Exhibit 10.1
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ASSET PURCHASE AGREEMENT
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DATED AS OF APRIL 6, 1998
BETWEEN
TRIZECHAHN CENTERS INC.
AND
THE XXXXX COMPANY
AND
WESTFIELD AMERICA, INC.
DISTRIBUTED APRIL 9, 1998
TABLE OF CONTENTS
PAGE
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. . . . . . . . . . . . . . . . . . . 2
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. ASSETS TO BE SOLD; CLOSINGS. . . . . . . . . . . . . . . . 15
SECTION 2.02. ASSUMPTION OF LIABILITIES. . . . . . . . . . . . . . . . . 18
SECTION 2.03. CLOSING DELIVERIES BY THCI . . . . . . . . . . . . . . . . 19
SECTION 2.04. CLOSING DELIVERIES BY THE ACQUIRORS. . . . . . . . . . . . 20
SECTION 2.05. DELIVERY OF POSSESSION . . . . . . . . . . . . . . . . . . 21
SECTION 2.06. MANAGEMENT COMPANY ACTS AND OMISSIONS. . . . . . . . . . . 21
SECTION 2.07. APPORTIONMENTS . . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THCI
SECTION 3.01. INCORPORATION AND AUTHORITY; OWNERSHIP OF MANAGEMENT
COMPANY SHARES AND PARTNERSHIP INTERESTS . . . . . . . . . 26
SECTION 3.02. NO CONFLICT. . . . . . . . . . . . . . . . . . . . . . . . 29
SECTION 3.03. CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . . . 30
SECTION 3.04. PERSONAL PROPERTY. . . . . . . . . . . . . . . . . . . . . 30
SECTION 3.05. LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.06. COMPLIANCE WITH LAWS . . . . . . . . . . . . . . . . . . . 31
SECTION 3.07. TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.08. REAL PROPERTY. . . . . . . . . . . . . . . . . . . . . . . 32
SECTION 3.09. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS . . . . . . . . . 33
SECTION 3.10. INSURANCE. . . . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 3.11. FINANCIAL INFORMATION. . . . . . . . . . . . . . . . . . . 34
SECTION 3.12. EMPLOYEE BENEFIT MATTERS . . . . . . . . . . . . . . . . . 34
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SECTION 3.13. LABOR MATTERS. . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 3.14. MATERIAL CONTRACTS . . . . . . . . . . . . . . . . . . . . 36
SECTION 3.15. THE MANAGEMENT COMPANY . . . . . . . . . . . . . . . . . . 37
SECTION 3.16. BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.17. RENT ROLLS . . . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 3.18. OTHER ASSETS.. . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 3.19. NO MATERIAL DEFECTS. . . . . . . . . . . . . . . . . . . . 38
SECTION 3.20. PARTICIPATIONS . . . . . . . . . . . . . . . . . . . . . . 38
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ACQUIRORS
SECTION 4.01. INCORPORATION AND AUTHORITY. . . . . . . . . . . . . . . . 38
SECTION 4.02. NO CONFLICT. . . . . . . . . . . . . . . . . . . . . . . . 39
SECTION 4.03. CONSENTS AND APPROVALS . . . . . . . . . . . . . . . . . . 39
SECTION 4.04. LITIGATION . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.05. FINANCING. . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.06. BROKERS. . . . . . . . . . . . . . . . . . . . . . . . . . 40
SECTION 4.07. INVESTMENT INTENT. . . . . . . . . . . . . . . . . . . . . 40
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. THCI CONDUCT OF BUSINESS PRIOR TO THE APPLICABLE CLOSING . 40
SECTION 5.02. INVESTIGATION. . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 5.03. ACCESS TO INFORMATION. . . . . . . . . . . . . . . . . . . 44
SECTION 5.04. CONFIDENTIALITY. . . . . . . . . . . . . . . . . . . . . . 45
SECTION 5.05. REGULATORY AND OTHER AUTHORIZATIONS; CONSENTS. . . . . . . 46
SECTION 5.06. NOTIFICATION TO GOVERNMENTAL AUTHORITIES . . . . . . . . . 47
SECTION 5.07. BULK TRANSFER LAWS . . . . . . . . . . . . . . . . . . . . 47
SECTION 5.08. USE OF NAME OR OTHER INTELLECTUAL PROPERTY . . . . . . . . 47
SECTION 5.09. PARTNERSHIP INTERESTS. . . . . . . . . . . . . . . . . . . 47
SECTION 5.10. SPECIAL PROVISIONS RELATING TO RIGHTS OF FIRST REFUSAL;
BUY/SELLS. . . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 5.11. TENANCY-IN-COMMON INTERESTS. . . . . . . . . . . . . . . . 49
SECTION 5.12. LIQUIDATED DAMAGES . . . . . . . . . . . . . . . . . . . . 51
SECTION 5.13. FURTHER ACTION . . . . . . . . . . . . . . . . . . . . . . 51
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SECTION 5.14. ENVIRONMENTAL REPORTS. . . . . . . . . . . . . . . . . . . 51
SECTION 5.15. RECORD OWNER APPORTIONMENTS. . . . . . . . . . . . . . . . 52
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. EMPLOYEES. . . . . . . . . . . . . . . . . . . . . . . . . 52
SECTION 6.02. EMPLOYEE BENEFITS. . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.03. EMPLOYEE PLANS . . . . . . . . . . . . . . . . . . . . . . 53
SECTION 6.04. OTHER EMPLOYEE BENEFITS. . . . . . . . . . . . . . . . . . 54
SECTION 6.05. WARN ACT . . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.06. INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . . . 54
SECTION 6.07. NO THIRD PARTY BENEFICIARIES . . . . . . . . . . . . . . . 55
SECTION 6.08. REIMBURSEMENT FOR CERTAIN PAYMENTS . . . . . . . . . . . . 55
ARTICLE VII
TAX MATTERS
SECTION 7.01. CONVEYANCE TAXES; COSTS. . . . . . . . . . . . . . . . . . 55
SECTION 7.02. TREATMENT OF INDEMNITY PAYMENTS. . . . . . . . . . . . . . 55
SECTION 7.03. ALLOCATION OF CONSIDERATION. . . . . . . . . . . . . . . . 56
SECTION 7.04. EMPLOYEE WITHHOLDING . . . . . . . . . . . . . . . . . . . 56
SECTION 7.05. LIKE-KIND EXCHANGE . . . . . . . . . . . . . . . . . . . . 56
SECTION 7.06. TAX INDEMNITY. . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.07. CONTESTS . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 7.08 SECTION 754 ELECTION . . . . . . . . . . . . . . . . . . . 58
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. CONDITIONS TO OBLIGATIONS OF THCI. . . . . . . . . . . . . 58
SECTION 8.02. CONDITIONS TO OBLIGATIONS OF THE ACQUIRORS . . . . . . . . 60
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. SURVIVAL . . . . . . . . . . . . . . . . . . . . . . . . . 64
iii
SECTION 9.02. INDEMNIFICATION BY THCI. . . . . . . . . . . . . . . . . . 65
SECTION 9.03. INDEMNIFICATION BY THE ACQUIRORS . . . . . . . . . . . . . 67
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 10.02. EFFECT OF TERMINATION. . . . . . . . . . . . . . . . . . . 70
SECTION 10.03. WAIVER . . . . . . . . . . . . . . . . . . . . . . . . . . 70
ARTICLE XI
CASUALTY AND CONDEMNATION
SECTION 11.01. CASUALTY . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 11.02. CONDEMNATION . . . . . . . . . . . . . . . . . . . . . . . 71
ARTICLE XII
GENERAL PROVISIONS
SECTION 12.01. EXPENSES . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 12.02. NOTICES. . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 12.03. PUBLIC ANNOUNCEMENTS . . . . . . . . . . . . . . . . . . . 73
SECTION 12.04. HEADINGS . . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.05. SEVERABILITY . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.06. ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.07. ASSIGNMENT . . . . . . . . . . . . . . . . . . . . . . . . 74
SECTION 12.08. NO THIRD-PARTY BENEFICIARIES . . . . . . . . . . . . . . . 75
SECTION 12.09. AMENDMENT; WAIVER. . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.10. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.11. COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.12. SPECIFIC PERFORMANCE . . . . . . . . . . . . . . . . . . . 75
SECTION 12.13. NO RECORDATION . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 12.14. JOINT AND SEVERAL OBLIGATIONS. . . . . . . . . . . . . . . 75
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EXHIBITS
A THCI Subsidiaries and THCI Partnerships
B Special Property Provisions
1.01(a) Form of Assignment and Assumption Agreement
1.01(b) Form of Assignment of Ground Lease
1.01(c) Form of Xxxx of Sale
1.01(d) Excluded Computer Software
1.01(e) Form of Lease Assignment
1.01(f) Transferred Computer Software
1.01(g) Form of UTC Right of First Refusal Agreement
2.01(d)(i) Form of Initial Closing Date Notice
2.01(d)(ii) Form of Subsequent Closing Date Notice
5.01(a)(ii) Assets to be Transferred from the Management Company
5.01(a)(iii) Assets to be Transferred to the Management Company
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ASSET PURCHASE AGREEMENT, dated as of April 6, 1998, between
TrizecHahn Centers Inc., a California corporation ("THCI"), and The Xxxxx
Company, a Maryland corporation ("XXXXX"), and Westfield America, Inc., a
Missouri corporation ("WEA" and, together with Xxxxx, the "ACQUIRORS").
W I T N E S S E T H:
WHEREAS, THCI, the subsidiaries of THCI listed in Exhibit A
(collectively, the "THCI SUBSIDIARIES") and the partnerships listed on
Exhibit A (the "THCI PARTNERSHIPS") own or lease, or own Partnership
Interests (as defined in Article I) in the partnerships listed in the column
entitled "Partnership" in Section 1.01(A) of the THCI Disclosure Schedule
(collectively, the "PARTNERSHIPS") that own or lease, or own partnership
interests in partnerships (the "SECOND TIER PARTNERSHIPS") listed in the
column entitled "Second Tier Partnership" in Section 1.01(A) of the THCI
Disclosure Schedule that own or lease, the shopping centers listed in the
column entitled "Property" in Section 1.01(A) of the THCI Disclosure Schedule
(the "PROPERTIES");
WHEREAS, TrizecHahn Centers Management Inc., a California corporation
and a direct, wholly owned subsidiary of THCI (the "MANAGEMENT COMPANY"),
performs management services for certain Properties;
WHEREAS, THCI and the THCI Subsidiaries desire to transfer to the
Acquirors, and the Acquirors desire to acquire from THCI, the Properties and
certain related assets or the Partnership Interests and, in connection
therewith, the Acquirors are willing to assume certain liabilities of THCI
and the THCI Subsidiaries relating thereto, all upon the terms and subject to
the conditions set forth herein;
WHEREAS, THCI desires that the transfers described above be effected
in transactions that will qualify, to the extent permissible, as "like-kind
exchanges" under Section 1031 of the Internal Revenue Code of 1986, as
amended (the "CODE"), and applicable Treasury Regulations, and the Acquirors
are willing to cooperate in structuring such transfers to so qualify; and
WHEREAS, THCI desires to transfer to the Acquirors, and the Acquirors
desire to acquire from THCI, all of the outstanding capital stock of the
Management Company;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, THCI and the Acquirors hereby
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings:
"ACQUIRORS" has the meaning specified in the preamble to this
Agreement.
"ACQUIRORS INDEMNIFIED PARTY" has the meaning specified in Section
9.02(a).
"AD VALOREM TAXES" has the meaning specified in Section 2.07(a).
"ADJUSTED ALLOCATED PURCHASE PRICE" means:
(a) for any Property, the amount by which (i) the sum of (A) the
Allocated Purchase Price for such Property, plus (B) any prepayment
premiums, breakage costs or similar payments required as a result of a
Qualified Prepayment of Existing Debt associated with such Property prior
to the Applicable Closing Date for such Property, plus (C) the Capital
Costs paid on or prior to the Applicable Closing with respect to such
Property under leases and construction contracts that are executed and
delivered after the date of this Agreement and renewals and extensions,
exercised or executed after the date of this Agreement, of leases executed
on or prior to the date of this Agreement (or the applicable Co-Tenant's
Share thereof), in each case in accordance with the terms of this
Agreement, plus (D) in the case of any Expansion Property, the Expansion
Costs incurred after December 31, 1997 and on or prior to the Applicable
Closing Date for such Property, exceeds (ii) the Assumed Debt Amount for
such Property; and
(b) for any Partnership Interest, the sum of (i) the Partnership
Interest Amount for such Partnership Interest plus (ii) any prepayment
premiums, breakage costs or similar payments required to be made by THCI or
2
the related Partner (or, if made by the applicable Partnership or Second
Tier Partnership, the applicable Partner's share thereof) as a result of a
Qualified Prepayment of Existing Debt associated with the associated
Property, plus (iii) the Capital Costs paid on or prior to the Applicable
Closing by THCI or the applicable Partner (or, if by the Partnership or
Second Tier Partnership, the Partner's share thereof), with respect to such
Property under leases and construction contracts that are executed and
delivered after the date of this Agreement and renewals and extensions,
exercised or executed after the date of this Agreement, of leases executed
on or prior to the date of this Agreement, in each case in accordance with
the terms of this Agreement, plus (iv) in the case of Partnership Interests
for any Expansion Property, the applicable Partner's share of Expansion
Costs incurred after December 31, 1997 and on or prior to the Applicable
Closing Date for such Partnership Interest.
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such specified
Person.
"AGREEMENT" means this Asset Purchase Agreement, dated as of April 6,
1998, between THCI and the Acquirors, including, without limitation, the
Schedules and Exhibits hereto, as the same may be amended pursuant to the terms
hereof.
"ALLOCATED PURCHASE PRICE" means (a) for each Property and each
Partnership Interest to be transferred pursuant to this Agreement, the amount
set forth as the Allocated Purchase Price in Section 1.01(A) of the THCI
Disclosure Schedule and (b) for the Management Company Shares, US$20,000.
"ANCILLARY AGREEMENTS" means the Bills of Sale, the Deeds, the
Assignment and Assumption Agreements, the Lease Assignments and the Assignments
of Ground Lease.
"APPLICABLE CLOSING" means, with respect to any purchase contemplated
by this Agreement, the Closing at which such purchase occurs.
"APPLICABLE CLOSING DATE" means, with respect to any purchase
contemplated by this Agreement, the Closing Date on which such purchase occurs.
"ARTICLE VI LIABILITIES" means any and all Liabilities to be assumed
by the Acquirors or retained by THCI or its Affiliates pursuant to Article VI.
3
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the assignment and
assumption agreement to be executed on each Applicable Closing Date,
substantially in the form of Exhibit 1.01(a).
"ASSIGNMENT OF GROUND LEASE" means the assignment and assumption
agreement to be executed on each Applicable Closing Date, substantially in the
form of Exhibit 1.01(b).
"ASSUMED DEBT AMOUNT" means, with respect to any Property, the amount
of indebtedness for borrowed money assumed by the Acquirors in accordance with
this Agreement, whether or not secured by such Property.
"ASSUMED PROPERTY LIABILITIES" means, with respect to any Property or
Partnership Interest, (a) all indebtedness of THCI, the THCI Subsidiaries and
the THCI Partnerships for borrowed money, whether or not secured by a Property,
outstanding on the Applicable Closing and (b) all other Liabilities of THCI and
each THCI Subsidiary or THCI Partnership relating to or arising out of such
Property or Partnership Interest, accruing or arising on or after the Applicable
Closing, except for Capital Costs incurred or to be incurred (i) under leases
and construction contracts relating to such Property that are executed and
delivered on or prior to the date of this Agreement (other than in connection
with renewals or extensions, exercised or executed after the date of this
Agreement, of leases executed on or prior to the date of this Agreement or in
connection with improvements or replacements to such Property made after
completion of the applicable tenant's initial fit-out work unless the same are
required to be performed prior to the Applicable Closing Date) or (ii) in
connection with the improvements and other items described in Section 1.01 of
the THCI Disclosure Schedule, which THCI shall continue to be obligated to pay
(or, to the extent paid by the Acquirors, shall be obligated to reimburse the
Acquirors).
"XXXX OF SALE" means the xxxx of sale and assignment to be executed on
each Closing Date, substantially in the form of Exhibit 1.01(c).
"BRIDGEWATER PARTNERSHIP" means Bridgewater Commons Associates.
"BRIDGEWATER PARTNERSHIP INTERESTS" has the meaning specified in
Section 2.01(b)(ii).
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized to be closed in the City of New
York.
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"CAPITAL COSTS" means all costs and expenses paid by THCI, a THCI
Subsidiary, a THCI Partnership, a Partnership or a Second Tier Partnership with
respect to a Property for improvements or replacements, tenant allowances,
leasing commissions, takeover obligations and other leasing costs, and all other
costs that are capital in nature, but excluding Expansion Costs.
"CLOSING" means the Initial Closing or a Subsequent Closing, as
applicable.
"CLOSING DATE" means the date of the Initial Closing or a Subsequent
Closing, as applicable.
"CO-TENANT" means a THCI Subsidiary, THCI Partnership or Partnership
that holds a TC Interest.
"CODE" has the meaning specified in the recitals to this Agreement.
"CONFIDENTIALITY AGREEMENTS" has the meaning specified in Section
5.04.
"CONTEST" has the meaning specified in Section 7.07(b).
"CONTRACTS" means contracts, agreements, leases, subleases, purchase
or sale orders, notes, bonds, mortgages, indentures, licenses, permits,
franchises, instruments, undertakings, commitments and other binding
arrangements.
"CURRENT REPORTING PERIOD" has the meaning specified in
Section 2.07(a)(v).
"DEED" means a quitclaim deed or its equivalent (or, if required to
obtain title insurance, a limited warranty deed) to be executed with respect to
each Owned Real Property on the Applicable Closing Date, in the customary form
for the jurisdiction in which the applicable Property is located.
"DPA" means DPA-H, Inc., the general partner of Plaza.
"EMPLOYEE PLANS" has the meaning specified in Section 3.12(a).
"EMPLOYEE-RELATED LIABILITIES" has the meaning specified in Section
6.01(a).
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"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge or
encumbrance.
"ENVIRONMENTAL LAW" means any Law relating to pollution or protection
of the environment, health, safety or natural resources, including, without
limitation, those relating to the use, handling, transportation, treatment,
storage, disposal, release or discharge of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EWH" means EWH 1979 Development Company, L.P., the general partner of
Midway Associates.
"EXCLUDED PROPERTY ASSETS" means, with respect to any Property:
(a) all cash, marketable securities and bank accounts, except
security deposits of tenants of such Property;
(b) all THCI Names and Marks;
(c) all insurance policies relating to the Properties or the Property
Assets and all rights of THCI or a THCI Subsidiary of every nature and
description under or arising out of such insurance policies, other than the
right to the proceeds thereunder attributable to Assumed Property
Liabilities covered by such policies or to the extent assigned to the
Acquirors pursuant to Article XI;
(d) subject to Section 2.07, all claims for refunds of Taxes paid by
THCI or any Affiliate of THCI attributable to such Property relating to any
period, or any portion of any period, ending on or prior to the Applicable
Closing Date;
(e) all claims for Tenant Delinquent Rents that are delinquent as of
the Applicable Closing Date and are payable under leases that terminated on
or prior to such Applicable Closing Date;
(f) the computer software, including, without limitation, source
code, operating systems and specifications, data, data bases, files,
documentation and other materials related thereto set forth in Exhibit
1.01(d);
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(g) all rights of THCI, the THCI Subsidiaries and the THCI
Partnerships under this Agreement and the Ancillary Agreements; and
(h) all other assets of THCI not identified in this Agreement as a
Property Asset with respect to such Property that is not necessary for the
operation of such Property.
"EXCLUSION NOTICE" has the meaning specified in Section 2.01(e).
"EXISTING DEBT" has the meaning specified in Section 3.14(a)(ii).
"EXPANSION COSTS" means, with respect to the Expansion Properties, all
costs and expenses, whether or not capitalized, paid by THCI or any THCI
Subsidiary or THCI Partnership in connection with the proposed renovations and
expansions of such Properties previously described to the Acquirors, including,
without limitation, cost of construction, grading, obtaining permits and
approvals, feasibility and parking studies, marketing and environmental analyses
and development fees (but, as to each Expansion Property, only to the extent of
an amount equal to the product of the applicable development fee times a
fraction, the numerator of which is the budgeted Expansion Costs, exclusive of
development fees, incurred after December 31, 1997 and on or prior to the
Applicable Closing Date and the denominator of which is all of the budgeted
Expansion Costs, exclusive of development fees), but excluding the purchase
price of any land or ground leasehold interest forming a part of such
Properties.
"EXPANSION PROPERTIES" means the Bridgewater Commons, Fashion Place,
Valley Fair and University Towne Centre Properties.
"FASHION OUTLET" means the Property located in Nevada known as Fashion
Outlet of Las Vegas, which is under construction as of the date hereof.
"GOVERNMENTAL AUTHORITY" means any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial or arbitral
body.
"GROUND LEASES" has the meaning specified in Section 3.08(a).
"HAZARDOUS MATERIALS" means (a) petroleum and petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials and polychlorinated biphenyls and (b) any other chemicals, materials
or substances that are regulated as to disposal, storage, use or quantity or
identified as
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toxic or hazardous or as a pollutant, contaminant or waste under any applicable
Environmental Law.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INITIAL CLOSING" has the meaning specified in Section 2.01(b).
"INITIAL CLOSING DATE" has the meaning specified in Section 2.01(b).
"INITIAL CLOSING DATE NOTICE" has the meaning specified in Section
2.01(d).
"INITIAL PROPERTIES" means the Properties described in Section
2.01(b)(i) of the THCI Disclosure Statement.
"IRS" means the U.S. Internal Revenue Service.
"KNOWLEDGE OF THCI" or "THCI'S KNOWLEDGE" means the actual knowledge,
after inquiry of the managers of the Properties, of the President of the
Management Company, the Chief Financial Officer of THCI, the General Counsel of
THCI and the Senior Vice President of THCI in charge of asset management.
"LAW" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, judgment or decree, and any judicial
or administrative interpretation thereof, and any other requirement or rule of
law.
"LEASE ASSIGNMENT" means the assignment and assumption agreement, to
be executed with respect to such Leased Real Property on the Applicable Closing
Date, substantially in the form of Exhibit 1.01(e).
"LEASED REAL PROPERTY" means each parcel of real property ground
leased, as ground lessee, by THCI, a THCI Subsidiary, a THCI Partnership, a
Partnership or a Second Tier Partnership, included in the Properties; PROVIDED
that, upon the conversion of ownership of the ground leasehold interest in the
North County Fair Property into a Tenancy in accordance with Section 5.01(e),
Leased Real Property with respect to the North County Fair Property means the TC
Interest of the Co-Tenant in the ground leasehold interest in the North County
Fair Property.
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"LIABILITIES" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law or any Contract.
"LOSSES" of a Person means any and all losses, liabilities, damages,
claims, awards, judgments, costs and expenses (including, without limitation,
reasonable attorneys' fees) actually suffered or incurred by such Person.
"MANAGEMENT COMPANY" has the meaning specified in the recitals to this
Agreement.
"MANAGEMENT COMPANY SHARES" has the meaning specified in Section
3.01(b).
"MATERIAL ADVERSE EFFECT" means any change in, or effect on, the
Properties, taken as a whole, that is (individually or in the aggregate with any
other changes therein or effects thereon that would be specifically addressed by
a representation or warranty contained in this Agreement but for a "Material
Adverse Effect" exception or qualification thereto), materially adverse to the
Properties, taken as a whole, or to the results of operations of the Properties,
taken as a whole, other than any such changes or effects resulting from
(a) changes in general (national, regional or local) economic, regulatory or
political conditions or changes that affect owners or managers of shopping
centers in general, (b) the termination or expiration of any service contract,
management agreement or space or anchor tenant lease, (c) any defaults by any
tenants (including the bankruptcy of any tenants) under a lease or any other
termination of any lease on or after the date hereof, (d) any notice of
violation from any Governmental Authority having jurisdiction over any Property
received on or after the date hereof with respect to any condition existing on
the date hereof or (e) this Agreement or the transactions contemplated hereby or
the announcement thereof other than, in the case of clauses (b) and (c), a
termination (i) resulting from a default by THCI, a THCI Subsidiary, a THCI
Partnership, a Partnership or a Second Tier Partnership or (ii) of a space lease
resulting from a default by an anchor tenant under an anchor tenant lease;
PROVIDED, HOWEVER, that if either Acquiror determines that any event or
circumstance causes a Material Adverse Effect, such Acquiror shall notify THCI
of such matter and THCI shall have the right to take such actions as may be
necessary to cure and, upon such cure, such event or circumstance shall no
longer to be deemed to have caused a Material Adverse Effect.
"MATERIAL CONTRACT" has the meaning specified in Section 3.14(a).
9
"MAXIMUM AMOUNT" has the meaning specified in Section 9.02(b).
"MULTIEMPLOYER PLAN" has the meaning specified in Section 3.12(b).
"MULTIPLE EMPLOYER PLAN" has the meaning specified in Section 3.12(b).
"NEW ENTITY" has the meaning specified in Section 5.01(d).
"NOI" means, for any Property for any period, (a) all gross rental
income of such Property during such period (including, without limitation, fixed
rents, percentage rents and common area maintenance and tax reimbursements) and
all other income of such Property from all other sources during such period,
including, without limitation, parking and concessions, minus (b) all operating
expenses for such Property during such period, including, without limitation,
ground lease rent, taxes, insurance, maintenance costs, electricity and
management fees and cost reimbursements, but excluding debt service on any
indebtedness, costs of obtaining leases (including, without limitation,
brokerage commissions and costs of tenant improvement work), property
depreciation and amortization or any other capital costs, all as determined in
accordance with Canadian generally accepted accounting principles.
"OPTION EXPIRATION DATE" has the meaning specified in Section
2.01(b)(ii).
"OTHER PARTNER" has the meaning specified in Section 5.10.
"OWNED REAL PROPERTY" means each parcel of real property owned in fee
by THCI, a THCI Subsidiary, a THCI Partnership, a Partnership or a Second Tier
Partnership included in the Properties, together with all buildings and other
structures, facilities and improvements located thereon, all fixtures, systems
and equipment attached or appurtenant thereto and all easements, licenses,
rights and appurtenances relating to any of the foregoing; PROVIDED that, upon
the conversion of ownership of the Fashion Show Property into a Tenancy in
accordance with Section 5.01(e), Owned Real Property with respect to the Fashion
Show Property means the TC Interest of the Co-Tenant in the Fashion Show
Property.
"PARTNER" means THCI, a THCI Subsidiary or a THCI Partnership in its
capacity as a partner in a Partnership.
10
"PARTNERSHIP INTEREST" means a general partner or limited partner
interest held by a Partner in a Partnership and all rights pertaining thereto,
including all rights to receive distributions and allocations and all other
rights pertaining thereto.
"PARTNERSHIP INTEREST AMOUNT" means, for each Partnership Interest,
the amount that would be payable to the Partner holding the Partnership Interest
pursuant to the terms of the applicable partnership agreement if the applicable
Property Assets were sold for a purchase price (assuming no brokerage
commissions, transfer taxes or other transfer costs) equal to the amount set
forth as the "100% Amount" in Section 1.01(A) of the THCI Disclosure Schedule
(or, in the case of a Partnership Interest for which, as a result of the
operation of Section 5.09, there is no "100% Amount", for a purchase price equal
to the Allocated Purchase Price for the related Property) where (a) prorations
of the type specified in Section 2.07 were made, (b) the principal amount of,
and current interest on, all loans to the Partnership and all other partnership
debts of the Partnership (and, if applicable, the Second Tier Partnership) were
paid in full (assuming that payment in full of all outstanding principal of, and
current interest on, indebtedness for money borrowed constitutes payment in full
of such indebtedness), (c) no reserves were established for contingent or
unasserted claims, (d) the Partnership (and, if applicable, the Second Tier
Partnership) were dissolved and liquidated and (e) to the extent of available
proceeds from the sale of such Property Assets, all loans made by the Partner to
another partner in the Partnership or by another partner in the Partnership to
the Partner were repaid.
"PARTNERSHIPS" has the meaning specified in the recitals to this
Agreement.
"PERMITS" means permits, licenses, authorizations, certificates,
exemptions and approvals of Governmental Authorities.
"PERMITTED ENCUMBRANCES" means (a) mortgages, deeds of trust, liens,
security interests, claims and other charges and encumbrances in favor of any
lender and given in connection with indebtedness that is assumed by either
Acquiror hereunder or to which such Acquiror take subject; (b) inchoate
mechanic, construction and materialmen liens for completed construction or
construction in progress; (c) (i) department store leases, reciprocal easement
agreements and other agreements described in Section 1.01 of the THCI Disclosure
Schedule, (ii) other easements that do not have a Material Adverse Effect and
(iii) all other leases and subleases (A) set forth on the Rent Rolls, (B)
entered into in the ordinary course of business between the respective dates of
the Rent Rolls and the date of this Agreement or (C) entered into pursuant to
the terms of this Agreement; (d) building restrictions and zoning and other
11
regulations, resolutions and ordinances and any amendments thereto in effect on
the date of this Agreement or hereafter adopted; (e) any state of facts that a
survey would show, PROVIDED such facts would not have a Material Adverse Effect;
(f) consents previously granted by THCI or any former owner of the property for
the erection of any structure or structures on, under or above any street or
streets on which the Property may abut; (g) easements or rights of use of record
in favor of any utility company for construction, use, maintenance or repair of
utility lines, wires, terminal boxes, mains, pipes, cables, conduits, poles and
other equipment and facilities on, under and across the Property; (h) liens for
any unpaid real estate tax, water charge, sewer rent and assessment, PROVIDED
the same are adjusted at the Applicable Closing; (i) standard printed exclusions
from coverage contained in the form of title insurance policy then issued by the
title company providing title insurance for either Acquiror (other than the
survey exception and the rights of tenants generally); (j) liens or encumbrances
encumbering the property as to which THCI shall deliver to either Acquiror, or
to the title company providing title insurance for either Acquiror, if any, at
or prior to the Applicable Closing, proper instruments, in recordable form,
either canceling such liens or encumbrances, together with any other instruments
necessary thereto and the cost of recording and canceling the same or causing
the title insurance company to insure over such lien or encumbrance; (k) the
revocable nature of the right, if any, to maintain street and sidewalk vaults
and other vault spaces, coal chutes, excavations, canopies, marquees and signs;
(l) any matter that is the responsibility of any tenant (other than THCI, a THCI
Subsidiary, THCI Partnership, a Partnership or a Second Tier Partnership, as the
case may be) under any lease of a Property or of any party to any reciprocal
easement agreement affecting any Property (other than THCI, a THCI Subsidiary, a
THCI Partnership, a Partnership or a Second Tier Partnership, as the case may
be); and (m) any other leases, liens or encumbrances which would not have a
Material Adverse Effect.
"PLAZA" means DPA, L.P., a California limited partnership.
"PERSON" means any individual, partnership, firm, corporation, limited
liability company, association, trust, unincorporated organization or other
entity, as well as any syndicate or group that would be deemed to be a person
under Section 13(d)(3) of the Securities Exchange Act of 1934, as amended.
"PRO RATA NOI" means the pro rata share of total NOI for a Property
that is allocable to the Partner in the related Partnership or Second Tier
Partnership based on the nominal percentage interest of such Partner in such
Partnership (taking into account the Partnership's nominal percentage interest
in the Second Tier Partnership).
12
"PROPERTIES" has the meaning specified in the recitals to this
Agreement.
"PROPERTY ASSETS" means, with respect to a Property, all the right,
title and interest of THCI, the THCI Subsidiaries, the THCI Partnerships, the
Partnerships, the Second Tier Partnerships and the Co-Tenants in, to and under
the following assets and properties, in each case other than items that
constitute Excluded Property Assets with respect to such Property:
(a) where the Property is Owned Real Property, all rights in the
land, improvements, fixtures and other real property forming a part of such
Owned Real Property;
(b) where the Property is Leased Real Property, all rights in the
tenant's leasehold estate in such Leased Real Property;
(c) all machinery, equipment, furniture, supplies and other similar
property located in such Property;
(d) all leases, subleases and licenses of such Property and all
amendments thereto, to the extent assignable or otherwise transferable;
(e) all service, maintenance, construction, leasing and other
contracts with respect to such Property, to the extent assignable or
otherwise transferable;
(f) all accounts receivable with respect to such Property, subject to
Section 2.07(a)(iv) as to Tenant Delinquent Rents and Section 2.07(a)(ii)
as to certain tax refunds and credits;
(g) the Real Estate Records with respect to such Property and all
financial records, personnel records and other files and records pertaining
solely to such Property, including all "as-built" building plans,
specifications and drawings for such Property to the extent in the
possession or under the control of THCI, any THCI Subsidiary or any THCI
Partnership;
(h) all municipal, state and federal franchises, permits, licenses,
agreements, waivers and authorizations held or used by THCI, a THCI
Subsidiary, a THCI Partnership, a Partnership or a Second Tier Partnership
solely in connection with, or required for, the operation of such Property,
to the extent assignable or otherwise transferable;
13
(i) the computer software, including, without limitation, source
code, operating systems and specifications, data, data bases, files,
documentation and other materials related thereto set forth in
Exhibit 1.01(f), to the extent transferable;
(j) all security deposits (including letters of credit) posted by
tenants;
(k) all tradenames, service marks, tradedress, logos and trademarks,
whether or not registered, including all common law rights thereto,
relating to such Property other than the THCI Names and Marks; and
(l) any other matter or item necessary for the operation of such
Property and owned by THCI, any THCI Subsidiary or any THCI Partnership.
"QUALIFIED INTERMEDIARY" has the meaning specified in Section 7.05(a).
"QUALIFIED PREPAYMENT" has the meaning specified in
Section 5.01(a)(vi).
"REAL ESTATE RECORDS" means, for any Property, all of the documents,
including, without limitation, all instruments, notices, agreements, contracts,
bills, invoices, surveys, engineering reports, environmental reports, leases,
assignments and plans and specifications that relate to such Property and are in
the possession of THCI or an Affiliate of THCI, except for memoranda that are
confidential and are not reasonably required for the operation of the
Properties.
"RECORD OWNER" means, with respect to any Partnership Interest, (a)
THCI, the THCI Subsidiary or the THCI Partnership that is the record owner of
such Partnership Interest or (b) a newly created wholly owned direct or indirect
subsidiary of THCI to which a prior Record Owner transfers such Partnership
Interest.
"RECORD OWNER PARTNERSHIP INTEREST" means, with respect to a Record
Owner that is a partnership, the partnership interests in such partnership.
"RECORD OWNER SHARES" means, with respect to a Record Owner that is a
corporation, the shares of capital stock of such corporation.
"RENT ROLLS" has the meaning specified in Section 3.17.
"RENTS" has the meaning specified in Section 2.07(a).
14
"XXXXX" has the meaning specified in the preamble to this Agreement.
"SECOND TIER PARTNERSHIPS" has the meaning specified in the recitals
to this Agreement.
"SECTION 1031 TREATMENT" has the meaning specified in Section 7.05(a).
"SUBSEQUENT CLOSING" has the meaning specified in Section 2.01(c).
"SUBSEQUENT CLOSING DATE" has the meaning specified in Section
2.01(c).
"SUBSEQUENT CLOSING DATE NOTICE" has the meaning specified in Section
2.01(d).
"TAX" or "TAXES" means any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind whatsoever (together with any
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any governmental or taxing authority, including,
without limitation, taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs duties, tariffs and
similar charges.
"TAX RETURN" means any return, form or other report required to be
filed with respect to Taxes, including any declaration of estimated tax and
information return.
"TC INTEREST" means a tenancy-in-common interest in a Tenancy
"TEACHERS" means Teachers Insurance and Annuity Association.
"TENANCY" means the tenancy-in-common form of ownership of an interest
in real property.
"TENANT DELINQUENT RENTS" has the meaning specified in Section
2.07(a)(iv).
15
"THCI" has the meaning specified in the preamble to this Agreement.
"THCI DISCLOSURE SCHEDULE" means the Disclosure Schedule, dated as of
the date hereof, delivered to the Acquirors by THCI.
"THCI FINANCIAL ADVISORS" has the meaning specified in Section 3.16.
"THCI INDEMNIFIED PARTY" has the meaning specified in Section 9.03(a).
"THCI NAMES AND MARKS" means the names "Trizec", "Xxxx", "TrizecHahn"
and variants thereof and all related trademarks, service marks, trade dress,
logos, trade names and corporate names, whether or not registered, including all
common law rights thereto, and registrations and applications for registration
thereof.
"THCI PARTNERSHIPS" has the meaning set forth in the preamble to this
Agreement.
"THCI SUBSIDIARIES" has the meaning specified in the recitals to this
Agreement.
"THRESHOLD AMOUNT" has the meaning specified in Section 9.02(b).
"TRANSFERRED EMPLOYEES" has the meaning specified in Section 6.01(a).
"TREASURY REGULATIONS" means the regulations promulgated under the
Code by the United States Treasury Department.
"UTC RIGHT OF FIRST REFUSAL AGREEMENT" means an agreement in the form
of Exhibit 1.01(g) pursuant to which the Acquirors grant to THCI a right of
first refusal in the event that, at any time prior to the third anniversary of
the Applicable Closing Date for the University Towne Centre Property, the
Acquirors elect to (a) sell or ground lease any portion of such Property to any
third party for the development of one or more office buildings on such property
or (b) engage or retain a developer to develop for the Acquirors one or more
office buildings on such property.
"WARN" means the Workers Adjustment and Retraining Notification Act.
"WEA" has the meaning specified in the preamble to this Agreement.
16
"WEA FINANCIAL ADVISORS" has the meaning specified in Section 4.06.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. ASSETS TO BE SOLD; CLOSINGS. (a) ASSETS TO BE SOLD.
Subject to Sections 5.09 and 5.10 and the other terms and conditions of this
Agreement, the parties hereto agree that THCI shall sell, assign, transfer,
convey and deliver, or cause to be sold, assigned, transferred, conveyed and
delivered, to the Acquirors, and the Acquirors shall purchase, all of THCI's and
the THCI Subsidiaries' right, title and interest in and to (i) the Property
Assets associated with the Properties for which a transfer of Property Assets is
specified in Section 1.01(A) of the THCI Disclosure Schedule, (ii) the
Partnership Interests held by Partners with respect to the Properties for which
a transfer of Partnership Interests is specified in Section 1.01(A) of the THCI
Disclosure Schedule and (iii) the Management Company Shares, for an aggregate
purchase price for such Property Assets, Partnership Interests and Management
Company Shares, of US$2,550,000,000, payable in cash, as adjusted in accordance
with the provisions of this Agreement.
(b) INITIAL CLOSING. (i) Subject to the terms and conditions of
this Agreement, at the Initial Closing, (A) the Property Assets associated with
the Properties and Partnership Interests specified in Section 2.01(b) of the
THCI Disclosure Schedule and the Property Assets associated with the Properties
and Partnership Interests, if any, specified in the Initial Closing Date Notice
shall be purchased by the Acquirors for an aggregate purchase price, payable in
cash, equal to the aggregate Adjusted Allocated Purchase Price for such
Properties and Partnership Interests and (B) the Management Company Shares shall
be purchased by the Acquirors for an aggregate purchase price, payable in cash,
equal to the Allocated Purchase Price therefor. Subject to the terms and
conditions of this Agreement, the transactions contemplated by this Section
2.01(b) shall take place at a closing (the "INITIAL CLOSING") to be held at the
offices of Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx at
10:00 a.m., New York City time, on a Closing Date specified in the Initial
Closing Date Notice, which shall not be less than 15 Business Days or more than
30 Business Days following delivery of the Initial Closing Date Notice to the
Acquirors but not later than August 31, 1998 or at such other place or at such
other time or on such other date as THCI and the Acquirors may mutually agree
upon in writing (the day on which the Initial Closing takes place being the
"INITIAL CLOSING DATE").
17
(ii) In the event that, as a result of the operation of Section 5.09,
THCI does not transfer to the Acquirors the Bridgewater Property at the Initial
Closing, THCI shall have the right to elect to deliver or assign to the
Acquirors, and the Acquirors shall accept, at the Initial Closing, either (A)
the Partnership Interests in the Bridgewater Partnership held by Command
Properties Corporation and THCI in Midway Associates (the "BRIDGEWATER
PARTNERSHIP INTERESTS") in consideration of the Adjusted Allocated Purchase
Price therefor payable at the Initial Closing, or (B) a binding purchase and
sale agreement with the Bridgewater Partnership (that is not subject to a right
of first refusal) pursuant to which the Bridgewater Property shall be sold to
the Acquirors on or before December 31, 1998 for a purchase price in an amount
not to exceed the Adjusted Allocated Purchase Price for the Bridgewater Property
(unless THCI agrees to pay any amount in excess thereof), in which case THCI
shall not be required to convey the Bridgewater Partnership Interests to the
Acquirors, and the Acquirors shall not be obligated to pay any separate
consideration to THCI for the Bridgewater Property other than pursuant to such
purchase and sale agreement. If THCI delivers the Bridgewater Partnership
Interests to the Acquirors, (W) from and after the Initial Closing, to the
extent permitted by the terms of the partnership agreement governing, and any
other agreements relating to, the Bridgewater Partnership, THCI agrees to act in
such manner as the Acquirors shall direct in exercising any management and
voting rights held by EWH in its capacity as a general partner in the
Bridgewater Partnership; PROVIDED that the Acquirors agree fully to indemnify
THCI for any loss, cost or damage incurred by THCI as a result thereof (provided
that in no event shall the Acquirors be liable for consequential damages
pursuant to such indemnity), (X) at any time prior to the expiration of the
six-month period after the earliest of (1) the twenty-first anniversary of the
ceremonial opening of the Bridgewater Property, (2) the date on which the
Acquirors or any of their respective Affiliates acquires at least an additional
26% interest in the Bridgewater Partnership or (3) receipt of the consent of the
Other Partner to the transfer of such interest to the Acquirors without being
subjected to the right of first refusal (which consent the Acquirors agree to
use commercially good faith efforts to obtain, but without obligation to expend
funds or to commence legal proceedings)(the earliest of such dates being the
"Option Expiration Date"), the Acquirors shall have the option, subject to
Section 5.10, to require THCI to transfer to the Acquirors, and THCI shall cause
EWH to transfer, and, at any time subsequent to the Option Expiration Date, THCI
shall have the right, subject to Section 5.10, to transfer to the Acquirors, and
the Acquirors shall acquire, EWH's Partnership Interest in the Bridgewater
Partnership in consideration of the Adjusted Allocated Purchase Price therefor,
(Y) until the Option Expiration Date, THCI shall not sell, assign, pledge or
otherwise transfer EWH's Partnership Interest without the consent of the
Acquirors, and (Z) until such time as THCI transfers EWH's Partnership Interest
to the Acquirors, THCI shall have the right
18
to receive and retain all distributions and other economic entitlements payable
in respect thereto. The agreements set forth above shall be set forth in an
agreement reasonably acceptable to THCI and the Acquirors, which shall be
executed by the parties at the time of the Initial Closing.
(c) SUBSEQUENT CLOSINGS. Subject to the terms and conditions of this
Agreement, the transactions contemplated by this Agreement that do not occur at
the Initial Closing shall take place at one or more closings (each a "SUBSEQUENT
CLOSING") to be held at the offices of Shearman & Sterling, 000 Xxxxxxxxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx at 10:00 a.m., New York City time, on a Closing Date
specified in a Subsequent Closing Date Notice, which shall not be less than 15
Business Days or more than 30 Business Days following delivery of such
Subsequent Closing Date Notice to the Acquirors or at such other place or at
such other time or on such other date as THCI and the Acquirors may mutually
agree upon in writing (the day on which a Subsequent Closing takes place being a
"SUBSEQUENT CLOSING DATE"). The Property Assets or Partnership Interests
associated with the Properties set forth in the Subsequent Closing Date Notice
for such Subsequent Closing shall be sold to the Acquirors for an amount of cash
equal to the aggregate Adjusted Allocated Purchase Prices for such Properties
and Partnership Interests.
(d) CLOSING NOTICES; FINAL CLOSING. THCI shall deliver a notice (the
"INITIAL CLOSING DATE NOTICE"), substantially in the form of Exhibit 2.01(d)(i),
to the Acquirors as promptly as practicable after THCI determines, in good
faith, the date on which it expects the conditions to the obligations of the
parties to consummate the Initial Closing to be satisfied, and the Acquirors
shall cooperate with THCI in making such determination. THCI may deliver a
notice (a "SUBSEQUENT CLOSING DATE NOTICE"), substantially in the form of
Exhibit 2.01(d)(ii), to the Acquirors at any time after THCI determines, in good
faith, the date on which it expects the conditions to the obligations of the
parties to consummate a Subsequent Closing with respect to one or more
Properties or Partnership Interests to be satisfied and the Acquirors shall
cooperate with THCI in making such determination. The parties shall cooperate
to schedule and hold a final Closing not later than December 31, 1998 with
respect to all Properties and Partnership Interests for which the conditions to
the obligations of the parties to consummate a Closing have been satisfied or
waived by the applicable parties, it being understood that THCI shall have no
further obligation to sell, and the Acquirors shall have no further obligation
to purchase, any Properties or Partnership Interests for which such conditions
have not been satisfied on or prior to such date. The Initial Closing Date
Notice and each Subsequent Closing Date Notice shall specify the Properties and
the Partnership Interests , if any, to be transferred, shall contain an estimate
of the Adjusted Allocated Purchase Prices for such Properties and Partnership
19
Interests and the basis for THCI's estimates thereof and may, at the election of
THCI, identify one or more Qualified Intermediaries and the Property or
Properties with respect to which each such Qualified Intermediary is to receive
payment.
(e) EXCLUSION NOTICES. At or prior to any Closing held prior to
December 31, 1998, THCI may deliver a notice (an "EXCLUSION NOTICE") with
respect to any Property or Partnership Interest included in the Initial Closing
Date Notice or a Subsequent Closing Date Notice, as the case may be, for such
Closing, stating that there are one or more conditions to the obligations of the
Acquirors to purchase such Property or Partnership Interest that THCI no longer
expects to be satisfied at or prior to such Closing. Unless the Acquirors
deliver, at or prior to such Closing, a waiver of such conditions, the Initial
Closing Date Notice or Subsequent Closing Date Notice for such Closing shall,
for all purposes under this Agreement, be deemed to be amended to remove such
Property or Partnership Interest from the list of Properties and Partnership
Interests to be transferred at such Closing. Such Property or Partnership
Interest may be included in a subsequent Closing Date Notice at any later time
that THCI determines, in good faith, the date on which it expects the conditions
to the obligations of the parties to consummate a Closing with respect to such
Property or Partnership Interest to be satisfied.
(f) CASH PAYMENTS. Cash payments to be made by the Acquirors to THCI
shall be made to THCI or a THCI Subsidiary (or to one or more Qualified
Intermediaries if THCI so elects by notice to the Acquirors) by wire transfer in
immediately available funds to a bank account or accounts designated by THCI in
a written notice to the Acquirors, such notice to be delivered not later than
the second Business Day prior to the Applicable Closing Date.
SECTION 2.02. ASSUMPTION OF LIABILITIES. (a) On the terms and
subject to the conditions of this Agreement, the Acquirors shall, on each
Closing Date, assume and shall agree to pay, perform, fulfill, and discharge
when due the Assumed Property Liabilities with respect to each Property and
Partnership Interest transferred to the Acquirors on such Closing Date other
than Article VI Liabilities (which shall be assumed or retained in accordance
with Article VI); PROVIDED, HOWEVER, that, with respect to limited recourse
debt, the Acquirors shall be required to assume such debt only to the extent of
recourse thereunder but shall in any event take Properties transferred hereunder
subject to such debt.
(b) The Acquirors agree to use their commercially reasonable efforts
to obtain releases of the obligations of THCI, each THCI Subsidiary, each THCI
Partnership and each of their respective Affiliates (including all guarantees
and
20
indemnities) with respect to the Assumed Debt Amount for each Property;
PROVIDED, HOWEVER, that the Acquirors shall not in any event be required to pay
any transfer fees or prepay any Existing Debt in order to obtain any such
releases.
SECTION 2.03. CLOSING DELIVERIES BY THCI. (a) INITIAL CLOSING. At
the Initial Closing, THCI shall deliver or cause to be delivered to the
applicable Acquirors:
(i) stock certificates evidencing the Management Company Shares, duly
endorsed in blank, or accompanied by stock powers duly executed in blank,
and with all required stock transfer tax stamps affixed;
(ii) with respect to each Property being transferred at such Closing:
(A) the Xxxx of Sale and the Deed (with respect to Owned Real
Property) and duly executed counterparts of the other Ancillary
Agreements with respect to such Property and such other instruments as
may be reasonably requested by such Acquiror to transfer the Property
Assets with respect to such Property to such Acquiror or to evidence
such transfer on the public records or to provide notice to third
parties of such transfer; PROVIDED, HOWEVER, that in no event shall
THCI be required to provide indemnities, guaranties or other recourse
assurances other than customary affidavits and assurances given to the
such Acquiror's title insurance company to permit it to issue the
title insurance policy referred to in Section 8.02; and
(B) if in the possession of THCI or a THCI Subsidiary, a
complete set of keys and combinations for the Property;
(iii) with respect to each Partnership Interest being transferred
at such Closing:
(A) duly executed counterparts of customary documents required
to cause the transfer of such Partnership Interest, to be registered
on the books of the applicable Partnership or the public records or to
notify third parties of such transfer; and
(B) original, executed counterparts of the partnership agreement
relating to such Partnership Interest being transferred or, if
unavailable, photocopies thereof;
21
(iv) one or more receipts for the aggregate Adjusted Allocated
Purchase Price and any other payments made by such Acquiror to THCI or a
Qualified Intermediary at such Closing;
(v) executed counterparts of the appropriate transfer tax
returns to be filed by such Acquiror pursuant to Section 7.01;
(vi) affidavits of THCI, each THCI Subsidiary and each THCI
Partnership transferring a Property or a Partnership Interest pursuant
to (A) Section 1445(b)(2) of the Code and (B) Section 18662 of the
California Revenue and Taxation Code (if applicable), stating that the
transferor is not a foreign person within the meaning of such Sections;
and
(vii) the certificates and other documents required to be
delivered at the Initial Closing pursuant to Section 8.02.
(b) SUBSEQUENT CLOSINGS. At each Subsequent Closing, THCI
shall deliver or cause to be delivered to the Acquirors, (i) with respect to
each Property being transferred, the items specified in Section 2.03(a)(ii),
(ii) with respect to each Partnership Interest being transferred, the items
specified in Section 2.03(a)(iii) and (iii) the items specified in Sections
2.03(a)(iv) through (vi).
SECTION 2.04. CLOSING DELIVERIES BY THE ACQUIRORS. (a) At each
Closing, the Acquirors shall deliver or cause to be delivered to THCI:
(i) duly executed counterparts of the Ancillary Agreements
with respect to the Property Assets being transferred at such Closing to
the Acquirors other than the Bills of Sale and the Deeds;
(ii) duly executed counterparts of customary documents
required to cause the transfer of any Partnership Interests being
transferred at such Closing to be registered on the books of the
applicable Partnerships and the public records;
(iii) appropriate transfer tax returns of the Acquirors, duly
completed and executed, together with certified checks, payable to the
order of the appropriate Governmental Authorities, in payment of the
transfer taxes payable by the Acquirors pursuant to Section 7.01;
22
(iv) the certificates and other documents required to be
delivered pursuant to Section 8.01; and
(v) the aggregate Adjusted Allocated Purchase Price and any
other payments to be made by the Acquirors with respect to such Closing
(all or a portion of which shall be paid to a Qualified Intermediary if
so directed by THCI in the Initial Closing Date Notice or a Subsequent
Closing Date Notice, as applicable).
(b) At the Closing for the University Towne Centre Property
only, the Acquirors shall deliver or cause to be delivered to THCI the UTC Right
of First Refusal Agreement.
SECTION 2.05. DELIVERY OF POSSESSION. Coincident with the
transfer at a Closing of Property Assets associated with a Property, THCI shall
deliver possession of such Property to the Acquirors, subject to Permitted
Encumbrances.
SECTION 2.06. MANAGEMENT COMPANY ACTS AND OMISSIONS. From and
after the transfer of the Management Company Shares at the Initial Closing, no
representation or warranty of THCI contained herein shall be deemed to be untrue
and no covenant or agreement of THCI contained herein shall be deemed to be
breached as a result of any act or omission of the Management Company first
occurring after such transfer.
SECTION 2.07. APPORTIONMENTS. (a) At each Closing, the
following items shall, with respect to the Properties being transferred, be
apportioned between THCI (which, for purposes of this Section 2.07(a), shall
include THCI and, as applicable, the THCI Subsidiaries) and the Acquirors on a
per diem basis, so that THCI shall be responsible for those items of expense and
credited with those items of income that are attributable to the period prior to
the Applicable Closing Date and the Acquirors shall be responsible for those
items of expense and credited with those items of income that are attributable
to the period on or after the Applicable Closing Date: rents (including without
limitation ground lease rent (if applicable), base rent, common area maintenance
reimbursements, marketing fund contributions, operating expense and tax
reimbursements, percentage rent and other additional rent) (collectively
"RENTS"); prepaid and accrued expenses (including, without limitation, interest,
ground rent, utility charges, water and sewer charges (unless such payment is to
be made directly by any tenant), fees for licenses and permits, fuel, steam, gas
and electricity charges, annual license, permit and inspection fees, payments
under reciprocal easement agreements and payments to merchants associations
and/or promotional funds
23
maintained by THCI, and obligations under the Contracts assumed by the
Acquirors; and real and personal ad valorem and other taxes and assessments ("AD
VALOREM TAXES") against such Property; PROVIDED that:
(i) If the Ad Valorem Taxes for the tax year in which the
Applicable Closing occurs are not known or cannot reasonably be
estimated, they shall be adjusted based on an estimate obtained using
the then current assessed value of such Property as of the Applicable
Closing Date and the tax rate and multiplier reflected by the most
recent Ad Valorem Taxes due. After the Ad Valorem Taxes for the year in
which the Applicable Closing occurs are known, adjustments shall be
made between the parties.
(ii) THCI shall have the right to control all tax certiorari
and tax reduction proceedings relating to Properties conveyed (or the
Properties associated with the Partnership Interests transferred) for
tax years prior to and including the tax year in which the Applicable
Closing Date occurs and shall keep the Acquirors informed with respect
thereto. Any tax refund or credit obtained by THCI (net of any costs of
obtaining such refund) attributable (A) to the period prior to the tax
year in which the Applicable Closing Date occurs shall be paid, FIRST,
to any tenants of the Properties entitled thereto and, SECOND, to THCI
and (B) to the tax year in which the Applicable Closing Date occurs
shall be apportioned between THCI and the Acquirors, with the portion
allocable to THCI to be applied as provided in clause (A) and the
balance paid to the Acquirors, subject, however, to the rights of
tenants of the Properties entitled thereto. With respect to any
proceeding in respect of a tax year in which the Applicable Closing Date
occurs, THCI shall coordinate its efforts with the Acquirors, shall keep
the Acquirors informed with respect thereto and shall not settle the
same without the consent of the Acquirors, which consent shall not be
unreasonably withheld or delayed. From and after the expiration of the
tax year in which the Applicable Closing Date occurs, the Acquirors
shall have the right to control all tax certiorari and tax reduction
proceedings relating to Properties conveyed for tax years commencing
with the tax year following the tax year in which the Applicable Closing
Date occurs.
(iii) The Acquirors shall take all steps necessary to
effectuate the transfer of all utilities to an Acquiror's name as of the
Applicable Closing Date and, where necessary, the Acquirors shall post
deposits with the utility companies. THCI shall pay all utility charges
accruing prior to the Applicable Closing Date and all utilities
thereafter shall be paid for by the Acquirors. THCI shall be entitled
to recover any and all deposits held by utility companies
24
as of the Applicable Closing Date. To the extent that the Acquirors
fail to make, where required, deposits to any such utility companies (or
to make any deposits with other service providers) so as to prevent the
timely release of THCI's deposits by the utility companies (or such
other service providers) on the Applicable Closing Date, the aggregate
amount of such deposits shall be credited to THCI. In such event,
THCI's deposits shall be assigned to an Acquiror, which shall have the
right to have the deposits released to it upon satisfaction of the
conditions imposed by the utility companies (or such other service
providers).
(iv) THCI shall, at the Applicable Closing, credit the
Acquirors for any Rents paid to THCI by the tenants of the applicable
Property with respect to the period beginning on the Applicable Closing
Date. No proration shall be made for Rents from tenants that are
delinquent as of the Applicable Closing Date (the "TENANT DELINQUENT
RENTS"). All Tenant Delinquent Rents collected on or after the
Applicable Closing Date shall be allocated, FIRST, to the then current
month, NEXT, to any other delinquency after the Applicable Closing Date,
and, FINALLY, to any other delinquency prior to the Applicable Closing
Date. Any Tenant Delinquent Rents collected by the Acquirors after the
Applicable Closing which are allocable to the period prior to the
Applicable Closing Date shall be held in trust and forthwith paid by the
Acquirors to THCI subject to and in accordance with the foregoing
allocation provision. The Acquirors shall use their commercially
reasonable efforts to collect all Tenant Delinquent Rents (other than
the Tenant Delinquent Rents described in clause (e) of the definition of
Excluded Property Assets), but in no event shall the Acquirors be
obligated to commence legal proceedings for collection against any
tenant. All rights to pursue collection of Tenant Delinquent Rents
(other than the Tenant Delinquent Rents described in clause (e) of the
definition of Excluded Property Assets) shall vest solely in the
Acquirors. Any Rents paid to THCI by the tenants of the applicable
Property on or after the Applicable Closing Date, other than Tenant
Delinquent Rents described in clause (e) of the definition of Excluded
Property Assets, shall be held in trust and forthwith paid by THCI to
the Acquirors (subject, however, to the allocation of the same as set
forth above). At the Applicable Closing, THCI shall deliver to the
Acquirors a written certification identifying any Tenant Delinquent
Rents.
(v) All percentage rents for tenants' annual sales reporting
periods (as defined in the tenant leases) ending prior to the Applicable
Closing Date, including tenant leases terminated before the Applicable
Closing, shall belong solely to THCI. Any percentage rent paid with
respect to any tenant's annual
25
sales reporting period that is in effect on the Applicable Closing Date
(the "CURRENT REPORTING PERIOD") shall be adjusted by and between THCI
and the Acquirors as hereinafter described. Percentage rent earned
during each tenant's Current Reporting Period shall be prorated on the
basis of the number of days in such annual sales reporting period that
the Applicable Property was owned by THCI or the Acquirors and payments
of THCI's share shall be made by the Acquirors following the end of the
applicable sales reporting period, PROVIDED that (i) there shall be
deducted from the amounts payable to THCI hereunder with respect to any
tenant any sums previously collected by THCI from such tenant on account
of percentage rent for the Current Reporting Period and (ii) if it shall
be determined by the parties that THCI has collected more than its share
of the percentage rent from such tenant, THCI shall immediately pay over
the surplus to the Acquirors. After the Applicable Closing Date, the
Acquirors shall deliver to THCI monthly status reports detailing
collections of percentage rents for the Current Reporting Period.
(vi) All security deposits (including any interest thereon to
the extent payable to the applicable tenants) not theretofore properly
applied to obligations under the applicable leases shall be delivered by
THCI to the Acquirors at the Applicable Closing, or, in the alternative,
THCI may elect to give the Acquirors a credit in the amount of such
security deposits. THCI shall either assign its rights under all
letters of credit security deposits to the Acquirors or, if any such
letters of credit are not assignable, shall cooperate with the Acquirors
in arranging for the transfer thereof to the Acquirors, and, pending
such transfer, THCI shall act as the Acquirors' agent in presenting any
draws under, and in otherwise administering such letters of credit.
(vii) [INTENTIONALLY OMITTED]
(viii) THCI shall receive a credit for all reserves, deposits
and escrows for taxes, insurance, interest, capital expenditures, tenant
improvements, claims and any other reserves, deposits and escrows on
deposit with any lender with respect to any indebtedness assumed by the
Acquirors (or to which the Acquirors take subject) or any other Person
other than any of the foregoing that is held (A) by insurers or (B) by
Teachers as security for capital improvement obligations that remain
unsatisfied as of the Applicable Closing Date.
(ix) THCI's insurance policies on the applicable Property
shall not be assumed by the Acquirors, but shall be canceled effective
as of the Applicable Closing Date. The amount of the refunds payable to
THCI in respect of such
26
early cancellation of insurance policies on the applicable Property
shall be the property of THCI. The Acquirors shall purchase and place
their own insurance on the applicable Property as of Applicable Closing
Date.
(x) Common area maintenance reimbursements and charges
payable under leases at the applicable Property with respect to the 1998
calendar year shall initially be apportioned between the parties at the
Applicable Closing based on the 1998 budgeted amounts of common area
maintenance reimbursement and other charges for such Property and on the
number of days THCI owned the applicable Property during the 1998
calendar year. THCI shall prepare a statement showing the amounts
collected from the tenants in respect of common area maintenance
reimbursements and charges for the portion of the 1998 calendar year
prior to the Applicable Closing Date, and shall furnish a copy of such
statement to the Acquirors. To the extent the amount owing to THCI
attributable to the portion of the 1998 calendar year prior to the
Applicable Closing Date determined by means of such estimate shall be
more than the amounts collected by THCI in respect of such 1998 calendar
year common area maintenance reimbursements and charges, then the
difference will be paid by the Acquirors to THCI at the Applicable
Closing. To the extent the amount owing to THCI attributable to the
portion of the 1998 calendar year through the Applicable Closing Date
determined by means of such estimate shall be less than the amounts
collected by THCI in respect of such 1998 calendar year common area
maintenance reimbursements and charges, then the difference will be paid
by THCI to the Acquirors at the Applicable Closing. A final
recalculation of the actual amounts payable for common area maintenance
reimbursements and other charges shall be made within 120 days after the
end of the 1998 calendar year.
(xi) The Acquirors shall receive a credit for unpaid tenant
allowances (which shall include tenant improvement allowances, landlord
contributions, lease takeover obligations and other payments to or for
the benefit of tenants and periods of free rent after the Applicable
Closing Date) and lease commissions applicable to all leases at the
Property that were executed and delivered prior to the date of this
Agreement (other than in connection with renewals or extensions,
exercised or executed after the date of this Agreement, of leases
executed on or prior to the date of this Agreement), the Acquirors shall
assume all responsibility for the payment of such tenant allowances and
lease commissions and all of the same shall constitute Assumed Property
Liabilities.
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(xii) Amounts subject to redemption under gift certificates
issued by THCI prior to the Applicable Closing Date and still
outstanding as of the Applicable Closing shall be described in a
schedule prepared by THCI and delivered to the Acquirors at the
Applicable Closing. At the Applicable Closing, the aggregate amount of
such issued and outstanding scheduled gift certificates shall be
deposited in the bank accounts maintained by THCI and to be transferred
over to the Acquirors at the Applicable Closing, to fund the redemption
of such scheduled gift certificates. The Acquirors shall assume all
liability for the redemption of such scheduled gift certificates.
(xiii) To the extent that the interest being transferred in a
Property at any Applicable Closing is an interest in a Partnership, the
amounts to be apportioned hereunder shall be adjusted to reflect the
amounts that THCI would receive or pay if such items of income or
expense were paid by the applicable owner of the Property.
(b) At each Applicable Closing, the net credit to THCI or the
Acquirors, as applicable, resulting from the apportionments made pursuant to
subsection (a) of this Section 2.07 for all Properties being transferred on such
Applicable Closing Date shall be paid to THCI or the Acquirors, as applicable,
by wire transfer of immediately available funds to a bank account or accounts
designated by THCI or the Acquirors, such notice to be delivered not later than
the second Business Day prior to such Applicable Closing Date.
(c) In the event that any amounts to be prorated pursuant to
Section 2.07(a) have not been finally determined on the Applicable Closing Date,
a mutually satisfactory estimate of such amounts made on the basis of THCI's
records or public records shall be used as a basis for settlement at the
Applicable Closing, and the amounts finally determined will be prorated as of
the Applicable Closing Date and appropriate settlement made as soon as
practicable after such final determination, but in no event later than 120 days
after the later of (i) the last day in the calendar year in which the Applicable
Closing Date occurs or (ii) the last day of the Current Reporting Period that is
the last Current Reporting Period to expire.
(d) At the Initial Closing, the current assets and current
liabilities of the Management Company shall be estimated in good faith by THCI,
and THCI shall pay to the Acquirors the excess, if any, of such current
liabilities over such current assets, or the Acquirors shall pay to THCI the
excess, if any, of such current assets over such current liabilities. To the
extent not known on the Initial Closing Date, the current assets and current
liabilities shall be estimated on the best available information
28
at the time and appropriate settlement made from time to time as the same are
liquidated.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THCI
THCI represents and warrants to the Acquirors as follows:
SECTION 3.01. INCORPORATION AND AUTHORITY; OWNERSHIP OF
MANAGEMENT COMPANY SHARES AND PARTNERSHIP INTERESTS. (a) THCI is a corporation
duly incorporated, validly existing and in good standing under the Laws of
California and has all necessary corporate power and authority to enter into
this Agreement and each Ancillary Agreement to which it is to be a party, to
carry out its obligations hereunder and thereunder and to consummate the
transactions contemplated hereby and thereby. Each THCI Subsidiary is a
corporation duly incorporated, validly existing and in good standing under the
Laws of its jurisdiction of organization and has all necessary corporate power
and authority to enter into each Ancillary Agreement to which it is to be a
party, to carry out its obligations thereunder and to consummate the
transactions contemplated thereby. The execution and delivery by THCI of this
Agreement and each Ancillary Agreement to which it is to be a party, the
performance by THCI of its obligations hereunder and thereunder and the
consummation by THCI of the transactions contemplated hereby and thereby have
been approved by all necessary action of the Board of Directors and stockholders
of THCI. The execution and delivery by each THCI Subsidiary of each Ancillary
Agreement to which it is to be a party, the performance by each THCI Subsidiary
of its obligations thereunder and the consummation by each THCI Subsidiary of
the transactions contemplated thereby will, prior to the Applicable Closing,
have been approved by all necessary action of the Board of Directors and
stockholders of such THCI Subsidiary. This Agreement has been and, at each
Closing, each Ancillary Agreement delivered at such Closing to which THCI is a
party will be, duly executed and delivered by THCI, and (assuming due
authorization, execution and delivery by the Acquirors of this Agreement and of
each Ancillary Agreement) this Agreement and such Ancillary Agreements
constitute or will constitute, as the case may be, legal, valid and binding
obligations of THCI enforceable against THCI in accordance with their respective
terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency (including, without limitation, all Laws relating to fraudulent
transfers), moratorium or similar Laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to the effect of general principles
of equity (regardless of whether such enforceability is
29
considered in a proceeding in equity or at law). At each Closing, each
Ancillary Agreement delivered at such Closing to which a THCI Subsidiary is a
party will be duly executed and delivered by such THCI Subsidiary and (assuming
due authorization, execution and delivery by the Acquirors of such Ancillary
Agreement) will constitute the legal, valid and binding obligation of such THCI
Subsidiary enforceable against such THCI Subsidiary in accordance with its
terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency (including, without limitation, all Laws relating to fraudulent
transfers), moratorium or similar Laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to the effect of general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law). Each THCI Partnership (i) is duly organized
and validly existing under the laws of its jurisdiction of organization,
(ii) has all necessary power and authority to enter into each Ancillary
Agreement to which it is to be a party, to carry out its obligations thereunder
and to consummate the transactions contemplated thereby. The execution and
delivery by each THCI Partnership of each Ancillary Agreement to which it is to
be a party, the performance by each THCI Partnership of its obligations
thereunder and the consummation by each THCI Partnership of the transactions
contemplated thereby will, prior to the Applicable Closing, be approved by all
necessary action on the part of such THCI Partnership. At each Closing, each
Ancillary Agreement delivered at such Closing to which a THCI Partnership is a
party will be duly executed and delivered by such THCI Partnership and (assuming
due authorization, execution and delivery by the Acquirors of such Ancillary
Agreement) will constitute the legal, valid and binding obligation of such THCI
Partnership enforceable against such THCI Partnership in accordance with its
terms, subject to the effect of any applicable bankruptcy, reorganization,
insolvency (including, without limitation, all Laws relating to fraudulent
transfers), moratorium or similar Laws affecting creditors' rights and remedies
generally and subject, as to enforceability, to the effect of general principles
of equity (regardless of whether such enforceability is considered in a
proceeding in equity or at law).
(b) The authorized capital stock of the Management Company
consists of 75,000 shares of Common Stock, par value US$1.00 per share, 10,000
shares of which (the "MANAGEMENT COMPANY SHARES") are issued and outstanding.
THCI owns the Management Company Shares, free and clear of all Encumbrances,
other than any Encumbrances arising out of, under or in connection with this
Agreement and Encumbrances that will be released at or prior to the Initial
Closing. The Management Company Shares are validly issued, fully paid and
nonassessable. None of the Management Company Shares was issued in violation of
any preemptive rights. There are no options, warrants, convertible securities
or other rights, agreements, arrangements or commitments of any character
relating to the capital stock
30
of the Management Company or obligating THCI or the Management Company to issue
or sell any shares of capital stock of, or any other interest in, the Management
Company. Upon consummation of the transactions contemplated by this Agreement
and registration of the Management Company Shares in the name of the Acquirors
in the stock records of the Management Company and assuming that the Acquirors
shall have purchased the Management Company Shares for value, in good faith and
without notice of any adverse claim, the Acquirors will own all the issued and
outstanding capital stock of the Management Company free and clear of all
Encumbrances, other than any Encumbrances resulting from any facts or
circumstances relating solely to either Acquiror.
(c) In the case of a transfer by a Partner of its Partnership
Interest to the Acquirors, THCI represents and warrants to the Acquirors that
such Partner owns such Partnership Interest in the applicable Partnership free
and clear of all Encumbrances, other than any Encumbrances arising out of, under
or in connection with this Agreement and Encumbrances that will be released at
or prior to the Applicable Closing and inchoate Encumbrances under the
applicable partnership agreement.
(d) THCI or another THCI Subsidiary owns or, prior to the
Applicable Closing, will own all of the outstanding capital stock of each THCI
Subsidiary. In the case of a transfer by THCI or a THCI Subsidiary of Record
Owner Shares to the Acquiror, THCI represents and warrants to the Acquirors that
(i) THCI or a THCI Subsidiary owns such Record Owner Shares, free and clear of
all Encumbrances, other than any Encumbrances arising out of, under or in
connection with this Agreement and Encumbrances that will be released at or
prior to the Applicable Closing, (ii) such Record Owner Shares are validly
issued, fully paid and nonassessable, (iii) none of such Record Owner Shares was
issued in violation of any preemptive rights, (iv) there are no options,
warrants, convertible securities or other rights, agreements, arrangements or
commitments of any character relating to the capital stock of the Record Owner
or obligating THCI, the Record Owner or any other THCI Subsidiary to issue or
sell any shares of capital stock of, or any other interest in, the Record Owner,
(v) upon consummation of the transactions contemplated by this Agreement and
registration of the Record Owner Shares in the name of the Acquirors in the
stock records of the Record Owner and assuming that the Acquirors shall have
purchased the Record Owner Shares for value, in good faith and without notice of
any adverse claim, the Acquirors will own all the issued and outstanding capital
stock of the Record Owner free and clear of all Encumbrances, other than any
Encumbrances resulting from any facts or circumstances relating solely to the
Acquirors and (vi) the applicable Record Owner has not conducted any activities
other than in connection with
31
its ownership of Properties, Partnerships and Second Tier Partnerships, as the
case may be, that shall have been transferred to the Acquirors prior to or at
the same time as the transfer of such Record Owner Shares.
(e) THCI or a THCI Subsidiary owns or, prior to the
Applicable Closing, will own all of the Partnership Interests of each Record
Owner that is a THCI Partnership. In the case of a transfer by THCI or a THCI
Subsidiary of any Record Owner Partnership Interest to the Acquirors, THCI
represents and warrants to the Acquirors that (i) THCI or a THCI Subsidiary owns
such Record Owner Partnership Interest free and clear of all Encumbrances, other
than any Encumbrances arising out of, under or in connection with this Agreement
and Encumbrances that will be released at or prior to the Applicable Closing and
inchoate Encumbrances under the partnership agreement of the applicable THCI
Partnership and (ii) the applicable Record Owner has not conducted any
activities other than in connection with its ownership of Properties,
Partnerships and Second Tier Partnerships, as the case may be, that shall have
been transferred to the Acquirors prior to, or are being transferred to the
Acquirors at the same time as, the transfer of the Record Owner Partnership
Interests in such Record Owner.
SECTION 3.02. NO CONFLICT. Assuming that all consents,
approvals, authorizations and other actions described in Section 3.03 have been
obtained and all filings and notifications listed in Sections 3.03(a) and (b) of
the THCI Disclosure Schedule have been made, and except as may result from any
facts or circumstances relating solely to an Acquiror, the execution, delivery
and performance by THCI of this Agreement and by THCI, each THCI Partnership and
each THCI Subsidiary of each Ancillary Agreement to which they are to be parties
do not and will not (a) violate or conflict with the certificate of
incorporation or by-laws (or similar organizational documents) of THCI, such
THCI Partnership or such THCI Subsidiary, (b) except as would not have a
Material Adverse Effect or a material adverse effect on the ability of THCI to
consummate the transactions contemplated by this Agreement or the Ancillary
Agreements to which it is a party or to perform any of its material obligations
hereunder or thereunder, conflict with or violate any Law applicable to THCI,
any THCI Partnership, any THCI Subsidiary, the Properties, the Management
Company Shares or the Partnership Interests, or (c) except as described in
Section 3.02 of the THCI Disclosure Schedule or as would not have a Material
Adverse Effect or a material adverse effect on the ability of THCI to consummate
the transactions contemplated by this Agreement or the Ancillary Agreements to
which it is a party or to perform any of its material obligations hereunder or
thereunder, result in any breach of, or constitute a default (or event that,
with the giving of notice or lapse of time, or both, would become a default)
under, or give to others any rights of termination,
32
amendment, acceleration or cancellation of, or result in the creation of any
Encumbrance on, the Management Company Shares, the Partnership Interests or any
of the Properties pursuant to, any Contract relating to the Management Company
Shares, the Partnership Interests or the Properties to which THCI or any THCI
Subsidiary, any THCI Partnership, any Partnership or any Second Tier Partnership
is a party or by which the Management Company Shares, the Partnership Interests
or any of the Properties is bound.
SECTION 3.03. CONSENTS AND APPROVALS. (a) The execution and
delivery by THCI of this Agreement and by THCI, each THCI Partnership and each
THCI Subsidiary of each Ancillary Agreement to which they are to be parties do
not or will not, as the case may be, and the performance by THCI of this
Agreement and by THCI, each THCI Partnership and each THCI Subsidiary of each
Ancillary Agreement to which they are to be parties will not, require any
consent, approval, authorization or other action by, or filing with or
notification to, any Governmental Authority, except (i) as described in
Section 3.03(a) of the THCI Disclosure Schedule, (ii) the notification
requirements of the HSR Act, if applicable, (iii) where failure to obtain such
consent, approval, authorization or action, or to make such filing or
notification, would not have a Material Adverse Effect or a material adverse
effect on the ability of THCI to consummate the transactions contemplated by
this Agreement or the Ancillary Agreements to which it is a party or to perform
any of its material obligations hereunder or thereunder and (iv) as may be
necessary as a result of any facts or circumstances relating solely to an
Acquiror.
(b) The execution and delivery by THCI of this Agreement and
by THCI, each THCI Partnership and each THCI Subsidiary of each Ancillary
Agreement to which they are to be parties do not or will not, as the case may
be, and the performance by THCI of this Agreement and by THCI, each THCI
Partnership and each THCI Subsidiary of each Ancillary Agreement to which they
are to be parties will not, require any third-party consents, approvals,
authorizations or actions, except (i) as described in Section 3.03(b) of the
THCI Disclosure Schedule or (ii) where failure to obtain such consents,
approvals, authorizations or actions would not have a Material Adverse Effect or
a material adverse effect on the ability of THCI to consummate the transactions
contemplated by this Agreement or the Ancillary Agreements to which it is a
party or to perform any of its material obligations hereunder or thereunder.
SECTION 3.04. PERSONAL PROPERTY. THCI, a THCI Subsidiary, a
THCI Partnership, a Partnership or a Second Tier Partnership owns, leases or has
the legal right to use all personal property (whether tangible or intangible)
currently employed in the operation of the applicable Property to be transferred
pursuant to this
33
Agreement, free and clear of all Encumbrances, except (a) as described in
Section 3.04 of the THCI Disclosure Schedule or (b) where the failure to own,
lease or have the legal right to use, or the Encumbrances on, such property
would not have a Material Adverse Effect.
SECTION 3.05. LITIGATION. As of the date hereof, except as
described in Section 3.05 of the THCI Disclosure Schedule, there are no claims,
actions, proceedings or investigations pending before any Governmental Authority
or, to the knowledge of THCI, threatened against THCI or any THCI Subsidiary,
THCI Partnership, Partnership, Second Tier Partnership or the Management Company
and relating to the Properties, the Management Company Shares or the Partnership
Interests that, if adversely determined, (a) would have a Material Adverse
Effect, (b) would delay or prevent the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements to which THCI or any
THCI Subsidiary, THCI Partnership, Partnership or Second Tier Partnership is a
party or (c) would have a material adverse effect on the ability of THCI to
consummate the transactions contemplated hereby or thereby or to perform any of
its material obligations hereunder or thereunder. Except as described in
Section 3.05 of the THCI Disclosure Schedule, to the knowledge of THCI, neither
THCI nor the Management Company or any THCI Partnership, THCI Subsidiary,
Property, or Partnership Interest is subject to any order, writ, judgment,
injunction, decree, determination or award relating to the Management Company or
such Property or Partnership Interest that would have a Material Adverse Effect
or a material adverse effect on the ability of THCI to consummate the
transactions contemplated by this Agreement or the Ancillary Agreements to which
it is a party or to perform any of its material obligations hereunder or
thereunder.
SECTION 3.06. COMPLIANCE WITH LAWS. All Permits required for
the current use of each Property have been issued and are currently in effect
without violation, except (a) as described in Section 3.06 of the THCI
Disclosure Schedule, (b) for the Expansion Properties (but only to the extent
arising out of the expansion thereof) and for Fashion Outlet or (c) where the
absence or violation of such Permits would not have a Material Adverse Effect.
To the knowledge of THCI, no Property is under investigation for failure to
comply with any Laws of any Governmental Authority pertaining to the use or
occupancy of such Property, except where the matter being investigated, if
adversely determined, would not have a Material Adverse Effect, and each
Property is in compliance with, and not in violation of, any applicable Laws,
except where the absence or failure to comply would not have a Material Adverse
Effect. Except as described in Section 3.06 of the THCI Disclosure Schedule, to
the knowledge of THCI, it has not received any written notice from any
Governmental Authority or any other Person of a violation of the Americans with
Disabilities Act
34
and, notwithstanding anything to the contrary contained in this Section 3.06,
THCI makes no other representation herein with respect to compliance with the
Americans with Disabilities Act or any rule, regulation or interpretation
promulgated thereunder.
SECTION 3.07. TAXES. (a) Except as described in
Section 3.07(a) of the THCI Disclosure Schedule, (i) THCI or an Affiliate of
THCI has filed or will file all material Tax Returns required to be filed with
respect to Taxes pertaining to the ownership of the Property Assets or the
operation of the Properties and the Partnerships and Second Tier Partnerships in
which THCI, a THCI Subsidiary, or a THCI Partnership is the managing general
partner, (ii) all Taxes shown thereon as due have been or will be paid, (iii)
neither THCI nor any Affiliate of THCI has received from any Governmental
Authority any written notice of proposed adjustment, deficiency or underpayment
of any Taxes pertaining to the ownership of the Property Assets or the operation
of the Properties, which notice has not been satisfied by payment or been
withdrawn, and to the knowledge of THCI, there are no claims with respect
thereto that have been asserted or threatened against THCI or any Affiliate of
THCI, and (iv) there are no agreements for the extension of time for the
assessment of any such Taxes.
(b) Except as described in Section 3.07(b) of the THCI
Disclosure Schedule, (i) the Management Company has timely filed or been
included in, or will timely file or be included in, all Tax Returns required to
be filed by it or in which it is to be included with respect to Taxes for any
period ending on or before the Initial Closing Date, taking into account any
extension of time to file granted to or obtained on behalf of THCI, any
Affiliate of THCI or the Management Company, (ii) all Taxes shown thereon as due
have been timely paid and (iii) no deficiency for any material amount of Tax has
been asserted or assessed by any Governmental Authority against the Management
Company.
SECTION 3.08. REAL PROPERTY. (a) Subject only to Permitted
Encumbrances and as described in Section 3.08(a) of the THCI Disclosure
Schedule, THCI, a THCI Subsidiary, a THCI Partnership, a Partnership or a Second
Tier Partnership, as the case may be, has good and valid leasehold interests in
each Leased Real Property pursuant to valid and subsisting ground leases
(collectively, the "GROUND LEASES"). Section 3.08(a) of the THCI Disclosure
Schedule contains a list of the Ground Leases, true and complete copies of which
have been made available to the Acquirors. Except as described in Section
3.08(a) of the THCI Disclosure Schedule, to THCI's knowledge (i) there exists no
default (or event, condition or act that, with the giving of notice or lapse of
time, or both, would become a default) of THCI, a THCI Subsidiary, a THCI
Partnership, a Partnership or a Second Tier Partnership under any Ground Lease
other than a default that would not have a Material Adverse Effect,
35
(ii) each Ground Lease is in full force and effect and (iii) all rents,
additional rents and sums payable pursuant to each Ground Lease that were or are
due and payable have been paid.
(b) THCI, a THCI Subsidiary, a THCI Partnership, a
Partnership or a Second Tier Partnership, as the case may be, holds fee title to
each Owned Real Property free and clear of all Encumbrances, other than
(i) Encumbrances described in Section 3.08(b) of the THCI Disclosure Schedule
and (ii) Permitted Encumbrances.
(c) Except as described in Section 3.08(c) of the THCI
Disclosure Schedule, no proceeding is pending or, to the knowledge of THCI,
threatened for the taking or condemnation of all or any part of any Property.
SECTION 3.09. ENVIRONMENTAL, HEALTH AND SAFETY MATTERS. Except
as described in Section 3.09 of the THCI Disclosure Schedule, (a) THCI, a THCI
Subsidiary, a THCI Partnership, a Partnership or a Second Tier Partnership, as
applicable, holds all the environmental, health and safety Permits necessary for
the use, occupancy or operation of each Property, except for such Permits the
absence of which would not have a Material Adverse Effect, (b) THCI, the THCI
Subsidiaries, the THCI Partnerships and the Partnerships are in compliance with
Environmental Laws and all of their environmental, health and safety Permits
with respect to the Properties, except as would not have a Material Adverse
Effect, (c) except as would not have a Material Adverse Effect, neither THCI nor
a THCI Subsidiary or a THCI Partnership, a Partnership or a Second Tier
Partnership or, to the knowledge of THCI, any other Person, has released
Hazardous Materials on or affecting on any of the Properties and (d) no Property
is listed or proposed for listing on the "National Priorities List" under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or on the Comprehensive Environmental Response, Compensation and
Liability Information System list maintained by the United States Environmental
Protection Agency or any similar state list of sites requiring investigation or
cleanup , nor is THCI, any THCI Subsidiaries, THCI Partnerships, Partnerships or
Second Tier Partnerships subject to any order to contribute to the remediation
of such sites. Other than as set forth in Section 3.09 of the THCI Disclosure
Schedule, neither THCI nor any THCI Subsidiary, or any THCI Partnership,
Partnership, Second Tier Partnership or Property or, to the knowledge of THCI,
any tenant or other occupant at a Property, is currently subject to an
enforcement action, consent order, voluntary site remediation or similar
proceeding related to Hazardous Materials or health and safety compliance
brought by any federal, state or local agency having jurisdiction over such
claims. Other than as set forth in Section 3.09 of the THCI Disclosure
Schedule, none of THCI, any THCI Subsidiary, any THCI Partnership, any
Partnership or any Second
36
Tier Partnership is currently subject to any order to undertake, or is currently
undertaking, the remediation or clean-up of any release of Hazardous Materials
or violation of Environmental Laws in which the total costs (including
remediation, fines, penalties, and fees of attorneys and consultants) exceed
US$500,000.
SECTION 3.10. INSURANCE. Insurance policies or binders of
insurance or programs of self-insurance in the types and amounts listed in
Section 3.10 of the THCI Disclosure Schedule are valid and currently in effect.
THCI has paid, or caused to be paid, all premiums due under such policies and is
not in default with respect to its obligations under any such policies in any
material respect.
SECTION 3.11. FINANCIAL INFORMATION. For the year ended
December 31, 1997, the NOI for Xxxx Xxxxxx, Xxxxxx Xxxxx, Xxxxxxx Xxxxx and
Xxxxxx Mall, the NOI and the Pro Rata NOI for Bridgewater Commons, Towson Town
Center, Xxxxxxxxxx Xxxxx Xxxxxx, Xxxxxxx Xxxxx Xxxx, Xxxxxxxx Xxxx, Xxx Xxxxxxxx
Center and Fox Hills Mall and the Pro Rata NOI for Valley Fair Mall, The Fashion
Show Mall, The Village at Corte Madera, North County Fair, Santa Xxxxx Fashion
Park, Downtown Plaza, Capital Mall and Westdale Mall are, in each case, in all
material respects as set forth in Section 3.11 of the THCI Disclosure Schedule.
SECTION 3.12. EMPLOYEE BENEFIT MATTERS. (a) Section 3.12(a) of
the THCI Disclosure Schedule lists all employee benefit plans (as defined in
Section 3(3) of ERISA) and all bonus, stock option, stock purchase, restricted
stock, incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or
agreements for the benefit of any person who will be an employee, officer or
director of the Management Company immediately prior to the Initial Closing or
in which the Management Company participates or to which it makes contributions
immediately prior to the Initial Closing (collectively, the "EMPLOYEE PLANS").
(b) Except as set forth in Section 3.12(b) of the THCI
Disclosure Schedule, none of the Employee Plans (i) is a multiemployer plan
(within the meaning of Section 3(37) or 4001(a)(3) of ERISA) (a "MULTIEMPLOYER
PLAN") or a single employer pension plan (within the meaning of
Section 4001(a)(15) of ERISA) for which THCI, any THCI Partnership, any THCI
Subsidiary or the Management Company could incur liability under Section 4063 or
4064 of ERISA (a "MULTIPLE EMPLOYER PLAN"), (ii) provides for the payment by the
Management Company of separation, severance, termination or similar-type
benefits to any Person or obligates the Management Company to pay separation,
severance, termination or similar-type
37
benefits solely as a result of any transaction contemplated by this Agreement or
as a result of a "change in control", within the meaning of such term under
Section 280G of the Code or (iii) provides for or promises retiree, medical,
disability or life insurance benefits from the Management Company to any current
or former employee, officer or director of the Management Company. Each
Employee Plan is subject only to the laws of the United States or a political
subdivision thereof.
(c) Except as described in Section 3.12(c) of the THCI
Disclosure Schedule, each Employee Plan is now and always has been operated in
all material respects in accordance with the requirements of all applicable
Laws, including, without limitation, ERISA and the Code. The Management Company
has performed all material obligations required to be performed by it under and
is not in any material respect in default under or in violation of any Employee
Plan. To the knowledge of THCI, there is no default or violation by any party
to any Employee Plan. No legal action, suit or claim is pending or, to the
knowledge of THCI, threatened with respect to any Employee Plan (other than
claims for benefits in the ordinary course) that could reasonably be expected to
give rise to any material liability to the Management Company and, to the
knowledge of THCI, no fact or event exists that could reasonably be expected to
give rise to any such action, suit or claim.
(d) Except as described in Section 3.12(d) of the THCI
Disclosure Schedule, each Employee Plan that is intended to be qualified under
Section 401(a) of the Code or Section 401(k) of the Code has received a
favorable determination letter from the IRS that it is so qualified and each
trust established in connection with any such Employee Plan that is intended to
be exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and no fact
or event has occurred since the date of such determination letter from the IRS
that could reasonably be expected to adversely affect the qualified status of
any such Employee Plan or the exempt status of any such trust.
(e) Except as described in Section 3.12(e) of the THCI
Disclosure Schedule, none of THCI, any THCI Subsidiary, THCI Partnership or the
Management Company has incurred any material liability under, arising out of or
by operation of Title IV of ERISA (other than liability for premiums to the
Pension Benefit Guaranty Corporation arising in the ordinary course), including,
without limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or
(ii) the withdrawal from any Multiemployer Plan or Multiple Employer Plan, and
no fact or event exists that could reasonably be expected to give rise to any
such liability. No reportable event (within the meaning of Section 4043 of
ERISA) has occurred or, to the knowledge of THCI, is expected to
38
occur with respect to any Employee Plan subject to Title IV of ERISA. No
Employee Plan is subject to Title IV of ERISA.
SECTION 3.13. LABOR MATTERS. (a) Set forth in Section 3.13(a)
of the THCI Disclosure Schedule is a list of each collective bargaining
agreement or other labor union contract applicable to Transferred Employees.
(b) Except as described in Section 3.13(b) of the THCI
Disclosure Schedule, (i) there are no material controversies pending or, to the
knowledge of THCI, threatened between the Management Company and any of its
employees, (ii) there are no material grievances outstanding against the
Management Company under any such agreement or contract, (iii) there are no
material unfair labor practice complaints pending against the Management Company
before the National Labor Relations Board and (iv) as of the date of this
Agreement, there are no strikes, slowdowns, work stoppages or lockouts pending
or, to the knowledge of THCI, threatened, by or with respect to any employees of
the Management Company.
SECTION 3.14. MATERIAL CONTRACTS. (a) Section 3.14(a) of the
THCI Disclosure Schedule lists each of the following contracts and agreements of
THCI, the THCI Partnerships, the THCI Subsidiaries, the Management Company and
the Partnerships (each such contract and agreement, being a "MATERIAL
CONTRACT"):
(i) all management contracts with respect to the Properties
and all amendments, supplements and modifications thereto;
(ii) all documents evidencing or creating indebtedness secured
by the Properties outstanding on the date of this Agreement ("EXISTING
DEBT") and all related security agreements, mortgages and guarantees;
(iii) the partnership agreements and all amendments,
modifications and supplements thereto with respect to the Partnerships;
(iv) all leases and all amendments, modifications and
supplements thereto of major department stores that are tenants on the
Properties;
(v) all reciprocal easement agreements and reciprocal
operating agreements and all amendments, modifications and supplements
thereto with anchor tenants at the Properties; and
39
(vi) all material disposition and development agreements and
owner participation agreements with any Governmental Authority.
(b) True and complete copies of the Material Contracts have
been made available to the Acquirors. Except with respect to Material Contracts
described in Section 3.14(a)(vi), as to which no representation or warranty is
made, and except as disclosed in Section 3.14(b) of the THCI Disclosure Schedule
or as would not have a Material Adverse Effect (i) each Material Contract is
valid and binding on the respective parties thereto and is in full force and
effect, (ii) upon consummation of the transactions contemplated by this
Agreement, except to the extent that any consents set forth in Section 3.03(b)
of the THCI Disclosure Schedule are not obtained, each Material Contract shall
continue in full force and effect without penalty or other adverse consequence,
(iii) neither THCI nor any THCI Subsidiary or any THCI Partnership is in breach
of, or default under, any Material Contract and (iv) to the knowledge of THCI,
no other party to any Material Contract is in breach thereof or default
thereunder.
(c) The aggregate amount of Existing Debt outstanding as of
March 31, 1998 with respect to each of the Properties is set forth in
Section 3.14(c) of the THCI Disclosure Schedule.
SECTION 3.15. THE MANAGEMENT COMPANY. Except as would not have
a Material Adverse Effect, the Management Company will, on the Initial Closing
Date, own or lease or have the legal right to use all such properties, assets
and rights as are necessary in the conduct of its business as currently
conducted. The Management Company's assets are maintained in accordance with
business practices generally accepted in the industry, and are in all material
respects in good operating condition and repair, ordinary wear and tear
excepted, and are suitable for the purposes for which they are used.
SECTION 3.16. BROKERS. Except for Xxxxxxx Xxxxx & Co. and X.X.
Xxxxxx Securities Inc. (collectively, the "THCI FINANCIAL ADVISORS"), no broker,
finder or investment banker is entitled to any brokerage, finder's or other fee
or commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of THCI, any THCI Partnership or
any THCI Subsidiary. THCI is solely responsible for the fees and expenses of
the THCI Financial Advisors.
40
SECTION 3.17. RENT ROLLS. THCI has delivered to Acquirors a
rent roll for each Property, copies of which are attached as Section 3.17 of the
THCI Disclosure Schedule (collectively, the "RENT ROLLS"), which Rent Rolls are
true, accurate and complete in all material respects as to all matters set forth
therein as of the respective dates thereof.
(a) As of the respective dates of the Rent Rolls, all of the
leases reflected in the Rent Rolls are in full force and effect except as
specifically identified in the Rent Rolls;
(b) As of the respective dates of the Rent Rolls, except as
disclosed in the rent roll or in Section 3.17 of the THCI Disclosure Schedule,
no tenant has delivered written notice (not heretofore substantially complied
with in all material respects or withdrawn) asserting any material claim or
basis for any material claim for reduction, deduction, or set-off against the
rent under any lease;
(c) As of the respective dates of the Rent Rolls, except as
disclosed in the Rent Rolls or in Section 3.17 of the THCI Disclosure Schedule,
to the knowledge of THCI, there is no material default by THCI, a THCI
Subsidiary, a THCI Partnership, a Partnership or a Second Tier Partnership in
the performance of any material obligations under any lease or events that, but
for the lapse of time or the giving of notice, or both, would constitute such a
default by THCI, such THCI Subsidiary, THCI Partnership, Partnership or Second
Tier Partnership;
(d) No tenant has an option, right of refusal or other
contractual right to purchase all of any portion of any Property.
SECTION 3.18. OTHER ASSETS. Except for the Excluded Assets,
neither THCI nor any THCI Subsidiary or THCI Partnership or any of their
respective Affiliates owns any interest, or has an option to acquire any
interest in (i) any of the Properties, Partnerships or Second Tier Partnerships
that is not subject to the terms of this Agreement, or (ii) any land adjacent to
the Properties that was acquired for purposes of the expansion of any of the
Properties.
SECTION 3.19. NO MATERIAL DEFECTS. To THCI's knowledge, and
except as set forth on Section 3.19 of the THCI Disclosure Schedule, there are
no defects in the roof, foundation, structural, mechanical or HVAC systems and
masonry walls in any of the Properties that would have a Material Adverse
Effect.
41
SECTION 3.20. PARTICIPATIONS. Except as disclosed in Section
3.20 of the THCI Disclosure Schedule, no third party is entitled to receive any
interest, rent or other payments from THCI or any THCI Subsidiary, THCI
Partnership, any Partnership or Second Tier Partnership calculated based on the
cash flow, receipts or income of any of the Properties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ACQUIRORS
Each Acquiror, severally but not jointly, represents and warrants
to THCI as follows:
SECTION 4.01. INCORPORATION AND AUTHORITY. Such Acquiror is a
corporation duly incorporated, validly existing and in good standing under the
laws of the its jurisdiction of incorporation and has all necessary corporate
power and authority to enter into this Agreement and each Ancillary Agreement to
which it is to be a party, to carry out its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by such Acquiror of this Agreement and each Ancillary
Agreement to which it is to be a party, the performance by such Acquiror of its
obligations hereunder and thereunder and the consummation by such Acquiror of
the transactions contemplated hereby and thereby have been approved by all
necessary action of the Board of Directors and stockholders of such Acquiror.
This Agreement has been, and, at each Closing, each Ancillary Agreement
delivered at such Closing to which such Acquiror is a party will be, duly
executed and delivered by such Acquiror, and (assuming due authorization,
execution and delivery by THCI of this Agreement and by THCI, a THCI Partnership
or a THCI Subsidiary, as the case may be, of such Ancillary Agreement) this
Agreement and such Ancillary Agreements constitute or will constitute, as the
case may be, legal, valid and binding obligations of such Acquiror enforceable
against such Acquiror in accordance with their respective terms, subject to the
effect of any applicable bankruptcy, reorganization, insolvency (including,
without limitation, all Laws relating to fraudulent transfers), moratorium or
similar Laws affecting creditors' rights and remedies generally and subject, as
to enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
SECTION 4.02. NO CONFLICT. Assuming that all consents,
approvals, authorizations and other actions described in Section 4.03 have been
42
obtained, and except as may result from any facts or circumstances relating
solely to THCI, any THCI Partnership or any THCI Subsidiary, the execution,
delivery and performance by such Acquiror of this Agreement and by such Acquiror
of the respective Ancillary Agreements to which it is a party do not and will
not (a) violate or conflict with the certificate of incorporation or by-laws (or
similar organizational documents) of such Acquiror, (b) except as would not have
a material adverse effect on the ability of such Acquiror to consummate the
transactions contemplated by this Agreement or the Ancillary Agreements to which
it is a party or to perform any of its material obligations hereunder or
thereunder, conflict with or violate any Law applicable to such Acquiror, or
(c) except as would not have a material adverse effect on the ability of such
Acquiror to consummate the transactions contemplated by this Agreement or the
Ancillary Agreements to which it is a party or to perform any of its material
obligations hereunder or thereunder, result in any breach of, or constitute a
default (or event which, with the giving of notice or lapse of time, or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Encumbrance on, any of the assets or properties of such Acquiror pursuant to,
any Contract relating to such assets or properties to which such Acquiror or any
of its subsidiaries is a party or by which any of such assets or properties is
bound.
SECTION 4.03. CONSENTS AND APPROVALS. (a) The execution and
delivery by such Acquiror of this Agreement and each Ancillary Agreement to
which it is a party do not or will not, as the case may be, and the performance
by such Acquiror of this Agreement and each Ancillary Agreement to which it is
to be a party will not, require any consent, approval, authorization or other
action by, or filing with or notification to, any Governmental Authority, except
(i) the notification requirements of the HSR Act, if applicable, (ii) where
failure to obtain such consent, approval, authorization or action, or to make
such filing or notification, would not have a material adverse effect on the
ability of such Acquiror to consummate the transactions contemplated by this
Agreement or the Ancillary Agreements to which it is a party or to perform any
of its material obligations hereunder or thereunder and (iii) as may be
necessary as a result of any facts or circumstances relating solely to THCI, any
THCI Partnership or any THCI Subsidiary.
(b) The execution and delivery by such Acquiror of this
Agreement and the Ancillary Agreements to which it is to be a party do not or
will not, as the case may be, and the performance by such Acquiror of this
Agreement and the Ancillary Agreements to which it is to be a party will not,
require any third-party consents, approvals, authorizations or actions, except
where failure to obtain such consents, approvals, authorizations or actions
would not have a material adverse effect on the
43
ability of such Acquiror to consummate the transactions contemplated by this
Agreement or the Ancillary Agreements to which it is a party or to perform any
of its material obligations hereunder or thereunder.
SECTION 4.04. LITIGATION. There are no claims, actions,
proceedings or investigations pending or, to the knowledge of such Acquiror,
threatened against such Acquiror that seek to delay or prevent the consummation
of the transactions contemplated by this Agreement or the Ancillary Agreements
to which it is a party or which would have a material adverse effect on the
ability of such Acquiror to consummate the transactions contemplated hereby or
thereby or to perform any of its material obligations hereunder or thereunder.
SECTION 4.05. FINANCING. Such Acquiror has or has available to
it all funds necessary to consummate the transactions contemplated by this
Agreement.
SECTION 4.06. BROKERS. Except for Xxxxxxx Xxxxx & Co. (the "WEA
FINANCIAL ADVISORS"), which is acting as financial advisor to WEA in connection
with the transactions contemplated by this Agreement, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of either Acquiror. WEA is solely
responsible for the fees and expenses of the WEA Financial Advisors.
SECTION 4.07. INVESTMENT INTENT. Such Acquiror is acquiring the
Management Company Shares and, if transferred to such Acquiror, the Partnership
Interests solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. THCI CONDUCT OF BUSINESS PRIOR TO THE APPLICABLE
CLOSING. (a) THCI covenants and agrees that, between the date hereof and the
Initial Closing Date, THCI shall operate the Management Company and the
Properties managed by the Management Company or any other Affiliate of THCI in
the ordinary course and consistent with THCI's prior practice, including by
keeping the Properties insured substantially as described in Section 3.10,
except:
44
(i) as described in Section 5.01(a)(i) of the THCI Disclosure
Schedule or as otherwise contemplated by this Agreement;
(ii) the assets described on Exhibit 5.01(a)(ii) may be
transferred from the Management Company prior to the Initial Closing;
(iii) the assets described on Exhibit 5.01(a)(iii) may be
transferred to the Management Company prior to the Initial Closing;
(iv) management contracts may be amended to provide that, in
the event that any Property or Partnership Interest is not transferred
to the Acquirors pursuant to this Agreement, the management contract
relating to the applicable Property may be terminated at any time by the
applicable Partnership or Second Tier Partnership upon 30 days' prior
written notice;
(v) THCI and any THCI Partnership, THCI Subsidiary,
Partnership and Second Tier Partnership may each enter into, amend,
modify, or terminate any lease, sublease, reciprocal easement agreement,
easement or other agreement relating to any Property if (A) failure to
do so would result in a breach of a contractual obligation to a third
party or breach of a fiduciary obligation to another partner, (B) the
agreement is approved by the Acquirors, which approval may not be
unreasonably withheld or delayed with respect to leases (other than
anchor tenant leases) or (C) such leases (other than anchor tenant
leases) are consistent with leasing guidelines approved by the
Acquirors, which approval, may not be unreasonably withheld or delayed,
provided that with respect to an anchor tenant, no anchor tenant
agreement may be entered into, modified, amended or terminated without
the consent of the Acquirors, which may be withheld in their sole
discretion; and
(vi) THCI and any THCI Partnership, THCI Subsidiary,
Partnership and Second Tier Partnership may repay or refinance all or
any portion of any Existing Debt (other than in respect of Xxxxxx Mall,
where a prepayment is prohibited by the terms thereof or Existing Debt
in Partnerships where the interest to be acquired is a Partnership
Interest) regardless of any prepayment restrictions that may apply;
PROVIDED, HOWEVER, that (A) the terms and conditions of any refinancing
shall be at least as favorable as such terms and conditions as are
generally available in the market at the time of refinancing for similar
loans, (B) the principal amount of the Existing Debt on the date hereof
shall not be increased as a result of any such refinancing and (c) the
refinancing shall provide that the interest to be paid shall be a
floating rather than a fixed
45
rate and that there shall be no prepayment fee thereunder (a prepayment
permitted under this clause with respect to the Existing Debt described
in Section 5.01(a)(vi) of the THCI Disclosure Schedule being referred to
as a "QUALIFIED PREPAYMENT").
(b) In furtherance and not in limitation of the foregoing,
THCI covenants and agrees that, except as described in Section 5.01(a), in
Section 5.01(d) or in Section 5.01(a) of the THCI Disclosure Schedule, it will
not, prior to the Applicable Closing, without the consent of the Acquirors,
(i) make any material change in operating policies and procedures used by THCI
with respect to the Properties managed by THCI, any THCI Partnership or any THCI
Subsidiary, (ii) in the case of the Expansion Properties, incur Expansion Costs
in excess of the aggregate amount specified in the budget described in
Section 5.01(b) of the THCI Disclosure Schedule, (iii) commence any new
expansion or redevelopments; (iv) sell or contract to sell any of the Properties
or Partnership Interests; (v) apply for or consent to the modification of any
zoning of a Property; or (vi) amend, modify or terminate any of the Material
Contracts.
(c) THCI shall continue to be solely responsible for, and
THCI shall use its commercially reasonable efforts in, continuing to completion
the construction of Fashion Outlet, generally in accordance with the development
plan for Fashion Outlet previously delivered by THCI to the Acquirors. The
Closing for Fashion Outlet shall not occur prior to completion of construction
of Fashion Outlet by THCI. THCI shall be obligated to pay for all hard and soft
costs incurred in connection with the construction of Fashion Outlet. As THCI
is not the general contractor of Fashion Outlet, THCI shall not warrant the
workmanship, design or construction of all or any part of Fashion Outlet, it
being expressly understood that the Acquirors are assuming the risk thereof, but
all warranties and guaranties of the general contractor shall be assigned to the
Acquirors at the Applicable Closing and THCI shall advise the Acquirors of the
times when the final punch list is to be prepared so as to permit the Acquirors
to participate in the preparation thereof. In addition, at the Applicable
Closing, THCI shall pay to the Acquirors in respect of any space that is not
leased at that time the budgeted cost for the initial lease up of such portion
of the Property, including, without limitation, tenant allowances and brokerage
commissions.
(d) THCI shall have the right to cause Midway Associates to
transfer its interest in the Corte Madera Partnership to an entity that is
wholly owned, directly or indirectly, by THCI (the "NEW ENTITY"), and, in such
event, from and after the date of transfer, the New Entity shall be deemed for
all purposes of this Agreement to be the Partner in the Corte Madera
Partnership.
46
(e) As promptly as is reasonably practicable after the date
hereof, provided that there is no material adverse consequence to either
Acquiror as a result thereof and that all requisite lender consents and other
third party consents have been obtained, the Acquirors and THCI shall cause the
dissolution of EWH Escondido Associates, L.P. (North County Fair) and H-S Las
Vegas Associates (Fashion Show) and cause the applicable Properties to be
distributed to the partners in such Partnerships as tenants-in-common. Each of
THCI and the Acquirors shall cause its respective co-tenants to enter into
tenancy-in-common agreements for such Properties that contain the same
substantive terms as the applicable partnership agreements for such Properties,
except for such modifications as are reasonably required to reflect the
difference in ownership structure so as to create, to the extent practicable,
the same types of rights and obligations as the parties had as partners in the
Partnerships (including, without limitation, restrictions on the mortgaging of
such tenancy-in-common interests and waivers of the rights of partition). THCI
shall pay any transfer taxes and legal fees and other fees of consultants
incurred in connection with any transfers of such TC Interest which occur prior
to the 6 month anniversary of the Applicable Closing Date other than the
transfer taxes, legal fees and other fees of consultants that would have been
incurred by the Aquirors had the Partnership Interest been transferred instead
of the TC Interest. At the Applicable Closing, the Acquirors shall cause an
Affiliate of either Acquiror to purchase the TC Interest of the applicable
Co-Tenant (and, at such time, all amounts owed between the co-tenants shall be
settled) and, thereafter, the Acquirors shall cause each associated Property to
continue to be held as a Tenancy under the applicable tenancy-in-common
agreement until the earlier of the sale to an unaffiliated third party by the
applicable Acquiror's associated co-tenants of the entire Property Assets
associated with such Property or January 1, 2001; PROVIDED that nothing
contained herein shall prevent Acquiror's associated co-tenants from
transferring partial co-tenancy interests in each associated Property. In the
event that the conversion of either such Property to a Tenancy has not been
consummated on or prior to November 15, 1998, then, in lieu of transferring the
TC Interest in such Tenancy, THCI shall be obligated to transfer to the
Acquirors, and the Acquirors shall be obligated to purchase, the Partnership
Interest associated with such Property, and in determining the Adjusted
Allocated Purchase Price for such Partnership Interest, the amount in clause
(b)(i) of the definition of Adjusted Allocated Purchase Price shall be the "100%
Amount" for such TC Interest.
SECTION 5.02. INVESTIGATION. (a) The Acquirors acknowledge and
agree that they (i) have made their own inquiry and investigation into, and,
based thereon, have formed an independent judgment concerning, the Properties,
the Management Company and the Partnership Interests and (ii) will not assert
any claim against THCI or any THCI Subsidiary or THCI Partnership or any of
their respective
47
directors, officers, employees, agents, stockholders, Affiliates, consultants,
investment bankers or representatives, or hold THCI or any such Persons liable,
for any inaccuracies, misstatements or omissions with respect to such
information furnished by THCI or such Persons concerning the Properties, the
Management Company or the Partnership Interests, other than any inaccuracies or
misstatements in the representations and warranties contained in this Agreement.
The Acquirors acknowledge that THCI has not made any representation or warranty
with respect to any estimates, projections, forecasts, plans or budgets that may
have been made available to or discussed with the Acquirors.
(b) The Acquirors acknowledge and agree that, except as
expressly set forth in this Agreement, the Acquirors are acquiring each
Property, the Management Company Shares and each Partnership Interest in its "as
is" condition "subject to all faults" and specifically and expressly without any
warranties, representations or guarantees, either express or implied, of any
kind, nature, or type whatsoever from or on behalf of THCI. The Acquirors
acknowledge that, except as expressly set forth in this Agreement, the Acquirors
have not relied and are not relying on any information, document, reports, sales
brochure or other literature, maps or sketches, financial information,
projections, estimates, forecasts, plans, budgets, pro formas or statements that
may have been given by or made by or on behalf of THCI. The Acquirors further
acknowledge that, except as otherwise expressly set forth herein, all materials
relating to the Properties, the Management Company Shares and the Partnership
Interests that have been provided by THCI (including, without limitation, the
Real Estate Records and any reports prepared by any consultants) have been
provided without any warranty or representation, expressed or implied, as to
their content, suitability for any purpose, accuracy, truthfulness or
completeness, and the Acquirors shall not have any recourse against THCI, any
THCI Partnership or any THCI Subsidiary or any of their respective directors,
officers, employees, agents, stockholders, Affiliates, consultants, investment
bankers or representatives for any information in the event of any errors
therein or omissions therefrom.
SECTION 5.03. ACCESS TO INFORMATION. (a) Within 15 days after
the date of this Agreement, THCI shall deliver to the Acquirors a list setting
forth, to the knowledge of THCI, all corporations, partnerships, limited
liability companies and other entities in which a THCI Subsidiary, a THCI
Partnership, a Partnership or a Second Tier Partnership owns a beneficial
interest that may be directly or indirectly acquired by the Acquirors pursuant
to the terms of this Agreement. From the date hereof until the Applicable
Closing, upon reasonable notice, THCI shall, and shall cause each THCI
Partnership and THCI Subsidiary and each of their respective officers,
directors, employees, auditors and agents to, (i) afford the officers,
48
employees, authorized agents and representatives of the Acquirors reasonable
access, during normal business hours, to the offices, properties, books and
records of THCI, the THCI Partnerships and the THCI Subsidiaries relating to the
Properties, the Management Company and the Partnership Interests and
(ii) furnish to the officers, employees and authorized agents and
representatives of the Acquirors such additional financial and operating data
and other information regarding the Properties, the Management Company and the
Partnership Interests as the Acquirors may from time to time reasonably request;
PROVIDED, HOWEVER, that (A) such investigation shall not unreasonably interfere
with any of the businesses or operations of THCI or any of its Affiliates
(including the THCI Partnerships and the THCI Subsidiaries) or the Properties,
the Partnerships or the Second Tier Partnerships, (B) the Acquirors shall not,
prior to the Applicable Closing, have any contact whatsoever with respect to the
Properties or the Partnership Interests or with respect to the transactions
contemplated by this Agreement with any partner, lender, ground lessor, anchor
department store or other tenant of THCI or any THCI Partnership, THCI
Subsidiary, Partnership or Second Tier Partnership except in consultation with
THCI and then only with the express prior approval of THCI, which approval shall
not be unreasonably withheld, and (C) all requests by the Acquirors for access
or information pursuant to this Section 5.03 shall be submitted or directed
exclusively to an individual to be designated by THCI. The Acquirors shall not
be permitted to conduct any invasive tests on any Property without THCI's prior
written consent. The Acquirors agree to indemnify THCI from and against any and
all losses, damages or claims suffered by THCI as a result of any investigations
or inspections made by the Acquirors.
(b) In order to allow THCI to investigate whether the
payments required pursuant to Section 2.07(c) have been made correctly, to
facilitate the resolution of any third party claims and to prepare documents
required to be filed by THCI with Governmental Authorities, after an Applicable
Closing, upon reasonable notice, the Acquirors shall (i) afford the officers,
employees and authorized agents and representatives of THCI reasonable access,
during normal business hours, to the books and records of the Acquirors relating
to the assets transferred and the liabilities assumed at such Closing,
(ii) furnish to the officers, employees and authorized agents and
representatives of THCI such additional financial and other information
regarding such assets and liabilities as THCI may from time to time reasonably
request and (iii) make available to THCI (at THCI's cost and expense) the
employees of the either Acquiror whose assistance, testimony or presence is
deemed necessary by THCI, in its reasonable judgment, to assist THCI in
evaluating or defending any such claims, including as witnesses in hearings or
trials for such purposes.
49
(c) The Acquirors agree that they shall preserve and keep all
books and records in respect of the Properties, the Management Company and the
Partnership Interests in the Acquirors' possession for a period of at least five
years from the last Closing Date. After such five-year period, before either
Acquiror shall dispose of any of such books and records, at least 90 calendar
days' prior written notice to such effect shall be given by such Acquiror to
THCI, and THCI shall be given an opportunity, at its cost and expense, to remove
and retain all or any part of such books and records as THCI may select. During
such five-year period, duly authorized representatives of THCI shall, upon
reasonable notice, have access thereto during normal business hours to examine,
inspect and copy such books and records.
SECTION 5.04. CONFIDENTIALITY. The terms of the letter
agreements dated March 4, 1998 and March 3, 1998, respectively (together, the
"CONFIDENTIALITY AGREEMENTS") between each of Xxxxx and WEA, on the one hand,
and TrizecHahn Corporation, on the other hand, are hereby incorporated by
reference and shall continue in full force and effect until the last Closing, at
which time such Confidentiality Agreements and the obligations of the parties
under this Section 5.04 shall terminate, PROVIDED that the provisions relating
to the solicitation of employees shall survive in accordance with the provisions
of the Confidentiality Agreement, except with respect to Transferred Employees.
If this Agreement is, for any reason, terminated prior to the Initial Closing,
the Confidentiality Agreements shall continue in full force and effect
thereafter in accordance with their respective terms.
SECTION 5.05. REGULATORY AND OTHER AUTHORIZATIONS; CONSENTS.
(a) THCI shall use its good faith commercially reasonable efforts to obtain the
authorizations, consents, orders and approvals necessary for its execution and
delivery of, and the performance of its obligations pursuant to, this Agreement
and each Ancillary Agreement (including, without limitation, the consent of
(i) Governmental Authorities, (ii) landlords under the Ground Leases,
(iii) lenders (including lenders of Existing Debt or any refinancings thereof),
(iv) partners in any Partnership or Second Tier Partnership, (v) redevelopment
authorities and (vi) tenants at any Property), and the Acquirors shall cooperate
fully with THCI in promptly seeking to obtain all such authorizations, consents,
orders and approvals. If required by the HSR Act, each party hereto agrees to
make an appropriate filing of a Notification and Report Form pursuant to the HSR
Act with respect to the transactions contemplated by this Agreement within five
Business Days after the date hereof and to supply promptly any additional
information and documentary material that may be requested pursuant to the
HSR Act. The parties hereto will not take any action that will have the effect
of delaying, impairing or impeding the receipt of any required approvals.
50
(b) The Acquirors shall use their good faith commercially
reasonable efforts to assist THCI in obtaining the consents of third parties
listed in Section 3.03(b) of the THCI Disclosure Schedule, including (i)
providing to such third parties such financial statements and other financial
information as such third parties may reasonably request, (ii) agreeing to
commercially reasonable adjustments to the terms of the Contracts with such
third parties (PROVIDED that neither party hereto shall be required to agree to
any increase in the amount payable with respect to, or any modification that
makes more burdensome, in any material respect, any Liabilities assumed by such
party with respect to such Contracts) and (iii) executing agreements to effect
the assumption of such Contracts on or before the Applicable Closing.
(c) In the event that THCI is unable to obtain any consent
referred to in Section 5.05(a) or (b) prior to December 31, 1998, THCI may elect
not to sell the affected Property or Partnership Interest, as applicable, and
such Property or Partnership Interest shall no longer be subject to this
Agreement, and the terms of this Agreement shall be modified accordingly.
(d) The Acquirors shall use their good faith, commercially
reasonable efforts to cause THCI and each of its Affiliates to be released as of
the Applicable Closing, or as soon thereafter as possible, from all guaranties,
guaranty obligations, indemnities and indemnity obligations of THCI and such
Affiliates relating principally to the transferred Properties and applicable to
the period subsequent to the Applicable Closing. The Acquirors shall cause to
be issued as of the Applicable Closing, or as soon thereafter as possible,
letters of credit, surety bonds and similar instruments in substitution of
letters of credit, surety bonds and similar instruments furnished by THCI and
any of its Affiliates relating principally to the Properties. The Acquirors
agree to indemnify THCI and each of its Affiliates for any and all Losses
incurred by THCI and any such Affiliate arising out of any such guaranties,
guaranty obligations, indemnities, indemnity obligations, letters of credit,
surety bonds and similar instruments, except to the extent related to
occurrences prior to the Applicable Closing.
SECTION 5.06. NOTIFICATION TO GOVERNMENTAL AUTHORITIES. The
Acquirors and THCI shall cooperate to provide notification, promptly after each
Closing, and in any event not later than when due, to each Governmental
Authority responsible for the regulatory supervision and administration of the
Properties.
SECTION 5.07. BULK TRANSFER LAWS. The Acquirors hereby waive
compliance by THCI, each THCI Partnership and each THCI Subsidiary with the
provisions of any so-called bulk transfer Laws of any jurisdiction in connection
with
51
the sale to the Acquirors of the Property Assets. THCI shall indemnify and hold
harmless the Acquirors against any and all liabilities (including Tax
liabilities) that may be asserted by third parties against the Acquirors as a
result of noncompliance by THCI, a THCI Partnership or a THCI Subsidiary with
any such bulk transfer Law (except for those assumed by the Acquirors hereunder
or in any Assumption Agreement).
SECTION 5.08. USE OF NAME OR OTHER INTELLECTUAL PROPERTY. The
Acquirors acknowledge that they are not acquiring, pursuant to this Agreement,
any rights with respect to any of the THCI Names and Marks. Within 60 calendar
days after the Applicable Closing, the Acquirors shall remove or obliterate from
all of the Property Assets and all assets of the Management Company (including
signs, stationery, packaging, labels and other materials) all THCI Names and
Marks. The Acquirors shall not use or put into use after the Applicable Closing
any signs, stationery, labels or other materials that bear any THCI Names and
Marks. Any signs, stationery, labels and other materials containing any THCI
Names and Marks shall, at the option of THCI upon due notification, be promptly
returned to THCI, in which case the cost of their removal and return shall be
shared equally between the Acquirors and THCI, or, with THCI's written consent,
destroyed or otherwise permanently disposed of. Immediately after the Initial
Closing, the Acquirors shall change the name of the Management Company to a name
that does not include any of the THCI Names and Marks.
SECTION 5.09. PARTNERSHIP INTERESTS. THCI will use good faith,
commercially reasonable efforts (but without obligation, except as contemplated
by this Agreement, to expend funds or to commence legal proceedings) to cause
each Property listed in Section 5.09 of the THCI Disclosure Schedule to be sold
to Acquirors, including the initiation of buy-sell arrangements, requests for
waivers or consents and/or direct negotiations. Notwithstanding the foregoing,
THCI gives no assurance as to the outcome of such actions. In the event that
THCI is unsuccessful in arranging for a sale to the Acquirors of any such
Property, THCI shall, subject to Section 5.10, sell to the Acquirors its
Partnership Interest related to such Property and, if applicable, the provisions
of Exhibit B shall apply thereto.
SECTION 5.10. SPECIAL PROVISIONS RELATING TO RIGHTS OF FIRST
REFUSAL; BUY/SELLS. (a) The Acquirors hereby waive and agree to cause their
respective Affiliates to waive, any rights of first refusal such Persons may
have under the partnership agreements or any other agreements relating to the
Fashion Show Partnership and the North County Fair Partnership with respect to
the transactions contemplated by this Agreement. The Acquirors acknowledge
that, as a condition to
52
the applicable Partner's ability to transfer to the Acquirors certain Properties
or the related Partnership Interests, such Partner may be required to (or in the
case of a buy/sell, may elect but is not obligated to) either (i) offer the
Partnership Interest for sale to one or more partners of such Partner (each, an
"OTHER PARTNER") in accordance with certain rights of first refusal or buy/sell
provisions contained in the applicable partnership agreement or (ii) obtain the
consent of one or more Other Partners to the sale of the Property to the
Acquirors and, in either such case, one or more Other Partners has the right to
purchase the Partnership Interest of such Partner in accordance with the
applicable partnership agreement. THCI agrees to offer the applicable
Partnership Interests to the Other Partner or Other Partners in accordance with
the applicable partnership agreement or to request the consent of the Other
Partner or Other Partners, as the case may be, in each case in accordance with
and is required by the applicable partnership agreement. THCI will use
commercially reasonable good faith efforts (but without obligation to expend
funds or to commence legal proceedings) to obtain all required consents. With
respect to each Property identified in Section 5.10 of the THCI Disclosure
Schedule, the terms of this Agreement are hereby modified and amended in the
manner provided in Section 5.10 of the THCI Disclosure Schedule. In addition,
for purposes of clarification, in the event that an Other Partner elects to
purchase the Partnership Interest of such Partner, then, with respect to such
Partnership Interest and the related Property only, (X) the Threshold Amount (as
used with respect to the purchase of the Partnership Interest by such Other
Partner) shall be an amount equal to 1% of the Adjusted Allocated Purchase Price
for such Partnership Interest and the Maximum Amount shall be an amount equal to
10% of such Adjusted Allocated Purchase Price and (Y) the definition of Material
Adverse Effect (as used with respect to the purchase of the Partnership Interest
by such Other Partner) shall mean any change in or effect on the applicable
Property (and not the Properties taken as a whole) that is (individually or in
the aggregate with any other changes therein or effects thereon that would be
specifically addressed by a representation or warranty about such Property
contained in this Agreement but for a "Material Adverse Effect" exception or
qualification thereto), materially adverse to such Property or to the results of
operations of such Property, other than changes resulting from the matters
specified in clauses (a) through (e) of the definition of Material Adverse
Effect. In addition, in the event that an Other Partner elects to purchase the
Partnership Interest of such Partner, the terms of this Agreement shall
automatically be modified and amended as follows with respect to such
Partnership Interest and the related Property only:
(1) THCI (and such Partner) shall not be obligated to sell to
the Acquirors, and the Acquirors shall not be obligated to purchase from
THCI, such Property or Partnership Interest;
53
(2) the purchase price payable by the Acquirors at the
Applicable Closing shall be reduced accordingly; and
(3) if the Other Partner elects not to purchase such
Partnership Interest, then the Acquirors shall be obligated to purchase
such Partnership Interest or the related Property, as the case may be,
subject to all of the terms and conditions of this Agreement but
excluding the terms of this Section 5.10.
(b) THCI, by notice to the Acquirors to such effect, shall
have the right to elect to have the Acquirors acquire the Partnership Interest
of DPA in "Plaza" in lieu of the stock of DPA if the consent of the Other
Partners in said Partnership to the substitution of the Acquirors as partners in
said Partnership is obtained. In such event, THCI shall have the right to
submit such interest to the right of first refusal in favor of the Other
Partners in such Partnership in accordance with the terms of the applicable
partnership agreement.
SECTION 5.11. TENANCY-IN-COMMON INTERESTS. (a) In the case of
Partnership Interests to be transferred hereunder, THCI may elect, in its sole
discretion, to dissolve and liquidate the assets of any Partnership or Second
Tier Partnership as a result of which the applicable Partner will become a
Co-Tenant and receive a TC Interest in the applicable Property in lieu of a
Partnership Interest in such Property. In that event, THCI shall be obligated
to convey to the Acquirors, and the Acquirors shall be obligated to purchase
from THCI, such TC Interest, subject to all the other terms and conditions of
this Agreement relating to the transfer by THCI to the Acquirors of a
Partnership Interest, with the following modifications:
(i) the TC Interest shall be held by the Co-Tenant pursuant
to a tenancy-in-common agreement that contains the same substantive
terms as the applicable partnership agreement for such Property, except
for such modifications as are reasonably required to reflect the
difference in ownership structure so as to create, to the extent
practicable, the same types of rights and obligations as the parties had
as partners in the Partnership or Second Tier Partnership (including,
without limitation, restrictions on the mortgaging of such TC Interest
and waivers of the right of partition);
(ii) the purchase price for the TC Interest shall be
calculated in accordance with the definition of Adjusted Allocated
Purchase Price as it relates to Partnership Interests, except that the
amount in clause (b)(i) thereof shall be calculated by determining the
amount that would be payable to a Co-Tenant holding a TC Interest
pursuant to the terms of the applicable
54
tenancy-in-common agreement, if the applicable Property Assets had been
sold for a purchase price (assuming no brokerage commissions, transfer
taxes or other transfer costs) equal to the applicable amount set forth
in Section 1.01(A) of the THCI Disclosure Schedule in a sale where
(A) apportionments of the type specified in Section 2.07 had been made
and (B) all joint and several indebtedness of the Co-Tenant and its
co-tenant (and all indebtedness secured by a mortgage on the entire
Property) had been paid in full;
(iii) the Assumed Debt Amount for the TC Interest shall include
all indebtedness of the Co-Tenant, other than indebtedness for which the
Co-Tenant and its co-tenant are jointly and severally liable and
indebtedness secured by a mortgage on the entire Property;
(iv) for purposes of THCI's representations and warranties
hereunder and THCI's closing deliveries, the TC Interest shall be
treated as Owned Real Property or Leased Real Property, as applicable,
and the rights of the other co-tenant shall be deemed a Permitted
Encumbrance; and
(v) THCI shall pay any transfer taxes, legal fees and other
fees of consultants incurred in connection with transfers of such TC
Interest which occur prior to the six-month anniversary of the
Applicable Closing Date other than transfer taxes, legal fees and other
fees of consultants that would have been incurred by the Acquirors had
the Partnership Interest been transferred instead of the TC Interest.
(b) In the case of a transfer of Property Assets hereunder
that are currently owned by a Partnership or a Second Tier Partnership, prior to
the Closing for such Property Assets, THCI shall have the right to cause the
applicable Partnership or Second Tier Partnership that holds such Property
Assets to dissolve and liquidate the assets of such Partnership or Second Tier
Partnership and distribute to the partners tenancy-in-common interests in the
Property Assets. In such event, (i) THCI shall cause all such tenancy-in-common
interests in such Property Assets to be transferred to the applicable Acquiror
at the Applicable Closing in consideration of the Adjusted Allocated Purchase
Price for such Property, (ii) the Assumed Debt Amount and all of THCI's
representations and warranties hereunder shall apply with respect to all such
tenancy-in-common interests as if such tenancy-in-common interests were a
Property, and (iii) THCI shall pay any transfer taxes, legal fees and other fees
of consultants incurred in connection with transfers of such tenancy-in-common
interests which occur prior to the six-month anniversary of the Applicable
Closing Date other than transfer taxes, legal fees
55
and other fees of consultants that would have been imposed had the Property been
transferred instead of the tenancy-in-common interests.
SECTION 5.12. LIQUIDATED DAMAGES. If, after receiving the
Initial Closing Date Notice or a Subsequent Closing Date Notice, the Acquirors
shall, in breach of this Agreement, fail to acquire the Properties and
Partnership Interests specified therein on the Closing Date therefor specified
pursuant to Section 2.01, the Acquirors shall pay to THCI an amount equal to 10%
of the aggregate Allocated Purchase Price for such Properties and Partnership
Interests. THCI and the Acquirors agree that actual damages accruing from such
a breach of this Agreement are incapable of precise estimation and would be
difficult to prove, that the payments stipulated in this Section 5.12 bear a
reasonable relationship to the potential injury likely to be sustained in the
event of such a breach and that the payments stipulated in this Section 5.12 are
intended by the parties to provide just compensation in the event of such a
breach and are not intended to compel performance or to constitute a penalty for
nonperformance. If the Acquirors fail promptly to pay to THCI any amounts due
under this Section 5.12, the Acquirors shall be obligated to pay the costs and
expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee from the date
such amount was required to be paid at an interest rate equal to the prime rate
published by THE WALL STREET JOURNAL from time to time. THCI's rights pursuant
to this Section 5.12 are in addition to, and may be pursued concurrently with,
THCI's rights pursuant to Section 12.12. The parties hereby acknowledge that
the agreements contained in this Section 5.12 are an integral part of the
transactions contemplated by this Agreement.
SECTION 5.13. FURTHER ACTION. (a) Each of the parties hereto
shall use its commercially reasonable efforts to take or cause to be taken all
appropriate action, do or cause to be done all things necessary, proper or
advisable, and execute and deliver such documents and other papers, as may be
required to carry out the provisions of this Agreement and consummate and make
effective the transactions contemplated by this Agreement.
(b) After the Initial Closing, the Acquirors shall cause the
Management Company to comply with the terms of the management agreements to
which it is a party with respect to any Properties that have not been
transferred (and for which Partnership Interests have not been transferred).
SECTION 5.14. ENVIRONMENTAL REPORTS. Within 30 days of the date
hereof, THCI shall deliver to the Acquirors Phase I Environmental Reports for
56
each Property. If such reports recommend Phase II investigations, the Acquirors
may conduct such investigations in accordance with the procedures contemplated
by Section 5.03. In the event that any such Environmental Reports shall
disclose the release of any Hazardous Materials in any of the Properties that
shall have caused a Material Adverse Effect, then unless THCI shall agree, at
its expense, to remediate such condition to the extent required by Environmental
Law or to indemnify the Acquirors against any loss, cost, liability or expense
resulting therefrom, the Acquirors shall not be obligated to acquire the
Property or Properties so affected. The Acquirors shall notify THCI of their
decision as to the acquisition of such Property or Properties promptly after
receipt of the notification of THCI's decision as to remediation or
indemnification, and if, in the absence of remediation or indemnification, the
Acquirors shall elect not to acquire the Property or Properties, THCI shall have
no obligation to convey them pursuant to this Agreement.
SECTION 5.15. RECORD OWNER APPORTIONMENTS. At any Closing at
which Record Owner Shares or Record Owner Partnership Interests are transferred
to the Acquirors, the then-current assets and then-current liabilities of the
Record Owner thereof shall be estimated in good faith by THCI, and THCI shall
pay to the Acquirors the excess, if any, of such current liabilities over such
current assets, or the Acquirors shall pay to THCI the excess, if any, of such
current assets over such current liabilities. To the extent not known on the
Applicable Closing Date, the current assets and liabilities shall be estimated
on the best available information at the time and appropriate settlement made
from time to time as the same are liquidated.
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. EMPLOYEES. (a) Except as otherwise expressly
provided in this Article VI or as set forth in Section 6.01(a) of the THCI
Disclosure Schedule, from and after the Initial Closing Date, the Acquirors and
the Management Company shall be responsible for (i) all Employee-related
Liabilities incurred on or after the Initial Closing Date with respect to the
individuals who are employed by the Management Company (including employees on
disability, leave of absence or layoff with recall rights) as of the Initial
Closing Date (collectively referred to herein as the "TRANSFERRED EMPLOYEES")
and their respective dependents and beneficiaries, and (ii) all Employee-related
Liabilities incurred prior to the Initial Closing Date with respect to the
Transferred Employees and their respective dependants and beneficiaries to the
extent such liabilities arise under Employee Plans sponsored by the Management
57
Company immediately prior to the Initial Closing Date. The Management Company
shall not be responsible, and shall be reimbursed or indemnified by THCI, for
all Employee-related Liabilities accrued but unpaid prior to the Initial Closing
Date that are not referred to in clause (ii) of the immediately preceding
sentence. "EMPLOYEE-RELATED LIABILITIES" shall include, without limitation,
Liabilities for salaries, bonuses, vacations, workers' compensation, medical and
life insurance benefit claims and other welfare benefits and all Liabilities
arising under the continuation coverage requirements of Section 4980(B)(f) of
the Code and Section 601 of ERISA.
(b) To the extent that service is relevant for purposes of
eligibility, vesting, calculation of any benefit, or benefit accrual under any
employee benefit plan, program or arrangement established or maintained by the
Acquirors or the Management Company (other than any defined benefit pension
plan) following the Initial Closing Date for the benefit of Transferred
Employees, such plan, program or arrangement shall credit such employees for
service on or prior to the Initial Closing Date that was recognized by THCI or
any THCI Subsidiary for purposes of employee benefit plans, programs or
arrangements maintained by any of them. In addition, with respect to any
welfare benefit plan (as defined in Section 3(1) of ERISA) established or
maintained by the Acquirors or the Management Company following the Initial
Closing Date for the benefit of Transferred Employees, such plan shall waive any
pre-existing condition exclusions and provide that any covered expenses incurred
on or before the Initial Closing Date by a Transferred Employee or by a covered
dependent shall be taken into account for purposes of satisfying applicable
deductible coinsurance and maximum out-of-pocket provisions after the Initial
Closing Date.
SECTION 6.02. EMPLOYEE BENEFITS. For a period of one year
following the Initial Closing Date, the Acquirors shall cause the Management
Company to provide Transferred Employees with benefits (including, without
limitation, retirement and welfare benefits) that either are (i) substantially
comparable, in the aggregate, to the benefits provided under the Employee Plans
as in effect immediately prior to the Initial Closing Date or (ii) the same as
the benefits generally made available to either of the Acquirors' similarly
situated employees.
SECTION 6.03. EMPLOYEE PLANS. From and after the Initial
Closing Date, the Management Company shall be responsible for the Employee Plans
it sponsored immediately prior to such date (which plans are listed in
Section 6.03 of the THCI Disclosure Schedule), and the Acquirors shall cause the
Management Company to comply with the terms and conditions of such plans. With
respect to any Employee Plan which is qualified under Section 401(a) of the Code
and was not sponsored by the Management Company prior to the Initial Closing
Date, the Acquirors shall either
58
cause the Management Company to establish a plan having substantially similar
terms or designate a plan maintained by an Acquiror or one of its subsidiaries
or affiliates to receive a transfer of the accrued benefits of each Transferred
Employee from such Employee Plan, which plan must also satisfy the requirements
of such Section 401(a) of the Code. Any such transfers shall be effected as
soon as practicable after the Initial Closing Date, be effective as of the later
of the Initial Closing Date or the last valuation date immediately preceding
such transfer, and shall be subject to the delivery by an Acquiror to THCI of a
determination letter indicating the qualified status of such plan or an opinion
of counsel to such Acquiror that the terms of such plan meet the applicable
requirements of such Section 401(a).
SECTION 6.04. OTHER EMPLOYEE BENEFITS. With respect to the
severance plans listed on Section 6.03 of the THCI Disclosure Schedule, THCI
agrees that no severance shall be payable thereunder to any participant who
voluntarily resigns from his or her employment with the Management Company
without Good Reason. For this purpose, "Good Reason" means (a) a reduction in a
participant's base salary as in effect immediately prior to the Initial Closing
Date, (b) a participant ceasing to be eligible for an annual cash bonus
opportunity of at least the same potential amount as immediately prior to the
Initial Closing Date or, with respect to a participant, with a target bonus
opportunity expressed as a percentage of base salary, a reduction in the
participant's annual cash bonus opportunity (expressed as a percentage of base
salary) from that in effect immediately prior to the Initial Closing Date, (c) a
failure to provide a participant benefits at the level required under Section
6.02 hereof, (d) a failure to provide a participant with a title of comparable
status to his or her title immediately prior to the Initial Closing Date, (e) an
adverse change in the scope or nature of a participant's responsibilities in
comparison to those in effect immediately prior to the Initial Closing Date, or
(f) a relocation of a participant's principal place of business by 25 miles or
more from the location immediately prior to the Initial Closing Date.
SECTION 6.05. WARN ACT. In the event that the Acquirors do not
continue all the operations of the Properties and/or do not employ all of the
Transferred Employees on and after the Initial Closing Date, the Acquirors shall
be liable and responsible for any notification required to be provided under the
WARN Act (or under any similar state or local Law), and the Acquirors shall
indemnify THCI and the THCI Subsidiaries and their respective Affiliates for any
claims arising out of a breach of this covenant.
SECTION 6.06. INDEMNITY. Anything in this Agreement to the
contrary notwithstanding, the Acquirors hereby agree to indemnify THCI, the THCI
Partnerships and the THCI Subsidiaries and their respective Affiliates against
and hold
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THCI and the THCI Subsidiaries and their respective Affiliates harmless from any
and all Losses arising out of or otherwise in respect of (a) any claim made by
any Transferred Employee against THCI, any THCI Partnership or any THCI
Subsidiary or any of their Affiliates for any severance or termination benefits
pursuant to the provisions of any plan, program or arrangement or any applicable
federal or state Law, (b) any action taken after the Initial Closing by the
Acquirors or the Management Company with respect to any plan (including any
Employee Plan), (c) any claim for payments or benefits by Transferred Employees
or their beneficiaries under any plan (including any Employee Plan) sponsored by
the Management Company or either Acquiror, and (d) any failure of the Acquirors
to discharge their obligations under this Article VI. The provisions of
Sections 9.03(c) and 9.03(d) shall apply to the Acquirors' indemnification
obligations under this Section 6.06.
SECTION 6.07. NO THIRD PARTY BENEFICIARIES. Notwithstanding
anything else contained herein to the contrary, nothing in this Article VI shall
be construed to create any third party beneficiary rights in any person who is
not a party to this Agreement.
SECTION 6.08. REIMBURSEMENT FOR CERTAIN PAYMENTS. THCI shall
reimburse the Acquirors for any payments made pursuant to the Employee Plans
listed in Section 6.03 of the THCI Disclosure Schedule other than
Section 6.03(I)(A) and (II)(A) thereof to the extent that the aggregate payments
made under such plans by the Management Company on or following the Initial
Closing Date exceed US$6.6 million and, with respect to the Employee Plans
listed in Section 6.03(I)(A) and (II)(A) thereof, to the extent that any
payments are required to be made under such plans by the Management Company.
ARTICLE VII
TAX MATTERS
SECTION 7.01. CONVEYANCE TAXES; COSTS. Except as set forth in
Sections 5.01(e) and 5.11(a) and (b), the Acquirors shall be liable for and
shall hold THCI harmless against any real property transfer or gains, sales,
use, transfer, value added, excise, stock transfer, stamp, recording,
registration and any similar Taxes that become payable in connection with the
acquisitions by Acquirors contemplated hereby, and the applicable parties shall
file such applications and documents as shall permit any such Tax to be assessed
and paid on or prior to the Applicable Closing Date in accordance with any
available pre-sale filing procedure. THCI agrees to cooperate
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with the Acquirors and, subject to the other terms of this Agreement and
provided the same does not prohibit or adversely affect in any manner the
ability of THCI or any THCI Subsidiary to qualify for Section 1031 Treatment, to
take any action reasonably requested by the Acquirors in order to minimize the
amount of such Taxes. The parties shall execute and deliver all instruments and
certificates necessary to permit compliance with the foregoing. Each party
shall be responsible for its own attorneys' fees. The Acquirors shall pay the
entire cost of any title insurance (for itself or any lender, including lenders
of indebtedness assumed by the Acquirors hereunder), surveys, title inspections,
environmental reports, engineering reports and appraisals that the Acquirors
elect to obtain in connection with the transactions contemplated hereby. The
Acquirors shall pay any and all attorneys' fees of its lenders and lenders of
indebtedness assumed by the Acquirors hereunder.
SECTION 7.02. TREATMENT OF INDEMNITY PAYMENTS. All payments
made by THCI or the Acquirors, as the case may be, to or for the benefit of the
other party pursuant to any indemnification obligations under this Agreement
shall be treated as adjustments to the consideration for Tax purposes, and such
agreed treatment shall govern for purposes of this Agreement.
SECTION 7.03. ALLOCATION OF CONSIDERATION. Neither THCI nor any
of its Affiliates or the Acquirors or any of their respective Affiliates shall
file any Tax Return, or take a position with a Tax authority in any refund
claim, in any litigation or otherwise, that is inconsistent with the Adjusted
Allocated Purchase Price determined hereunder for any Property or Partnership
Interest or the Allocated Purchase Price for the Management Company Shares, or
that treats the transactions contemplated by this Agreement in a manner
inconsistent with the terms of this Agreement. THCI and the Acquirors shall
inform each other promptly of any challenge by any Tax authority to such
Adjusted Allocated Purchase Price or Allocated Purchase Price, and neither party
shall agree to any adjustment asserted by such Tax authority without the prior
written consent of the other party, which consent shall not be unreasonably
withheld.
SECTION 7.04. EMPLOYEE WITHHOLDING. THCI and the Acquirors
agree that, pursuant to and to the extent permitted by the "Alternative
Procedure" provided in Section 5 of Revenue Procedure 84-77, 1984-2 C.B. 753,
with respect to filing and furnishing IRS Forms W-2, W-3 and 941, (a) THCI and
the Acquirors shall each report on a "predecessor-successor" basis, as set forth
therein, (b) THCI shall be relieved from furnishing Forms W-2 to any of THCI's
employees that become employees of the Acquirors and (c) the Acquirors shall
assume the obligations of THCI to furnish such Forms W-2 to such employees for
the full 1998 calendar year.
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SECTION 7.05. LIKE-KIND EXCHANGE. (a) The parties hereto agree
that, no later than two Business Days prior to an Applicable Closing Date, THCI
may, for the purpose of treating all or part of the sale of Properties hereunder
as a like-kind exchange of property ("SECTION 1031 TREATMENT") under Section
1031 of the Code, assign certain rights that it has under this Agreement,
including its right to receive all or part of the cash consideration it is
entitled to receive at such Closing pursuant to this Agreement, to one or more
qualified intermediaries, as defined in Treasury Regulations Section
1.1031(k)-1(g)(4) (each a "QUALIFIED INTERMEDIARY"), and provide notice of such
assignment to the Acquirors, provided that no such assignment shall release THCI
from its obligations hereunder. In such case, the Acquirors agree to pay such
cash consideration directly to a Qualified Intermediary. In such case, on or
before the day that is 45 days following the Applicable Closing Date, THCI shall
have the right to identify one or more properties to the Qualified Intermediary
as replacement properties for the Properties with respect to which the Qualified
Intermediary received such cash consideration, and, if a property or properties
is so identified, shall have the right to have such property or properties so
identified purchased by the Qualified Intermediary and transferred to THCI on or
before the day that is 180 days following the Applicable Closing Date. In no
event shall the Acquirors have any right to any cash deposited with the
Qualified Intermediary.
(b) The Acquirors agree to cooperate with THCI in taking such
further actions that THCI shall determine are reasonable and necessary in
securing Section 1031 Treatment for all or part of the Properties. THCI agrees
to indemnify the Acquirors against and hold the Acquirors harmless from any
Losses arising from such cooperation.
SECTION 7.06. TAX INDEMNITY. (a) From and after the Initial
Closing Date, THCI agrees to indemnify the Acquirors and the Management Company
against all Taxes imposed on the Management Company with respect to any taxable
period or portion thereof that ends on or before the Initial Closing Date and
against all Taxes imposed on any member of any affiliated group with which the
Management Company has filed a Tax Return on a consolidated basis for any
taxable period or portion thereof based on an interim closing of the books
methodology prior to or including the Initial Closing Date; PROVIDED, HOWEVER,
that no indemnity shall be provided under this Agreement for any Tax resulting
from (i) an actual or deemed election under Section 338 of the Code with respect
to the transactions contemplated by this Agreement; (ii) a reduction in any net
operating loss, capital loss or tax credit carryover allocable to the Management
Company; or (iii) any transaction of the Management Company occurring on the
Initial Closing Date but after the Closing that is not in the ordinary course of
business.
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(b) Payment by THCI of any amounts due under this Section
7.06 in respect of Taxes shall be made within thirty days following written
notice by either of the Acquirors that payment of such amounts to the
appropriate Tax authority is due, PROVIDED that THCI shall not be required to
make any payment earlier than five days before such payment is due to the
appropriate Tax authority. In the case of a Tax that is contested in accordance
with the provisions of Section 7.07, payment of the Tax to the appropriate Tax
authority shall not be considered to be due earlier than the date a final
determination to such effect is made by the appropriate Tax authority or a court
of competent jurisdiction.
SECTION 7.07. CONTESTS. (a) After the Closing Date, the
Acquirors shall promptly notify THCI in writing of the commencement of any Tax
audit or administrative or judicial proceeding or of any demand or claim on the
Acquirors or any of their respective Affiliates which, if determined adversely
to the taxpayer or after the lapse of time, would be grounds for indemnification
under Section 7.06. Such notice shall contain factual information (to the
extent known to the Acquirors or the relevant Affiliate) describing the asserted
Tax liability in reasonable detail and shall include copies of any notice or
other document received from any Tax authority in respect of any such asserted
Tax liability. If the Acquirors fail to give THCI prompt notice of an asserted
Tax liability as required by this Section 7.07 and if THCI is precluded by the
failure to give prompt notice from contesting the asserted Tax liability in both
the administrative and judicial forums, then THCI shall not have any obligation
to indemnify for any loss arising out of such asserted Tax liability to the
extent that THCI was prejudiced as a result of such failure.
(b) THCI may elect to direct, through counsel of its own
choosing and at its own expense, any audit, claim for refund and administrative
or judicial proceeding involving any asserted liability with respect to which
indemnity may be sought under Section 7.06 relating to any taxable period ending
on or before the Closing Date (any such audit, claim for refund or proceeding
relating to an asserted Tax liability is referred to herein as a "CONTEST"). If
THCI elects to direct a Contest, it shall within 30 calendar days of receipt of
the notice of asserted Tax liability notify the Acquirors in writing of its
intent to do so, and the Acquirors shall cooperate and shall cause their
respective Affiliates or their respective successors to cooperate, at THCI's
expense, in each phase of such Contest. In each such case, neither the
Acquirors nor any of their respective Affiliates may settle or compromise any
asserted Tax liability over the objection of THCI. If THCI elects not to direct
the Contest or fails to notify the Acquiror of its election as herein provided,
the Acquirors or any of their respective Affiliates may contest, at their own
expense, such asserted Tax liability or pay or compromise such asserted Tax
liability at THCI's expense.
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SECTION 7.08 SECTION 754 ELECTION. With respect to each
transfer by a Partner of its Partnership Interest to the Acquirors, THCI agrees,
if THCI, a THCI Subsidiary or a THCI Partnership is a managing general partner
of a Partnership at the time that a year-end tax return is filed and if
permitted by the applicable partnership agreement, unless otherwise notified by
the Acquirors, to cause the Partnership and, if applicable, the Second Tier
Partnership, to make an election under section 754 of the Code with respect to
the transferred interest and to make any available election under substantially
similar state or local laws.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. CONDITIONS TO OBLIGATIONS OF THCI. (a) The
obligations of THCI to consummate the transactions contemplated by this
Agreement for the Initial Closing shall be subject to the satisfaction or
waiver, at or prior to the Initial Closing, of each of the following conditions:
(i) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Acquirors contained in this Agreement that are
qualified as to materiality shall be true and correct as of the Initial
Closing Date (other than such representations and warranties as are made
as of a certain date, which shall be true and correct as of such certain
date) and the representations and warranties of the Acquirors contained
in this Agreement that are not so qualified shall be true and correct in
all material respects as of the Initial Closing Date (other than such
representations and warranties as are made as of a certain date, which
shall be true and correct in all material respects as of such certain
date), and THCI shall have received a certificate of the Acquirors to
such effect signed by a duly authorized officer of each Acquiror;
(ii) COVENANTS. All covenants contained in this Agreement to
be complied with by the Acquirors on or before the Initial Closing shall
have been complied with in all material respects, and THCI shall have
received a certificate of the Acquirors to such effect signed by a duly
authorized officer of each Acquiror;
(iii) HSR ACT. Any waiting period (and any extension thereof)
under the HSR Act applicable to the transactions to be consummated at
the Initial Closing shall have expired or been terminated;
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(iv) NO ORDER. No Governmental Authority or court of
competent jurisdiction shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and has
the effect of making the transactions contemplated by this Agreement for
the Initial Closing illegal or otherwise restraining or prohibiting
consummation of such transactions; PROVIDED, HOWEVER, that the
provisions of this Section 8.01(a)(iv) shall not apply unless THCI has
used its commercially reasonable efforts to have any such order or
injunction vacated;
(v) CONSENTS. The Acquirors, THCI, the THCI Partnerships,
the THCI Subsidiaries, the Partners, the Partnerships or the Second Tier
Partnerships, as applicable, shall have received the authorizations,
orders, approvals and consents of Governmental Authorities and third
parties described in Sections 3.03(a) and 3.03(b) of the THCI Disclosure
Schedule, in form and substance reasonably satisfactory to THCI, with
respect to the Properties and Partnership Interests to be transferred;
and
(vi) ANCILLARY AGREEMENTS. The Acquirors shall have duly
executed and delivered to THCI counterparts of each Ancillary Agreement
to which it they are parties with respect to the Properties to be
transferred.
(b) The obligations of THCI to consummate the transactions
contemplated by this Agreement for each Subsequent Closing shall be subject to
the satisfaction or waiver, at or prior to such Subsequent Closing, of each of
the following conditions:
(i) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Acquirors contained in this Agreement that are
qualified as to materiality shall be true and correct as of such
Subsequent Closing Date (other than such representations and warranties
as are made as of a certain date, which shall be true and correct as of
such certain date) and the representations and warranties of the
Acquirors contained in this Agreement that are not so qualified shall be
true and correct in all material respects as of such Subsequent Closing
Date (other than such representations and warranties as are made as of a
certain date, which shall be true and correct in all material respects
as of such certain date), and THCI shall have received a certificate of
the Acquirors to such effect signed by a duly authorized officer of each
Acquiror;
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(ii) COVENANTS. All covenants contained in this Agreement to
be complied with by the Acquiror on or before such Subsequent Closing
shall have been complied with in all material respects, and THCI shall
have received a certificate of the Acquirors to such effect signed by a
duly authorized officer of each Acquiror;
(iii) NO ORDER. No Governmental Authority or court of
competent jurisdiction shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and has
the effect of making the transactions contemplated by this Agreement for
such Subsequent Closing illegal or otherwise restraining or prohibiting
consummation of such transactions; PROVIDED, HOWEVER, that the
provisions of this Section 8.01(b)(iii) shall not apply unless THCI has
used its commercially reasonable efforts to have any such order or
injunction vacated;
(iv) CONSENTS. The Acquirors, THCI, the THCI Partnerships,
the THCI Subsidiaries, the Partners, the Partnerships or the Second Tier
Partnerships, as applicable, shall have received the authorizations,
orders, approvals and consents of Governmental Authorities and third
parties described in Sections 3.03(a) and 3.03(b) of the THCI Disclosure
Schedule, in form and substance reasonably satisfactory to THCI, with
respect to the Properties and Partnership Interests to be transferred;
and
(v) ANCILLARY AGREEMENTS. The Acquirors shall have duly
executed and delivered to THCI counterparts of each Ancillary Agreement
to which it is a party with respect to the Properties to be transferred
at such Subsequent Closing.
SECTION 8.02. CONDITIONS TO OBLIGATIONS OF THE ACQUIRORS.
(a) The obligations of the Acquirors to consummate the transactions
contemplated by this Agreement for the Initial Closing shall be subject to the
satisfaction or waiver, at or prior to the Initial Closing, of each of the
following conditions:
(i) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of THCI contained in this Agreement that are qualified as to
materiality shall be true and correct as of the Initial Closing Date
(other than such representations and warranties as are made as of a
certain date, which shall be true and correct as of such certain date),
and the representations and warranties of THCI contained in this
Agreement that are not so qualified shall
66
be true and correct in all material respects as of the Initial Closing
Date (other than such representations and warranties as are made as of a
certain date, which shall be true and correct in all material respects
as of such certain date), and the Acquirors shall have received a
certificate of THCI to such effect signed by a duly authorized officer
thereof;
(ii) COVENANTS. All covenants contained in this Agreement to
be complied with by THCI on or before the Initial Closing shall have
been complied with in all material respects, and the Acquirors shall
have received a certificate of THCI to such effect signed by a duly
authorized officer thereof;
(iii) HSR ACT. Any waiting period (and any extension thereof)
under the HSR Act applicable to the transactions to be consummated at
the Initial Closing shall have expired or been terminated;
(iv) NO ORDER. No Governmental Authority or court of
competent jurisdiction shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, injunction or other order
(whether temporary, preliminary or permanent) which is in effect and has
the effect of making the transactions contemplated by this Agreement for
the Initial Closing illegal or otherwise restraining or prohibiting
consummation of such transactions; PROVIDED, HOWEVER, that the
provisions of this Section 8.02(a)(iv) shall not apply unless the
Acquirors have used its commercially reasonable efforts to have any such
order or injunction vacated;
(v) CONSENTS. The Acquirors, THCI, the THCI Partnerships,
the THCI Subsidiaries, the Partners, the Partnerships or the Second Tier
Partnerships, as applicable, shall have received the authorizations,
orders, approvals and consents of Governmental Authorities and third
parties described in Sections 3.03(a) and 3.03(b) of the THCI Disclosure
Schedule, in form and substance reasonably satisfactory to the
Acquirors, with respect to the Properties and Partnership Interests to
be transferred;
(vi) ANCILLARY AGREEMENTS. THCI, a THCI Partnership or a THCI
Subsidiary, as appropriate, shall have duly executed and delivered to
the Acquirors counterparts of each Ancillary Agreement with respect to
the Properties to be transferred at the Initial Closing;
(vii) Subject to the other terms and provisions of this
Agreement, all of the Initial Properties shall be included in the
Initial Closing; and
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(viii) The Acquirors, at their expense and provided they have
ordered the same promptly following the date hereof, shall have received
an ALTA owner or leasehold owner (or equivalent), or commitment to issue
the same, as applicable, title insurance policy with extended coverage
(to the extent available) with respect to each Property included in the
Initial Closing, at standard market rates, subject only to Permitted
Exceptions.
(b) At the Initial Closing, if there is a failure of
condition with respect to one or more of the Properties or Partnership Interests
to be conveyed at the Initial Closing and, with respect to Properties other than
the Initial Properties, the same are not withdrawn by THCI as Properties to be
conveyed at the Initial Closing, then, subject to THCI's right to a reasonable
postponement of the Initial Closing in order to cure the same, the Acquirors may
at their option (i) terminate this Agreement, in which event no party hereto
shall have any further obligations hereunder; (ii) waive the condition and
purchase such Property or Partnership Interest; or (iii) elect not to purchase
such Property or Partnership Interest and purchase the remainder of the
Properties or Partnership Interests to be delivered at the Initial Closing, in
which case the Acquirors shall remain obligated to purchase such Property or
Partnership Interest and the remainder of the Properties and Partnership
Interests to be delivered at Subsequent Closings in accordance with the terms of
this Agreement.
(c) The obligations of the Acquirors to consummate the
transactions contemplated by this Agreement for each Subsequent Closing shall be
subject to the satisfaction or waiver, at or prior to such Subsequent Closing,
of each of the following conditions:
(i) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of THCI contained in Sections 3.01(a) and 3.16 of this
Agreement that are qualified as to materiality shall be true and correct
as of such Subsequent Closing Date and the representations and
warranties of THCI contained in Sections 3.01(a) and 3.16 of this
Agreement that are not so qualified shall be true and correct in all
material respects as of such Subsequent Closing Date, and the
representations and warranties of THCI contained in Sections 3.01(c),
3.01(d), 3.01(e), 3.02, 3.03, 3.04, 3.05, 3.06, 3.07(a), 3.08, 3.09,
3.10, 3.11, 3.14, 3.17, 3.18, 3.19 and 3.20 of this Agreement that are
qualified as to materiality shall be true and correct with respect to
the Properties and the Partnership Interests, if any, to be transferred
at such Subsequent Closing as of such Subsequent Closing Date (other
than such representations and warranties as are made as of a certain
date, which shall be true and correct as of such certain date) and the
representations and warranties of THCI contained in
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Sections 3.01(c), 3.01(d), 3.01(e), 3.02, 3.03, 3.04, 3.05, 3.06,
3.07(a), 3.08, 3.09, 3.10, 3.11, 3.14, 3.17, 3.18, 3.19 and 3.20 of this
Agreement that are not so qualified shall be true and correct with
respect to the Properties and Partnership Interests, if any, to be
transferred at such Subsequent Closing in all material respects as of
such Subsequent Closing Date (other than such representations and
warranties as are made as of a certain date, which shall be true and
correct in all material respects as of such certain date); and the
Acquirors shall have received a certificate of THCI to such effect
signed by a duly authorized officer thereof;
(ii) COVENANTS. All covenants contained in this Agreement to
be complied with by THCI on or before such Subsequent Closing with
respect to the Properties and the Partnership Interests, if any, to be
transferred at such Subsequent Closing shall have been complied with in
all material respects; and the Acquirors shall have received a
certificate of THCI to such effect signed by a duly authorized officer
thereof;
(iii) NO ORDER. No Governmental Authority or court of
competent jurisdiction shall have enacted, issued, promulgated, enforced
or entered any statute, rule, regulation, injunction or other order
(whether temporary, preliminary or permanent) that is in effect and has
the effect of making the transactions contemplated by this Agreement for
such Subsequent Closing illegal or otherwise restraining or prohibiting
consummation of such transactions; PROVIDED, HOWEVER, that the
provisions of this Section 8.02(b)(iii) shall not apply unless the
Acquirors have used their commercially reasonable efforts to have any
such order or injunction vacated;
(iv) CONSENTS. The Acquirors, THCI, the THCI Partnerships,
the THCI Subsidiaries, the Partners, the Partnerships or the Second Tier
Partnerships, as applicable, shall have received the authorizations,
orders, approvals and consents of Governmental Authorities and third
parties described in Sections 3.03(a) and 3.03(b) of the THCI Disclosure
Schedule, in form and substance reasonably satisfactory to the
Acquirors, with respect to the Properties and Partnership Interests to
be transferred;
(v) ANCILLARY AGREEMENTS. THCI or a THCI Subsidiary, as
appropriate, shall have duly executed and delivered to the Acquirors
counterparts of each Ancillary Agreement with respect to the Properties
to be transferred at such Subsequent Closing; and
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(vi) The Acquirors, at their expense and provided they have
ordered the same promptly following the date hereof, shall have received
an ALTA owner or leasehold owner (or equivalent), or commitment to issue
the same, as applicable, title insurance policy with extended coverage
(to the extent available) with respect to each Property included in the
Subsequent Closing, at standard market rates, subject only to Permitted
Exceptions.
(d) The obligations of the Acquirors to consummate the
transactions contemplated by this Agreement for the Applicable Closing for the
Partnership Interest in the Corte Madera Partnership or Second Tier Partnership
shall be subject to the satisfaction or waiver, at or prior to such Applicable
Closing, of the following additional conditions:(i) the Existing Debt with
respect to such Property shall have been paid in full and (ii) the Acquirors
shall not, as a result of the acquisition of such Partnership Interest, acquire
a direct or indirect interest in the capital stock of Xxxx JMB Institutional
Funding Corp.
(e) At a Subsequent Closing, if there is a failure of
condition with respect to the applicable Property or Partnership Interests to be
conveyed at the Subsequent Closing, subject to THCI's right to a reasonable
postponement of the Applicable Closing in order to cure the same, the Acquirors
may at their option (i) waive the condition and purchase each Property or
Partnership Interest or (ii) elect not to purchase such Property or Partnership
Interest, in which case the Acquirors shall remain obligated to purchase such
Property or Partnership Interest and the remainder of the Properties or
Partnership Interests to be delivered at Subsequent Closings in accordance with
the terms of this Agreement.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. SURVIVAL. (a) Subject to the limitations and
other provisions of this Agreement, the representations and warranties of the
parties hereto contained herein, to the extent covered in a certificate
delivered at the Applicable Closing pursuant to Section 8.01(a)(i), 8.01(b)(i),
8.02(a)(i) or 8.02(b)(i), as the case may be, shall survive the Applicable
Closing and shall remain in full force and effect, regardless of any
investigation made by or on behalf of THCI or the Acquirors, for a period of one
year after the Applicable Closing Date; PROVIDED, HOWEVER, that (i) the
representations and warranties set forth in Section 3.07 shall survive the
Applicable Closing and remain in full force and effect until the termination of
all liabilities arising
70
from the subject matter thereof pursuant to all applicable statutes of
limitations and (ii) the representations and warranties set forth in
Sections 3.04, 3.08 and 3.10 shall not survive the Applicable Closing with
respect to the Properties, Management Company Shares and Partnership Interests
that are transferred at such Closing.
(b) Subject to the limitations and other provisions of this
Agreement, each covenant and agreement, including, without limitation, the
indemnity obligations set forth in Section 7.06, of the parties hereto contained
herein shall survive the Applicable Closing and shall remain in full force and
effect for the shortest of the following: (i) an indefinite period after the
Applicable Closing Date; (ii) until the termination of all liabilities arising
from the subject matter thereof pursuant to all applicable statutes of
limitations and (iii) until the end of the applicable period specified elsewhere
in this Agreement with respect to such covenant or agreement.
SECTION 9.02. INDEMNIFICATION BY THCI. (a) THCI agrees,
subject to the other terms and conditions of this Agreement, to indemnify the
Acquirors and their Affiliates, officers, directors, employees, agents,
successors and assigns (each an "ACQUIRORS INDEMNIFIED PARTY") against and hold
them harmless from all Losses arising out of (i) the breach of any
representation or warranty of THCI contained herein, (ii) any breach of any
covenant or agreement of THCI contained herein (other than any covenant or
agreement contained in Article VI, it being understood that all rights to
indemnification under Article VI are pursuant to its terms), (iii) all
Liabilities of the Management Company arising prior to the Initial Closing other
than Liabilities for which the Acquirors receive a credit pursuant to Section
2.07 (other than Liabilities of the Management Company referred to in Article
VI, it being understood that all rights with respect to indemnification for such
Liabilities are pursuant to Article VI), (iv) with respect to any Property or
Partnership Interest for which a Closing has occurred, any Liability of THCI,
the THCI Partnerships and the THCI Subsidiaries relating to or arising out of
such Property or Partnership Interest, arising or accruing prior to the
Applicable Closing for such Property or Partnership Interest which is not an
Assumed Property Liability and (v) with respect to any Record Owner whose Record
Owner Shares or Record Owner Partnership Interests are transferred to the
Acquirors pursuant to this Agreement, all Liabilities of such Record Owner
arising prior to the Applicable Closing other than Liabilities for which the
Acquirors receive a credit pursuant to Section 5.15. Anything in Section 9.01
to the contrary notwithstanding, no claim may be asserted nor any action
commenced against THCI for breach of any representation or warranty contained
herein, unless written notice of such claim or action is received by THCI
describing in detail the facts and circumstances with respect to the subject
matter of such claim or action on or prior to the 30th day after the date on
which the representation or warranty on which such claim or action is based
ceases to
71
survive as set forth in Section 9.01, and such claim or action on or prior to
the date such representation or warranty ceased to survive, in which case such
representation or warranty will survive as to such claim until such claim has
been finally resolved
(b) The indemnification obligations of THCI pursuant to
Section 9.02(a)(i) and (a)(ii) shall not be effective until the aggregate dollar
amount of all Losses that would otherwise be indemnifiable pursuant to this
Section 9.02 exceeds 1% of the aggregate Allocated Purchase Price for the
Properties, Partnership Interests and Management Company Shares (the "THRESHOLD
AMOUNT"), and then only to the extent such aggregate amount exceeds the
Threshold Amount. The indemnification obligations of THCI pursuant to Section
9.02(a)(i) shall be effective only until the dollar amount paid in respect of
the Losses indemnified against under Section 9.02(a)(i) aggregates an amount
equal to 10% of the aggregate Allocated Purchase Price for the Properties,
Partnership Interests and Management Company Shares transferred pursuant to this
Agreement (the "MAXIMUM AMOUNT"). For purposes of this Section 9.02(b), in
computing such individual or aggregate amounts of claims, the amount of each
claim shall be deemed to be an amount net of any insurance proceeds and any
indemnity, contribution or other similar payment actually reserved by the
Acquirors Indemnified Parties from any third party with respect thereto.
(c) Payments by THCI pursuant to Section 9.02(a) shall be
limited to the amount of any liability or damage that remains after deducting
therefrom any insurance proceeds and any indemnity, contribution or other
similar payment actually reserved by the Acquirors Indemnified Parties from any
third party with respect thereto.
(d) An Acquirors Indemnified Party shall give THCI written
notice of any claim, assertion, event or proceeding by or in respect of a third
party as to which such Acquirors Indemnified Party may request indemnification
hereunder or as to which the Threshold Amount may be applied as soon as is
practicable and in any event within 30 days of the time that such Acquirors
Indemnified Party learns of such claim, assertion, event or proceeding;
PROVIDED, HOWEVER, that the failure to so notify THCI shall not affect rights to
indemnification hereunder except to the extent that THCI is actually prejudiced
by such failure. THCI shall have the right to direct, through counsel of its
own choosing, the defense or settlement of any such claim or proceeding at its
own expense, provided that THCI shall not settle any such claim or proceeding
without getting the release of the managing general partner of any Partnership
that is an Acquirors Indemnified Party. If THCI elects to assume the defense of
any such claim or proceeding, THCI shall consult with the Acquirors Indemnified
Party and the Acquirors Indemnified Party may participate in such
72
defense, but in such case the expenses of the Acquirors Indemnified Party shall
be paid by the Acquirors Indemnified Party. The Acquirors Indemnified Party
shall provide THCI with access to its records and personnel relating to any such
claim, assertion, event or proceeding during normal business hours and shall
otherwise cooperate with THCI in the defense or settlement thereof, and THCI
shall reimburse the Acquirors Indemnified Party for all its reasonable
out-of-pocket expenses in connection therewith. If THCI elects to direct the
defense of any such claim or proceeding, the Acquirors Indemnified Party shall
not pay, or permit to be paid, any part of any claim or demand arising from such
asserted liability unless THCI consents in writing to such payment or unless
THCI, subject to the last sentence of this Section 9.02(d), withdraws from the
defense of such asserted liability or unless a final judgment from which no
appeal may be taken by or on behalf of THCI is entered against the Acquirors
Indemnified Party for such liability. If THCI fails to defend or if, after
commencing or undertaking any such defense, THCI fails to prosecute or withdraws
from such defense, the Acquirors Indemnified Party shall have the right to
undertake the defense or settlement thereof, at THCI's expense. If the
Acquirors Indemnified Party assumes the defense of any such claim or proceeding
pursuant to this Section 9.02(d) and proposes to settle such claim or proceeding
prior to a final judgment thereon or to forego any appeal with respect thereto,
then the Acquirors Indemnified Party shall give THCI prompt written notice
thereof, and THCI shall have the right to participate in the settlement or
assume or reassume the defense of such claim or proceeding.
(e) The Acquirors hereby acknowledge and agree that, except
as provided in Section 12.12, from and after each Closing, its sole and
exclusive remedy with respect to any and all claims relating to the Properties,
Partnership Interests and other assets transferred at such Closing shall be
pursuant to the indemnification provisions set forth in this Article IX and in
Article VII; it being understood that the Acquirors shall retain all of their
other rights and remedies under this Agreement with respect to any and all
Properties, Partnership Interests and other assets not transferred under this
Agreement on or prior to such Closing. In furtherance of the foregoing and
except as specified therein, the Acquirors hereby waive, to the fullest extent
permitted under applicable Law, any and all rights, claims and causes of action
relating to the subject matter of this Agreement that they may have against THCI
arising under or based upon any Law (including, without limitation, any such
rights, claims or causes of action arising under or based upon common law or
otherwise).
(f) Except as set forth in this Agreement, THCI is not making
any representation, warranty, covenant or agreement with respect to the matters
contained herein. Anything herein to the contrary notwithstanding, no breach of
any representation, warranty, covenant or agreement contained herein shall give
rise to any
73
right on the part of the Acquirors, after the consummation of the transactions
contemplated hereby, to rescind this Agreement or any of the transactions
contemplated hereby.
(g) THCI shall have no liability under any provision of this
Agreement for and in no event shall the Threshold Amount be applied to any
consequential damages. The Acquirors shall take all reasonable steps to
mitigate Losses for which indemnification may be claimed pursuant to this
Agreement upon and after becoming aware of any event that could reasonably be
expected to give rise to any such Losses.
(h) THCI agrees that until December 31, 1999 it, together
with any guarantor of the obligations of THCI under this Article IX pursuant to
a guaranty in form and substance reasonably acceptable to the Acquiror, shall
maintain a net worth, determined in accordance with Canadian generally accepted
accounting principles, at least equal to the Maximum Amount. THCI shall have
the right to designate one or more such guarantors from time to time, which
guarantors shall become jointly and severally liable with THCI and each other
guarantor at such time as such guarantor delivers the guaranty referred to
above. The Acquirors shall respond promptly to any proposed form of guaranty
submitted by THCI.
SECTION 9.03. INDEMNIFICATION BY THE ACQUIRORS. (a) The
Acquirors agree, subject to the other terms and conditions of this Agreement,
jointly and severally to indemnify THCI and its Affiliates, officers, directors,
employees, agents, successors and assigns (each a "THCI INDEMNIFIED PARTY")
against and hold them harmless from all Losses arising out of (i) the breach of
any representation or warranty of the Acquirors contained herein, (ii) any
breach of any covenant or agreement of the Acquirors contained herein (other
than any covenant or agreement contained in Article VI, it being understood that
all rights to indemnification under Article VI are pursuant to its terms) and
(iii) the Assumed Property Liabilities with respect to the Properties and
Partnership Interests as to which a Closing has occurred. Anything in
Section 9.01 to the contrary notwithstanding, no claim may be asserted nor may
any action be commenced against the Acquirors for breach of any representation
or warranty contained herein, unless written notice of such claim or action is
received by the Acquirors describing in detail the facts and circumstances with
respect to the subject matter of such claim or action on or prior to the 30th
day after the date on which the representation or warranty on which such claim
or action is based ceases to survive as set forth in Section 9.01, and such
claim or action arose on or prior to the date such representation or warranty
ceased to survive, in which case such
74
representation or warranty will survive as to such claim until such claim has
been finally resolved.
(b) The indemnification obligations of the Acquirors pursuant
to Section 9.03(a)(i) and (a)(ii) shall not be effective until the aggregate
dollar amount of all Losses that would otherwise be indemnifiable pursuant to
this Section 9.03 exceeds the Threshold Amount, and then only to the extent such
aggregate amount exceeds the Threshold Amount. The indemnification obligations
of the Acquirors pursuant to Section 9.03(a)(i) shall be effective only until
the dollar amount paid in respect of the Losses indemnified against under
Section 9.03(a)(i) aggregates the Maximum Amount. For purposes of this
Section 9.03(b), in computing such individual or aggregate amounts of claims,
the amount of each claim shall be deemed to be an amount net of any insurance
proceeds and any indemnity, contribution or other similar payment actually
recovered by THCI Indemnified Parties from any third party with respect thereto.
(c) Payments by the Acquirors pursuant to Section 9.03(a)
shall be limited to the amount of any liability or damage that remains after
deducting therefrom any insurance proceeds and any indemnity, contribution or
other similar payment actually recovered by THCI Indemnified Parties from any
third party with respect thereto.
(d) A THCI Indemnified Party shall give the Acquirors written
notice of any claim, assertion, event or proceeding by or in respect of a third
party as to which such THCI Indemnified Party may request indemnification
hereunder or as to which the Threshold Amount may be applied as soon as is
practicable and in any event within 30 days of the time that such THCI
Indemnified Party learns of such claim, assertion, event or proceeding;
PROVIDED, HOWEVER, that the failure to so notify the Acquirors shall not affect
rights to indemnification hereunder except to the extent that the Acquirors are
actually prejudiced by such failure. The Acquirors shall have the right to
direct, through counsel of its own choosing, the defense or settlement of any
such claim or proceeding at its own expense. If the Acquirors elects to assume
the defense of any such claim or proceeding, the Acquirors shall consult with
the THCI Indemnified Party, the THCI Indemnified Party may participate in such
defense, but in such case the expenses of the THCI Indemnified Party shall be
paid by the THCI Indemnified Party. The THCI Indemnified Party shall provide
the Acquirors with access to its records and personnel relating to any such
claim, assertion, event or proceeding during normal business hours and shall
otherwise cooperate with the Acquirors in the defense or settlement thereof, and
the Acquirors shall reimburse the THCI Indemnified Party for all the reasonable
out-of-pocket expenses of such THCI
75
Indemnified Party in connection therewith. If the Acquirors elect to direct the
defense of any such claim or proceeding, the THCI Indemnified Party shall not
pay, or permit to be paid, any part of any claim or demand arising from such
asserted liability, unless the Acquirors consent in writing to such payment or
unless the Acquirors, subject to the last sentence of this Section 9.03(d),
withdraws from the defense of such asserted liability, or unless a final
judgment from which no appeal may be taken by or on behalf of the Acquirors is
entered against the THCI Indemnified Party for such liability. If the Acquirors
fail to defend or if, after commencing or undertaking any such defense, the
Acquirors fail to prosecute or withdraws from such defense, the THCI Indemnified
Party shall have the right to undertake the defense or settlement thereof, at
the Acquirors' expense. If the THCI Indemnified Party assumes the defense of
any such claim or proceeding pursuant to this Section 9.03(d) and proposes to
settle such claim or proceeding prior to a final judgment thereon or to forego
appeal with respect thereto, then such THCI Indemnified Party shall give the
Acquirors prompt written notice thereof and the Acquirors shall have the right
to participate in the settlement or assume or reassume the defense of such claim
or proceeding.
(e) THCI hereby acknowledges and agrees that, except as
provided in Section 12.12, from and after each Closing, its sole and exclusive
remedy with respect to any and all claims relating to the Properties,
Partnership Interests and other assets transferred at such Closing shall be
pursuant to the indemnification provisions set forth in this Article IX and in
Articles VI and VII; it being understood that THCI shall retain all of its other
rights and remedies under this Agreement with respect to any and all Properties,
Partnership Interests and other assets not transferred under this Agreement on
or prior to such Closing. In furtherance of the foregoing and except as
specified therein, THCI hereby waives, to the fullest extent permitted under
applicable Law, any and all rights, claims and causes of action relating to the
subject matter of this Agreement that they may have against the Acquirors
arising under or based upon any Law (including, without limitation, any such
rights, claims or causes of action arising under or based upon common law or
otherwise).
(f) Except as set forth in this Agreement, the Acquirors are
not making any representation, warranty, covenant or agreement with respect to
the matters contained herein. Anything herein to the contrary notwithstanding,
no breach of any representation, warranty, covenant or agreement contained
herein shall give rise to any right on the part of THCI, after the consummation
of the transactions contemplated by this Agreement, to rescind this Agreement or
any of the transactions contemplated hereby.
76
(g) The Acquirors shall have no liability under any provision
of this Agreement for and in no event shall the Threshold Amount be applied to
any consequential damages. THCI shall take all reasonable steps to mitigate
Losses for which indemnification may be claimed pursuant to this Agreement upon
and after becoming aware of any event that could reasonably be expected to give
rise to any such Losses.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. TERMINATION. This Agreement may be terminated:
(a) at any time, by the mutual written consent of THCI and
the Acquirors; or
(b) by either THCI or the Acquirors, if the Initial Closing
shall not have occurred prior to September 30, 1998; PROVIDED, HOWEVER,
that the right to terminate this Agreement under this Section 10.01(b)
shall not be available to any party whose failure to fulfill any
obligation under this Agreement shall have been the cause of, or shall
have resulted in, the failure of the Initial Closing to occur prior to
such date.
Time shall be of the essence for the purposes of this Section 10.01.
SECTION 10.02. EFFECT OF TERMINATION. In the event of
termination of this Agreement as provided in Section 10.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto except (a) as set forth in Sections 3.16, 4.06, 5.04 and 12.01 and
(b) nothing herein shall relieve either party from liability for any willful
breach hereof.
SECTION 10.03. WAIVER. At any time prior to the Closing, the
Acquirors and THCI hereto may (a) extend the time for the performance of any of
the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered by the other party pursuant hereto or
(c) waive compliance with any of the agreements of the other party or conditions
to its own obligations contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party to be
bound thereby. Waiver of any term or condition of this
77
Agreement by a party shall not be construed as a waiver of any subsequent breach
or waiver of the same term or condition by such party, or a waiver of any other
term or condition of this Agreement by such party.
ARTICLE XI
CASUALTY AND CONDEMNATION
SECTION 11.01. CASUALTY. In the event of any damage or
destruction with respect to any Property, (a) the Acquirors may not exclude such
Property (or Partnership Interest, if applicable) from the assets being
purchased by the Acquirors hereunder; (b) the Adjusted Allocable Purchase Price
for such Property or Partnership Interest shall not be adjusted; and (c) THCI
shall assign to the Acquirors at the Applicable Closing all insurance proceeds
or awards received by THCI in respect of such damage or destruction (and any
rights to receive same) net of any costs incurred by THCI in obtaining such
proceeds or awards or used by THCI to rebuild or protect the Property and shall
pay to the Acquirors the amount of any deductible under such insurance policy;
PROVIDED that in the case of a casualty where the cost to repair or rebuild, as
reasonably estimated by THCI, exceeds 25% of the Allocated Purchase Price
applicable to such Property, the Acquirors may, at their sole option at any time
within 30 days following notice from THCI of such estimated cost, elect not to
purchase the Property.
SECTION 11.02. CONDEMNATION. In the event of any condemnation
with respect to any Property, (a) the Acquirors may not exclude such Property
(or Partnership Interest, if applicable) from the assets being purchased by the
Acquirors hereunder; (b) the Adjusted Allocable Purchase Price for such Property
or Partnership Interest shall not be adjusted; and (c) THCI shall assign to the
Acquirors at the Applicable Closing all condemnation proceeds or awards received
by THCI in respect of such condemnation (and any rights to receive same) net of
any costs incurred by THCI in obtaining such proceeds or awards or used by THCI
to protect the Property or to integrate the balance of the Property into a
functional unit; PROVIDED that in the case of a condemnation where the value of
the portion of the Property so taken is greater than 25% of the Allocated
Purchase Price applicable to such Property, the Acquiror may, at its sole option
at any time written 30 days following notice from THCI of such taking, elect not
to purchase the Property.
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ARTICLE XII
GENERAL PROVISIONS
SECTION 12.01. EXPENSES. Except as provided in Section 7.01, all
costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the party
incurring such costs and expenses, whether or not the Initial Closing shall have
occurred.
SECTION 12.02. NOTICES. (a) All notices and other
communications given or made pursuant hereto or pursuant to any Ancillary
Agreement shall, subject to Section 12.02(b), be deemed to have been duly given
or made upon receipt or refusal of notice and shall be in writing and shall be
sent by an overnight courier service that provides proof of receipt or
telecopied to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(i) if to THCI:
TrizecHahn Centers Inc.
c/o TrizecHahn Corporation
BCE Place, 000 Xxx Xxxxxx
Xxxxx 0000, Xxx 000
Xxxxxxx, Xxxxxxx X0X 0X0
Xxxxxx
Telecopy No.: (000) 000-0000
Attention: General Counsel
with a copy to:
Shearman & Sterling
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxxx Xxxxxxx, Esq.
79
(ii) if to the Acquirors:
The Xxxxx Company
00000 Xxxxxx Xxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxxx 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxxxx Xxxxxxxxxx, Esq.
General Counsel
and
Westfield America, Inc.
c/o Westfield Corporation, Inc.
00000 Xxxxxxxx Xxxx., 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Telecopy No.: (000) 000-0000
Attention: Xxx Xxxxxx, Esq.
General Counsel
with copies to:
Debevoise & Xxxxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy No.: (000) 000-0000
Attention: Xxxxx Xxxxx, Esq.
(b) If this Agreement requires the exercise of a right by
notice on or before a certain date or within a designated period, such right
shall be deemed exercised on the date of delivery to the courier service or
telecopying of the notice pursuant to which such right is exercised.
(c) Notices of changes of address shall be effective only
upon receipt.
(d) Any notices or other communications given by either
Acquiror shall be deemed given by both Acquirors and THCI shall be entitled to
rely thereon.
SECTION 12.03. PUBLIC ANNOUNCEMENTS. Except as required by Law
or the rules of any securities exchange on which the securities of either party
80
hereto may be traded (in which case the disclosing party shall use all
reasonable efforts to provide prior notification to the other party), no party
to this Agreement shall make any public announcement in respect of this
Agreement or the transactions contemplated hereby or otherwise communicate with
any news media without giving prior notification thereof to the other party, and
the parties shall each consult with the other as to the timing and contents of
any such announcement.
SECTION 12.04. HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
SECTION 12.05. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in any
manner adverse to any party. Upon such determination that any term or other
provision is invalid, illegal or incapable of being enforced, the parties hereto
shall negotiate in good faith to modify this Agreement so as to effect the
original intent of the parties as closely as possible in a mutually acceptable
manner in order that the transactions contemplated hereby be consummated as
originally contemplated to the greatest extent possible.
SECTION 12.06. ENTIRE AGREEMENT. This Agreement and the
Ancillary Agreements constitute the entire agreement of the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
undertakings, both written and oral, other than the Confidentiality Agreements
with respect to the subject matter thereof and except as otherwise expressly
provided herein.
SECTION 12.07. ASSIGNMENT. This Agreement shall not be assigned
by operation of Law or otherwise without the express written consent of THCI and
the Acquirors (which consent may be granted or withheld in the sole discretion
of THCI on the one hand and the Acquirors, on the other hand); PROVIDED,
HOWEVER, that (a) THCI may, without the consent of the Acquirors, assign this
Agreement in accordance with Section 7.05, (b) each Acquiror may assign any or
all of its rights hereunder to the other Acquiror, but no such assignment shall
relieve either Acquiror of any of its obligations hereunder and (c) any party
may assign any or all of its rights and interests hereunder to one or more of
its Affiliates, but no such assignment shall relieve such party of any of its
obligations hereunder. Each of WEA and Xxxxx may elect to have title to any
Property or any Partnership Interest conveyed directly to any entity which is
wholly owned or controlled by WEA or Xxxxx if the same would not cause THCI to
be
81
in violation of the representation set forth in Section 3.14(b). Any action
required to be taken by THCI pursuant to this Agreement shall be deemed to be
taken if THCI causes one of its Affiliates or another Person to take such
action.
SECTION 12.08. NO THIRD-PARTY BENEFICIARIES. This Agreement
shall be binding upon the Acquiror and THCI and shall inure to the sole benefit
of the Acquirors, THCI, and, in the case of Article IX, THCI Indemnified Parties
and the Acquirors Indemnified Parties, and their respective successors, heirs,
legal representatives and permitted assigns. Nothing herein, express or
implied, is intended to or shall confer upon any other person or entity any
legal or equitable right, benefit or remedy of any nature whatsoever under or by
reason of this Agreement.
SECTION 12.09. AMENDMENT; WAIVER. This Agreement may not be
amended or modified except by an instrument in writing signed by THCI and the
Acquiror.
SECTION 12.10. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the Laws of the State of New York;
PROVIDED, HOWEVER, that all matters related to conveying any Property shall be
governed by, and construed in accordance with, the Laws of the State in which
such Property is located. All actions and proceedings arising out of or
relating to this Agreement shall be heard and determined in any state or federal
court sitting in the City of New York, and the parties hereto hereby irrevocably
submit to the exclusive jurisdiction of such courts in any such action or
proceeding and irrevocably waive the defense of an inconvenient forum to the
maintenance of any such action or proceeding.
SECTION 12.11. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 12.12. SPECIFIC PERFORMANCE. The parties hereto agree
that the remedy at law for any breach of this Agreement will be inadequate and
that any party by whom this Agreement is enforceable shall be entitled to
specific performance in addition to any other appropriate relief or remedy.
SECTION 12.13. NO RECORDATION. The Acquirors shall not be
permitted to record this Agreement or any memorandum hereof. To the extent any
82
such recording is made, the Acquirors shall indemnify THCI, each THCI
Partnership and each THCI Subsidiary against any damages incurred by any of them
in connection therewith.
SECTION 12.14. JOINT AND SEVERAL OBLIGATIONS. The obligation of
the Acquirors pursuant to this Agreement shall be joint and several.
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IN WITNESS WHEREOF, THCI and the Acquiror have caused this
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
TrizecHahn Centers Inc.
By /s/ Xxxxxxx Xxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxx
Title: Executive Vice President
The Xxxxx Company
By /s/ Xxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Senior Vice President
Westfield America, Inc.
By /s/ Xxxxx X. Xxxx
-------------------------------
Name: Xxxxx X. Xxxx
Title: Co-President
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