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EXHIBIT 2.1
DISTRIBUTION AGREEMENT
among
EXCEL REALTY TRUST, INC.
ERT DEVELOPMENT CORPORATION
and
EXCEL LEGACY CORPORATION
dated as of
March 31, 1998
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TABLE OF CONTENTS
PAGE
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ARTICLE I. DEFINITIONS..................................................................... 2
Section 1.01 General.......................................................... 2
Section 1.02. Terms Defined Elsewhere in Agreement............................. 11
ARTICLE II. TRANSFER OF ASSETS............................................................. 11
Section 2.01 Transfer of Assets to Legacy..................................... 11
Section 2.02 Consideration.................................................... 12
Section 2.03 Transfers Not Effected Prior to the Distribution................. 12
Section 2.04 Cooperation Re: Assets.......................................... 13
Section 2.05 No Representations or Warranties; Consents....................... 14
Section 2.06 Conveyancing and Assumption Instruments.......................... 15
Section 2.07. Cash Management.................................................. 15
ARTICLE III. ASSUMPTION AND SATISFACTION OF LIABILITIES.................................... 16
Section 3.01. Assumption and Satisfaction of Liabilities...................... 17
ARTICLE IV. THE DISTRIBUTION............................................................... 17
Section 4.01. Cooperation Prior to the Distribution........................... 17
Section 4.02. Excel and EDV Board Action; Conditions Precedent
to the Distribution............................................. 18
Section 4.03. The Distribution................................................ 19
Section 4.04. Cash in Lieu of Fractional Shares............................... 19
ARTICLE V. INDEMNIFICATION................................................................. 19
Section 5.01. Indemnification by Excel........................................ 19
Section 5.02. Indemnification by EDV.......................................... 20
Section 5.03. Indemnification by Legacy....................................... 20
Section 5.04. Insurance Proceeds.............................................. 21
Section 5.05. Procedure for Indemnification................................... 21
Section 5.06. Remedies Cumulative............................................. 25
Section 5.07. Survival of Indemnities......................................... 26
ARTICLE VI. CERTAIN ADDITIONAL MATTERS..................................................... 26
Section 6.01. Legacy Board.................................................... 26
Section 6.02. Certificate and Bylaws.......................................... 26
Section 6.03. Certain Post-Distribution Transactions.......................... 26
Section 6.04. Notices by Excel................................................ 28
ARTICLE VII. ACCESS TO INFORMATION AND SERVICES............................................ 28
Section 7.01. Provision of Corporate Records.................................. 28
Section 7.02. Access to Information........................................... 29
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Section 7.03. Production of Witnesses......................................... 30
Section 7.04. Reimbursement................................................... 30
Section 7.05. Retention of Records............................................ 30
Section 7.06. Confidentiality................................................. 31
Section 7.07. Privileged Matters.............................................. 31
ARTICLE VIII. INSURANCE.................................................................... 34
Section 8.01. Policies and Rights Included Within the Legacy Assets........... 34
Section 8.02. Post-Distribution Date Claims................................... 35
Section 8.03. Administration and Reserves..................................... 35
Section 8.04. Agreement for Waiver of Conflict and Shared Defense............. 37
ARTICLE IX. MISCELLANEOUS.................................................................. 37
Section 9.01. Complete Agreement; Construction................................ 37
Section 9.02. Expenses........................................................ 37
Section 9.03. Governing Law................................................... 37
Section 9.04. Notices......................................................... 38
Section 9.05. Amendments...................................................... 38
Section 9.06. Successors and Assigns.......................................... 38
Section 9.07. Termination..................................................... 38
Section 9.08. Subsidiaries.................................................... 39
Section 9.09. No Third-Party Beneficiaries.................................... 39
Section 9.10. Titles and Headings............................................. 39
Section 9.11. Exhibits and Schedules.......................................... 39
Section 9.12. Legal Enforceability............................................ 39
Section 9.13. Arbitration of Disputes......................................... 40
EXHIBITS
Exhibit A: Administrative Services Agreement
Exhibit B: Legacy Bylaws
Exhibit C: Legacy Certificate
Exhibit D: Legacy Employees
Exhibit E: Tax Sharing Agreement
Exhibit F: Transitional Services Agreement
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DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT (this "Agreement") is made as of this
31st day of March, 1998 among Excel Realty Trust, Inc., a Maryland corporation
("Excel"), ERT Development Corporation, a Delaware corporation ("EDV"), and
Excel Legacy Corporation, a Delaware corporation and a wholly-owned subsidiary
of Excel ("Legacy").
RECITALS
WHEREAS, Excel and EDV, of which Excel owns 100% of the
outstanding preferred shares, (i) acquire, develop, own and manage certain real
estate assets, including neighborhood and community shopping centers and other
retail and commercial properties, and (ii) hold certain notes receivable;
WHEREAS, the Boards of Directors of Excel and EDV have each
determined that it is in the best interests of their respective stockholders to
transfer to Legacy certain real properties, notes receivable and related assets
and liabilities currently held by Excel and EDV (the "Asset Transfers"), and
thereafter to distribute all of the outstanding shares of common stock, par
value $.01 per share, of Legacy to the holders of Excel common stock (the
"Distribution");
WHEREAS, in connection with the Distribution, Excel, EDV and
Legacy have determined that it is necessary and desirable to set forth the
principal corporate transactions required to effect the Asset Transfers and the
Distribution, and to set forth the agreements that will govern certain matters
following the Distribution.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby agree
as follows:
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ARTICLE I.
DEFINITIONS
Section 1.01 General. As used in this Agreement, the following
terms shall have the following meanings:
Action: Any action, claim, suit, arbitration, inquiry, proceeding
or investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
Administrative Services Agreement: The Administrative Services
Agreement between Excel and Legacy, which agreement shall be entered into on or
prior to the Distribution Date in substantially the form of Exhibit A attached
hereto.
Affiliate: With respect to any specified Person, any other Person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such specified Person. For purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the foregoing.
Notwithstanding the foregoing, (i) the Affiliates of Excel shall not include
Legacy or any other Person which would be an Affiliate of Excel by reason of
Excel's ownership of the capital stock of Legacy prior to the Distribution or
the fact that any officer or director of Legacy shall also serve as an officer
or director of Excel, (ii) the Affiliates of EDV shall not include Legacy or any
other Person which would be an Affiliate of EDV by reason of the fact that any
officer or director or Legacy shall also serve as an officer or director of EDV,
and (iii) the Affiliates of Legacy shall not include Excel, EDV or any other
Person which would be an Affiliate of Legacy by reason of Excel's ownership of
the capital stock of Legacy prior to the
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Distribution or the fact that any officer or director of Legacy shall also serve
as an officer or director of Excel or EDV.
Agent: The distribution agent appointed by Excel to distribute
the Legacy Common Stock pursuant to the Distribution.
Commission: The Securities and Exchange Commission.
Conveyancing and Assumption Instruments: Collectively, the
various agreements, instruments and other documents to be entered into to effect
the Asset Transfers and the assumption of Liabilities in the manner contemplated
by this Agreement and the Related Agreements.
Distribution Date: The date determined by the Excel Board as the
date on which the Distribution shall be effected, which Distribution Date is
contemplated by the Excel Board to occur on or about March 31, 1998.
Distribution Record Date: The date established by the Excel Board
as the date for taking a record of the Holders of Excel Common Stock entitled to
participate in the Distribution, which Distribution Record Date has been
established as March 2, 1998, subject to the fulfillment on or before March 31,
1998 of certain conditions to the Distribution as provided in Section 4.02.
EDV Board: The Board of Directors of EDV.
EDV Books and Records: The books and records (including
computerized records) of EDV and all books and records owned by Legacy which
relate to the EDV Retained Business or are necessary to operate the EDV Retained
Business, or are required by law to be retained by EDV, all files relating to
any Action pertaining to the EDV Retained Liabilities, original corporate minute
books, stock ledgers and certificates and corporate seals, and all licenses,
leases, agreements and filings, relating to EDV or the EDV Retained Business
(but not including the Legacy Books and Records, provided that EDV shall have
access to, and shall have the right to obtain duplicate copies of, the Legacy
Books and Records in accordance with the provisions of Article VII).
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EDV Common Stock: The common stock, par value $.0001 per share,
of EDV.
EDV Notes: The notes receivable listed on Schedule 1.01(a).
EDV Real Estate Assets: The real estate assets listed on Schedule
1.01(b).
EDV Retained Assets: The assets of EDV other than the Legacy
Assets transferred to Legacy by EDV, including without limitation (i) assets
relating to the EDV Retained Business, (iii) all of the assets expressly
allocated to EDV under this Agreement or the Related Agreements, and (iv) any
other assets of EDV and its Affiliates relating to the EDV Retained Business.
EDV Retained Business: The businesses conducted by EDV pursuant
to or utilizing the EDV Retained Assets, including without limitation, the
acquisition, development, ownership and management of real estate assets.
EDV Retained Liabilities: (i) All of the Liabilities arising out
of or in connection with the EDV Retained Assets or the EDV Retained Business,
(ii) all of the Liabilities of EDV under, or to be retained or assumed by EDV
pursuant to, this Agreement or any of the Related Agreements, (iii) any
Financing Obligations not constituting Legacy Liabilities or Excel Retained
Liabilities, (iv) all Liabilities for the payment of outstanding drafts of EDV
attributable to the EDV Retained Business existing as of the Distribution Date,
and (v) all other Liabilities of EDV not constituting Legacy Liabilities.
EDV Retained Policies: All Policies, current or past, which are
owned or maintained by or on behalf of EDV (or any of its predecessors) which
relate to the EDV Retained Business but do not relate to the Legacy Business.
Excel Board: The Board of Directors of Excel.
Excel Books and Records: The books and records (including
computerized records) of Excel and all books and records owned by Legacy which
relate to the Excel Retained Business or are necessary to operate the Excel
Retained Business, or are required by law to be retained by Excel,
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including without limitation, all files relating to any Action pertaining to the
Excel Retained Liabilities, original corporate minute books, stock ledgers and
certificates and corporate seals, and all licenses, leases, agreements and
filings, relating to Excel or the Excel Retained Business (but not including the
Legacy Books and Records, provided that Excel shall have access to, and shall
have the right to obtain duplicate copies of, the Legacy Books and Records in
accordance with the provisions of Article VII).
Excel Common Stock: The common stock, par value $.01 per share,
of Excel.
Excel Notes: The notes listed on Schedule 1.01(c).
Excel Real Estate Assets: The real estate assets listed on
Schedule 1.01(d).
Excel Retained Assets: The assets of Excel other than the Legacy
Assets transferred to Legacy by Excel, including without limitation (i) assets
relating to the Excel Retained Business, (iii) all of the assets expressly
allocated to Excel under this Agreement or the Related Agreements, and (iv) any
other assets of Excel and its Affiliates relating to the Excel Retained
Business.
Excel Retained Business: The businesses conducted by Excel
pursuant to or utilizing the Excel Retained Assets, including without
limitation, the acquisition, development, ownership and management of real
estate assets, including neighborhood and community shopping centers and other
retail and commercial properties.
Excel Retained Liabilities: (i) All of the Liabilities arising
out of or in connection with the Excel Retained Assets or the Excel Retained
Business, (ii) all Liabilities arising out of or in connection with any lawsuits
relating to the Distribution (other than those Liabilities relating to employee
claims which shall be allocated pursuant to the Administrative Services
Agreement), (iii) all of the Liabilities of Excel under, or to be retained or
assumed by Excel pursuant to, this Agreement or any of the Related Agreements,
(iv) any Financing Obligations not constituting Legacy Liabilities or EDV
Retained Liabilities, (v) all Liabilities for the payment of outstanding drafts
of Excel
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attributable to the Excel Retained Business existing as of the Distribution
Date, and (vi) all other Liabilities of Excel not constituting Legacy
Liabilities.
Excel Retained Policies: All Policies, current or past, which are
owned or maintained by or on behalf of Excel (or any of its predecessors) which
relate to the Excel Retained Business but do not relate to the Legacy Business.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Financing Obligations: All (i) indebtedness for borrowed money,
(ii) obligations evidenced by bonds, notes, debentures or similar instruments,
(iii) obligations under capitalized leases and deferred purchase arrangements,
(iv) reimbursement or other obligations relating to letters of credit or similar
arrangements, and (v) obligations to guarantee, directly or indirectly, any of
the foregoing types of obligations on behalf of others.
Holders: The holders of record of Excel Common Stock as of the
Distribution Record Date.
Insurance Proceeds: Those moneys (i) received by an insured from
an insurance carrier or (ii) paid by an insurance carrier on behalf of the
insured, in either case net of any applicable premium adjustment,
retrospectively-rated premium, deductible, retention, cost or reserve paid or
held by or for the benefit of such insured.
Insured Claims: Those Liabilities that, individually or in the
aggregate, are covered within the terms and conditions of any of the Policies,
whether or not subject to deductibles, co-insurance, uncollectability or
retrospectively-rated premium adjustments, but only to the extent that such
Liabilities are within applicable Policy limits, including aggregates.
Legacy Board: The Board of Directors of Legacy.
Legacy Books and Records: The books and records (including
computerized records) of Legacy and all books and records owned by Excel and EDV
which relate to the Legacy Business
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or are necessary to operate the Legacy Business, including, without limitation,
all such books and records relating to Legacy Employees, all files relating to
any Action being assumed by Legacy as part of the Legacy Liabilities, original
corporate minute books, stock ledgers and certificates and corporate seals, and
all licenses, leases, agreements and filings, relating to Legacy or the Legacy
Business (but not including the Excel Books and Records or the EDV Books and
Records, provided that Legacy shall have access to, and have the right to obtain
duplicate copies of, the Excel Books and Records and the EDV Books and Records
in accordance with the provisions of Article VII).
Legacy Bylaws: The Amended and Restated Bylaws of Legacy,
substantially in the form of Exhibit B, to be in effect at the Distribution
Date.
Legacy Certificate: The Amended and Restated Certificate of
Incorporation of Legacy, substantially in the form of Exhibit C, to be in effect
at the Distribution Date.
Legacy Common Stock: The common stock, par value $.01 per share,
of Legacy.
Legacy Employees: All of the Legacy employees at the time of the
Distribution, as identified on Exhibit D.
Legacy Liabilities: (i) All of the Liabilities of Legacy under,
or to be retained or assumed by Legacy pursuant to, this Agreement or any of the
Related Agreements, including those set forth on Schedule 1.01(e), (ii) all
Liabilities for payment of outstanding drafts of Excel or EDV attributable to
the Legacy Business existing as of the Distribution Date, and (iii) all
Liabilities arising out of or in connection with any of the Legacy Assets or the
Legacy Business.
Legacy Policies: All Policies, current or past, which are owned
or maintained by or on behalf of Excel or EDV or any of their Affiliates or
predecessors, which relate to the Legacy Business but do not relate to the
Retained Businesses, and which Policies are either maintained by Legacy or
assignable to Legacy.
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Liabilities: Any and all debts, liabilities and obligations,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, including all costs
and expenses relating thereto, and including, without limitation, those debts,
liabilities and obligations arising under any law, rule, regulation, Action,
threatened Action, order or consent decree of any governmental entity or any
award of any arbitrator of any kind, and those arising under any contract,
commitment or undertaking.
Notes: The Excel Notes and the EDV Notes, collectively.
Person: Any individual, corporation, partnership, association,
trust, estate or other entity or organization, including any governmental entity
or authority.
Policies: Insurance policies and insurance contracts of any kind
relating to the Legacy Business or the Retained Businesses as conducted prior to
the Distribution Date, including without limitation primary and excess policies,
comprehensive general liability policies, automobile and workers' compensation
insurance policies, and self-insurance and captive insurance company
arrangements, together with the rights, benefits and privileges thereunder.
Privileges: All privileges that may be asserted under applicable
law, including, without limitation, privileges arising under or relating to the
attorney-client relationship (including but not limited to the attorney-client
and work product privileges), the accountant-client privilege, and privileges
relating to internal evaluative processes.
Privileged Information: All Information as to which Excel, EDV,
Legacy or any of their Subsidiaries are entitled to assert the protection of a
Privilege.
Related Agreements: All of the agreements, instruments,
understandings, assignments or other arrangements which are entered into in
connection with the transactions contemplated hereby and which are set forth in
a writing, including, without limitation (i) the Conveyancing and
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Assumption Instruments, (ii) the Administrative Services Agreement, (iii) the
Tax Sharing Agreement, and (iv) the Transitional Services Agreement.
Retained Assets: The Excel Retained Assets and the EDV Retained
Assets, collectively.
Retained Businesses: The Excel Retained Business and the EDV
Retained Business, collectively.
Retained Liabilities: The Excel Retained Liabilities and the EDV
Retained Liabilities, collectively.
Retained Policies: The Excel Retained Policies and the EDV
Retained Policies, collectively.
Shared Policies: All Policies, current or past, which are owned
or maintained by or on behalf of Excel, EDV or their predecessors which relate
to both the Retained Businesses and the Legacy Business, and all other Policies
not constituting Legacy Policies or Retained Policies.
Subsidiary: With respect to any Person, (a) any corporation of
which at least a majority in interest of the outstanding voting stock (having by
the terms thereof voting power under ordinary circumstances to elect a majority
of the directors of such corporation, irrespective of whether or not at the time
stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned or controlled by such Person, by one or more
Subsidiaries of such Person, or by such Person and one or more of its
Subsidiaries, or (b) any non-corporate entity in which such Person, one or more
Subsidiaries of such Person, or such Person and one or more Subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has at
least majority ownership interest.
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Tax Sharing Agreement: The Tax Sharing Agreement between Legacy
and Excel, which agreement shall be entered into on or prior to the Distribution
Date in substantially the form of Exhibit E attached hereto.
Transitional Services Agreement: The agreement to be entered into
between Excel and Legacy on or prior to the Distribution Date, providing for the
furnishing of certain services on a transitional basis after the Distribution
Date, in substantially the form attached hereto as Exhibit F.
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Section 1.02. Terms Defined Elsewhere in Agreement.
Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
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Asset Transfers Recitals
Consents 4.01(c)
Distribution Recitals
EDV/Legacy Indemnifiable Losses 5.02
Excel Recitals
Excel/EDV Indemnitees 5.03
Excel/EDV Indemnifiable Losses 5.03
Excel/Legacy Indemnifiable Losses 5.01
Indemnifiable Losses 5.03
Indemnifying Party 5.04
Indemnitee 5.04
Information 7.02
Legacy Recitals
Legacy Assets 2.01(c)
Legacy Business Recitals
Legacy Indemnitees 5.01
Pending Action 5.05(h)
Third-Party Claim 5.05(a)
ARTICLE II.
TRANSFER OF ASSETS
Section 2.01 Transfer of Assets to Legacy.
(a) Prior to the Distribution Date, Excel shall take or cause to
be taken all actions necessary to cause the transfer, assignment, delivery and
conveyance to Legacy of all of Excel's right, title and interest in the
following assets:
(i) the Excel Real Estate Assets;
(ii) the Excel Notes;
(iii) the Legacy Books and Records;
(iv) all of the other assets to be assigned to Legacy by
Excel under this Agreement or the Related Agreements; and
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(v) all other assets relating to the Legacy Business held
by Excel.
(b) Prior to the Distribution Date, EDV shall take or cause to be
taken all actions necessary to cause the transfer, assignment, delivery and
conveyance to Legacy of all of EDV's right, title and interest in the following
assets:
(i) the EDV Real Estate Assets;
(ii) the EDV Notes;
(iii) the Legacy Books and Records;
(iv) all of the other assets to be assigned to Legacy by
EDV under this Agreement or the Related Agreements; and
(v) all other assets relating to the Legacy Business held
by EDV.
(c) The "Legacy Assets" shall consist of the assets transferred
to Legacy by Excel and EDV pursuant to this Section 2.1.
Section 2.02 Consideration for Asset Transfers. As consideration
for the foregoing asset transfers:
(a) On or prior to the Distribution Date, Excel shall receive
from Legacy (i) a sufficient number of shares of Legacy Common Stock to effect
the Distribution to the Holders of Excel Common Stock, and (ii) a promissory
note payable to Excel in the amount of $21.4 million.
(b) On or prior to the Distribution Date, EDV shall receive
evidence of the cancellation of certain indebtedness of EDV currently held by
Excel in the amount of $33.3 million.
Section 2.03 Transfers Not Effected Prior to the Distribution. To
the extent that any transfers contemplated by this Article II shall not have
been fully effected on the Distribution Date, the parties shall cooperate to
effect such transfers as promptly as shall be practicable following the
Distribution Date. Nothing herein shall be deemed to require the transfer of any
assets or the assumption of any Liabilities which by their terms or operation of
law cannot be transferred or
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assumed; provided, however, that Excel, EDV and Legacy and their respective
Subsidiaries and Affiliates shall cooperate in seeking to obtain any necessary
consents or approvals for the transfer of all assets and Liabilities
contemplated to be transferred pursuant to this Article II. In the event that
any such transfer of assets or Liabilities has not been consummated effective as
of the Distribution Date, the party retaining such asset or Liability shall
thereafter hold such asset in trust for the use and benefit of the party
entitled thereto (at the expense of the party entitled thereto) and retain such
Liability for the account of the party by whom such Liability is to be assumed
pursuant hereto, and take such other actions as may be reasonably required in
order to place the parties, insofar as reasonably possible, in the same position
as would have existed had such asset been transferred or such Liability been
assumed as contemplated hereby. As and when any such asset or Liability becomes
transferable, such transfer and assumption shall be effected forthwith. The
parties agree that, except as set forth in this Section 2.03, as of the
Distribution Date, each party hereto shall be deemed to have acquired complete
and sole beneficial ownership over all of the assets, together with all rights,
powers and privileges incidental thereto, and shall be deemed to have assumed in
accordance with the terms of this Agreement all of the Liabilities, and all
duties, obligations and responsibilities incidental thereto, which such party is
entitled to acquire or required to assume pursuant to the terms of this
Agreement.
Section 2.04 Cooperation Re: Assets. In the case that at any time
after the Distribution Date, Legacy reasonably determines that any of the Excel
Retained Assets or the EDV Retained Assets are essential for the conduct of the
Legacy Business, or Excel reasonably determines that any of the Legacy Assets
are essential for the conduct of the Excel Retained Business, or EDV reasonably
determines that any of the Legacy Assets are essential for the conduct of the
EDV Retained Business, and the nature of such assets makes it impracticable for
Legacy, Excel or EDV, as the case may be, to obtain substitute assets or to make
alternative arrangements on commercially
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reasonable terms to conduct their respective businesses, and reasonable
provisions for the use thereof are not already included in the Related
Agreements, then Legacy (with respect to the Legacy Assets), Excel (with respect
to the Excel Retained Assets) and EDV (with respect to the EDV Retained Assets)
shall cooperate to make such assets available to the appropriate party on
commercially reasonable terms, as may be reasonably required for such party to
maintain normal business operations (provided that such assets shall be required
to be made available only until such time as the other party may reasonably
obtain substitute assets or make alternative arrangements on commercially
reasonable terms to permit it to maintain normal business operations).
Section 2.05 No Representations or Warranties; Consents. Each of
the parties hereto understands and agrees that no party hereto is, in this
Agreement or in any other agreement or document contemplated by this Agreement
or otherwise, representing or warranting in any way (i) as to the value or
freedom from encumbrance of, or any other matter concerning, any assets of such
party or (ii) as to the legal sufficiency to convey title to any asset
transferred pursuant to this Agreement or any Related Agreement, including,
without limitation, any Conveyancing and Assumption Instruments. It is also
agreed and understood that there are no warranties, express or implied, as to
the merchantability or fitness of any of the assets either transferred to or
retained by the parties, as the case may be, and all such assets shall be "as
is, where is" and "with all faults" (provided, however, that the absence of
warranties shall have no effect upon the allocation of liabilities under this
Agreement). Similarly, each party hereto understands and agrees that no party
hereto is, in this Agreement or in any other agreement or document contemplated
by this Agreement or otherwise, representing or warranting in any way that the
obtaining of any consents or approvals, the execution and delivery of any
amendatory agreements and the making of any filings or applications contemplated
by this Agreement will satisfy the provisions of any or all applicable laws or
judgments or other instruments or agreements relating to such assets.
Notwithstanding the
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foregoing, the parties shall use their good faith efforts to obtain all consents
and approvals, to enter into all reasonable amendatory agreements and to make
all filings and applications which may be reasonably required for the
consummation of the transactions contemplated by this Agreement, and shall take
all such further reasonable actions as shall be reasonably necessary to preserve
for each of Excel, EDV and Legacy, to the greatest extent feasible, the economic
and operational benefits of the allocation of assets and liabilities provided
for in this Agreement. In case at any time after the Distribution Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary or desirable action.
Section 2.06 Conveyancing and Assumption Instruments. In
connection with the Asset Transfers and the assumptions of Liabilities
contemplated by this Agreement, the parties shall execute or cause to be
executed by the appropriate entities the Conveyancing and Assumption Instruments
in such forms as the parties shall reasonably agree, including the transfer of
real property with deeds as may be appropriate, and the assignment of trademarks
and other intellectual property rights. The transfer of capital stock shall be
effected by means of delivery of stock certificates and executed stock powers
and notation on the stock record books of the corporation or other legal
entities involved and, to the extent required by applicable law, by notation on
public registries.
Section 2.07. Cash Management.
(a) Cash Management After the Distribution Date. Legacy shall
establish and maintain a separate cash management system and accounting records
with respect to the Legacy Business effective as of 12:01 a.m. on the day
following the Distribution Date; thereafter, (i) any payments by Excel or EDV on
behalf of Legacy in connection with the Legacy Business (including, without
limitation, any such payments in respect of Liabilities or other obligations of
Legacy under the Administrative Services Agreement) shall be recorded in the
accounts of Legacy as a payable to
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Excel or EDV, as applicable; (ii) any payments by Legacy on behalf of Excel or
EDV in connection with the Excel Retained Business or the EDV Retained Business,
respectively (including, without limitation, any such payments in respect of
Liabilities or other obligations of Excel or EDV under the Administrative
Services Agreement), shall be recorded in the accounts of Excel or EDV, as
applicable, as a payable to Legacy; (iii) any cash payments received by Excel or
EDV relating to the Legacy Business or the Legacy Assets shall be recorded in
the accounts of Excel or EDV, as applicable, as a payable to Legacy; (iv) any
cash payments received by Legacy relating to the Excel Retained Business, the
EDV Retained Business, the Excel Retained Assets or the EDV Retained Assets
shall be recorded in the accounts of Legacy as a payable to Excel or EDV, as
applicable; (v) Excel, EDV and Legacy shall make adjustments for late deposits,
checks returned for not sufficient funds and other post-Distribution Date
transactions as shall be reasonable under the circumstances consistent with the
purpose and intent of this Agreement; and (vi) the net balance due to Excel, EDV
or Legacy, as the case may be, in respect of the aggregate amounts of clauses
(i), (ii), (iii), (iv) and (v) shall be paid by Excel, EDV or Legacy, as
appropriate, as promptly as practicable. For purposes of this Section 2.07(a),
the parties contemplate that the Excel Retained Business, the EDV Retained
Business and the Legacy Business, including but not limited to the
administration of accounts payable and accounts receivable, will be conducted in
the normal course.
(b) All transactions contemplated in this Section 2.07 shall be
subject to audit by the parties, and any dispute thereunder shall be resolved by
Coopers & Xxxxxxx L.L.P. (or, if Coopers & Xxxxxxx L.L.P. is not available, by
such other independent firm of certified public accountants mutually acceptable
to Excel, EDV and Legacy), whose decision shall be final and unappealable.
ARTICLE III.
ASSUMPTION AND SATISFACTION OF LIABILITIES
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Section 3.01. Assumption and Satisfaction of Liabilities. Except
as set forth in the Administrative Services Agreement, the Tax Sharing Agreement
or the other Related Agreements, effective as of and after the Distribution
Date, (a) Legacy shall assume, pay, perform and discharge in due course all of
the Legacy Liabilities, (b) Excel shall pay, perform and discharge in due course
all of the Excel Retained Liabilities, and (c) EDV shall pay, perform and
discharge in due course all of the EDV Retained Liabilities.
ARTICLE IV.
THE DISTRIBUTION
Section 4.01. Cooperation Prior to the Distribution.
(a) Excel, EDV and Legacy shall cooperate in preparing, filing
with the Commission and causing to become effective any registration statements
or amendments thereof which are appropriate to reflect the establishment of, or
amendments to, any employee benefit plans and other plans contemplated by the
Administrative Services Agreement.
(b) Excel, EDV and Legacy shall take all such action as may be
necessary or appropriate under the securities or blue sky laws of states or
other political subdivisions of the United States in connection with the
transactions contemplated by this Agreement and the Related Agreements.
(c) Excel, EDV and Legacy shall use all reasonable efforts to
obtain any third-party consents or approvals necessary or desirable in
connection with the transactions contemplated hereby ("Consents").
(d) Excel, EDV and Legacy will use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary or desirable under applicable law, to consummate the
transactions contemplated under this Agreement and the Related Agreements.
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Section 4.02. Excel and EDV Board Action; Conditions Precedent to
the Distribution. The Excel Board and the EDV Board shall, in their discretion,
establish any appropriate procedures in connection with the Distribution. In no
event shall the Distribution occur unless the following conditions shall have
been satisfied:
(a) the transactions contemplated by Sections 2.01 and 2.02 shall
have been consummated in all material respects;
(b) the Legacy Board, comprised as contemplated by Section 6.01,
shall have been elected, and the Legacy Certificate and Legacy Bylaws shall have
been adopted and shall be in effect;
(c) Excel, EDV and Legacy shall have obtained all Consents, the
failure of which to obtain would, in the determination of each of the Excel
Board and the EDV Board, have a material adverse effect on Excel, EDV or Legacy;
(d) the Registration Statement on Form 10 under the Exchange Act
filed by Legacy shall have been declared effective by the Commission;
(e) the Legacy Common Stock shall have been approved for
quotation and trading on the OTC Bulletin Board subject to official notice of
issuance; and
(f) Excel, EDV and Legacy shall have entered into the Related
Agreements to which they are a party; provided, however, that (i) any such
condition may be waived by the concurrence of the Excel Board and the EDV Board
in their sole discretion, and (ii) the satisfaction of such conditions shall not
create any obligation on the part of Excel, EDV or any other party hereto to
effect the Distribution or in any way limit Excel's and EDV's power of
termination set forth in Section 9.07 or alter the consequences of any such
termination from those specified in such Section.
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Section 4.03. The Distribution. On the Distribution Date, subject
to the conditions and rights of termination set forth in this Agreement, Excel
shall deliver to the Agent a share certificate representing all of the then
outstanding shares of Legacy Common Stock owned by Excel and shall instruct the
Agent to distribute, on or as soon as practicable following the Distribution
Date, such Legacy Common Stock to the Holders. Legacy agrees to provide all
share certificates that the Agent shall require in order to effect the
Distribution.
Section 4.04. Cash in Lieu of Fractional Shares. No certificate
or scrip representing fractional shares of Legacy Common Stock shall be issued
as part of the Distribution and in lieu thereof, each holder of Excel Common
Stock who would otherwise be entitled to receive a fractional share of Legacy
Common Stock will receive cash for such fractional share. Excel shall instruct
the Agent to determine the number of whole shares and fractional shares of
Legacy Common Stock allocable to each holder of record of Excel Common Stock as
of the Distribution Record Date. Excel shall instruct the Agent to aggregate all
such fractional shares into whole shares and sell the whole shares obtained
thereby in the open market as soon as practicable following the Distribution
Date at then prevailing prices on behalf of Holders who otherwise would be
entitled to receive fractional share interests and to distribute to each such
Holder such Holder's ratable share of the proceeds of such sale as soon as
practicable after the Distribution Date. Excel shall bear the costs of
commissions incurred in connection with such sales.
ARTICLE V.
INDEMNIFICATION
Section 5.01. Indemnification by Excel. Except as otherwise
expressly set forth in a Related Agreement, Excel shall indemnify, defend and
hold harmless Legacy and its directors, officers, employees, agents and
Affiliates and each of the heirs, executors, successors and assigns of any of
the foregoing (the "Legacy Indemnitees") from and against the Excel Retained
Liabilities and
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any and all losses, Liabilities, damages, including, without limitation, the
costs and expenses of any and all Actions, threatened Actions, demands,
assessments, judgments, settlements and compromises relating to the Excel
Retained Liabilities and attorneys' fees and any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any such
Actions or threatened Actions (collectively, "Excel/Legacy Indemnifiable Losses"
and, individually, an "Excel/Legacy Indemnifiable Loss") of the Legacy
Indemnitees arising out of or due to the failure or alleged failure of Excel or
any of its Affiliates (i) prior to or after the Distribution Date to pay,
perform or otherwise discharge in due course any of the Excel Retained
Liabilities, or (ii) comply with the provisions of Section 6.04.
Section 5.02. Indemnification by EDV. Except as otherwise
expressly set forth in a Related Agreement, EDV shall indemnify, defend and hold
harmless the Legacy Indemnitees from and against the EDV Retained Liabilities
and any and all losses, Liabilities, damages, including, without limitation, the
costs and expenses of any and all Actions, threatened Actions, demands,
assessments, judgments, settlements and compromises relating to the EDV Retained
Liabilities and attorneys' fees and any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any such Actions or
threatened Actions (collectively, "EDV/Legacy Indemnifiable Losses" and,
individually, an "EDV/Legacy Indemnifiable Loss") of the Legacy Indemnitees
arising out of or due to the failure or alleged failure of EDV or any of its
Affiliates (i) prior to or after the Distribution Date to pay, perform or
otherwise discharge in due course any of the EDV Retained Liabilities, or (ii)
comply with the provisions of Section 6.04.
Section 5.03. Indemnification by Legacy. Except as otherwise
expressly set forth in a Related Agreement, Legacy shall indemnify, defend and
hold harmless Excel and EDV and each of their respective directors, officers,
employees, agents and Affiliates and each of the heirs, executors, successors
and assigns of any of the foregoing (the "Excel and EDV Indemnitees") from and
against
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the Legacy Liabilities and any and all losses, Liabilities, damages, including,
without limitation, the costs and expenses of any and all Actions, threatened
Actions, demands, assessments, judgments, settlements and compromises relating
to the Legacy Liabilities and attorneys' fees and any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any such Actions or threatened Actions (collectively, "Excel/EDV Indemnifiable
Losses" and, individually, an "Excel/EDV Indemnifiable Loss") of the Excel and
EDV Indemnitees arising out of or due to the failure or alleged failure of
Legacy or any of its Affiliates (i) prior to or after the Distribution Date to
pay, perform or otherwise discharge in due course any of the Legacy Liabilities
or (ii) comply with the provisions of Section 6.04. The "Excel/Legacy
Indemnifiable Losses," the "EDV/Legacy Indemnifiable Losses," and the "Excel/EDV
Indemnifiable Losses" are collectively referred to as the "Indemnifiable
Losses."
Section 5.04. Insurance Proceeds. The amount which any party (an
"Indemnifying Party") is or may be required to pay to any other Person (an
"Indemnitee") pursuant to Section 5.01, Section 5.02 or Section 5.03 shall be
reduced (including, without limitation, retroactively) by any Insurance Proceeds
or other amounts actually recovered by or on behalf of such Indemnitee in
reduction of the related Indemnifiable Loss. If an Indemnitee shall have
received the payment required by this Agreement from an Indemnifying Party in
respect of an Indemnifiable Loss and shall subsequently actually receive
Insurance Proceeds, or other amounts in respect of such Indemnifiable Loss as
specified above, then such Indemnitee shall pay to such Indemnifying Party a sum
equal to the amount of such Insurance Proceeds or other amounts actually
received.
Section 5.05. Procedure for Indemnification.
(a) Except as may be set forth in a Related Agreement, if an
Indemnitee shall receive notice or otherwise learn of the assertion by a Person
(including, without limitation, any governmental entity) who is not a party to
this Agreement or to any of the Related Agreements of any
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claim or of the commencement by any such Person of any Action (a "Third-Party
Claim") with respect to which an Indemnifying Party may be obligated to provide
indemnification pursuant to this Agreement, such Indemnitee shall give such
Indemnifying Party written notice thereof promptly after becoming aware of such
Third-Party Claim; provided that the failure of any Indemnitee to give notice as
required by this Section 5.05 shall not relieve the Indemnifying Party of its
obligations under this Article V, except to the extent that such Indemnifying
Party is prejudiced by such failure to give notice. Such notice shall describe
the Third-Party Claim in reasonable detail, and shall indicate the amount
(estimated if necessary) of the Indemnifiable Loss that has been or may be
sustained by such Indemnitee.
(b) An Indemnifying Party may elect to defend or to seek to
settle or compromise, at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third-Party Claim, provided that the
Indemnifying Party must confirm in writing that it agrees that the Indemnitee is
entitled to indemnification hereunder in respect of such Third-Party Claim.
Within 30 days of the receipt of notice from an Indemnitee in accordance with
Section 5.05(a) (or sooner, if the nature of such Third-Party Claim so
requires), the Indemnifying Party shall notify the Indemnitee of its election
whether to assume responsibility for such Third-Party Claim (provided that if
the Indemnifying Party does not so notify the Indemnitee of its election within
30 days after receipt of such notice from the Indemnitee, the Indemnifying Party
shall be deemed to have elected not to assume responsibility for such
Third-Party Claim), and such Indemnitee shall cooperate in the defense or
settlement or compromise of such Third-Party Claim. After notice from an
Indemnifying Party to an Indemnitee of its election to assume responsibility for
a Third-Party Claim, such Indemnifying Party shall not be liable to such
Indemnitee under this Article V for any legal or other expenses (except expenses
approved in advance by the Indemnifying Party) subsequently incurred by such
Indemnitee in connection with the defense thereof; provided that if the
defendants in
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any such claim include both the Indemnifying Party and one or more Indemnitees
and in such Indemnitees' reasonable judgment a conflict of interest between such
Indemnitees and such Indemnifying Party exists in respect of such claim, such
Indemnitees shall have the right to employ separate counsel and in that event
the reasonable fees and expenses of such separate counsel (but not more than one
separate counsel reasonably satisfactory to the Indemnifying Party) shall be
paid by such Indemnifying Party. If an Indemnifying Party elects not to assume
responsibility for a Third-Party Claim (which election may be made only in the
event of a good faith dispute that a claim was inappropriately tendered under
Section 5.01, 5.02 or 5.03, as the case may be) such Indemnitee may defend or
(subject to the following sentence) seek to compromise or settle such
Third-Party Claim. Notwithstanding the foregoing, an Indemnitee may not settle
or compromise any claim without prior written notice to the Indemnifying Party,
which shall have the option within ten days following the receipt of such notice
(i) to disapprove the settlement and assume all past and future responsibility
for the claim, including reimbursing the Indemnitee for prior expenditures in
connection with the claim, or (ii) to disapprove the settlement and continue to
refrain from participation in the defense of the claim, in which event the
Indemnifying Party shall have no further right to contest the amount or
reasonableness of the settlement if the Indemnitee elects to proceed therewith,
or (iii) to approve the amount of the settlement, reserving the Indemnifying
Party's right to contest the Indemnitee's right to indemnity, or (iv) to approve
and agree to pay the settlement. In the event the Indemnifying Party makes no
response to such written notice from the Indemnitee, the Indemnifying Party
shall be deemed to have elected option (ii).
(c) If an Indemnifying Party chooses to defend or to seek to
compromise any Third-Party Claim, the Indemnitee shall make available to such
Indemnifying Party any personnel and any books, records or other documents
within its control or which it otherwise has the ability to make available that
are necessary or appropriate for such defense.
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(d) Notwithstanding anything else in this Section 5.05 to the
contrary, an Indemnifying Party shall not settle or compromise any Third-Party
Claim unless such settlement or compromise contemplates as an unconditional term
thereof the giving by such claimant or plaintiff to the Indemnitee of a written
release from all liability in respect of such Third-Party Claim (and provided
further that such settlement may not provide for any non-monetary relief by
Indemnitee without the written consent of Indemnitee). In the event the
Indemnitee shall notify the Indemnifying Party in writing that such Indemnitee
declines to accept any such settlement or compromise, such Indemnitee may
continue to contest such Third-Party Claim, free of any participation by such
Indemnifying Party, at such Indemnitee's sole expense. In such event, the
obligation of such Indemnifying Party to such Indemnitee with respect to such
Third-Party Claim shall be equal to (i) the costs and expenses of such
Indemnitee prior to the date such Indemnifying Party notifies such Indemnitee of
the offer to settle or compromise (to the extent such costs and expenses are
otherwise indemnifiable hereunder) plus (ii) the lesser of (A) the amount of any
offer of settlement or compromise which such Indemnitee declined to accept and
(B) the actual out-of-pocket amount such Indemnitee is obligated to pay
subsequent to such date as a result of such Indemnitee's continuing to pursue
such Third-Party Claim.
(e) Any claim on account of an Indemnifiable Loss which does not
result from a Third-Party Claim shall be asserted by written notice given by the
Indemnitee to the applicable Indemnifying Party. Such Indemnifying Party shall
have a period of 15 days after the receipt of such notice within which to
respond thereto. If such Indemnifying Party does not respond within such 15- day
period, such Indemnifying Party shall be deemed to have refused to accept
responsibility to make payment. If such Indemnifying Party does not respond
within such 15-day period or rejects such claim in whole or in part, such
Indemnitee shall be free to pursue such remedies as may be available to such
party under applicable law or under this Agreement.
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(f) In addition to any adjustments required pursuant to Section
5.04, if the amount of any Indemnifiable Loss shall, at any time subsequent to
the payment required by this Agreement, be reduced by recovery, settlement or
otherwise, the amount of such reduction, less any expenses incurred in
connection therewith, shall promptly be repaid by the Indemnitee to the
Indemnifying Party.
(g) In the event of payment by an Indemnifying Party to any
Indemnitee in connection with any Third-Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to any
events or circumstances in respect of which such Indemnitee may have any right
or claim relating to such Third-Party Claim against any claimant or plaintiff
asserting such Third-Party Claim. Such Indemnitee shall cooperate with such
Indemnifying Party in a reasonable manner, and at the cost and expense of such
Indemnifying Party, in prosecuting any subrogated right or claim.
(h) Notwithstanding anything else in this Section 5.05 to the
contrary, with respect to any Action pending at the time of the Distribution (a
"Pending Action") with respect to which an Indemnifying Party may be obligated
to provide indemnification pursuant to this Agreement, Excel, EDV or Legacy
shall, at the request of any other party, cause the employee(s) who were
handling the defense, compromise or settlement of such Pending Action prior to
the Distribution to continue to handle such defense, compromise or settlement
following the Distribution (subject to the last two sentences of subsection (b)
above). If such employees are employed by the Indemnitee, the Indemnitee shall
keep the Indemnifying Party reasonably informed of the progress of, and the
Indemnifying Party shall cooperate in, such defense, compromise or settlement.
Section 5.06. Remedies Cumulative. The remedies provided in this
Article V shall be cumulative and shall not preclude assertion by any Indemnitee
of any other rights or the seeking of any and all other remedies against any
Indemnifying Party.
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Section 5.07. Survival of Indemnities. The obligations of each of
Excel, EDV and Legacy under this Article V shall survive the sale or other
transfer by it of any assets or businesses or the assignment by it of any
Liabilities with respect to any Indemnifiable Loss of the others related to such
assets, businesses or Liabilities.
ARTICLE VI.
CERTAIN ADDITIONAL MATTERS
Section 6.01. Legacy Board. Excel, EDV and Legacy shall take all
actions which may be required to constitute, effective as of the Distribution
Date, the board of directors of Legacy with the persons listed on Schedule
1.01(f).
Section 6.02. Certificate and Bylaws. On or prior to the
Distribution Date, Legacy shall adopt the Legacy Certificate and the Legacy
Bylaws, and shall file the Legacy Certificate with the Secretary of State of the
State of Delaware.
Section 6.03. Certain Post-Distribution Transactions.
(a) Legacy. (i) Legacy shall comply with each
representation and statement made, or to be made, to any taxing authority in
connection with any ruling obtained, or to be obtained, by Excel, EDV and Legacy
acting together, from any such taxing authority with respect to any transaction
contemplated by this Agreement, and (ii) until the second anniversary of the
Distribution Date, Legacy shall not (A) make a material disposition, by means of
a sale or exchange of assets or capital stock, a distribution to stockholders or
otherwise, of any substantial portion of its assets, (B) repurchase or issue any
Legacy capital stock (other than stock issued pursuant to employee plans), or
(C) cease the active conduct of a material portion of its business
independently, with its own employees and without material change, unless, in
each of cases (A), (B) and (C), in the opinion of counsel to Legacy, which
opinion shall be reasonably satisfactory to Excel and EDV, or pursuant to a
favorable supplemental ruling letter reasonably satisfactory to Excel and EDV,
such act or
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omission would not adversely affect the tax consequences of the Distribution to
Excel or EDV or the stockholders of Excel or EDV, as set forth in any ruling
issued by any taxing authority.
(b) Excel. (i) Excel shall comply with each representation and
statement made, or to be made, to any taxing authority in connection with any
ruling obtained, or to be obtained, by Excel, EDV and Legacy acting together,
from any such taxing authority with respect to any transaction contemplated by
this Agreement, and (ii) until the second anniversary of the Distribution Date,
Excel shall not (A) make a material disposition, by means of a sale or exchange
of assets or capital stock, a distribution to stockholders or otherwise, of any
substantial portion of its assets (other than the Legacy Assets), (B) repurchase
or issue any capital stock of Excel (other than stock issued pursuant to
employee plans), or (C) cease the active conduct of a material portion of its
business independently, with its own employees and without material change,
unless, in each of cases (A), (B) and (C), in the opinion of counsel to Excel,
which opinion shall be reasonably satisfactory to Legacy, or pursuant to a
favorable supplemental ruling letter reasonably satisfactory to Legacy, such act
or omission would not adversely affect the tax consequences of the Distribution
to Legacy or the stockholders of Legacy, as set forth in any ruling issued by
any taxing authority.
(c) EDV. (i) EDV shall comply with each representation and
statement made, or to be made, to any taxing authority in connection with any
ruling obtained, or to be obtained, by Excel, EDV and Legacy acting together,
from any such taxing authority with respect to any transaction contemplated by
this Agreement, and (ii) until the second anniversary of the Distribution Date,
EDV shall not (A) make a material disposition, by means of a sale or exchange of
assets or capital stock, a distribution to stockholders or otherwise, of any
substantial portion of its assets (other than the Legacy Assets), (B) repurchase
or issue any capital stock of EDV (other than stock issued pursuant to employee
plans), or (C) cease the active conduct of a material portion of its business
independently, with its own employees and without material change, unless, in
each of cases (A), (B)
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and (C), in the opinion of counsel to EDV, which opinion shall be reasonably
satisfactory to Legacy, or pursuant to a favorable supplemental ruling letter
reasonably satisfactory to Legacy, such act or omission would not adversely
affect the tax consequences of the Distribution to Legacy or the stockholders of
Legacy, as set forth in any ruling issued by any taxing authority.
Section 6.04. Notices by Excel. Excel shall provide notice of the
Distribution to all holders of its securities, or options, rights or warrants
convertible into its securities, as may be required by Excel's Certificate of
Incorporation or Bylaws or any agreement to which Excel is a party.
ARTICLE VII.
ACCESS TO INFORMATION AND SERVICES
Section 7.01. Provision of Corporate Records.
(a) Except as may otherwise be provided in a Related Agreement,
each of Excel and EDV shall arrange as soon as practicable following the
Distribution Date, to the extent not previously delivered in connection with the
transactions contemplated in Article II, for the transportation (at Legacy's
cost) to Legacy of the Legacy Books and Records in its possession, except to the
extent such items are already in the possession of Legacy. The Legacy Books and
Records shall be the property of Legacy, but shall be available to Excel and EDV
for review and duplication until Excel or EDV shall notify Legacy in writing
that such records are no longer of use to Excel or EDV, respectively.
(b) Except as otherwise provided in a Related Agreement, Legacy
shall arrange as soon as practicable following the Distribution Date, to the
extent not previously delivered in connection with the transactions contemplated
in Article II, for the transportation (at Excel's cost) to Excel of the Excel
Books and Records in its possession, except to the extent such items are already
in the possession of Excel. The Excel Books and Records shall be the property of
Excel, but shall be
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available to Legacy for review and duplication until Legacy shall notify Excel
in writing that such records are no longer of use to Legacy.
(c) Except as otherwise provided in a Related Agreement, Legacy
shall arrange as soon as practicable following the Distribution Date, to the
extent not previously delivered in connection with the transactions contemplated
in Article II, for the transportation (at EDV's cost) to EDV of the EDV Books
and Records in its possession, except to the extent such items are already in
the possession of EDV. The EDV Books and Records shall be the property of EDV,
but shall be available to Legacy for review and duplication until Legacy shall
notify EDV in writing that such records are no longer of use to Legacy.
Section 7.02. Access to Information. Except as otherwise provided
in a Related Agreement, from and after the Distribution Date, Excel and EDV
shall afford to Legacy and its authorized accountants, counsel and other
designated representatives reasonable access (including using reasonable efforts
to give access to persons or firms possessing information) and duplicating
rights during normal business hours to all records, books, contracts,
instruments, computer data and other data and information relating to
pre-Distribution operations (collectively, "Information") within Excel's or
EDV's possession insofar as such access is reasonably required by Legacy for the
conduct of its business, subject to appropriate restrictions for classified or
Privileged Information. Similarly, except as otherwise provided in a Related
Agreement, Legacy shall afford to Excel and EDV and their authorized
accountants, counsel and other designated representatives reasonable access
(including using reasonable efforts to give access to persons or firms
possessing information) and duplicating rights during normal business hours to
Information within Legacy's possession, insofar as such access is reasonably
required by Excel or EDV for the conduct of its business, subject to appropriate
restrictions for classified or Privileged Information. Information may be
requested under this Article VII for the legitimate business purposes of either
party, including, without limitation, audit,
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accounting, claims (including claims for indemnification hereunder), litigation
and tax purposes, as well as for purposes of fulfilling disclosure and reporting
obligations and for performing this Agreement and the transactions contemplated
hereby.
Section 7.03. Production of Witnesses. At all times from and
after the Distribution Date, each of Excel, EDV and Legacy shall use reasonable
efforts to make available to the others, upon written request, its and its
Subsidiaries' officers, directors, employees and agents as witnesses to the
extent that such persons may reasonably be required in connection with any
Action.
Section 7.04. Reimbursement. Except to the extent otherwise
contemplated in any Related Agreement, a party providing Information or witness
services to another party under this Article VII shall be entitled to receive
from the recipient, upon the presentation of invoices therefor, payments of such
amounts, relating to supplies, disbursements and other out-of-pocket expenses
(at cost) and direct and indirect expenses of employees who are witnesses or
otherwise furnish assistance (at cost), as may be reasonably incurred in
providing such Information or witness services.
Section 7.05. Retention of Records. Except as otherwise required
by law or agreed to in a Related Agreement or otherwise in writing, each of
Excel, EDV and Legacy may destroy or otherwise dispose of any of the
Information, which is material Information and is not contained in other
Information retained by Excel, EDV or Legacy, as the case may be, at any time
after the tenth anniversary of this Agreement, provided that, prior to such
destruction or disposal, (a) it shall provide no less than 90 or more than 120
days prior written notice to the other, specifying in reasonable detail the
Information proposed to be destroyed or disposed of and (b) if a recipient of
such notice shall request in writing prior to the scheduled date for such
destruction or disposal that any of the Information proposed to be destroyed or
disposed of be delivered to such requesting party, the party proposing the
destruction or disposal shall promptly arrange for the delivery of such of the
Information as was requested at the expense of the party requesting such
Information.
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Section 7.06. Confidentiality. Each of Excel, EDV, Legacy and
their respective Subsidiaries shall hold, and shall cause its consultants and
advisors to hold, in strict confidence, all Information concerning the other
parties hereto in its possession or furnished by the other parties or the other
parties' representatives pursuant to this Agreement (except to the extent that
such Information has been (i) in the public domain through no fault of such
party or (ii) later lawfully acquired from other sources by such party), and
each party shall not release or disclose such Information to any other person,
except its auditors, attorneys, financial advisors, rating agencies, bankers and
other consultants and advisors, unless compelled to disclose by judicial or
administrative process or, as reasonably advised by its counsel or by other
requirements of law, or unless such Information is reasonably required to be
disclosed in connection with (x) any litigation with any third-parties or
litigation between Excel, EDV and Legacy or any of them, (y) any contractual
agreement to which Excel, EDV or Legacy or any of them are currently parties, or
(z) in exercise of any party's rights hereunder.
Section 7.07. Privileged Matters. Excel, EDV and Legacy recognize
that legal and other professional services that have been and will be provided
prior to the Distribution Date have been and will be rendered for the benefit of
each of Excel, EDV and Legacy and that each of Excel, EDV and Legacy should be
deemed to be the client for the purposes of asserting all Privileges. To
allocate the interests of each party in the Privileged Information, the parties
agree as follows:
(a) Excel shall be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged Information
which relates solely to the Excel Retained Business, whether or not the
Privileged Information is in the possession of or under the control of Excel,
EDV or Legacy. Excel shall also be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged Information
that relates solely to the subject matter of any claims constituting Excel
Retained Liabilities, now pending or which may be asserted in the
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future, in any lawsuits or other proceedings initiated against or by Excel,
whether or not the Privileged Information is in the possession of or under the
control of Excel, EDV or Legacy.
(b) EDV shall be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged Information
which relates solely to the EDV Retained Business, whether or not the Privileged
Information is in the possession of or under the control of Excel, EDV or
Legacy. EDV shall also be entitled, in perpetuity, to control the assertion or
waiver of all Privileges in connection with Privileged Information that relates
solely to the subject matter of any claims constituting EDV Retained
Liabilities, now pending or which may be asserted in the future, in any lawsuits
or other proceedings initiated against or by EDV, whether or not the Privileged
Information is in the possession of or under the control of Excel, EDV or
Legacy.
(c) Legacy shall be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged Information
which relates solely to the Legacy Business, whether or not the Privileged
Information is in the possession of or under the control of Excel, EDV or
Legacy. Legacy shall also be entitled, in perpetuity, to control the assertion
or waiver of all Privileges in connection with Privileged Information which
relates solely to the subject matter of any claims constituting Legacy
Liabilities, now pending or which may be asserted in the future, in any lawsuits
or other proceedings initiated against or by Legacy, whether or not the
Privileged Information is in the possession of Legacy or under the control of
Excel, EDV or Legacy.
(d) Excel, EDV and Legacy agree that they shall have a shared
Privilege, with equal right to assert or waive, subject to the restrictions in
this Section 7.07, with respect to all Privileges not allocated pursuant to the
terms of Sections 7.07(a), (b) and (c). All Privileges relating to any claims,
proceedings, litigation, disputes or other matters which involve each of Excel,
EDV and Legacy in respect of which Excel, EDV and Legacy retain any
responsibility or liability under this Agreement shall be subject to a shared
Privilege.
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(e) No party may waive any Privilege which could be asserted
under any applicable law, and in which any other party has a shared Privilege,
without the consent of the other party, except to the extent reasonably required
in connection with any litigation with third-parties or as provided in
subsection (f) below. Consent shall be in writing, or shall be deemed to be
granted unless written objection is made within 20 days after notice upon the
other party requesting such consent.
(f) In the event of any litigation or dispute between Excel, EDV
and Legacy, or any of them, any party may waive a Privilege in which any other
party has a shared Privilege, without obtaining the consent of the other party,
provided that such waiver of a shared Privilege shall be effective only as to
the use of Information with respect to the litigation or dispute between such
parties, and shall not operate as a waiver of the shared Privilege with respect
to third-parties.
(g) If a dispute arises between the parties regarding whether a
Privilege should be waived to protect or advance the interest of any party, each
party agrees that it shall negotiate in good faith, shall endeavor to minimize
any prejudice to the rights of the other parties, and shall not unreasonably
withhold consent to any request for waiver by the other parties. Each party
specifically agrees that it will not withhold consent to waiver for any purpose
except to protect its own legitimate interests.
(h) Upon receipt by any party of any subpoena, discovery or other
request which arguably calls for the production or disclosure of Information
subject to a shared Privilege or as to which any other party has the sole right
hereunder to assert a Privilege, or if any party obtains knowledge that any of
its current or former directors, officers, agents or employees have received any
subpoena, discovery or other requests which arguably calls for the production or
disclosure of such Privileged Information, such party shall promptly notify the
other party of the existence of the request and shall provide the other party a
reasonable opportunity to review the Information and to assert any
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rights it may have under this Section 7.07 or otherwise to prevent the
production or disclosure of such Privileged Information.
(i) The transfer of the Legacy Books and Records, the Excel Books
and Records and the EDV Books and Records and other Information between Excel,
EDV, Legacy and their respective Subsidiaries is made in reliance on the
agreement of Excel, EDV and Legacy, as set forth in Sections 7.06 and 7.07, to
maintain the confidentiality of Privileged Information and to assert and
maintain all applicable Privileges. The access to information being granted
pursuant to Sections 7.01 and 7.02, the agreement to provide witnesses and
individuals pursuant to Section 7.03 and the transfer of Privileged Information
between Excel, EDV, Legacy and their respective Subsidiaries pursuant to this
Agreement shall not be deemed a waiver of any Privilege that has been or may be
asserted under this Agreement or otherwise.
ARTICLE VIII.
INSURANCE
Section 8.01. Policies and Rights Included Within the Legacy
Assets. Without limiting the generality of the definition of the Legacy Assets
set forth in Section 2.01 or the effect of Section 2.01, the Legacy Assets shall
include (a) any and all rights of an insured party under each of the Shared
Policies, specifically including rights of indemnity and the right to be
defended by or at the expense of the insurer, with respect to all injuries,
losses, liabilities, damages and expenses incurred or claimed to have been
incurred on or prior to the Distribution Date by any party in or in connection
with the conduct of the Legacy Business or, to the extent any claim is made
against Legacy or any of its Subsidiaries, the Retained Businesses, and which
injuries, losses, liabilities, damages and expenses may arise out of insured or
insurable occurrences or events under one or more of the Shared Policies;
provided, however, that nothing in this Section 8.01 shall be deemed to
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constitute (or to reflect) the assignment of the Shared Policies, or any of
them, to Legacy, and (b) the Legacy Policies.
Section 8.02. Post-Distribution Date Claims. If, subsequent to
the Distribution Date, any person, corporation, firm or entity shall assert a
claim against Legacy with respect to any injury, loss, liability, damage or
expense incurred or claimed to have been incurred on or prior to the
Distribution Date in or in connection with the Distribution or the conduct of
the Legacy Business or, to the extent any claim is made against Legacy or any of
its Subsidiaries, the Retained Businesses, and which injury, loss, liability,
damage or expense may arise out of insured or insurable occurrences or events
under one or more of the Shared Policies, Excel and/or EDV, as appropriate,
shall at the time such claim is asserted be deemed to assign, without need of
further documentation, to Legacy any and all rights of an insured party under
the applicable Shared Policy with respect to such asserted claim, specifically
including rights of indemnity and the right to be defended by or at the expense
of the insurer; provided, however, that nothing in this Section 8.02 shall be
deemed to constitute (or to reflect) the assignment of the Shared Policies, or
any of them, to Legacy.
Section 8.03. Administration and Reserves.
(a) Notwithstanding the provisions of Article III, but subject to
any contrary provisions of any Related Agreement, from and after the
Distribution Date:
(i) Legacy shall be entitled to any reserves established
by Excel, EDV or any of their Subsidiaries, or the benefit of reserves
held by any insurance carrier, with respect to the Legacy Liabilities;
(ii) Excel shall be entitled to any reserves established
by Excel or any of its Subsidiaries, or the benefit of reserves held by
any insurance carrier, with respect to the Excel Retained Liabilities;
and
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(iii) EDV shall be entitled to any reserves established by
EDV or any of its Subsidiaries, or the benefit of reserves held by any
insurance carrier, with respect to the EDV Retained Liabilities.
(b) Insurance Premiums. Legacy shall have the right but not the
obligation to pay the premiums, to the extent that Excel and EDV do not pay
premiums with respect to Retained Liabilities (retrospectively-rated or
otherwise), with respect to Shared Policies and the Legacy Policies, as required
under the terms and conditions of the respective Policies, whereupon Excel and
EDV shall forthwith reimburse Legacy for that portion of such premiums paid by
Legacy as are attributable to the Retained Liabilities. Each of Excel and EDV
shall provide continued coverage under its director and officer liability
insurance policy, if any, for a period of not less than three years for acts
which took place or were alleged to have taken place prior to the Distribution
Date covering persons who were directors and officers of Excel or EDV,
respectively, prior to the Distribution Date. Fifty percent of the additional
premiums, if any, for such coverage shall be reimbursed by Legacy within 15 days
of the Distribution Date.
(c) Allocation of Insurance Proceeds. Insurance Proceeds received
with respect to claims, costs and expenses under the Policies shall be paid to
Legacy with respect to the Legacy Liabilities, to Excel with respect to the
Excel Retained Liabilities and to EDV with respect to the EDV Retained
Liabilities. Payment of the allocable portions of indemnity costs of Insurance
Proceeds resulting from the liability policies will be made to the appropriate
party upon receipt from the insurance carrier. In the event that the aggregate
limits on any Shared Policies are exceeded, the parties agree to provide an
equitable allocation of Insurance Proceeds received after the Distribution Date
based upon their respective bona fide claims. The parties agree to use their
best efforts to cooperate with respect to insurance matters.
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Section 8.04. Agreement for Waiver of Conflict and Shared
Defense. In the event that Insured Claims of Excel, EDV and Legacy, or any two
of them, exist relating to the same occurrence, such parties agree to jointly
defend and to waive any conflict of interest necessary to the conduct of that
joint defense. Nothing in this Section 8.04 shall be construed to limit or
otherwise alter in any way the indemnity obligations of the parties to this
Agreement, including those created by this Agreement, by operation of law or
otherwise.
ARTICLE IX.
MISCELLANEOUS
Section 9.01. Complete Agreement; Construction. This Agreement,
including the Schedules and Exhibits and the Related Agreements and other
agreements and documents referred to herein, shall constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and shall supersede all previous negotiations, commitments and writings
with respect to such subject matter. Notwithstanding any other provisions in
this Agreement to the contrary, in the event and to the extent that there shall
be a conflict between the provisions of this Agreement and the provisions of the
Related Agreements, the Related Agreements shall control.
Section 9.02. Expenses. Except as otherwise set forth in this
Agreement or any Related Agreement, all costs and expenses in connection with
the preparation, execution, delivery and implementation of this Agreement, the
Distribution and with the consummation of the transactions contemplated by this
Agreement shall be charged to the party for whose benefit the expenses are
incurred, with any expenses which cannot be allocated on such basis to be split
equally between the parties.
Section 9.03. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of California, without
regard to the principles of conflicts of laws thereof.
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Section 9.04. Notices. All notices and other communications
hereunder shall be in writing and shall be delivered by hand or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other addresses for a party as shall be
specified by like notice) and shall be deemed given on the date on which such
notice is received:
To Legacy:
Excel Legacy Corporation
00000 Xxx Xxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
To Excel:
Excel Realty Trust, Inc.
00000 Xxx Xxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
To EDV:
ERT Development Corporation
00000 Xxx Xxx Xxxxx, Xxxxx 000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Section 9.05. Amendments. This Agreement may not be modified or
amended except by an agreement in writing signed by the parties.
Section 9.06. Successors and Assigns. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns. The parties
acknowledge and agree that any party into which Excel, EDV or Legacy merges or
which acquires all or substantially all of Excel's, EDV's or Legacy's assets in
a sale transaction would constitute a permitted assign for purposes of this
Section 9.06.
Section 9.07. Termination. This Agreement may be terminated and
the Distribution abandoned at any time prior to the Distribution Date by and in
the sole discretion of the Excel Board
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and the EDV Board without the approval of Legacy or of the stockholders of Excel
or EDV. In the event of such termination, no party shall have any liability to
any other party pursuant to this Agreement.
Section 9.08. Subsidiaries. Each of the parties hereto shall
cause to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth herein to be performed by any Subsidiary of
such party which is contemplated to be a Subsidiary of such party on and after
the Distribution Date.
Section 9.09. No Third-Party Beneficiaries. Except for the
provisions of Article V relating to Indemnities, this Agreement is solely for
the benefit of the parties hereto and their respective Subsidiaries and
Affiliates and should not be deemed to confer upon third-parties any remedy,
claim, Liability, reimbursement, claim of action or other right in excess of
those existing without reference to this Agreement.
Section 9.10. Titles and Headings. Titles and headings to
sections herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 9.11. Exhibits and Schedules. The Exhibits and Schedules
shall be construed with and as an integral part of this Agreement to the same
extent as if the same had been set forth verbatim herein.
Section 9.12. Legal Enforceability. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Without prejudice
to any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an
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inadequate remedy for any breach of the provisions of this Agreement and agrees
that the obligations of the parties hereunder shall be specifically enforceable.
Section 9.13. Arbitration of Disputes.
(a) Any controversy or claim arising out of this Agreement, or
any breach of this Agreement, including any controversy relating to a
determination of whether specific assets constitute Legacy Assets or Retained
Assets or whether specific Liabilities constitute Legacy Liabilities or Retained
Liabilities, shall be settled by arbitration in accordance with the Rules of the
American Arbitration Association then in effect, as modified by this Section
9.13 or by the further agreement of the parties.
(b) Such arbitration shall be conducted in San Diego, California.
(c) Any judgment upon the award rendered by the arbitrators may
be entered in any court having jurisdiction thereof. The arbitrators shall have
the authority to award to the prevailing party its attorneys' fees and costs
incurred in such arbitration. The arbitrators shall not, under any
circumstances, have any authority to award punitive, exemplary or similar
damages, and may not, in any event, make any ruling, finding or award that does
not conform to the terms and conditions of this Agreement.
(d) Nothing contained in this Section 9.13 shall limit or
restrict in any way the right or power of a party at any time to seek injunctive
relief in any court and to litigate the issues relevant to such request for
injunctive relief before such court (i) to restrain any other party from
breaching this Agreement or (ii) for specific enforcement of this Section 9.13.
The parties agree that any legal remedy available to a party with respect to a
breach of this Section 9.13 will not be adequate and that, in addition to all
other legal remedies, each party is entitled to an order specifically enforcing
this Section 9.13.
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(e) The parties hereby consent to the jurisdiction of the federal
courts located in San Diego, California for all purposes under this Agreement.
(f) Neither the parties nor the arbitrators may disclose the
existence or results of any arbitration under this Agreement or any evidence
presented during the course of the arbitration without the prior written consent
of the parties, except as required to fulfill applicable disclosure and
reporting obligations, or as otherwise required by law.
(g) Except as provided in Section 9.13(c), each party shall bear
its own costs incurred in the arbitration. If any party refuses to submit to
arbitration any dispute required to be submitted to arbitration pursuant to this
Section 9.13, and instead commences any other proceeding, including, without
limitation, litigation, then the party who seeks enforcement of the obligation
to arbitrate shall be entitled to its attorneys' fees and costs incurred in any
such proceeding.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
EXCEL REALTY TRUST, INC.
By: /s/ XXXX X. XXXXX
--------------------------------------
Name: XXXX X. XXXXX
--------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
--------------------------------------
ERT DEVELOPMENT CORPORATION
By: /s/ XXXX X. XXXXX
--------------------------------------
Name: XXXX X. XXXXX
--------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
--------------------------------------
EXCEL LEGACY CORPORATION
By: /s/ XXXX X. XXXXX
--------------------------------------
Name: XXXX X. XXXXX
--------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
--------------------------------------
S-1
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EXHIBITS
Exhibit A: Administrative Services Agreement
Exhibit B: Legacy Bylaws
Exhibit D: Legacy Certificate
Exhibit D: Legacy Employees
Exhibit E: Tax Sharing Agreement
Exhibit F: Transitional Services Agreement
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SCHEDULES
Schedule 1.01(a): EDV Notes
Schedule 1.01(b): EDV Real Estate Assets
Schedule 1.01(c): Excel Notes
Schedule 1.01(d): Excel Real Estate Assets
Schedule 1.01(e): Legacy Liabilities
Schedule 1.01(f): Legacy Board
