lease or to
be released of any of its material obligations thereunder. With the
exception of written notices given with respect to certain of the
delinquencies in the payment of Rents specified in Schedule 1, since the
date six months prior to the date of this Agreement, the Joint Venture
has not given written notice to any Tenant which is still outstanding
that such Tenant is in default under its Lease, except as set forth in
Schedule 2.
(iv) Schedule 3 annexed hereto is a Rent Roll that is true, correct
and complete in all material respects as of the date thereof. Except as
set forth to the contrary on such Rent Roll, no Tenant has paid any rent
in advance except for the month in respect of which such Rent Roll was
prepared.
(e) With respect to the Operating Agreements:
(i) Exhibit C annexed hereto is a list of all Operating Agreements
in effect on the date of this Agreement (and all documents comprising the
Operating Agreements, provided that without affecting Transferees' right
to refuse to
51
(v) consummate the Closing under this Agreement as a result
thereof, Transferors shall not be deemed to be in breach of this
representation and warranty solely because Exhibit C fails to list
one or more amendments to an Operating Agreement if the cumulative
effect thereof does not materially modify the Operating Agreement
in question) and Transferors have made true, correct and complete
originals or copies of all Operating Agreements in effect as of
the date of this Agreement available to Transferees for their
review.
(ii) Except as set forth in Schedule 2, the Joint Venture
has not received written notice which is still outstanding from
any party to an Operating Agreement (A) that the Joint Venture has
defaulted in performing any of its obligations under such
Operating Agreement, or (B) that such party is entitled to any
reduction in, refund of or counterclaim or offset against, or is
otherwise disputing, any Rents paid, payable or to become payable
thereunder by such party or is entitled to cancel or terminate
such Operating Agreement or to be released of any of its material
obligations thereunder. With the exception of written notices
given with respect to certain of the delinquencies in the payment
of Rents specified in Schedule 1, since the date six months prior
to the date of this Agreement, the Joint Venture has not given
written notice to any of the other parties to the Operating
Agreements which is still outstanding that any such party is in
default thereunder except as set forth in Schedule 2.
(f) With respect to the Other Agreements:
(i) Exhibit D annexed hereto is a list of all Other
Agreements in effect on the date of this Agreement (and all
documents comprising such Other Agreements, provided that without
affecting Transferees' right to refuse to consummate the Closing
under this Agreement as a result thereof, Transferor shall not be
deemed to be in breach of this representation and warranty solely
because Exhibit D fails to list one or more amendments to an Other
Agreement if the cumulative effect thereof does not materially
modify the Other Agreement in question) and Transferors have made
true, correct and complete originals or copies of all material
Other Agreements in effect as of the
52
date of this Agreement available to Transferees for their review.
(ii) Except as set forth on Schedule 2, the Joint Venture has
not received written notice which is still outstanding from any
party to any Other Agreement that the Joint Venture has defaulted in
performing any of its obligations under such Other Agreement.
(g) The Joint Venture has not received any written notice of any
Violation with respect to the Mall from any Governmental Authority which
has not heretofore been complied with.
(h) No condemnation, eminent domain, zoning, land use or similar
proceeding in which the Joint Venture has been served with process or of
which either Transferor has otherwise received written notice is pending
with respect to all or any part of the Mall, and neither Transferor has
knowledge that any such proceeding is threatened or contemplated.
(i) There are no pending litigations or other proceedings against
the Joint Venture or the Mall in respect of which the Joint Venture has
been served with process or of which either Transferor has otherwise
received written notice except for (i) claims for personal injury,
property damage or worker's compensation for which the insurance carrier
has been notified on a timely basis and for which said insurance carrier
will provide coverage and (ii) other litigations or proceedings shown on
Schedule 8.03(i) annexed hereto. Neither Transferor has knowledge of any
threatened litigation or proceedings against the Joint Venture or the
Mall except litigation of the nature described in clause (i) above.
(j) To Transferors' knowledge, the Financial Statements have
previously been delivered to Transferees and fairly present the assets,
liabilities, financial position, results of operations and changes in
financial position of the Joint Venture as of the dates thereof or for
the periods referred to therein (subject, in the case of the Interim
Financial Statements, to normal, recurring year-end audit adjustments),
and have been prepared in accordance with generally accepted accounting
principles, consistently applied throughout the periods indicated (except
as may be indicated in the notes thereto). From December 31,
53
1997 to the date of this Agreement the Joint Venture has conducted its
business in the ordinary course consistent with past procedures and
practices and, to Transferors' knowledge, during such period there were
no material adverse changes in the financial condition of the Joint
Venture (other than as may be reflected in the Interim Financial
Statements).
(k) Schedule 8.03(k) annexed hereto lists all environmental reports
(and amendments and modifications thereto) dated after January 1, 1993,
within the Joint Venture's, Transferors' or any Managing Agent's
possession or control with respect to the Mall. Transferors have made
true, correct and complete copies of such environmental reports available
to Transferees. Except as disclosed on (i) Schedule 8.03(k), (ii) the
reports listed on Schedule 8.03(k) or (iii) any environmental reports
prepared as part of Transferees' investigation of the Mall, Transferors
have received no written notice from any Person, and otherwise have no
knowledge, that Hazardous Substances have been maintained, disposed of,
stored, released or generated on, under or at the Mall or any part
thereof except for the storage and use of substances commonly present at
or used in the operation and maintenance of shopping centers in
quantities commonly present at shopping centers and in compliance with
applicable laws including Environmental Laws. Transferors have not
received any notice from any Governmental Authority or other Person that
the Mall is not in compliance with any Environmental Law or that it has
any liability with respect thereto and there are no administrative,
regulatory or judicial proceedings pending or, to the knowledge of
Transferors, threatened with respect to the Mall pursuant to, or alleging
any violation of, or liability under any Environmental Law.
(l) Except as set forth on Schedule 8.03(l), the Joint Venture is
under no obligation to make contributions or otherwise provide assistance
to any promotional association or promotional fund related to
the Mall nor has the Joint Venture customarily in the past made or
provided any such contributions or assistance.
(m) Schedule 8.03(m) annexed hereto contains true and complete
copies of the current real estate tax bills with respect to the Mall,
other than tax bills sent to Tenants who have the obligation to pay such
taxes to the collecting authority. No portion of the Mall comprises
part of a tax parcel which includes
54
property other than property comprising all or a portion of the Mall.
To Transferors' knowledge, no application or proceeding is pending with
respect to a reduction or an increase of such taxes. To Transferors'
knowledge, there are no tax refund proceedings relating to the Mall which
are currently pending.
(n) The Joint Venture has no employees.
(o) To Transferors' knowledge, there are no lease brokerage
agreements, leasing commission agreements or other agreements providing
for payments by the Joint Venture of any amounts for leasing activities
or procuring tenants with respect to the Mall.
(p) None of the Joint Venture, the Transferors and their respective
partners and shareholders either directly or indirectly owns or leases
any land within a one mile radius of the Property.
(q) Transferors acknowledge that they understand that the Units to
be issued pursuant hereto will not be registered under the Securities Act
of 1933, as amended, in reliance upon the exemption afforded by Section
4(2) thereof for transactions by an issuer not involving any public
offering, and will not be registered or qualified under any applicable
state securities laws; that the Partnership shall not have any obligation
to register the Units in connection with the offering, sale or issuance of
the Units pursuant to this Agreement or at any time thereafter; that the
Units are subject to restrictions on transfer contained in the
Partnership Agreement and this Agreement and, in any event, cannot be
sold unless they are subsequently registered under the 1933 Act or an
exemption from such registration is available; and that the Partnership,
in issuing Units in accordance with the provisions hereof, is relying
upon the representations and warranties of Transferors contained herein.
Transferors jointly and severally represent and warrant that (i) they are
acquiring such Units for investment only and without any view toward
distribution thereof, and, except for distributions to their shareholders
and partners or as otherwise approved by the Partnership, they will not
sell or otherwise dispose of such Units except in compliance with the
registration requirements or exemption provisions of any applicable state
securities
55
laws and in accordance with the terms applicable to such securities in
the Partnership Agreement as amended by the Partnership Agreement
Amendment and the Redemption Rights Agreement, (ii) each Transferor's
economic circumstances are such that it is able to bear all risks of the
investment in the Units for an indefinite period of time, including the
risk of a complete loss of its investment in the Units, (iii) each
Transferor has knowledge and experience in financial and business matters
sufficient to evaluate the risks of investment in the Units and (iv) each
Transferor has consulted with its own counsel and tax advisor, to the
extent deemed necessary by it, as to all legal and taxation matters
covered by this Agreement and has not relied upon Transferees for any
explanation of the application of the various United States or state
securities laws or tax laws with regard to its acquisition of the Units.
Transferors further acknowledge and jointly and severally represent and
warrant that they have made their own independent investigation of the
Partnership and the business conducted by the Partnership, that
Transferors have been provided with such other information regarding the
Partnership as they have requested and have had an opportunity to meet
with and ask questions of representatives of the Partnership, and that
Transferors have received a copy of, have been advised to read, and have
read the PPM, including its exhibits, have become familiar with the PPM's
terms and provisions, and have been advised to consult, and have
consulted, with independent tax counsel regarding the tax consequences of
the transactions contemplated under the terms of this Agreement. Nothing
contained in this Section 8.03(q) shall be deemed to impair, limit or
otherwise affect Transferors' rights under this Agreement in respect of
the representations, warranties and covenants of Transferees set forth in
this Agreement, including the Transferees' indemnity set forth in Section
14.08, and the other provisions hereof binding on Transferees.
(r) Transferors have made a true, correct and complete original or
copy of the Joint Venture Agreement available to Transferees for their
review, and such Agreement has not been amended or modified. Each
Transferor has a good, marketable and unencumbered title to its Joint
Venture Interest, free and clear of any lien, pledge, security interest
or other encumbrance whatsoever except, in the case of Nashland's Joint
Venture Interest, the Existing
56
Nashland Debt. Neither Transferor has granted any outstanding rights
to purchase its respective Joint Venture Interest and except with respect
to the Existing Nashland Debt, neither Transferor has encumbered or
hypothecated its Joint Venture Interest or is a party to any agreement,
arrangement or understanding restricting or otherwise relating to the
transfer or voting of its respective Joint Venture Interest, except in
each case for any such rights or restrictions included in the joint
venture agreement of the Joint Venture delivered pursuant to Section
7.01, which rights or restrictions included in the joint venture
agreement of the Joint Venture are hereby waived by Transferees. The
Joint Venture has qualified as a partnership for federal income tax
purposes at all times during its existence and no taxing authority has
asserted or threatened to assert any position to the contrary.
Transferors are the sole partners of the Joint Venture.
(s) To Transferors' knowledge, there are no easements,
restrictions, liens, conveyances or other matters affecting title to the
Property except for the Permitted Encumbrances.
SECTION 8.04. No Independent Investigation. All representations and
warranties made herein by Transferors which are expressly qualified herein
as being based on Transferors' knowledge are made, and are hereby
acknowledged by Transferees to be made, without independent investigation
regarding the facts contained therein other than inquiry of the Managing
Agent (but in no event will knowledge of the Managing Agent be imputed to
Transferors), and are otherwise limited as provided in the definition of
"knowledge" or "notice". Transferors agree that promptly after the
execution of this Agreement by the parties they will deliver a copy of
Section 8.03 of this Agreement, together with copies of the Exhibits and
Schedules referred to therein, to the Managing Agent and will request that
the Managing Agent inform Transferors of any matters known to the Managing
Agent that might qualify or contradict any of the representations and
warranties set forth in Section 8.03.
SECTION 8.05. Effect of Estoppels. To the extent that prior to the
Closing a Tenant or an Adjoining Owner provides an estoppel letter
addressed to Transferees (or addressed to the Joint Venture but
containing a statement to the effect that any
57
transferee of the Joint Venture Interests may rely thereon) delivered in
response to a request made pursuant to this Agreement which sets forth
information with respect to any item as to which Transferors have made a
representation or warranty, then Transferors' representation and warranty
in respect of such information shall thereafter be null and void and of
no further force or effect and such representation and warranty shall not
be deemed to have been remade as of the Closing and Transferees shall
rely solely on the information set forth in such estoppel letter.
Nothing contained in this Section 8.05 shall affect or negate
Transferees' right to refuse to proceed with the Closing as provided in
Section 15.03.
SECTION 8.06. Survival of Transferors' Representations and
Warranties, etc. (a) All of Transferors' representations and warranties
contained in this Article VIII, as remade as of the Closing as provided
in Section 8.06(b) and subject to any modifications thereof made in any
certificate provided for in said Section, and all certifications,
representations and warranties made by Transferors in any Transferors'
Estoppel Letter delivered by Transferors to Transferees, shall survive
the Closing.
(b) All of Transferors' representations and warranties set forth in
this Article VIII shall be deemed to have been remade on and as of the
Closing Date, subject, however, to the provisions of Section 8.05 and
facts disclosed on the schedules to this Agreement which are to be
delivered by Transferors to Transferees at the Closing pursuant to
Section 7.01, and Transferors shall deliver at the Closing a certificate
addressed to Transferees stating that all representations and warranties
of Transferors contained in this Article VIII are remade and are true and
correct as of the Closing Date, except as modified (i) in accordance with
the terms of Section 8.05 and this Section 8.06, (ii) by facts disclosed
on the schedules to this Agreement which are to be delivered by
Transferors to Transferees at the Closing pursuant to Section 7.01 and
(iii) by changes resulting from the operation of the Mall between the
date hereof and the Closing Date in accordance with the provisions of
Article XI; provided, however, that if (A) any matter or event shall have
occurred between the date hereof and the date of the Closing which does
not result from any intentional act or omission of Transferors, that is
not permitted under any provisions of this Agreement and which makes any
such warranty or representation
58
untrue in any material respect as of the Closing Date or (B)
Transferors discover that any warranty or representation was inaccurate
in any material respect as of the date hereof and Transferors had no
knowledge thereof on the date hereof, Transferors shall have the right to
disclose such matter, event or inaccuracy in the certificate required to
be delivered pursuant to this sentence, and if Transferors do so,
Transferors shall not be liable to Transferees following the Closing for
the breach of the warranty or representation in question which results
from the occurrence of such matter, thing or inaccuracy, but in no event
shall Transferees be obligated to close hereunder unless the conditions
precedent to Transferees' obligation to close set forth in this Agreement
(including in Section 10.02(a)) shall have been fulfilled.
(c) Notwithstanding anything to the contrary set forth in this
Article VIII or elsewhere in this Agreement, if (i) Transferees have
knowledge on the date hereof that any of Transferors' warranties or
representations set forth in this Article VIII is untrue in any material
respect, then the breach by Transferors of the warranties and
representations as to which Transferees shall have such knowledge shall
be deemed waived by Transferees and Transferors shall not be deemed in
default hereunder and shall have no liability to Transferees or their
successors or assigns in respect thereof and (ii) if after the date
hereof and prior to the Closing Transferees obtain knowledge that any of
Transferors' warranties or representations set forth in this Article
VIII, or any of Transferors' warranties or representations made in any
documents delivered by Transferors in connection with the Closing
(including any Transferors' Estoppel Letter), is untrue in any respect,
and Transferors shall not have had knowledge of such breach when such
warranties or representations were made, Transferors shall not be liable
to Transferees following the Closing for the breach of such warranties or
representations, but in no event shall Transferees be obligated to close
hereunder unless the conditions precedent to Transferees' obligation to
close set forth in this Agreement (including in Section 10.02(a)) shall
have been fulfilled. For the purposes of this Section 8.06(c),
Transferees' knowledge shall mean the current, actual knowledge of ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, without any duty or
obligation to
59
conduct any investigation or review of any files or records.
Notwithstanding anything to the contrary contained in Sections 8.05
and 8.06, in no event shall any estoppel letters, certificates of
Transferors, or any information known to, discovered or disclosed to
Transferees, alter, modify, amend or terminate Transferors'
indemnification obligations under Section 14.07(c) with respect to claims
made by any Person for the period prior to the Closing Date except as set
forth in such indemnity.
ARTICLE IX
Representations and Warranties of Transferees
SECTION 9.01. Transferees' Representations and Warranties.
Transferees jointly and severally represent and warrant to Transferors as
follows:
(a) The Partnership is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of
Delaware. Altamonte Springs Mall, L.P. is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Delaware. The Partnership owns a 99.999% limited partnership
interest in Altamonte Springs Mall, L.P. The general partner of
Altamonte Springs Mall, L.P. is Altamonte Springs Mall, Inc., a Delaware
corporation, which owns a .001% general partnership interest in Altamonte
Springs Mall, L.P.
(b) Each Transferee has full power and authority to enter into this
Agreement, and each Transferee has full power and authority to perform
their respective obligations hereunder in accordance with the terms
hereof. The execution, delivery and performance of this Agreement by
each Transferee, and the documents to be executed by each Transferee and
the General Partner, respectively, pursuant hereto have been duly and
validly authorized by all necessary parties and no other proceedings on
the part of either Transferee or the General Partner are necessary in
order to permit them to consummate the transactions contemplated hereby.
This Agreement has been duly executed and delivered by each Transferee.
This Agreement constitutes the legal, valid and binding
60
obligation of each Transferee with respect to their respective
obligations set forth herein, enforceable against each Transferee in
accordance with its terms, subject to the effect of applicable
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance
or similar laws affecting the rights of creditors generally and to
general principles of equity.
(c) Execution by Transferees of this Agreement, and the execution
by Transferees and the General Partner of all documents provided for
herein to be executed by Transferees and/or the General Partner, and
performance by Transferees and the General Partner of the provisions
hereof and thereof, (i) will not violate or result in any breach of, or
constitute a default under, any law, regulation, order or judgment of any
Governmental Authority to which either Transferee or the General Partner
is subject or by which either Transferee's or the General Partner's
property or assets is bound or affected, or the Partnership Agreement or
any other agreement, indenture, mortgage, deed of trust, bank loan,
credit agreement or any other instrument to which either Transferee or
the General Partner is a party or by which either Transferee or the
General Partner is bound, where such breach or default might adversely
affect either Transferee's or the General Partner's ability to perform
their respective obligations hereunder or under such other documents or
(ii) require the approval or consent of any Governmental Authority.
(d) Transferees are not utilizing the assets of any employee
benefit plan (as described in Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended) for or in connection with their
acquisition of the Joint Venture Interests.
(e) When issued in accordance with this Agreement, the Units shall
be duly and validly issued, fully paid and nonassessable and free from any
liens or encumbrances or rights of others, other than any liens,
encumbrances or rights created by Transferors.
(f) The Transferees have provided a true, correct and complete copy
of the Partnership Agreement to Transferors for their review, and the
Partnership Agreement has not been amended or modified as of the date
hereof.
61
(g) Neither the issuance, sale or delivery of the Units to be
issued pursuant to this Agreement nor, upon the conversion thereof, the
issuance or delivery of the Common Stock is subject to any preemptive
right of stockholders of the General Partner arising under law or the
certificate of incorporation or by-laws of the General Partner, to any
contractual right of first refusal or other right in favor of any Person.
(h) None of Transferees and the General Partner has been served
with legal process or written notice of any litigation or proceeding
pending or currently threatened against Transferees or the General
Partner that questions the right of Transferees or the General Partner to
consummate the transactions contemplated by this Agreement, or that
might, either individually or in the aggregate, have a Material Adverse
Effect.
(i) As of the date hereof, the PPM and the documents incorporated
by reference therein do not contain any untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that the Transferees make no representations or warranties as to
(i) the information contained in or omitted from the PPM in reliance upon
and in conformity with information furnished by Transferors to the
Partnership or (ii) the tax consequences of the transactions contemplated
by this Agreement.
(j) Except as disclosed in the PPM and the documents incorporated
by reference therein, or in documents filed with the SEC and publicly
available prior to the date of this Agreement, or as set forth in or
contemplated by this Agreement, since December 31, 1997, there has not
been any Material Adverse Effect or any development that is likely to
result in a Material Adverse Effect arising for any reason whatsoever.
(k) As of the date hereof, Transferees have no present intention of
liquidating the Joint Venture after the Closing.
SECTION 9.02. Remaking of Representations and Warranties; Survival.
All of the representations and warranties set forth in this Article IX
shall be
62
deemed to have been remade on and as of the Closing Date. Such
representations and warranties, as remade, shall survive the Closing.
ARTICLE X
Conditions to Closing; Risk of Loss
SECTION 10.01. Conditions to the Obligation of Transferors To
Close. The obligation of Transferors to consummate the Closing under
this Agreement is expressly conditioned upon the fulfillment by and as of
the Closing Date of each of the conditions listed below; provided,
however, that Transferors, at their election, may waive all or any of
such conditions, which election shall be conclusively evidenced by
Transferors' proceeding with and completing the Closing:
(a) Partnership shall have issued Units in accordance with Section
3.01 and Partnership and Transferees shall have paid all other amounts
required to be paid by them hereunder.
(b) All representations and warranties of Transferees set forth in
Article IX shall be true and correct in all material respects on and as
of the Closing Date as if made on and as of such date.
(c) Transferees shall have executed and/or delivered or caused to
be delivered at the Closing all documents and executed counterparts of
documents and instruments required by this Agreement to be executed
and/or delivered by them and/or the other parties thereto and shall have
taken all other actions and fulfilled all other covenants and conditions
required of them under this Agreement.
(d) For the 10 Trading Day period during which the Unit Value as of
the Closing Date (as such Closing Date may be adjourned pursuant to
Section 5.01) shall have been determined, neither the General Partner nor
the Partnership shall have (A) declared, set aside or paid any dividends
on, or made any other distributions in respect of, any of its capital
stock, other than regular quarterly dividends and distributions by the
General Partner or the Partnership made in the ordinary course of
business or (B) split, combined or reclassified any of its capital stock
or
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issued any other securities in respect of, in lieu of or in
substitution for shares of its capital stock.
(e) Any amendments or modifications to the Partnership Agreement
executed after the date hereof that adversely affect the Transferors
shall have been approved in writing by the Transferors.
SECTION 10.02. Conditions to the Obligation of Transferees To
Close. The obligation of Transferees to consummate the Closing under
this Agreement is conditioned upon the fulfillment by and as of the
Closing Date of each of the conditions listed below; provided, however,
that Transferees, at their election, may waive all or any of such
conditions, which election shall be conclusively evidenced by
Transferees' proceeding with and completing the Closing:
(a) All representations and warranties of Transferors set forth in
Article VIII shall be true and correct in all material respects on and as
of the Closing Date as if made on and as of such date (without reference
or regard to any modifications thereof contained in the certificate
delivered by Transferors to Transferees pursuant to Section 8.06(b)),
subject, however, to changes resulting from the operation of the Mall
between the date hereof and the Closing Date in accordance with the
provisions of Article XI.
(b) Transferors shall have executed and/or delivered or caused to
be delivered at Closing all of the documents and executed counterparts of
documents and instruments required by this Agreement to be executed
and/or delivered by Transferors and/or the other parties thereto and
shall have taken all other actions and fulfilled all other covenants and
conditions required of Transferors under this Agreement.
(c) The conditions set forth in Sections 15.01 and 15.03 shall be
satisfied.
(d) The Title Company shall have issued (or be irrevocably
committed to issue) the Title Policy.
(e) At Closing, there is no litigation, including any arbitration,
investigation or other proceeding, pending by or before any court,
arbitrator or governmental or regulatory official, body or authority
against the Joint Venture or Transferors nor
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any decree, order or injunction issued by any such court, arbitrator or
governmental or regulatory official, body or authority and remaining in
effect against the Joint Venture or Transferors which does or is likely
to prevent or hinder the timely consummation of the Closing or materially
adversely affect the Mall or the business of the Joint Venture.
SECTION 10.03. Risk of Loss. (a) If prior to the Closing the Mall
shall suffer any damage by fire or other casualty, the cost to repair
which exceeds $2,500,000 or if any proceeding shall be instituted for the
taking in condemnation or by eminent domain of any material portion of
the Mall (it being agreed any taking of more than 50 parking spaces or
more than 5,000 square feet of leasable area in the Mall shall be deemed
material), Transferees shall have the right to terminate this Agreement
by giving written notice to Transferors within 15 days after Transferees
are first advised of such damage or taking. Transferors agree to give
Transferees prompt notice of the occurrence of any such damage or taking.
If this Agreement is so terminated by Transferees, the Escrow Agent
shall return the Deposit to Transferees (and Transferors and Transferees
shall execute a written instruction to Escrow Agent to do so) and no
party shall have any further obligations or liabilities hereunder, or
otherwise with respect to the subject matter hereof, except as otherwise
expressly provided herein to the contrary.
(b) Notwithstanding the foregoing, if all or any portion of the Mall
shall be damaged by fire or other casualty or taken in whole or in part
in condemnation or by eminent domain, and if as a result of such damage
or taking Transferees shall be entitled to be relieved of their
obligations under this Agreement pursuant to Section 10.03(a) above,
Transferees shall have the right, by giving written notice to Transferors
within 15 days after receipt by Transferees from Transferors of written
notice of such damage or taking, to elect nevertheless to accept the
Joint Venture Interests. If Transferees make such election (which
election shall be deemed to have been made by Transferees if they for any
reason fail to give Transferors notice of their election to terminate
this Agreement within the 15-day period provided for in Section 10.03(a))
or if the damage or taking shall not be of sufficient magnitude to
entitle Transferees to terminate this Agreement pursuant to Section
10.03(a),
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this Agreement and the obligations of Transferors and Transferees
hereunder shall remain in full force and effect except that (i)
Transferees shall accept the Joint Venture Interests notwithstanding such
damage or taking without any reduction in the Agreed Value and (ii) (x)
following the Closing the Joint Venture shall be entitled to all right,
title and interest in and to all insurance proceeds (including business
interruption or rent insurance proceeds) payable by reason of such damage
or all awards payable by reason of such taking, and, in the case of
insurance proceeds, Transferors shall credit against the Agreed Value the
amount of any deductible under the Joint Venture's insurance policies,
(y) at the Closing Transferors shall pay over to Transferees the amount
of such proceeds or award, if any, received by the Joint Venture prior to
the date of the Closing and (z) Transferors shall not permit the Joint
Venture to settle or compromise any claim for such proceeds or award
prior to the Closing without the prior consent of Transferees, which
consent shall not be unreasonably withheld or delayed. Notwithstanding
the foregoing, Transferors shall be entitled to receive or retain (A) out
of such casualty insurance proceeds or award, any out-of-pocket amounts
actually expended by the Joint Venture prior to Closing (x) to settle the
claim for such proceeds or award and (y) to remove or protect the Mall
and (B) in the case of rental or business interruption proceeds allocable
to periods prior to the Adjustment Point, loss of rents by reason of the
fire or other casualty suffered by the Joint Venture prior to the
Closing, which entitlement shall survive the Closing.
SECTION 10.04. Inspections. From and after the date of this
Agreement, Transferors shall give Transferees and their representatives
and consultants reasonable access to and reasonable opportunities to
visit and inspect the Mall (but not for purposes of further environmental
testing). From and after the date of this Agreement until the Closing
and upon request by Transferees, Transferors promptly shall provide
Transferees with reasonable access to the Books and Records and such
other material information and data with respect to the Mall which is in
the possession of Transferors and/or the Managing Agent, including copies
of the Leases, the Operating Agreements and the Other Agreements and such
financial and other information as Transferees reasonably request.
Subject to prior notice to and approval by Transferors (such approval not
to be unreasonably
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withheld), prior to the Closing Transferees may contact Tenants and
Adjoining Owners in furtherance of the transactions contemplated hereby
(and Transferees shall not otherwise engage in any such contacts).
Transferees, jointly and severally, shall indemnify, defend and hold
Transferors harmless from and against all Losses proximately caused by
the exercise by Transferees of their rights of access and inspection
pursuant to this Section 10.04. The indemnification obligations of
Transferees under this Section 10.04 shall survive the Closing or
termination of this Agreement.
ARTICLE XI
Operation of the Mall Until Closing
SECTION 11.01. Standard of Operation. Transferors jointly and
severally agree to operate and maintain the Mall, or cause the Mall to be
operated and maintained, between the date of this Agreement and the
Closing Date in the ordinary course of business and consistent with past
procedures and practices heretofore followed in connection with such
operation and maintenance, except as otherwise specifically provided in
this Agreement; provided, however, that nothing contained in this Section
11.01 or elsewhere in this Agreement shall require Transferors or the
Joint Venture to make or undertake any capital improvements, deferred
maintenance or replacements at the Mall between the date hereof and the
Closing Date.
SECTION 11.02. Notice Requirements. Transferors will notify
Transferees of any of the following matters which occur between the date
of this Agreement and the Closing Date: (i) notices of default received
or given by the Joint Venture with respect to any Lease, any Operating
Agreement or any material Other Agreement, (ii) litigation commenced by
the Joint Venture, or litigation of which the Joint Venture has received
notice commenced or threatened against the Joint Venture, with respect to
the Mall (other than litigation covered by insurance as to which the
insurer has been notified on a timely basis and has not disclaimed
liability), (iii) notices of condemnation proceedings commenced or
directed against all or any portion of the Mall received by the Joint
Venture and (v) any casualty loss to the Improvements in excess of
$50,000.
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SECTION 11.03. Transferors' Rights and Covenants. Between the date
hereof and the Closing Date, Transferors and Transferees agree that (i)
the Joint Venture shall maintain all insurance currently maintained by
the Joint Venture on the Mall in full force and effect, (ii) the Joint
Venture shall have the right, upon prior written notice to Transferees,
to take such action as is appropriate to collect Rents or damages in lieu
of Rents under any Lease which shall be in default, whether or not such
default existed prior to the date of this Agreement, (iii) the Joint
Venture shall not without the prior written consent of Transferees, which
consent may be withheld in Transferees' reasonable business judgment,
which judgment shall be exercised with consideration given to
Transferors' recommendations: (A) amend, modify or terminate any of the
Operating Agreements or enter into any new Operating Agreement, (B) enter
into any new Lease or occupancy agreement with respect to space in the
Mall (except in accordance with Section 11.04 and except for proposed
leases set forth on Schedule 6.02 on substantially the terms described in
such Schedule), (C) amend or modify any Lease (except for proposed
amendments or modifications set forth on Schedule 6.02 on substantially
the terms described in such Schedule) if the affect thereof would be to
reduce the term thereof or the Rent payable thereunder or to increase the
landlord's obligations thereunder in any respect, (D) terminate any Lease
except by reason of the default of the Tenant thereunder, (E) make any
alterations to the Mall or enter into any new contracts or extend or
renew or cancel any Other Agreement relating to capital expenditures,
except to the extent required by the Leases, (F) enter into any other new
contracts or extend, renew or cancel, consent to the assignment of or
waive any material right under any Other Agreement, except for contracts
executed in the ordinary and usual course and business and in accordance
with past practices and policies which can be terminated without penalty
or payment upon not more than 30 days prior notice or (G) sell, transfer,
exchange, further encumber or grant interests (including easements) in
the Mall or any part thereof or engage in negotiations or discussions
with, or otherwise solicit or assist, any third party relating to the
acquisition by such third party of the Mall or the Joint Venture
Interests. Transferors shall cause to be timely filed any and all
required returns and filings for the Joint Venture with respect to all
federal, state, local and foreign income
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and franchise taxes related to all periods prior to the Closing Date.
Transferors jointly and severally covenant and agree that they shall pay
all federal, state, local and foreign income and franchise taxes for the
Joint Venture related to all periods prior to the Closing Date, together
with all penalties related to such taxes and interest on such taxes and
penalties.
SECTION 11.04. Noncomplying New Leases. If between the date hereof
and the Closing Date, the Joint Venture desires to enter into any new
lease or occupancy agreement wish respect to space in the Property which
requires Transferees' consent hereunder, Transferors shall give
Transferees notice (the "New Lease Notice") which sets forth with respect
to such proposed new lease (i) the name of the prospective tenant, (ii)
the term of the lease, (iii) the Rents payable under the lease, (iv) the
location and size of the premises, (v) the permitted uses under the
lease, (vi) the expenses associated with the consummation of the lease,
including leasing commissions, tenant improvement costs, tenant
allowances and the like and (vii) any concessions or free Rent being
granted, and which sets forth on its face the substance of the last
sentence of this Section 11.04. If Transferees do not respond to any New
Lease Notice within five Business Days after its receipt thereof,
Transferees shall be conclusively deemed to have approved the new lease
which is the subject of such New Lease Notice and the Joint Venture shall
have the right to enter into such new lease.
SECTION 11.05. Survival. The provisions of this Article XI shall
survive the Closing.
ARTICLE XII
Title to the Property
SECTION 12.01. Title Defects. If, on the Closing Date, the Title
Company shall be unwilling to issue the Title Policy in accordance with
the provisions of this Agreement, Transferors shall be entitled, but
shall not be obligated, to adjourn the Closing for one or more periods
not to exceed 60 days in the aggregate (concurrent with any other
adjournments taken by Transferors hereunder) for the purpose of causing
title to the Mall to be placed in the condition called for by this
Agreement. If on the
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Closing Date, as the same may be adjourned as above provided, the Title
Company shall be unwilling to issue the Title Policy in accordance with
the terms of this Agreement, Transferees may terminate this Agreement by
notice to Transferors delivered on or prior to the Closing Date, as the
same may have been extended, in which event this Agreement shall be
terminated and of no further effect and neither party shall have any
obligations of any nature to the other hereunder or by reason hereof,
except as to those obligations hereunder that are specifically stated to
survive such termination, and the Deposit shall be returned to
Transferees by Escrow Agent (and in such circumstances Transferors shall
join with Transferees in a written instruction to Escrow Agent to pay the
Deposit to Transferees in the manner set forth in Section 3.02).
Transferors shall be under no obligation to take any steps or to
institute or prosecute any action or proceedings, or expend any sums of
money, to remove from title to the Mall any defect, encumbrance or
objection to title; provided, however, that Transferors shall be
responsible for discharging or causing the Title Company affirmatively to
insure over any liens (including judgment liens against either Transferor
or the Joint Venture), mortgages or deeds of trust which do not
constitute Permitted Encumbrances, which secure liquidated amounts, which
can be discharged solely by the payment of a fixed and determined sum of
money and which arise on account of obligations undertaken or actions
performed, or actions required to be performed under the terms of this
Agreement and not so performed, by Transferors or the Joint Venture.
Except for Transferors' failure to discharge or cause the Title Company
affirmatively to insure over such liens or encumbrances as aforesaid,
Transferors shall not be deemed in default of this Agreement, and
Transferees shall not be entitled to damages of any kind, if Transferors
shall be unable to satisfy the conditions set forth herein pertaining to
the state of title to the Mall, nor shall Transferees in such
circumstances be entitled to specific performance of this Agreement;
provided, however, that the foregoing provisions of this sentence shall
not apply in respect of any exception to title which is created as a
result of the intentional act or omission of Transferors or the Joint
Venture between the date hereof and the Closing Date and is not permitted
under the terms of Article XI. In no event shall Transferors be
obligated to discharge any mechanic's or similar lien created by a Tenant
in occupancy or an Adjoining Owner to the extent the same
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shall constitute a Permitted Encumbrance, but Transferors shall, prior to
the Closing, use commercially reasonable efforts to cause such Tenant or
Adjoining Owner to do so.
SECTION 12.02. Waiver by Transferees. Transferees, at their
election, may at the Closing accept such title to the Mall as can be
insured by the Title Company, without reduction of the Agreed Value or
any credit or allowance on account thereof or any claim against
Transferors by reason thereof.
SECTION 12.03. Affirmative Insurance. With Transferees' consent,
which consent shall not be unreasonably withheld, Transferors shall have
the right (but not an obligation) to cause the Title Company
affirmatively to insure over defects in title which do not constitute
Permitted Encumbrances and which are not otherwise covered by Section
12.01 by causing such items to be omitted from Schedule B of the Title
Policy; provided, however, that Transferees' consent shall not be
required for insurance over (i) mechanics' liens, (ii) real estate taxes
or any other item apportioned under Article VI or (iii) other matters
customarily "insured over" by reputable title insurers.
ARTICLE XIII
Brokers, etc.
SECTION 13.01. Transferors' Representation and Warranty. Transferors
jointly and severally represent and warrant to Transferees that neither
Transferors nor their affiliates dealt with any broker, finder or like
agent who might claim a commission or fee in connection with the
transaction contemplated in this Agreement or on account of introducing
the parties, the preparation or submission of brochures, the negotiation
or execution of this Agreement or the closing of the transaction
contemplated herein other ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. ("Broker"). The fees
and expenses of Broker, as certified by Transferors at least two Business
Days prior to the Closing, shall be paid by Transferees at the Closing in
accordance with Section 16.08. Transferors jointly and severally agree
to indemnify and hold harmless Transferees and their respective
successors and assigns from and against any and all claims, losses,
liabilities and expenses, including reasonable attorneys' fees,
disbursements and
71
charges, arising out of any claim or demand for commissions or other
compensation for bringing about this transaction by any broker, finder or
similar agent or party, including Broker, who claims to have dealt with
Transferors or any affiliate thereof in connection with this transaction.
SECTION 13.02. Transferees' Representation and Warranty.
Transferees jointly and severally represent and warrant to Transferors
that neither Transferees, nor their affiliates dealt with any broker,
finder or like agent who might claim a commission or fee in connection
with the transaction contemplated in this Agreement or on account of
introducing the parties, the preparation or submission of brochures, the
negotiation or execution of this Agreement or the closing of the
transaction contemplated herein, other than Broker. Transferees jointly
and severally agree to indemnify and hold harmless Transferors and their
respective successors and assigns from and against any and all claims,
losses, liabilities and expenses, including reasonable attorneys' fees,
disbursements and charges, arising out of any claim or demand for
commissions or other compensation for bringing about this transaction by
any broker, finder or similar agent or party other than Broker who claim
to have dealt with Transferees or any affiliate thereof in connection
with this transaction.
SECTION 13.03. Survival. The provisions of this Article XIII shall
survive the Closing or any termination of this Agreement.
ARTICLE XIV
Default; Remedies; Indemnification
SECTION 14.01. Transferees' Default. If Transferees shall be in
default under the terms of this Agreement and such default is not cured
within 10 days after written notice thereof from Transferors to
Transferees (except in the case of default in Transferees' obligations
under Section 5.02, which default shall not require any notice or cure
period), then Transferors shall be entitled as their sole and exclusive
remedy to terminate this Agreement and receive the Deposit from the
Escrow Agent as liquidated damages for Transferees' default (and in such
circumstances Transferees shall join with Transferors in a written
instruction to Escrow Agent to pay the
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Deposit to Transferors in the manner set forth in Section 3.02).
Transferees and Transferors agree that such liquidated damages are
reasonable under the circumstances and that actual damages are incapable
of an exact or reliable determination.
SECTION 14.02. Transferors' Default. If Transferors shall be in
default under the terms of this Agreement prior to the Closing and such
default is not cured within 10 days after written notice thereof from
Transferees to Transferors, then Transferees shall be entitled to pursue,
at their election, either of the following as their sole and exclusive
remedy: (i) terminate this Agreement and have the Deposit returned to
them by the Escrow Agent (and in such circumstances Transferors shall
join with Transferees in a written instruction to Escrow Agent to pay the
Deposit to Transferees in the manner set forth in Section 3.02) or (ii)
seek specific performance of Transferors' obligations under this
Agreement; provided, however, that if and to the extent specific
performance is not available following such an uncured default because
(x) the consideration hereunder for the transfer of the Joint Venture
Interests to Transferees is payable in Units or (y) Joint Venture
Interests rather than the Mall are being transferred to Transferees,
Transferees shall have the right to restructure the transaction
contemplated hereunder as a direct sale of the Mall to Transferees for
cash and to seek specific performance of Transferors' obligation
hereunder to consummate such restructured transaction. Transferees hereby
waive any right to ▇▇▇ Transferors for damages (including consequential
damages) for any default by Transferors hereunder, but if the Closing
occurs, subject to the provisions of Section 8.05 and Sections 8.06(b)
and 8.06(c), such waiver shall not apply to damages to which Transferees
may be entitled hereunder by reason of any breach by Transferors of any
of their covenants, warranties or representations hereunder which survive
the Closing.
SECTION 14.03. Limitation on Post-Closing Liability of Transferors.
(a) Notwithstanding any provision to the contrary contained in this
Agreement or in any document delivered by Transferors in connection with
the Closing (including any Transferors' Estoppel Letter), Transferors
shall have no liability to Transferees following the Closing for breach
of any representation or warranty set forth in Article VIII or in such
document, or for breach by Transferors of any
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of their agreements set forth in Article XI or under Transferors'
indemnity set forth in Section 14.07 as it relates to any such breach
(but excluding Sections 8.03(s) and 14.07(d)) unless and except to the
extent that the damages due to Transferees by reason of all such breaches
exceed $250,000 (and upon reaching said threshold Transferors liability
shall be for all damages from the first dollar); provided, however, that
the foregoing limitation set forth in this Section 14.03(a) shall not
apply to any breach of the Redemption Rights Agreement, the Partnership
Agreement Amendment, the Partnership Agreement or the Guarantee. In no
event shall Transferors be liable to Transferees for consequential
damages in respect of any such breaches.
(b) Notwithstanding any provision to the contrary contained in this
Agreement or any document delivered by Transferors in connection with the
Closing (including any Transferors' Estoppel Letter), the maximum
aggregate liability of Transferors to Transferees and the Partnership,
collectively, following the Closing based on or arising under this
Agreement and all such other documents delivered by Transferors in
connection with the Closing (including any liability for any breach of
any warranty, representation or covenant contained herein or therein or
under Transferors' indemnity set forth in Section 14.07 as it relates to
any such breach) shall be limited to $3,500,000 and Transferees agree
that their sole remedy hereunder or thereunder shall be to seek recourse
against the Escrow Fund pursuant to Section 14.05; provided, however,
that the limitations set forth in this Section 14.03(b) shall not apply
to (i) any liability arising under the Redemption Rights Agreement, the
Partnership Agreement Amendment, the Partnership Agreement or the
Guarantee, (ii) any liability of Transferors under Section 8.03(s),
Section 14.05(d) or clause (d) of Section 14.07 , (iii) any liability of
a Transferor under Section 3.04(b) with respect to its obligation to
cause a Section 3.04(b) Certificate to be delivered to the Partnership or
(iv) any fraud committed by Transferors.
SECTION 14.04. Transferors' Partners and Affiliates Not Liable.
Notwithstanding any provision to the contrary contained in this Agreement
or any document delivered by Transferors in connection with the Closing
(including any Transferors' Estoppel Letter but excluding the Guaranty),
none of the respective
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shareholders, partners or affiliates of Transferors shall have any
liability for the obligations of Transferors hereunder or thereunder.
SECTION 14.05. Escrow Fund. (a) At the Closing, Transferors shall
cause to be deposited with the Escrow Agent (in addition to the $875,000
of cash deposited pursuant to Section 5.02(c) (the "Deposited Cash"))
Units with an aggregate value of $2,625,000, consisting of $875,000 to be
deposited by Nashland (the "Nashland Deposited Units") and $1,750,000 to
be deposited by HRE (the "HRE Deposited Units") (collectively, the
"Escrow Fund"), based upon the Unit Value on the Closing Date. The
Escrow Fund shall be held by the Escrow Agent in a segregated account and
the cash portion thereof shall be invested only in Permitted Investments.
At the Closing, Nashland shall also deposit with the Escrow Agent three
original executed assignments of the Nashland Deposited Units in blank
and HRE shall deposit with the Escrow Agent three original executed
assignments of the HRE Deposited Units in blank.
(b) All interest, dividends or other income earned on the Escrow
Fund ("the Escrow Income") shall not constitute part of the Escrow
Fund and shall in all events be paid to (i) Nashland to the extent
allocable to the Deposited Cash or the Nashland Deposited Units and (ii)
to HRE to the extent allocable to the HRE Deposited Units promptly upon
receipt by the Escrow Agent without any further authorization from or
notice to Transferors or Transferees (and without regard to whether a
dispute may be pending with respect to all or any part of the Escrow
Fund). In the event that Transferees or either of them has a claim under
the terms of this Agreement or under any other document executed by
Transferors in connection with the Closing (other than the Redemption
Rights Agreement, the Partnership Agreement Amendment, the Partnership
Agreement, the Guarantee or any Section 3.04(b) Certificate),
Transferees, or either of them, as the case may be, shall provide written
notice of such claim to Transferors and Escrow Agent, which notice shall
set forth in reasonable detail the basis for such claim. Escrow Agent
shall thereupon deliver a written notice to Transferors that a claim has
been made on the Escrow Fund together with a copy of the notice of the
claim. The notice from Escrow Agent shall state in capital letters that
failure of the addressee to object to the claim within 10 days after the
notice of the claim from
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Escrow Agent shall constitute a waiver of the addressee's right to
contest or object to the claim. In the event that Transferors fail to so
object within the 10-day period, or in the event that Transferors provide
written notice of agreement with the claim, Escrow Agent shall promptly
disburse the amount set forth in the claim from the Escrow Fund to the
order of Transferees within 10 days after the giving of Escrow Agent's
notice to Transferors. In the event that Transferors object to the claim
within such 10-day period, such objection shall be in writing setting
forth in reasonable detail the basis for the objection and shall be
delivered to Escrow Agent and Transferees. Escrow Agent shall not make
any payments from the Escrow Fund except as provided in this Section
14.05. In the event that any dispute shall arise with respect to the
entitlement of either party to all or any portion of the Escrow Fund,
Escrow Agent shall continue to hold the Escrow Fund until otherwise
directed by written instruction from Transferors and Transferees or a
final order or judgment of a court of competent jurisdiction entered in
an action or proceeding to which Escrow Agent is a party. In addition,
in the event of any such dispute, Escrow Agent shall have the right at
any time to commence an action in interpleader and to deposit the Escrow
Fund with the clerk of a court of appropriate jurisdiction in the State
of New York. Upon the commencement of such action and the making of such
deposit, Escrow Agent shall be released and discharged from and of all
further obligations and responsibilities hereunder.
(c) Any payment to Transferees from the Escrow Fund shall be
made in a combination of cash and Units so that the ratio of (i) the cash
paid and (ii) the aggregate Unit Value of such Units paid as of the date
of payment shall be in the ratio of 25:75, respectively; provided,
however, that if such ratio would result in payment of a fractional Unit
the number of Units to be paid shall be rounded to the nearest whole
number and a corresponding offsetting adjustment shall be made to the
cash portion of the payment. Each of the Transferors hereby irrevocably
constitute and appoint Escrow Agent as their true and lawful
attorney-in-fact to complete the respective assignments of the Nashland
Deposited Units and the HRE Deposited Units required pursuant to this
Section 14.05, and hereby authorize Escrow Agent to so complete the
respective assignments of the Nashland Deposited Units and the HRE
Deposited Units, by completing the name of
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the Transferee to whom the Units will be delivered and the number of
Units to be assigned. The foregoing grant of a power of attorney shall be
deemed coupled with an interest and shall not be revocable until the
release of all deposits held by Escrow Agent. Upon delivery to the
Transferees, or either of them, of an assignment or assignments of Units
under the terms of this Section 14.05, the Partnership covenants and
agrees to deliver to Escrow Agent a new certificate or certificates
evidencing the remaining Nashland Deposited Units and the remaining HRE
Deposited Units, after deducting the respective Units assigned to
Transferees, and Escrow Agent, without any requirement for further
direction from Transferors or Transferees, shall deliver to the
Partnership the prior certificate or certificates for cancelation. In no
event will the aggregate payments to Transferees of cash and Units (valued
at the respective Unit Values as of the applicable payment dates) under
this Section 14.05 exceed $3,500,000.
(d) In the event that the Escrow Agent is required to make a
payment to Transferees from the Escrow Fund and the number of Units in
the Escrow Fund is less than the number of Units required to be paid to
Transferees in accordance with the provisions of Section 14.05(c),
Transferors shall promptly deposit with Escrow Agent for the account of
Transferees an amount of cash equal to such shortfall, whereupon Escrow
Agent shall pay such cash to Transferees. No payment made by or on
behalf of Transferors pursuant to this Section 14.05(d) shall be counted
as a liability of Transferors for purposes of Section 14.03.
(e) On the Termination Date the Escrow Agent promptly shall return
(i) all remaining Deposited Cash and Nashland Deposited Units to Nashland
and (ii) all remaining HRE Deposited Units to HRE; provided, however, that
if prior to the Termination Date Transferees shall have provided notice to
Escrow Agent and Transferors setting forth in reasonable detail the facts,
circumstances and amount of any claim that Transferees assert is entitled
to the benefit of the Escrow Fund, the terms of this Section 14.05 shall
be extended until the final resolution of such claim; provided further,
however that the amount of cash and Units remaining in the Escrow Fund at
such time in excess of the amount of the alleged claim shall be returned
on a pro rata basis to Nashland and HRE.
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(f) At any time and from time to time prior to the Termination Date
a Transferor may direct the Escrow Agent to release to such Transferor
some or all the Units deposited by such Transferor and still held in the
Escrow Fund against delivery to the Escrow Agent of cash for each Unit to
be released equal to the Unit Value as of the Closing Date. In such
event, such Transferor's rights with respect to such cash and any income
therefrom shall correspond to its rights with respect to the Units so
released.
(g) The provisions of Sections 3.02(d) and 3.02(e) shall apply with
respect to the Escrow Fund and the rights and obligations of Escrow Agent
under this Section 14.05.
(h) The provisions of this Section 14.05 shall survive the Closing.
SECTION 14.06. General Provisions Regarding Survival. (a) Except
where expressly provided in this Agreement, none of the provisions
contained in this Agreement or any other documents delivered by
Transferors or Transferees in connection with the Closing shall survive
the Closing.
(b) Where this Agreement expressly provides that any
representation, warranty, covenant or obligation of Transferees contained
in this Agreement or any document delivered by Transferees at the Closing
(other than the Redemption Rights Agreement and the Partnership Agreement
Amendment) shall survive the Closing, such representation, warranty,
covenant or obligation shall survive the Closing indefinitely, subject
only to applicable statutes of limitation; provided, however, that
Transferees' representations and warranties set forth in Section 9.01,
other than those set forth in Sections 9.01(a),(b) and (c), shall survive
the Closing for a period of three years after the Closing.
(c) Where this Agreement expressly provides that any representation,
warranty, covenant or obligation of Transferors contained in this
Agreement or any document delivered by Transferors at the Closing
(including any Transferors' Estoppel Letter) shall survive the Closing,
such representation, warranty, covenant or obligation shall survive the
Closing for a period of one year (except for Transferors' indemnity under
clause (d) of Section 14.07, Transferors'
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representations and warranties set forth in Sections 8.03(a), (b) and
(s) and the obligation of a Transferor under Section 3.04(b) to cause a
Section 3.04(b) Certificate to be delivered to the Partnership, which
shall survive the Closing indefinitely, subject only to applicable
statutes of limitation); provided, however, that Transferors' liability
for any breach of any such representations, warranties, covenants and
obligations shall not expire as to any breach or alleged breach thereof
if prior to the first anniversary of the Closing Date Transferees shall
have either commenced litigation in respect of such breach or alleged
breach or provided notice to Transferors setting forth in reasonable
detail the facts and circumstances of such breach or alleged breach and,
if such notice is given, Transferees subsequently commence litigation
with respect to the matter included in such notice within six months
after such notice is given. Notwithstanding anything to the contrary
contained in this Agreement, the limitation set forth in this Section
14.06(c) shall not be applicable to the Redemption Rights Agreement, the
Partnership Agreement Amendment, the Partnership Agreement or the
Guarantee.
SECTION 14.07. Indemnification by Transferors. Subject to Sections
8.05, 8.06(c), 14.03 and 14.06(c), from and after the Closing,
Transferors, jointly and severally, shall indemnify, defend and hold
harmless, Transferees and their respective shareholders, directors,
officers, members, partners, employees, representatives and agents and
their respective successors and assigns (collectively, the "Indemnified
Transferee Persons") from and against any
Losses incurred or suffered by any Indemnified Transferee Person that
results from, relates to or arises out of: (a) the breach or inaccuracy
of any representation or warranty made by Transferors in this Agreement
or any document delivered by Transferors at the Closing (other than the
Redemption Rights Agreement and the Partnership Agreement Amendment but
including any Transferors' Estoppel Letter); (b) the breach or
non-fulfillment by Transferors of any of the covenants or agreements of
Transferors under this Agreement or any document delivered by Transferors
at the Closing (other than the Redemption Rights Agreement and the
Partnership Amendment Agreement but including any Transferors' Estoppel
Letter); (c) claims made by any Tenant or Anchor under the Leases, any
Adjoining Owner under the Operating Agreements or by any party under
79
the Other Agreements that relate to any actions or events first
occurring, or obligations first accruing, prior to the Closing Date;
provided, however, that Transferors' obligations under this clause (c)
shall not apply to any claims which (i) allege or are based on the
failure of the Joint Venture to keep the Mall, the fixtures, systems and
facilities contained in the Mall or the common areas related to the Mall
in good repair or to make required repairs or improvements thereto, (ii)
are based on any matter which is identified in this Agreement (including
the Schedules and Exhibits hereto) as an exception or qualification to
any representation or warranty of Transferors set forth herein, or in any
Transferors' Estoppel Letter or any estoppel letter or certificate
delivered pursuant to this Agreement by any Tenant, Anchor or other
occupant under a Lease or any Adjoining Owner under an Operating
Agreement (provided that Transferors' obligations under this clause (c)
shall apply to monetary and financial claims raised by any Tenant, Anchor
or Adjoining Owner in an estoppel letter delivered to the Joint Venture
prior to the Closing Date pursuant to this Agreement), (iii) are based on
any matter constituting a breach of such representation or warranty that
is deemed waived pursuant to the terms of this Agreement or (iv) are
based on a liability which was taken into account as a Closing adjustment
pursuant to Article VI; and (d) any Losses of the Joint Venture not
covered by the foregoing clauses (a) through (c) which is based on any
matter which occurred or accrued prior to the Closing to the extent
Transferees would not have been subject to such Losses if they had
purchased the Property directly from the Joint Venture rather than
acquiring the Joint Venture Interests pursuant to this Agreement, which
Losses shall include (1) all federal, state and local taxes of whatever
kind or nature of the Joint Venture relating to the period prior to the
Closing; (2) liabilities relating to any employees, employee benefit
plans or the Managing Agent, including severance pay and accrued vacation
pay obligations and other liabilities of the Joint Venture, the Managing
Agent or others relating to the termination of such employees as the
result of the consummation of the transactions contemplated by this
Agreement; (3) any tort liability arising from any accident, injury,
event, circumstance, action or omission occurring prior to the Closing,
whether asserted before or after the Closing; (4) any fine, penalty or
the like that is imposed or assessed by any governmental authority for
the period prior to the
80
Closing, whether imposed or assessed before or after the Closing; (5) any
liability to the holder of the Existing Nashland Debt or arising in
connection with the Existing Nashland Debt; and (6) any liability of the
Joint Venture arising from any business unrelated to the ownership and
operation of the Mall conducted by the Joint Venture prior to the Closing
Date.
SECTION 14.08. Indemnification by Transferees. From and after the
Closing, Transferees, jointly and severally, shall indemnify, defend and
hold harmless Transferors and their respective shareholders, directors,
officers, members, partners, employees, representatives and agents and
their respective successors and assigns (collectively, the "Indemnified
Transferor Persons") from and against any Losses incurred or suffered by
any Indemnified Transferor Person that results from, relates to or arises
out of: (a) the breach or inaccuracy of any representation or warranty
made by Transferees or the Partnership in this Agreement or any document
delivered by Transferees at the Closing (other than the Redemption Rights
Agreement and the Partnership Agreement Amendment); (b) the breach or
non-fulfillment by Transferees or the Partnership of any of their
covenants or agreements under this Agreement or any documents delivered
by Transferees at the Closing (other than the Redemption Rights
Agreement, the Partnership Agreement and the Partnership Agreement
Amendment); (c) claims made by any Tenant or Anchor under the Leases, any
Adjoining Owner under the Operating Agreements or by any party under the
Other Agreements that relate to any actions or events first occurring, or
obligations first accruing, after the Closing Date; and (d) all claims
excluded from clause (c) of Section 14.07 pursuant to part (iv) of the
proviso in such clause.
SECTION 14.09. Prevailing Party's Attorneys' Fees. In connection
with any litigation, including appellate proceedings, initiated by a party
hereto against any other party hereto and arising out of this Agreement
or any instrument or document executed pursuant hereto, the party
adjudicated to be the substantially prevailing party shall be entitled to
recover reasonable attorneys' fees and disbursements from the other
party.
SECTION 14.10. Survival. Notwithstanding anything to the contrary
contained in this Article XIV, the provisions of this Article XIV shall
survive the
81
Closing or any termination of this Agreement indefinitely and without
regard to any time period except as specifically set forth in Sections
14.06(b) and (c).
ARTICLE XV
Estoppels
SECTION 15.01. Required Estoppels. Transferees' obligation to
consummate the Closing hereunder shall be conditioned upon its receipt of
the following estoppel letters, each to be dated no earlier than June 9,
1998 (the "Required Estoppel Letters"):
(a) Estoppel letters from all Adjoining Owners in substantially the
form of the estoppel letter annexed hereto as Exhibit L-1; provided,
however, that if any Operating Agreement provides for the form or content
of an estoppel letter, Transferees shall accept an estoppel letter as
called for therein if the Adjoining Owner refuses to execute one in the
form annexed hereto as Exhibit L-1 after requested to do by Transferors.
(b) Estoppel letters (i) from all Anchors which are Tenants under
Leases, if any, such estoppel letters to be in substantially the form of
the estoppel letter annexed hereto as Exhibit L-2 and (ii) from Tenants
leasing in the aggregate not less than 85% of the gross leasable area
leased at the Mall by Tenants other than Anchors, such estoppel letters
to be in substantially the form of the estoppel letter annexed hereto as
Exhibit M; provided, however, that if any Lease provides for the form or
content of an estoppel letter, Transferees shall accept an estoppel
letter as called for therein if any Tenant refuses to execute one in the
applicable form annexed hereto after being requested to do so by
Transferors.
SECTION 15.02. Transferors' Estoppels. If Transferors shall be
unable to obtain the Required Estoppel Letters required from Tenants,
other than Anchors, leasing in the aggregate not less than 85% of the
gross leasable area leased at the Mall by Tenants other than Anchors but
has obtained estoppel letters from Tenants, other than Anchors, leasing
in the aggregate not less than 70% of the gross leasable area at the
Mall, Transferors may elect (but shall not be required) to provide
estoppel letters signed by
82
Transferors in the form annexed hereto as Exhibit N (each a "Transferors'
Estoppel Letter") with respect to Tenants (other than Anchors) from which
it has not obtained an estoppel letter and any Transferors' Estoppel
Letter so provided shall be deemed to constitute Required Estoppel
Letters for purposes of Section 15.01. Statements made by Transferors in
a Transferors' Estoppel Letter shall constitute warranties and
representations by Transferors which shall survive the Closing and shall
otherwise be subject to the limitations set forth in Section 8.06. A
Transferors' Estoppel Letter shall be of no further force or effect as of
the date on which there is delivered to Transferees an estoppel letter
from the party in respect of which such Transferors' Estoppel Letter was
given, but only to the extent that the estoppel letter executed by such
party confirms the statements made in such Transferors' Estoppel Letter.
SECTION 15.03. Variance Between Estoppels and Forms Annexed as
Exhibits. Transferors shall not be in default under this Agreement if
one or more estoppel letters signed by Anchors, Tenants or other third
parties set forth allegations or facts at variance with the statements in
the forms annexed hereto as Exhibits, but it shall be a condition to
Transferees' obligation to consummate the Closing under this Agreement
that such estoppel letters, taken together, do not disclose either (i)
any material matters which are materially inconsistent in any of the
representations and warranties of Transferors hereunder (without giving
effect to any qualifications to Transferors' knowledge referred to
therein) or (ii) material exceptions in the statements set forth in the
agreed forms of such estoppel letters (other than exceptions disclosed
herein or otherwise known to Transferees on the date hereof).
SECTION 15.04. All Estoppels To Be Delivered. Transferors agree that
notwithstanding the fact that the Required Estoppel Letters encompass
less than all the Tenants, Transferors will request all Adjoining Owners
and all Anchors and Tenants to execute estoppel letters in the form
called for by Section 15.01. Transferors further agree that all
estoppels received by them will be delivered to Transferees promptly
after receipt, whether or not such estoppels are required in order to
satisfy any of the requirements of this Article XV and whether or not
such estoppels are received before or after the Closing.
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The provisions of the preceding sentence shall survive the Closing.
ARTICLE XVI
Miscellaneous
SECTION 16.01. Notices. Except as otherwise provided in this
Agreement, all notices, demands, requests, consents, approvals or other
communications which are required or permitted to be given under this
Agreement or which either party desires to give with respect to this
Agreement shall be in writing and shall be delivered by hand or sent by
telecopy (with the original sent by first-class mail, postage prepaid),
or sent postage prepaid, by registered or certified mail, return receipt
requested, or by reputable overnight courier service addressed to the
party to be notified as follows (or to such other address as such party
shall have specified at least 10 days prior thereto by like notice) and
shall be deemed given when so delivered by hand or telecopied, and if
mailed, three Business Days after mailing (one (1) Business Day in case
of overnight courier service), as follows:
if to Nashland, to:
▇.▇. ▇'▇▇▇▇▇▇ & Co. Incorporated
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Cravath, Swaine & ▇▇▇▇▇
Worldwide Plaza
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to HRE or Hexalon Real Estate, Inc., to:
CGR Advisors
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
84
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Arnall Golden & ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
if to Transferees, to:
General Growth Properties, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 16.02. Further Assurances. Transferors and Transferees
agree, at any time and from time to time after the Closing, to execute,
acknowledge where appropriate and deliver such further instruments and
documents and to take such other action as the other party may reasonably
request in order to carry out the intent and purposes of this Agreement,
provided that such request is made by notice given within two years after
the Closing Date. If required by the other party, the party making the
request will bear the reasonable cost involved. Neither party shall be
required to execute any instrument or document pursuant to this Section
16.02 which would increase the liability or obligations of such party
over that provided for in this Agreement and the instruments and
documents executed by such party pursuant hereto in any material respect.
The provisions of this Section 16.02 shall survive the Closing.
SECTION 16.03. Captions. The article and section titles or
captions in this Agreement and the Table of Contents and the Schedule of
Exhibits prefixed
85
hereto are for convenience only and shall not be deemed to be part of
this Agreement.
SECTION 16.04. Governing Law; Construction. This Agreement shall
be construed, interpreted and enforced in accordance with the laws of the
State of New York applicable to contracts negotiated, executed and to be
performed wholly within such State. Each party hereto acknowledges that
it was represented by counsel in connection with this Agreement and the
transactions contemplated herein, that it and its counsel reviewed and
participated in the preparation and negotiation of this Agreement and the
documents and instruments to be delivered hereunder and that any rule of
construction to the effect that ambiguities are to be resolved against
the drafting party shall not be employed in the interpretation of this
Agreement or the documents and instruments to be delivered hereunder.
SECTION 16.05. Entire Agreement; No Third Party Beneficiary, etc.
This Agreement, including all Schedules and Exhibits, contains the entire
agreement between the parties with respect to the subject matter hereof
and supersedes all prior understandings, if any, with respect thereto.
The parties have made no representations with respect to the subject
matter of this Agreement and have given no warranties with respect to the
subject matter hereof except as expressly provided herein and/or
expressly provided in the documents delivered at Closing. This Agreement
may not be modified, changed, supplemented or terminated, nor may any
obligations hereunder be waived, except by written instrument signed by
the party to be charged or by its agent duly authorized in writing or as
otherwise expressly permitted herein. The parties do not intend to
confer any benefit hereunder on any person, firm, corporation or other
entity other than the parties hereto and their permitted assigns. The
provisions of this Section 16.05 shall survive the Closing or any
termination of this Agreement.
SECTION 16.06. Waivers; Extensions. No waiver of any breach of any
agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof or of any other agreement or
provision herein contained. No extension of time for performance of any
obligations or acts shall be deemed an extension of the time for
performance of any other obligations or acts. The provisions of this
Section 16.06 shall survive the Closing or any termination of this
Agreement.
86
SECTION 16.07. Publicity. In no event shall Transferors or
Transferees, or their respective Affiliates issue any press release or
otherwise disclose any non-public information regarding this Agreement or
the transactions contemplated under the terms of this Agreement unless
the other parties have consented thereto in writing (and the other
parties agree not unreasonably to withhold or delay such consent) and to
the form and substance of any such statement or disclosure; provided,
however, that nothing herein shall be deemed to limit or impair in any
way any party's ability to disclose the details of or information
concerning this Agreement, the transactions contemplated under the terms
of this Agreement or the Mall (a) to such party's attorneys, accountants
or other advisors or to the extent such party reasonably deems necessary
or desirable, (b) pursuant to any court or governmental order or
applicable securities laws or regulations financial reporting
requirements, (c) to obtain the estoppels or financing for the
acquisition of the Mall, to the extent reasonably necessary in connection
with actual or prospective financing or sale transactions of such party
or any of its Affiliates, (d) to the direct or indirect constituent
partners, members or shareholders, as the case may be (and to counsel for
such constituent partners, members and shareholders) of such party and
its Affiliates and their respective successors and assigns and (e) as
otherwise necessary to comply with the terms of this Agreement.
SECTION 16.08. Transaction Expenses; Fees and Disbursements of
Counsel, etc. (a) Transferors shall pay all (i) recording fees and
charges for documents required to remove exceptions to title which do not
constitute Permitted Encumbrances and/or the cost of causing the Title
Company to insure over any such exceptions that Transferees have agreed
in writing may be insured over or that are insured over in accordance
with Section 12.01.
(b) Transferees shall pay (i) the cost of the Survey and any updates
thereto, (ii) the premiums for the Title Policy, (iii) the premiums for
any loan title insurance (including endorsements) required by any lender
to Transferees, (iv) all recording fees and charges (except as provided
in Section 16.08(a)), (v) all transfer taxes, stamp taxes and documentary
fees payable in connection with the transactions
87
contemplated by this Agreement (which items shall not include any items
referred to in the following clause (vi)), (vi) all transfer taxes, stamp
taxes and documentary fees payable in connection with any liquidation of
the Joint Venture or transfer of the Mall after the Closing, (vii) the
fees of the Broker in connection with the transactions contemplated by
this Agreement, as certified by Transferors at least two Business Days
prior to the Closing, (viii) the fees, disbursements and charges of
counsel to Transferors in connection with the negotiation and preparation
of this Agreement and the Closing, as certified by Transferors at least
two Business Days prior to the Closing, (ix) the fees, disbursements and
charges of counsel to Transferees in connection with the negotiation and
preparation of this Agreement and the Closing and (x) the fees and
expenses of any escrows with the Escrow Agent to the extent billed by the
Escrow Agent at least two Business Days prior to the Closing.
(c) Subject to Sections 16.08(a) and 16.08(b), each party shall pay
its own expenses in connection with the transactions contemplated by this
Agreement, including the fees, disbursements and charges of its own
counsel, accountants, consultants, experts and other advisors in
connection with the negotiation and preparation of this Agreement and the
Closing.
(d) Transferors on the one hand and Transferees on the other hand
shall each pay 50% of the fees and expenses of any escrows with the
Escrow Agent to the extent not billed by the Escrow Agent at least two
Business Days prior to the Closing.
(e) The provisions of this Section 16.08 shall survive the Closing
or any termination of this Agreement.
SECTION 16.09. Assignment. Neither Transferee shall, without the
prior written consent of Transferors, assign this Agreement or its
respective rights hereunder, in whole or in part, to any other Person;
provided, however, that Transferees shall have the right, without the
consent of Transferors, to assign this Agreement and its rights hereunder
to any wholly owned subsidiary of the Partnership. This Section 16.09
shall survive the Closing or any termination of this Agreement.
88
SECTION 16.10. Counterparts. This Agreement may be executed in
counterparts, each of which (or any combination of which, signed by all
of the parties) shall be deemed an original, but all of which, taken
together, shall constitute one and the same instrument.
SECTION 16.11. No Recording. The parties agree that (i) neither
this Agreement nor any memorandum or notice hereof shall be recorded or
filed in any public records. and (ii) in no event shall Transferees be
entitled to file a lis pendens against the Property. If Transferees
violate the terms of this Section 16.11, Transferors, in addition to any
other rights or remedies they may have, may immediately terminate this
Agreement by giving notice to Transferees of their election so to do and,
in the event of such termination, Transferors shall be entitled to
receive the Deposit from the Escrow Agent as liquidated damages for such
breach (and in such circumstances Transferees shall join with Transferors
in a written instruction to Escrow Agent to pay the Deposit to
Transferors in the manner set forth in Section 3.02). The provisions of
this Section 16.11 shall survive the Closing or any termination
of this Agreement.
SECTION 16.12. Obligations of Transferors and Transferees are Joint
and Several. (a) Transferors shall have joint and several liability for
each representation, warranty, covenant, indemnity, obligation and other
liability of either Transferor under this Agreement or in any document
delivered by Transferors in connection with the Closing. Except as
otherwise specifically provided herein, all notices, elections and other
decisions to be made or taken by Transferors shall be made or taken
jointly by them.
(b) Transferees shall have joint and several liability for each
representation, warranty, covenant, indemnity, obligation and other
liability of either Transferee under this Agreement or in any document
delivered by Transferees in connection with the Closing. Except as
otherwise specifically provided herein, all notices, elections and other
decisions to be made or taken by Transferees shall be made or taken
jointly by them.
SECTION 16.13. Waiver of Rights to Jury Trial. Transferors and
Transferees waive any right to
89
trial by jury of any claim arising under or with respect to this
Agreement, whether now existing or hereafter arising. Transferors and
Transferees hereby agree that any such claim shall be decided by a court
trial without a jury and that any party hereto may file an original
counterpart or a copy of this Section 16.13 with any court as written
evidence of the consent of the other party hereto to waiver of its right
to trial by jury. The provisions of this Section 16.13
shall survive the Closing or any termination of this Agreement.
IN WITNESS WHEREOF, the parties have duly delivered this Agreement
as of the day and year first above written.
NASHLAND ASSOCIATES,
By ▇'▇▇▇▇▇▇ REALTY INVESTORS II
L.P., its managing partner,
By ▇.▇. ▇'▇▇▇▇▇▇ & CO. INCORPORATED,
its managing general partner,
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
By HRE NASHLAND, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
HRE ALTAMONTE, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
By ALTAMONTE SPRINGS MALL, INC.,
its general partner,
By /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Vice President
GGP LIMITED PARTNERSHIP,
By GENERAL GROWTH PROPERTIES, INC.,
its general partner
By /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Senior Vice President
The undersigned hereby executes this Agreement solely to evidence its agreement
to hold the Deposit, the Income and the Escrow Fund in accordance with Sections
3.02 and 14.05 and to perform its other obligations expressly set forth in this
Agreement.
FIRST AMERICAN TITLE
INSURANCE COMPANY,
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
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Name: ▇▇▇▇▇ ▇. ▇▇▇▇
Title: Vice President
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SCHEDULE 1
Schedule of Delinquencies
SCHEDULE 2
Default Notices Relating to Leases,
Operating Agreements and Other Agreements
SCHEDULE 3
Rent Roll
SCHEDULE 6.02
Proposed Leases and Lease Amendments
SCHEDULE 8.03(i)
Schedule of Litigation
SCHEDULE 8.03(k)
Description of Environmental Reports
SCHEDULE 8.03(l)
Schedule of Obligations to Promotional Association
The Joint Venture is required to contribute 25% of the amount collected
from the Tenants by the Altamonte Mall Merchants Association for promotional
activities at the Mall.
SCHEDULE 8.03(m)
Real Estate Tax Bills
