Exhibit 2.3
MERGER AGREEMENT
Among
GGP Limited Partnership, GGP Acquisition L.L.C.
And
U.S. Prime Property Inc.
May 14, 1998
TABLE OF CONTENTS
1. Definitions............................................................................. 1
2. Basic Transaction.......................................................................11
(a) The Merger.........................................................................11
(b) The Closing........................................................................11
(c) Actions at the Closing.............................................................11
(d) Effect of Merger...................................................................12
(e) Procedure for Payment..............................................................14
(f) Closing of Transfer Records........................................................16
(g) Dissenters' Rights.................................................................16
(h) Escrow of Deposit..................................................................16
(i) Escrow For Post-Closing Claims and Adjustments.....................................17
(j) Withholding Matters................................................................17
(k) Net Quick Asset Adjustment.........................................................19
(l) Further Assurances.................................................................22
3. Representations and Warranties of the Company...........................................22
(a) Organization, Qualification and Corporate Power....................................22
(b) Capitalization.....................................................................23
(c) PCI; the Venture; the Trust........................................................23
(d) Subsidiaries; Other Equity Interests...............................................23
(e) Authorization of Transaction.......................................................24
(f) Noncontravention...................................................................24
(g) Financial Statements...............................................................25
(h) Events Subsequent to Most Recent Fiscal Period End.................................26
(i) Tax Returns and Liabilities........................................................27
(j) Litigation.........................................................................29
(k) Real and Personal Property.........................................................29
(l) Shopping Centers - Service Contracts; Leases; REAs; and Brokerage
Commissions; Other Material Contracts..............................................29
(m) Shopping Centers - Representations Pertaining to the Premises and Legal
Matters............................................................................32
(n) Debt Instruments...................................................................34
(o) ERE Yarmouth Agreement.............................................................34
(p) Xxxx-Xxxxx-Xxxxxx Act..............................................................34
(q) Employees..........................................................................35
(r) Brokers' Fees......................................................................35
(s) Promotional Funds..................................................................35
(t) Violations.........................................................................35
(u) Licenses and Permits...............................................................36
i
(v) Tenant Bankruptcy........................................................36
(w) Intellectual Property....................................................36
(x) Tax Assessments..........................................................36
(y) Bank Accounts and Powers of Attorney.....................................37
(z) Records..................................................................37
4. Representations and Warranties of the Buyer and the Transitory Subsidiary.....37
(a) Organization.............................................................37
(b) Financial Ability to Perform.............................................37
(c) Authorization of Transaction.............................................37
(d) Noncontravention.........................................................38
(e) Litigation...............................................................38
(f) The Transitory Subsidiary................................................38
(g) Brokers' Fees............................................................38
5. Survival of Representations and Warranties....................................39
6. Claims Against the Escrow Fund................................................39
7. Covenants.....................................................................39
(a) General..................................................................39
(b) Notices and Consents.....................................................39
(c) Regulatory Matters; Stockholder Approval.................................40
(d) Conduct of Business by the Company.......................................40
(e) Full Access..............................................................42
(f) Notice of Developments...................................................42
(g) Indemnification; Directors' and Officers' Insurance......................43
(h) Contracts, Transfers and Encumbrances....................................46
(i) Tenant Leases and REAs...................................................46
(j) Notice...................................................................47
(k) Estoppel Letters; Rent Roll..............................................47
(l) Taxes; Notices; Lease Negotiations; and Insurance........................48
(m) Other Obligations........................................................48
(n) Contest..................................................................49
(o) Transfer Taxes...........................................................49
(p) Exclusivity..............................................................49
(q) Governmental Entities....................................................50
(r) Employees................................................................50
8. Delivery of Title Commitments and Surveys.....................................50
9. Conditions to Obligation to Close.............................................52
(a) Conditions to Obligations of the Buyer and the Transitory Subsidiary.....52
(b) Conditions to Obligation of the Company..................................55
ii
10. Termination..............................................................56
(a) Termination of Agreement and Remedies...............................56
(b) Effect of Termination...............................................57
(c) Remedies............................................................57
11. Miscellaneous............................................................57
(a) Press Releases and Public Announcements.............................57
(b) No Third-Party Beneficiaries........................................58
(c) Entire Agreement....................................................58
(d) Succession and Assignment...........................................58
(e) Counterparts........................................................58
(f) Headings............................................................58
(g) Notices.............................................................58
(h) Governing Law.......................................................60
(i) Amendments and Waivers..............................................60
(j) Severability........................................................60
(k) Construction........................................................60
(l) Consent of the Buyer................................................61
(m) Expenses............................................................61
(n) Enforcement of Agreement............................................61
(o) Waiver of Jury Trial................................................61
(p) Incorporation of Exhibits and Schedules.............................61
Exhibit A--List of Properties
Exhibit B--Form of Certificate of Merger
Exhibit C--Certificate of Incorporation
Exhibit D--Bylaws
Exhibit E--Form of Letter of Transmittal
Exhibit F--Intentionally Omitted
Exhibit G--Form of Deposit Escrow Agreement
Exhibit H--Form of Post-Closing Escrow Agreement
Exhibit I--Form of Non-Foreign Person Certificate
Exhibit J--Form of Notice of Submission of Application for Withholding
Certificate
Exhibit K--Certain Liabilities on Net Quick Assets Schedules
Exhibit L--Forms of Estoppel
Exhibit M--Intentionally Omitted
Schedule I--Stockholders to be Parties to Post-Closing Escrow Agreement
Schedule II--List of Knowledge Persons
Schedule III--Approved Committed Capital Expenditures and Tenant Improvements
and Certain Due Diligence Items, Commissions and Other Matters
Disclosure Schedule--Exceptions to Representations and Warranties and other
Provisions
iii
MERGER AGREEMENT
Merger Agreement, entered into on May 14, 1998, by and among GGP Limited
Partnership, a Delaware limited partnership (the "Buyer"), GGP Acquisition,
L.L.C., a Delaware limited liability company wholly-owned by the Buyer (the
"Transitory Subsidiary"), and U.S. Prime Property Inc., a Delaware corporation
(the "Company"). The Buyer, the Transitory Subsidiary and the Company are each
sometimes referred to herein as a "Party" and collectively as the "Parties".
This Agreement contemplates a transaction in which the Buyer will acquire
the Company for cash through a reverse subsidiary merger of the Transitory
Subsidiary with and into the Company. It is intended that, immediately prior to
the Effective Time (as hereinafter defined), P City, Inc. ("PCI"), a Delaware
corporation which is the owner of a fifty percent interest in the partnership
which owns the entire beneficial interest in Park City Center, located in
Lancaster, Pennsylvania, will transfer such interest (the "PCI Venture
Interest") to the Company (or, if requested by the Buyer, to a newly-formed
wholly-owned subsidiary of the Company ("Company Sub")) so that, upon the
Merger, the Buyer will indirectly acquire the entire beneficial interest in Park
City Center. Such transaction will be effected pursuant to the terms of an
agreement, dated as of the date hereof (the "P City Agreement"), among the
Company, the Schedule I Stockholders (as defined below) and PCI. As an
inducement to the Buyer to enter into this Agreement, certain stockholders of
the Company holding a majority of the outstanding Company Shares (as defined
below) are concurrently herewith entering into an agreement with the Buyer and
the Transitory Subsidiary providing that such stockholders shall vote their
Company Shares for approval of the Merger and the transactions contemplated
hereby (the "Stockholder Voting Agreement").
Now, therefore, in consideration of the premises and the mutual promises
herein made, and in consideration of the representations, warranties and
covenants herein contained, the Parties agree as follows.
1. Definitions.
"Adjustment" has the meaning set forth in (S)2(k)(iii).
"Affiliate" has the meaning set forth in Rule 12b-2 of the regulations
promulgated under the Securities Exchange Act of 1934, as amended.
"Auditor" has the meaning set forth in (S)2(k)(v).
"Business Day" means any day, other than a Saturday, Sunday, legal holiday
under the Federal laws of the United States of America or a day on which banks
are closed in Chicago, Illinois or New York, New York.
"Buyer" has the meaning set forth in the preface above.
"CBA" has the meaning set forth in (S)7(r)(ii).
"Certificate" means any certificate which immediately prior to the
Effective Time represented Company Shares.
"Certificate of Merger" has the meaning set forth in (S) 2(c)(iv).
"Chargeable Violation" means any violation of any law, ordinance, order,
requirement or regulation of any governmental authority (i) which is not caused
by the Buyer or the result of any of its decisions under this Agreement, (ii)
which no one other than the Company, any of its Subsidiaries, or the Venture is
solely responsible for complying with, (iii) which the Company, any of its
Subsidiaries, or the Venture has received written notice of from the appropriate
governmental authority on or prior to the Closing Date, (iv) which is not listed
in the Disclosure Schedule or otherwise known to the Buyer on the date hereof,
(v) which will cost at least $5,000 to cure, and (vi) for which the cost of
curing cannot be passed through to tenants or other occupants as common area
maintenance charges pursuant to Leases or REAs.
"Closing" has the meaning set forth in (S) 2(b).
"Closing Date" has the meaning set forth in (S) 2(b).
"Closing Expense Fund" means the amount set forth in a written notice from
the Company to the Buyer at least three (3) Business Days prior to the Closing
Date, to be paid to the Representative, as agent for the Company Stockholders
and PCI, at the Closing pursuant to (S) 2(c), to cover certain transaction
expenses of the Company, the Company Stockholders and PCI, as set forth in such
notice, including, without limitation, all unpaid title and survey costs to be
borne by the Company Stockholders as set forth in (S) 8(a) of this Agreement,
fees, expenses and other amounts payable to ERE Yarmouth Inc. or its Affiliates
(including any disposition fees, termination fees and asset management fees
payable in respect of any period prior to or following the Closing), any unpaid
legal or accounting fees or expenses relating to the transactions contemplated
by this Agreement, the P City Agreement and the other agreements contemplated
hereby, all Transfer Taxes other than Pennsylvania Commonwealth Transfer Taxes
and any fees and expenses of the Representative, which notice shall also
separately identify which expenses are expenses attributable to the Company, the
Company Stockholders and PCI, respectively. The amounts and allocations so set
forth shall be subject to the review and approval of the Buyer, which approval
shall not be unreasonably withheld based on the expenses which can reasonably be
expected to be incurred by the Company, the Company Stockholders and PCI in
connection with the transactions contemplated hereby and which remain unpaid at
Closing. The Representative shall pay all such transaction expenses on behalf
of the Company Stockholders and PCI out of and to the extent of the Closing
Expense Fund, and the Surviving Corporation shall have no liability therefor.
The Buyer and the Surviving Corporation shall be indemnified pursuant to the
Post-Closing Escrow Agreement against any expenses which should have been paid
out of the Closing Expense Fund, but which were not so paid.
"Closing Net Quick Assets Schedules" has the meaning set forth in (S) 2(k)
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"Code" means the Internal Revenue Code of 1986, as amended.
"Company" has the meaning set forth in the preface above.
"Company Common Share" means any share of Common Stock, par value $.01 per
share, of the Company.
"Company Share" means any Company Common Share and any share of Class A
Stock, par value $.01 per share, of the Company.
"Company Stockholder" means any Person who or which holds any Company
Shares.
"Company Sub" has the meaning set forth in the preface above.
"Confidential Information" means any information concerning the business or
affairs of the Company, any of its Subsidiaries or the Venture other than
information which (i) at or prior to the time of disclosure by the Company or
any of its Affiliates or representatives, is generally available to and known
by the public other than as a result of a disclosure directly or indirectly by
the Buyer or its partners, directors, officers, employees, agents or advisors,
(ii) was or becomes available to the Buyer on a non-confidential basis from a
source other than the Company, or anyone acting on behalf of the Company,
provided that such source is not and was not known by the Buyer to be bound by a
confidentiality agreement with or other obligation of secrecy to the Company or
(iii) is independently developed by the Buyer or its partners, directors,
officers, employees, agents or advisors without violation of any confidentiality
obligation set forth herein or in the Confidentiality Agreement. To the extent
the foregoing definition conflicts with the definition of Evaluation Material in
the Confidentiality Agreement, the definition of Confidential Information herein
shall control for purposes hereof and of the Confidentiality Agreement.
"Confidentiality Agreement" means the Confidentiality Agreement between
General Growth Properties, Inc. and the Representative (formerly known as The
Yarmouth Group, Inc.), dated December 18, l997, as amended.
"Delaware General Corporation Law" means the General Corporation Law of the
State of Delaware, as amended.
"Deposit" has the meaning set forth in (S) 2(h)(i).
"Deposit Escrow Agent" means Commonwealth Land Title Insurance Company.
"Deposit Escrow Agreement" has the meaning set forth in (S) 2(h)(i).
"Disclosure Schedule" has the meaning set forth in (S) 3.
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"Dissenting Share" means any Company Share which any Company Stockholder
who or which has exercised his or its appraisal rights in accordance with the
Delaware General Corporation Law holds of record and Dissenting Stockholder
means any such Company Stockholder.
"Effective Time" has the meaning set forth in (S) 2(d)(i).
"Employee" has the meaning set forth in (S) 3(q).
"Environmental Laws" means all federal, state and local statutes,
ordinances, codes, rules, regulations, guidelines, orders and decrees
regulating, relating to or imposing liability or standards concerning or in
connection with Hazardous Materials, underground storage tanks or the protection
of human health or the environment, as any of the same may be amended from time
to time, including but not limited to, the Comprehensive Environmental Response,
Compensation and Liability Act ("CERCLA"), 42 U.S.C. (S) 9601 et. seq., as
amended by the Superfund Amendments and Reauthorization Act, or any equivalent
state or local laws or ordinances; the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. (S) 6901 et. seq., as amended by the Hazardous and Solid
Waste Amendments of 1984, or any equivalent state or local laws or ordinances;
the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. (S)
136 et. seq. or any equivalent state or local laws or ordinances; the Hazardous
Materials Transportation Act, 49 U.S.C. (S) 1801 et. seq.; the Emergency
Planning and Community Right-to-Know Act ("EPCRA"), 42 U.S.C. (S) 11001 et.
seq., or any equivalent state or local laws or ordinances; the Toxic Substance
Control Act ("TSCA"), 15 U.S.C. (S) 2601 et. seq,. or any equivalent state or
local laws or ordinances; the Atomic Energy Act, 42 U.S.C. (S) 2011 et. seq., or
any equivalent state or local laws or ordinances; the Clean Water Act (the
"Clean Water Act"), 33 U.S.C. (S) 1251 et. seq., or any equivalent state or
local laws or ordinances; the Clean Air Act (the "Clean Air Act") 42 U.S.C. (S)
7401 et. seq., or any equivalent state or local laws or ordinances; and the
Occupational Safety and Health Act, 29 U.S.C. (S) 65101 et. seq., or any
equivalent state or local laws or ordinances.
"ERE-Yarmouth" means ERE-Yarmouth, Inc., a Delaware corporation.
"Escrow Withholding Amount" has the meaning set forth in (S) 2(j)(ii).
"Financial Statements" has the meaning set forth in (S) 3(g).
"GAAP" means United States generally accepted accounting principles, and,
with respect to the Financial Statements and the Venture Financial Statements,
such principles in effect on the date of the relevant Financial Statement or
Venture Financial Statement, as the case may be.
"Xxxx-Xxxxx-Xxxxxx Act" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements
Act of 1976, as amended.
"Hazardous Materials" has the meaning set forth in (S) 3(m)(iv).
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"Indemnified Party" has the meaning set forth in (S) 7(g).
"Indemnifying Party" has the meaning set forth in (S) 7(g).
"Knowledge of the Company" means the actual knowledge, after due inquiry,
of the persons identified on Schedule II to this Agreement.
"Licenses and Permits" has the meaning set forth in (S) 3(u).
"Liens" means liens, charges, claims, pledges, security interests,
mortgages or encumbrances of any nature whatsoever.
"Mandatory Cure Items" has the meaning set forth in (S) 8(b).
"Material Adverse Effect" means a material adverse effect on the business,
properties, liabilities, financial condition or results of operations of the
Company and its Subsidiaries (including, for this purpose the Venture), taken as
a whole, or on the ability of the Parties to consummate the transactions
contemplated by this Agreement or perform their obligations under this
Agreement. Effects attributable to either (i) actions required by the terms of
this Agreement or (ii) changes in general economic conditions, including,
without limitation, changes in prevailing real estate values and interest rates,
shall not be considered to constitute a Material Adverse Effect.
"Mayfair" means Mayfair Property, Inc., a Delaware corporation.
"Xxxxxxx Mall Loan" means the loan evidenced by Promissory Note dated
November 30, 1993 of the Company, as Maker, and Connecticut General Life
Insurance Company, as Payee, in the principal amount of $67 million, as modified
by the Modification of Note, Deed of Trust and Other Loan Documents dated August
5, 1994.
"Xxxxxxx Mall Mortgage" means the Deed of Trust and Security Agreement with
Assignment of Rents and Fixture Filing, dated November 30, 1993, as modified by
the Modification of Note, Deed of Trust and Other Loan Documents dated August 5,
1994.
"Merger" has the meaning set forth in (S) 2(a).
"Merger Consideration" means $625,000,000 less the sum of (i) the
outstanding unpaid principal balance together with accrued and unpaid interest
thereon in respect of the Xxxxxxx Mall Loan, (ii) $15,230,940 in respect of
committed capital expenditures and tenant improvements and certain due diligence
items, commissions and other matters identified in Schedule III, (iii) the Park
City Proceeds, (iv) the Revolving Credit Proceeds and (v) the Closing Expense
Fund, as adjusted in accordance with the terms of this Agreement.
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"Most Recent Fiscal Period End" has the meaning set forth in (S) 3(g).
"Net Quick Assets" has the meaning set forth in (S) 2(k)
"Notice of Denial" has the meaning set forth in (S) 2(j).
"Other Material Contract" means any agreement (including all modifications,
amendments and supplements thereto), other than a Service Contract, Lease or
REA, (i) that limits or purports to limit, directly or indirectly, the ability
of the Company, any of its Subsidiaries or the Venture to compete with any
Person in any geographic area during any period; (ii) relating to the
acquisition or disposition of any real property, whether by merger, sale of
stock, sale of assets or otherwise; (iii) under which the Company, any of its
Subsidiaries or the Venture is obligated to pay in excess of $25,000 over the
remaining term thereof; (iv) constituting an option agreement for real property
or (v) which is between or among any of the Company, any of its Subsidiaries,
PCI, Park City and the Venture, including without limitation, any notes
representing indebtedness among any such entities.
"Ordinary Course of Business" means the ordinary course of business of the
Company, its Subsidiaries, P City and the Venture, consistent with past custom
and practice.
"Park City" means Park City, Inc., a Delaware corporation.
"Park City Proceeds" means the aggregate amount, in U.S. Dollars, required
to be paid by the Company in order to satisfy in full the mortgage indebtedness
of the Company secured by the Park City Center located in Lancaster,
Pennsylvania and to obtain the release of all Liens related thereto on the
Closing Date and all other obligations of the Company and its Affiliates in
respect thereof, including the payment of all fees and expenses related thereto.
"Party" has the meaning set forth in the preface above.
"Paying Agent" has the meaning set forth in (S) 2(e)(i)(A).
"Payment Fund" has the meaning set forth in (S) 2(e)(i)(A).
"PCI" has the meaning set forth in the preface above.
"P City Agreement" has the meaning set forth in the preface above.
"PCI Allocable Portion" means that portion of the Merger Consideration
allocable to PCI in accordance with the P City Agreement in consideration of the
transfer by PCI to the Company (or Company Sub) of the PCI Venture Interest
immediately prior to the Effective Time. The Company shall give written notice
of the PCI Allocable Portion to the Buyer at least three (3) Business Days prior
to the Closing Date, which notice shall specify the amount of the Merger
Consideration which constitutes the PCI Allocable Portion (i) to be delivered to
PCI at
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the Closing and (ii) to be paid to the Escrow Agent in accordance with the terms
of this Agreement and the Post-Closing Escrow Agreement at the Closing as part
of the Escrow Amount.
"PCI Venture Interest" has the meaning set forth in the preface above.
"Permitted Exceptions" means matters identified as Permitted Exceptions in
the Disclosure Schedule. The listing of an item as a Permitted Exception shall
not be deemed to qualify any representation, warranty, covenant, closing
condition (other than the condition relating to the delivery of the Title
Policies), indemnity or other agreement contained herein or in the agreements
contemplated hereby, except as expressly set forth herein or therein.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or any other entity, including a
governmental entity (or any department, agency or political subdivision
thereof).
"Post-Closing Escrow Agent" means Commonwealth Land Title Insurance
Company.
"Post-Closing Escrow Agreement" has the meaning set forth in (S) 2(i).
"Post-Closing Escrow Amount" has the meaning set forth in (S) 2 (i).
"Post-Closing Escrow Fund" has the meaning set forth in (S) 2(i).
"Preliminary Net Quick Assets Schedules" has the meaning set forth in (S)
2(k)(i).
"Quick Assets" has the meaning set forth in (S) 2(k)(i).
"Quick Liabilities" has the meaning set forth in (S) 2(k)(i).
"REA" means the reciprocal easement agreements set forth in the Disclosure
Statement.
"REA Party" means any party to an REA other than the Company, any of its
Subsidiaries, or the Venture.
"Representative" means ERE Yarmouth, Inc., acting solely in its capacity
as representative of the Schedule I Stockholders and PCI.
"Requisite Stockholder Approval" means the affirmative vote of the holders
of a majority of the Company Shares voting as a single class in favor of this
Agreement and the Merger.
"Revolving Credit Agreements" means (i) the Credit Agreements, each dated
as of November 17, 1994, (x) among the Company, the banks parties thereto and
Westpac Banking
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Corporation, as agent and as issuing bank, (y) between the Company and Lend
Lease Corporation Limited ("Lendlease") and (z) between the Company and MLC Life
Limited ("MLC") and (ii) the Commercial Paper Agreement dated as of November 17,
l994 among the Company, Lendlease, MLC, ABN AMRO Australia Limited and ABN AMRO
Bank N.V. and all amendments to the foregoing (in each case, together with all
documents and instruments referred to therein making up the commercial paper
credit facility as referred to in such agreements).
"Revolving Credit Proceeds" means the aggregate amount, in U.S. Dollars,
required to be paid by the Company under the Revolving Credit Agreements in
order to satisfy in full all of the Company's obligations thereunder and obtain
the release all Liens related thereto on the Closing Date, including the payment
of all fees and expenses related thereto.
"Schedule I Stockholders" has the meaning set forth in (S) 2(d)(vi).
"Service Contract" has the meaning set forth in (S)3(l)(i).
"Settlement Date" has the meaning set forth in (S)2(k)(iii).
"Shopping Centers" means the properties listed on Exhibit A hereto.
"Special Meeting" has the meaning set forth in (S) 7(c).
"Stockholder Allocable Portion" means the difference between the Merger
Consideration and the PCI Allocable Portion.
"Stockholder's Portion" means, with respect to any Company Stockholder,
that portion of the Merger Consideration included in the Stockholder Allocable
Portion equal to the product of the Stockholder's Percentage of such Company
Stockholder multiplied by the Stockholder Allocable Portion.
"Stockholder's Percentage" means, with respect to any Company Stockholder,
the percentage (computed to the fourth decimal place) determined by dividing the
number of Company Shares held by such Company Stockholder immediately prior to
the Effective Time by the aggregate number of Company Shares issued and
outstanding immediately prior to the Effective Time.
"Stockholder Voting Agreement" has the meaning set forth in the preamble
above.
"Subsidiary" means any corporation, partnership, limited liability company
or other entity with respect to which the Company (or a Subsidiary thereof),
directly or indirectly, owns a majority of the voting securities or equivalent
interests or has the power to vote or direct the voting of sufficient securities
or equivalent interests to elect a majority of the directors or those Persons
performing similar functions or otherwise to direct the management and policies
thereof.
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"Survey" means:
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with respect to Landmark Mall, that certain survey dated April 1, 1998,
revised May 6, 1998, prepared by Holland Engineering (the "Landmark
Survey");
with respect to Northgate Mall, that certain survey dated April 10, 1998,
revised May 6, 1998, prepared by Xxxxx Xxxxxx Realty Development Co. (the
"Northgate Survey");
with respect to Oglethorpe Mall, (a) that certain survey dated September
20, 1982, as updated on April 14, 1998, revised April 25, 1998, prepared by
Hussey, Gay, Xxxx & XxXxxxx and (b) with respect to the outparcels, (i)
those certain surveys dated April 26, 1990, as visually reinspected and
updated on April 25, 1998, prepared by Hussey, Gay, Xxxx & De Young and
(ii) those certain surveys dated March 30, 1990, as visually reinspected
and updated on April 25, 1998, prepared by Hussey, Gay, Xxxx & De Xxxxx
(collectively, the "Oglethorpe Survey");
with respect to Park City Center, that certain survey dated March 30, 1998,
revised May 11, 1998, prepared by Acer Engineers & Consultants, Inc. (the
"Park City Survey");
with respect to Mayfair Mall and the Mayfair office buildings, that certain
survey dated April 10, 1998 prepared by National Survey & Engineering (the
"Mayfair Survey"); and
with respect to Xxxxxxx Mall that certain survey dated April 10, 1998,
revised May 6, 1998, prepared by VTN Nevada Consulting Engineers, Planners
& Surveyors (the "Xxxxxxx Survey").
"Surveyor" means:
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with respect to the Landmark Survey, Holland Engineering;
with respect to the Northgate Survey, Xxxxx Xxxxxx Realty Development Co.;
with respect to the Oglethorpe Survey, Hussey, Gay, Xxxx & XxXxxxx;
with respect to the Park City Survey, Acer Engineers & Consultants, Inc.;
with respect to the Mayfair Survey, National Survey & Engineering; and
with respect to the Xxxxxxx Survey, VTN Nevada Consulting Engineers,
Planners & Surveyors.
"Survival Termination Date" has the meaning set forth in (S) 5.
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"Surviving Corporation" has the meaning set forth in (S) 2(a).
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"Tax" means any federal, state, local, foreign or other tax (including
withholding taxes), assessment, deficiency, fee, levy, social security
obligation or other governmental charge, from time to time imposed by or
required to be paid to any governmental authority (including
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penalties and additions to tax thereon, penalties for failure to file a return
or report and interest on any of the foregoing).
"Tax Returns and Reports" means any federal, state, local or foreign Tax
returns, statements, reports, forms and notices required to be filed with any
Taxing authority.
"Title Company" means Commonwealth Land Title Insurance Company.
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"Title Commitments" means:
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with respect to Landmark Mall, the pro forma Title Insurance Policy No. AX
984054AA dated May 12, 1998 issued by the Title Company;
with respect to Northgate Mall, the pro forma Title Insurance Policy No.
97-027 dated May 12, 1998 issued by the Title Company;
with respect to Oglethorpe Mall, the pro forma Title Insurance Policy No.
00-0000-0 dated May 12, 1998 issued by the Title Company;
with respect to Park City Center, the pro forma Title Insurance Policy No.
D201714LA dated May 12, 1998 issued by the Title Company;
with respect to Mayfair Mall and the Mayfair office buildings, the pro
forma Title Insurance Policies No. 00-00-000000 and No. 00-00-000000 dated
May 12, 1998 issued by Lawyers Title Insurance Corporaton; and
with respect to Xxxxxxx Mall, the pro forma Title Insurance Policy Xx.
0000000 dated May 12, 1998 issued by Lawyers Title of Nevada.
"Title Policy" means an ALTA Form B-1970 Owner's Policy of Title Insurance
issued by the Title Company with respect to each Shopping Center, (other than
with respect to Northgate Mall as to which the policy shall be an ALTA 1975
Leasehold Owner's Policy) in the applicable amount set forth on the
corresponding Title Commitment, and dated the date and time of Closing, insuring
the Company as owner of good, marketable and indefeasible fee title (other than
Northgate Mall as to which the title insured shall be leasehold title) to each
Shopping Center except for Mayfair Mall and the Mayfair office buildings as to
which Mayfair Property Inc. shall be insured as the owner of good, marketable
and indefeasible fee title, and except for Park City Center as to which the
Trust shall be insured as the owner of good, marketable and indefeasible title,
subject in each case only to the Permitted Exceptions, and containing such
affirmative insurance and endorsements as are specified in the respective Title
Commitment.
"Transfer Taxes" has the meaning set forth in (S) 7(o).
--------------
"Transitory Subsidiary" has the meaning set forth in the preface above.
---------------------
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"Trust" means the Lancaster Trust, an Illinois trust established by that
certain Indenture of Trust dated as of July 31, 1979 between the Venture and
Xxxxxx Xxxxxxxxxxx and M. Xxxxx Xxxxxxx, Xx., as trustees, as amended, which is
the legal owner of Park City Center, located in Lancaster, Pennsylvania.
"Venture" means PARCIT-IIP Lancaster Venture, an Illinois partnership
which owns the entire beneficial interest in Park City Center, located in
Lancaster, Pennsylvania.
"Venture Agreement" has the meaning set forth in (S) 3(c).
-----------------
"Venture Financial Statements" has the meaning set forth in (S) 3(g).
----------------------------
"Withholding Amount" has the meaning set forth in (S) 2(j).
------------------
"Withholding Certificate" has the meaning set forth in (S) 2(j).
-----------------------
2. Basic Transaction.
-----------------
(a) The Merger. On and subject to the terms and conditions of this
Agreement, the Transitory Subsidiary will merge with and into the Company (the
"Merger") at the Effective Time in accordance with the Delaware General
Corporation Law. The Company shall be the corporation surviving the Merger (the
"Surviving Corporation").
(b) The Closing. Subject to (S) 10(a) hereof, the closing of the
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of Coudert Brothers, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx
00000 (or such other location as the Parties may agree upon), commencing at 9:00
a.m. local time on the second Business Day following the satisfaction or waiver
of all conditions to the obligations of the Parties to consummate the
transactions contemplated hereby (other than conditions with respect to actions
the respective Parties will take at the Closing itself) or such other date as
the Parties may mutually determine (the "Closing Date").
(c) Actions at the Closing. At the Closing, (i) the Company will deliver
to the Buyer and the Transitory Subsidiary the various certificates, instruments
and documents referred to in (S) 9(a) below; (ii) the Buyer and the Transitory
Subsidiary will deliver to the Company the various certificates, instruments and
documents referred to in (S) 9(b) below; (iii) the Buyer will deliver or cause
to be delivered, in each case in accordance with wire transfer instructions
delivered in writing at least three (3) Business Days prior to the Closing, (A)
the Revolving Credit Proceeds to Citibank N.A. as depository with respect to the
commercial paper program of the Company supported by the Revolving Credit
Agreements in order to discharge all indebtedness represented by the foregoing;
(B) the Park City Proceeds to Union Bank of Switzerland, New York Branch in
order to discharge the Park City Center mortgage indebtedness; (C) the Closing
Expense Fund to the Representative; (D) the Post-Closing Escrow Amount and the
aggregate Escrow Withholding Amounts to the Post-Closing Escrow Agent, (E)
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the PCI Allocable Portion (net of the portion thereof delivered as part of the
Post-Closing Escrow Amount) to PCI in satisfaction of the Company's obligations
in respect of the transfer to the Company (or Company Sub) by PCI of the PCI
Venture Interest and (F) the Payment Fund to the Paying Agent in the manner
provided below in this (S) 2 (and the Company hereby authorizes the Buyer to
make or cause to be made all payments referred to in this clause (iii)); (iv)
the Company and the Transitory Subsidiary will file with the Secretary of State
of the State of Delaware a Certificate of Merger in the form attached hereto as
Exhibit B (the "Certificate of Merger") and (v) the Deposit Escrow Agent will
deliver the Deposit, together with interest earned thereon, to the Paying Agent.
(d) Effect of Merger.
----------------
(i) General. The Merger shall become effective at the time (the
"Effective Time") the Company and the Transitory Subsidiary file the
Certificate of Merger with the Secretary of State of the State of Delaware
in accordance with (S) 264 of the Delaware General Corporation Law. The
Merger shall have the effect set forth in the Delaware General Corporation
Law. The Surviving Corporation may, at any time after the Effective Time,
take any action (including executing and delivering any document) in the
name and on behalf of either the Company or the Transitory Subsidiary in
order to carry out and effectuate the transactions contemplated by this
Agreement.
(ii) Certificate of Incorporation. The Certificate of Incorporation
of the Surviving Corporation shall, by virtue of the Merger and without any
further action on the part of the Surviving Corporation be amended and
restated to read in its entirety as set forth in Exhibit C hereto, and such
Certificate of Incorporation shall be the Certificate of Incorporation of
the Surviving Corporation until thereafter amended as provided by law and
such Certificate of Incorporation.
(iii) Bylaws. The Bylaws of the Surviving Corporation shall, by
virtue of the Merger and without any further action on the part of the
Surviving Corporation be amended and restated to read in their entirety as
set forth in Exhibit D hereto, and such Bylaws shall be the Bylaws of the
Surviving Corporation, until thereafter amended as provided by law, the
Surviving Corporation's Certificate of Incorporation and such Bylaws.
(iv) Directors and Officers. The Board of Directors of the Surviving
Corporation shall be comprised of Xxxxxxx Xxxxxxxxx, Xxxx Xxxxxxxxx and
Xxxxxx X. Xxxxxxxx and the officers of the Surviving Corporation shall be
Xxxxxxx Xxxxxxxxx as President, Xxxx Xxxxx, Xxxx Xxxxxxxxx, Xxxxxx X.
Xxxxxxxx and Xxxxxxx Xxxxxxxx, each as a Vice President, Xxxxxxx Xxxxxxxx
as Treasurer and Xxxxxxxx Xxxxxxxxx as Secretary, in each case to serve
until their successors have been duly elected and qualified or until their
earlier, death, resignation or removal
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(v) Cancellation of Treasury Stock. As of the Effective Time, any
Company Shares that are owned beneficially or of record by the Company or
any of its Subsidiaries shall automatically be cancelled and retired and
all rights with respect thereto shall cease to exist, and no consideration
shall be delivered in exchange therefor.
(vi) Conversion of Company Shares. At and as of the Effective Time,
(A) all of the Company Shares (other than any Company Shares to be
cancelled in accordance with (S) 2(d)(v) and Dissenting Shares) shall, by
virtue of the Merger and without any action on the part of the holders
thereof, automatically be cancelled, converted and reclassified into and
represent the right, in the case of each Company Stockholder, to receive
such Stockholder's Portion of the Stockholder Allocable Portion of the
Merger Consideration upon surrender of the Certificate or Certificates
representing the Company Shares held by the Company Stockholder and (B)
each Dissenting Share shall be converted into the right to receive payment
from the Surviving Corporation with respect thereto in accordance with the
provisions of the Delaware General Corporation Law; provided, however,
that, notwithstanding the foregoing, the Stockholder's Portion of the
Stockholder Allocable Portion of the Merger Consideration otherwise
receivable by each of the Company Stockholders listed on Schedule I hereto
(the "Schedule I Stockholders") shall be reduced by the amount of such
Schedule I Stockholder's proportionate interest in the Post-Closing Escrow
Fund as set forth on Schedule I and any applicable Escrow Withholding
Amount, which amounts shall be payable to the Post-Closing Escrow Agent as
part of the Post-Closing Escrow Amount and the Tax Escrow Fund (as defined
in the Post-Closing Escrow Agreement), respectively, to be held and
distributed in accordance with (S) 2(j) and the terms of the Post-Closing
Escrow Agreement, and by any amounts required to be withheld and paid to
the Internal Revenue Service pursuant to (S)2(j). The Stockholder's
Portion for all other Company Stockholders shall be reduced by amounts
required to be withheld pursuant to (S) 2(j). No Company Share shall be
deemed to be outstanding or to have any rights other than those set forth
above in this (S) 2(d)(vi) after the Effective Time.
(vii) Conversion of Capital Stock of the Transitory Subsidiary. At
and as of the Effective Time, all of the outstanding membership interests
in the Transitory Subsidiary (all of which are owned by the Buyer) shall,
by virtue of the Merger and without any action on the part of the
Transitory Subsidiary, automatically be converted into 100 validly issued,
fully paid and nonassessable shares of Common Stock, no par value per
share, and 120 validly issued, fully paid and non-assessable shares of non-
voting preferred stock, par value $1.00 per share, of the Surviving
Corporation, and the Surviving Corporation shall issue certificates
representing such shares.
(viii) Company's Obligations, Properties, Assets. At the Effective
Time, the identity, existence, rights, privileges, powers, franchises,
liabilities, obligations, properties and assets of the Company, as the
Surviving Corporation in the Merger, shall continue unaffected and
unimpaired, except as specifically provided herein; and the identity and
separate existence of the Transitory Subsidiary shall cease and all of the
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rights, privileges, powers, franchises, liabilities, obligations,
properties and assets of the Transitory Subsidiary shall be vested in the
Surviving Corporation, all in accordance with the provisions of this
Agreement and the Delaware General Corporation Law.
(ix) No Further Rights. From and after the Effective Time, holders of
certificates theretofore evidencing Company Shares shall cease to have any
rights as stockholders of the Surviving Corporation, except as provided
herein or by law. No dividends or other distributions declared or made
after the Effective Time with respect to Company Shares with a record date
after the Effective Date shall be paid to any holder of Certificates until
the holder of any such Certificate shall properly surrender such
Certificate to the Paying Agent.
(e) Procedure for Payment.
---------------------
(i) At the Effective Time, (A) the Buyer will, or will cause the
Surviving Corporation to, furnish to the paying agent engaged for purposes
of this Agreement (the "Paying Agent") a corpus consisting of cash which,
together with the amount to be delivered by the Deposit Escrow Agent
pursuant to (S) 2(h)(ii)(a), is sufficient in the aggregate for the Paying
Agent to make full payment of the Stockholder Allocable Portion of the
Merger Consideration to the holders of all of the outstanding Company
Shares (other than any Dissenting Shares and less the applicable Post-
Closing Escrow Amount to be paid to the Post-Closing Escrow Agent and less
amounts to be withheld and paid to the Internal Revenue Service pursuant to
(S)2(j), or deposited with the Post-Closing Escrow Agent pursuant to
(S)2(j)) (the "Payment Fund"), and (B) the Buyer will cause the Paying
Agent to mail a letter of transmittal (with instruction for its use), which
shall specify that delivery shall be effected, and risk of loss and title
to the Certificates shall pass, only upon proper delivery of such
Certificates to the Paying Agent, in the form attached hereto as Exhibit E
to each record holder of outstanding Company Shares for the holder to use
in surrendering the Certificates which represented such holder's Company
Shares against payment of such holder's Stockholder's Portion of the Merger
Consideration (less, in the case of each Schedule I Stockholder, the
amounts thereof to be paid to the Post-Closing Escrow Agent as part of the
Post-Closing Escrow Amount and any applicable Escrow Withholding Amount,
and less any amounts to be withheld and paid to the Internal Revenue
Service pursuant to (S)2(j) and, in the case of other Company Stockholders,
amounts to be withheld pursuant to (S) 2(j)). Each holder of Certificates
theretofore evidencing Company Shares, upon proper surrender thereof to the
Paying Agent together with and in accordance with such transmittal form and
any other documents required thereby, shall, subject to (S) 2(j), be
entitled to receive in exchange therefore such holder's Stockholder's
Portion of the Merger Consideration deliverable in respect of the Company
Shares theretofore evidenced by the Certificates so surrendered (less, in
the case of each Schedule I Stockholder, the amounts thereof to be paid to
the Escrow Agent as part of the Post-Closing Escrow Amount and any
applicable Escrow Withholding Amount, and less any amounts to be withheld
and paid to the Internal Revenue Service pursuant to (S)2(j) and, in the
case of other Company
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Stockholders, amounts to be withheld pursuant to (S) 2(j)). Upon such
proper surrender, the Paying Agent shall, subject to (S) 2(j), promptly
deliver such holder's Stockholder's Portion of the Merger Consideration to
the relevant Company Stockholder (less, in the case of each Schedule I
Stockholder, the amounts thereof to be paid to the Post-Closing Escrow
Agent as part of the Post-Closing Escrow Amount and any applicable Escrow
Withholding Amount, and less any amounts to be withheld and paid to the
Internal Revenue Service pursuant to (S)2(j) and, in the case of other
Company Stockholders, amounts to be withheld pursuant to (S) 2(j)). Until
properly surrendered, Certificates formerly evidencing Company Shares shall
be deemed for all purposes to evidence only the right to receive the
applicable portion of the Merger Consideration as herein provided and
subject to (S)(S) 2(i) and (j). No interest shall accrue or be paid on any
cash payment upon surrender of Certificates which immediately prior to the
Effective Time represented Company Shares. In the event of a permitted
transfer of ownership of Company Shares, which is not registered in the
transfer records of the Company, the applicable Stockholder's Portion of
the Merger Consideration or portion thereof (less the applicable portion of
the Post-Closing Escrow Amount and any applicable Escrow Withholding
Amount, and less any amounts to be withheld and paid to the Internal
Revenue Service pursuant to (S)2(j), in the case of Schedule I Stockholders
and, in the case of the other Company Stockholders, amounts to be withheld
pursuant to (S) 2(j)) may be paid to a transferee of a Certificate if such
Certificate is presented to the Paying Agent accompanied by all documents
required to evidence and effect such transfer and any evidence that any
applicable stock transfer Taxes have been paid. Notwithstanding the
foregoing, the Buyer will, if and to the extent requested by the Company or
any Company Stockholder not less than three (3) Business Days prior to the
Closing Date, make appropriate arrangements, subject to (S) 2(j), with the
Paying Agent to enable the Stockholder's Portion of the Merger
Consideration payable to any Company Stockholder (less, in the case of each
Schedule I Stockholder, the amount thereof to be paid to the Post-Closing
Escrow Agent as part of the Post-Closing Escrow Amount and any applicable
Escrow Withholding Amount, and less any amounts to be withheld and paid to
the Internal Revenue Service pursuant to (S) 2(j) and, in the case of the
other Company Stockholders, amounts to be withheld pursuant to (S) 2(j)),
to be paid on the Effective Date (including payment by wire transfer of
immediately available funds), upon surrender of the Certificates evidencing
such Company Stockholder's Company Shares and such other documents as may
be required by the Paying Agent.
(ii) The Buyer may cause the Paying Agent to invest the cash included
in the Payment Fund, to the extent such cash is not disbursed on the
Effective Date, in certificates of deposit or money market funds; provided,
however, that the terms and conditions of the investments shall be such as
to permit the Paying Agent to make, subject to (S)(S) 2(i) and (j), prompt
payment of the applicable portion of the Stockholder Allocable Portion of
the Merger Consideration included in the Payment Fund as necessary. The
Buyer may cause the Paying Agent to pay over to the Surviving Corporation
any net earnings with respect to the investments, and the Buyer will cause
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the Surviving Corporation to replace promptly any portion of the Payment
Fund which the Paying Agent loses through investments.
(iii) The Buyer may cause the Paying Agent to pay over to the
Surviving Corporation any portion of the Payment Fund (including any
earnings thereon) remaining 180 days after the Effective Time, and
thereafter all former Company Stockholders shall only be entitled to look
to the Surviving Corporation (subject to abandoned property, escheat and
other similar laws) as general creditors thereof with respect to the Merger
Consideration payable upon surrender of their Certificates. The Buyer and
the Surviving Corporation shall not be liable to any holder of Certificates
for any cash payable in respect thereof delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(iv) The Buyer shall cause the Surviving Corporation to pay all
charges and expenses of the Paying Agent.
(f) Closing of Transfer Records. From and after the Effective Time, the
stock transfer books of the Company shall be closed and no transfers of
Company Shares outstanding prior to the Effective Time shall be made on the
stock transfer books of the Surviving Corporation.
(g) Dissenters' Rights. No Dissenting Stockholder shall be entitled to
such Dissenting Stockholder's Stockholder's Portion of the Merger
Consideration unless and until such Dissenting Stockholder shall have
failed to perfect or shall have effectively withdrawn or lost such holder's
right to dissent from the Merger under the Delaware General Corporation
Law, and any Dissenting Stockholder shall be entitled to receive only the
payment provided by Section 262 of the Delaware General Corporation Law
with respect to Company Shares owned by such Dissenting Stockholder. If
any Person who otherwise would be deemed a Dissenting Stockholder shall
have failed to properly perfect or shall have effectively withdrawn or lost
the right to dissent with respect to any Company Shares, such Company
Shares shall, subject to (S) 2(j), thereupon be treated as though such
Company Shares had been converted into the applicable portion of the Merger
Consideration pursuant to (S) 2(d)(vi) hereof. The Company shall give the
Buyer (i) prompt notice of any written demands for appraisal, attempted
withdrawals of such demands and any other instruments served pursuant to
applicable law received by the Company relating to stockholders' rights of
appraisal and (ii) the opportunity to direct all negotiations and
proceedings with respect to demand for appraisal under the Delaware General
Corporation Law. The Company shall not, except with the prior written
consent of the Buyer, voluntarily make any payment with respect to any
demands for appraisals of Dissenting Shares, offer to settle or settle any
such demands or approve any withdrawal of any such demands.
(h) Escrow of Deposit.
-----------------
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(i) On the date hereof, the Buyer has deposited with the Deposit
Escrow Agent the amount of $18,750,000 (the "Deposit") to be held in escrow
pursuant to the provisions of an escrow agreement among the parties hereto
and the Deposit Escrow Agent in the form attached hereto as Exhibit G (the
"Deposit Escrow Agreement"). The Deposit Escrow Agent has separately
acknowledged its receipt of the Deposit and agreed to hold it pursuant to
the provisions of the Deposit Escrow Agreement.
(ii) In accordance with and subject to the terms of the Deposit
Escrow Agreement:
(a) If the Closing occurs, at the Closing, the Deposit Escrow
Agent shall deliver the Deposit, together with all interest earned thereon,
if any, to the Paying Agent.
(b) If this Agreement terminates in accordance with its terms by
reason of the Buyer's or the Transitory Subsidiary's default and a notice
of termination has been delivered to the Buyer, the Deposit Escrow Agent
shall deliver the Deposit, together with all interest earned thereon, if
any, to the Company as liquidated damages as provided in (S) 10(c), subject
to the terms of the Deposit Escrow Agreement.
(c) If this Agreement terminates in accordance with its terms for
any other reason and a notice of termination has been delivered to the
Company, the Deposit, together with all interest earned thereon, if any,
shall forthwith be paid to the Buyer, subject to the terms of the Deposit
Escrow Agreement.
(i) Escrow For Post-Closing Claims and Adjustments. At the Closing, the
Buyer shall deposit with the Post-Closing Escrow Agent, as escrow agent for the
Buyer, the Schedule I Stockholders and PCI pursuant to the terms of the escrow
agreement attached hereto as Exhibit H and incorporated herein by this reference
(the "Post-Closing Escrow Agreement") and (S)2(c)(D), funds in an amount equal
to Twenty Million Dollars ($20,000,000), as increased to the extent required by
(S) 2(k) (the "Post Closing Escrow Amount"), which shall be maintained by the
Post-Closing Escrow Agent pursuant to the Post-Closing Escrow Agreement (such
funds, together with any net earnings from the investment thereof, being
hereinafter referred to as the "Post-Closing Escrow Fund") in connection with
the disposition of Post-Closing Claims and any Adjustments pursuant to the terms
of this Agreement and the Post-Closing Escrow Agreement. The funds in the Post-
Closing Escrow Fund shall be held for disbursement as provided in the Post-
Closing Escrow Agreement.
(j) Withholding Matters.
-------------------
(i) The Buyer will, subject to (S)2(j)(ii) hereof, withhold and
promptly pay over to the Internal Revenue Service an amount equal to ten percent
(10%) of the sum of (x) the aggregate Stockholder's Portions of the Merger
Consideration allocable to the Company Stockholders who or which are foreign
persons for purposes of Section 1445 of the Code, and
-17-
(y) the aggregate portions of the Closing Expense Fund allocable to such Company
Stockholders (such aggregate ten percent (10%) withheld amount being referred to
as the "Withholding Amount"), together with the applicable Internal Revenue
Service forms (as duly prepared and executed by the Buyer), which shall specify
the portion of the Withholding Amount allocable to each Company Stockholder with
respect to whom or which the Buyer has withheld under this (S)2(j). If the
Buyer is required pursuant to (S)2(k) to pay the Adjustment to the
Representative, on behalf of the Company Stockholders, the Buyer will, subject
to (S)2(j)(ii) hereof, at the time when the Buyer is required to so pay the
Adjustment, withhold and promptly pay over to the Internal Revenue Service ten
percent (10%) of the aggregate portions of the Adjustment allocable to the
Company Stockholders who or which are foreign persons for purposes of Section
1445 of the Code (such aggregate ten percent (10%) withheld amount being
referred to as the "Adjustment Withholding Amount"), together with the
applicable Internal Revenue Service forms (as duly prepared and executed by the
Buyer), which shall specify the portion of the Adjustment Withholding Amount
allocable to each such Company Stockholder with respect to whom or which the
Buyer has withheld under this (S)2(j). Promptly after filing with the Internal
Revenue Service, the Buyer will deliver to the Representative a copy of all
Internal Revenue Service forms filed by the Buyer in accordance with this
(S)2(j). The Buyer will not withhold under this (S)2(j) any portion of a
Stockholder's Portion of the Merger Consideration, any portion of the Closing
Expense Fund, or any portion of the Adjustment, allocable to any Company
Stockholder who or which furnishes to the Buyer on or before the Closing a
certificate in the form attached hereto as Exhibit I certifying that such
Company Stockholder is not a "foreign person" within the meaning of Section 1445
of the Code. If a Company Stockholder does not furnish such certificate to the
Buyer, it shall be assumed that such Company Stockholder is a "foreign person".
(ii) If a Schedule I Stockholder who or which is a "foreign person"
for purposes of Section 1445 of the Code applies for a withholding certificate
from the Internal Revenue Service to authorize reduced withholding (including
zero withholding) under Section 1445 of the Code (a "Withholding Certificate")
on or before the Closing, such Schedule I Stockholder shall submit to the Buyer
on or before the Closing a notice under Treasury Regulations Section 1.1445-
1(c)(2) substantially in the form of Exhibit J attached hereto. In this event,
the Buyer shall deposit with the Post-Closing Escrow Agent an amount equal to
ten percent (10%) of the sum of (x) such Schedule I Stockholder's Stockholder's
Portion of the Merger Consideration, and (y) the portion of the Closing Expense
Fund allocable to such Company Stockholder (such ten percent (10%) deposited
amount being referred to as the "Escrow Withholding Amount"), in accordance with
this (S)2(j). The Post-Closing Escrow Agent shall hold the Escrow Withholding
Amount with respect to such Schedule I Stockholder until the earlier to occur of
(x) receipt by the Post-Closing Escrow Agent of a copy of a Withholding
Certificate or notice of denial ("Notice of Denial") from the Internal Revenue
Service with respect to such Schedule I Stockholder (which copy shall be
delivered to the Post-Closing Escrow Agent by the Buyer, promptly upon receipt
of such copy by the Buyer from the Internal Revenue Service, and may be
delivered to the Post-Closing Escrow Agent by such Schedule I Stockholder), or
(y) the date (the "Expiration Date") which is twelve (12) months following the
Closing Date. The Post-Closing Escrow Agent shall pay the Escrow Withholding
Amount with respect to such Schedule
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I Stockholder (or a portion thereof) within twenty (20) days following the
mailing by the Internal Revenue Service of a Withholding Certificate or Notice
of Denial (or copy thereof) with respect to such Schedule I Stockholder (but not
less than five (5) days from receipt of such Withholding Certificate or Notice
of Denial or copy thereof), as follows. In the event the Internal Revenue
Service issues a Withholding Certificate eliminating the withholding tax under
Section 1445 of the Code with respect to such Schedule I Stockholder, the Post-
Closing Escrow Agent (v) shall pay such Escrow Withholding Amount, together with
all interest earned thereon, directly to such Schedule I Stockholder, and (w)
shall send to the Buyer a copy of the check payable to the order of such
Schedule I Stockholder in the amount of such Escrow Withholding Amount. In the
event the Internal Revenue Service denies the Schedule I Stockholder's
application for a Withholding Certificate, or issues a Withholding Certificate
with respect to such Schedule I Stockholder providing for an amount of
withholding that is less than such Escrow Withholding Amount, upon receipt of
any executed applicable Internal Revenue Service forms from the Buyer, the Post-
Closing Escrow Agent promptly (x) shall pay to the Internal Revenue Service such
Escrow Withholding Amount, or portion thereof, plus interest thereon (if any),
as set forth in the Notice of Denial or Withholding Certificate with respect to
such Schedule I Stockholder, together with the applicable Internal Revenue
Service forms received from the Buyer (which Internal Revenue Service forms the
Buyer agrees to promptly prepare, execute and deliver), (y) shall pay to such
Schedule I Stockholder the balance of such Escrow Withholding Amount (if any)
plus interest (if any), and (z) shall send to the Buyer a copy of the check
payable to the order of the Internal Revenue Service in the amount set forth in
the Notice of Denial or Withholding Certificate with respect to such Schedule I
Stockholder. If the Expiration Date occurs prior to the issuance of a
Withholding Certificate or a Notice of Denial with respect to such Schedule I
Stockholder, the Post-Closing Escrow Agent shall pay the Escrow Withholding
Amount to the Internal Revenue Service for the account of such Schedule I
Stockholder, together with the applicable Internal Revenue Service forms
received from the Buyer (which Internal Revenue Service forms the Buyer agrees
to promptly prepare, execute and deliver). If the Buyer is required pursuant to
(S)2(k) hereof to pay the Adjustment to the Representative, on behalf of the
Company Stockholders, the following provisions shall apply with respect to each
Schedule I Stockholder who has submitted to the Buyer on or before the Closing
a notice under Treasury Regulations Section 1.1445-1(c)(2) substantially in the
form of Exhibit J. In this event, at the time when the Buyer is required to pay
the Adjustment to the Representative, on behalf of the Company Stockholders, the
Buyer shall deposit with the Post-Closing Escrow Agent an amount equal to ten
percent (10%) of the Adjustment allocable to each such Schedule I Stockholder
(the "Adjustment Escrow Amount"). Thereafter, the Adjustment Escrow Amount with
respect to each such Schedule I Stockholder shall be subject to the provisions
of this (S)2(j)(ii) applicable to the Escrow Withholding Amount with respect to
such Schedule I Stockholder.
(k) Net Quick Asset Adjustment.
--------------------------
(i) No later than five (5) days prior to the Closing, the Company
shall prepare and deliver to the Buyer a preliminary pro forma consolidated
statement of Net Quick Assets (as defined below) of (a) the Company and its
Subsidiaries (excluding the Venture) and (b) the Venture, in each case, as of
the Closing Date, assuming the consummation of the transactions
-19-
contemplated hereby and by the P City Agreement, prepared in accordance with the
terms of this (S) 2(k) (the "Preliminary Net Quick Asset Schedules"). No later
than ninety (90) days after the Closing Date, the Buyer shall cause to be
prepared and delivered to the Representative an unaudited consolidated statement
of Net Quick Assets of (x) the Company and its Subsidiaries (excluding the
Venture) and (y) the Venture as of the Closing Date and following the
consummation of the transactions contemplated hereby and by the P City
Agreement, prepared in accordance with the terms of this (S) 2(k) (the "Closing
Net Quick Asset Schedules"). The Preliminary Net Quick Asset Schedules and the
Closing Net Quick Asset Schedules shall reflect only the following categories of
assets, which categories are referred to in the Financial Statements for the
year ended December 31, 1997: "Cash and Cash Equivalents", "Accounts
Receivable", and "Prepaid expenses and other assets," in the case of the Company
and its Subsidiaries (excluding the Venture) and "Cash and Cash Equivalents",
"Accounts Receivable" and "Prepaid expenses, in the case of the Venture
(collectively, the "Quick Assets") and shall reflect only the following
categories of liabilities, which categories are referred to in the Financial
Statements for the year ended December 31, 1997, "Accounts payable and accrued
expenses", "Accrued real estate taxes" and "Tenant liabilities", in the case of
the Company and its Subsidiaries (excluding the Venture), and "Accounts payable
and accrued expenses" and "Tenant liabilities", in the case of the Venture
(collectively, the "Quick Liabilities"), provided that, as described above, the
Quick Assets and Quick Liabilities shall be calculated assuming consummation of
the transactions contemplated hereby and by the P City Agreement (except that
the Venture shall not be treated as consolidated with the Company). With
respect to each Preliminary Net Quick Asset Schedule and each Closing Net Quick
Asset Schedule, the amount (positive or negative) equal to Quick Assets less
Quick Liabilities is referred to as "Net Quick Assets." The Preliminary Net
Quick Asset Schedules and the Closing Net Quick Asset Schedules shall be
prepared in accordance with GAAP applied in a manner consistent with that
utilized in the preparation of the Financial Statements, except as provided
above. To the extent that, during the period January 1, 1998 through the Closing
Date, (i) any sale by the Company, any of its Subsidiaries or the Venture of any
real property, or any item of personal property with a sale price exceeding
$25,000, occurs or has occurred or (ii) any proceeds are or have been received
by the Company, any of its Subsidiaries or the Venture as a result of any
condemnation, casualty or any similar event, the proceeds from any such sale or
other event shall, regardless of the form in which received, be deducted in the
determination of Net Quick Assets and not be deemed to be Quick Assets and any
corresponding liability shall not be deemed to constitute Quick Liabilities for
the purposes of such determination. In addition, the matters identified in
Schedule III to this Agreement shall not be deemed to consitute Quick
Liabilities for the purpose of such determination.
(ii) If, as set forth on the Preliminary Net Quick Assets Schedules,
the combined Quick Liabilities exceed the combined Quick Assets by an amount in
excess of $1,000,000, the Post-Closing Escrow Amount shall be increased by the
amount of such shortfall.
(iii) If, based on the Closing Net Quick Assets Schedules, the
combined Net Quick Assets exceed zero, the Buyer will, no later than the later
of (A) thirty (30) days following the delivery of the Closing Net Quick Assets
Schedules or (B) 5 Business Days
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following the resolution of a dispute with respect to any items on the Closing
Net Quick Assets Schedules as set forth in subsection (iv) hereof (the
"Settlement Date"), pay to the Representative, on behalf of the Company
Stockholders and PCI, the amount of such excess, together with interest thereon
calculated as described below, by wire transfer of immediately available funds
to an account designated by the Representative, subject to (S)2(j) hereof. If
the combined Closing Net Quick Assets are less than zero, the Representative
will cause the Post-Closing Escrow Agent to pay to the Buyer, no later than the
Settlement Date, the amount of such shortfall, together with interest thereon
calculated as described below, by wire transfer of immediately available funds
to an account designated by the Buyer. The amount, if any, payable pursuant to
this clause (iii), together with interest thereon at the rate of interest paid
from time to time on the Post-Closing Escrow Fund from the Closing Date up to
and including the date of payment is hereafter referred to as the "Adjustment."
(iv) If the Representative in good faith disagrees with any items on
the Closing Net Quick Assets Schedules, the Representative shall notify the
Buyer and the Post-Closing Escrow Agent in writing of such disagreement within
twenty-nine (29) days after the Representative's receipt of the Closing Net
Quick Assets Schedules. Such notice shall set forth the basis for such
disagreement in reasonable detail. During such twenty-nine (29) day period, the
Buyer shall afford the Representative access to all of the Surviving
Corporation's books and records and cause the Buyer's accountants to afford the
Representative access to all of the work papers of the Buyer's accountants
during regular business hours as required by the Representative to review the
Closing Net Quick Assets Schedules, in each case, solely for the purposes of
resolving such disagreement. The Buyer and the Representative shall thereafter
negotiate in good faith to resolve any such disagreements, provided that the
Representative shall promptly cause the Escrow Agent to pay to the Buyer, or the
Buyer shall promptly pay to the Representative on behalf of the Company
Stockholders and PCI, as the case may be, the portion of the Adjustment that is
not subject to dispute.
(v) If the Buyer and the Representative are unable to resolve any
such disagreements within twenty (20) days after the expiration of the twenty-
nine-day period referred to in clause (iv), the Buyer and the Representative
shall use their reasonable best efforts to cause the Chicago office of Xxxxxx
Xxxxxxxx LLP, acting as an independent arbitrator, (the "Auditor") to resolve
all disagreements on the disputed items as soon as practicable, provided that
the Auditor shall be bound by the provisions of this (S) 2(k) and may not assign
a value to any item greater than the greatest value for such item claimed by
either the Buyer or the Representative or less than the smallest value for such
item claimed by either the Buyer or the Representative. Each of the Buyer and
the Representative shall permit the Auditor to have full access to its books,
records, key employees and independent accountants, in each case solely in order
to resolve any such disagreements. The resolution of such disagreements by the
Auditor shall be final and binding on the Buyer, the Company Stockholders, PCI
and the Representative. The fees and expenses of the Auditor shall be paid by
the party whose position is most at variance with the decision of the Auditor,
as determined by the Auditor which, if required to be paid by the Representative
on behalf of the Company Stockholders and PCI, shall be paid out of the Escrow
Fund in accordance with the terms of the Post-Closing Escrow Agreement. Any
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payment by the Buyer to the Representative shall be net of amounts to be
withheld pursuant to (S) 2(j).
(l) Further Assurances. Each Party hereto and the Representative, in its
capacity as representative of PCI and the Schedule I Stockholders, will, either
prior to or after the Effective Time, execute such further documents,
instruments, deeds, bills of sale, assignments and assurances and take such
further actions as may reasonably be requested by one or more of the others to
consummate the transactions contemplated hereby, to vest the Surviving
Corporation with full title to all assets, properties, privileges, rights,
approvals, immunities and franchises of the Company and to effect the other
purposes of this Agreement.
(m) Chargeable Violations. Notwithstanding that Chargeable Violations are
Permitted Exceptions, if on the Closing Date Chargeable Violations exist which
have not been cured, then the Buyer shall be entitled as its sole and exclusive
remedy to a credit against the Merger Consideration in an amount equal to the
cost of curing said Chargeable Violations, as reasonably determined by Buyer and
the Company, it being understood and agreed that no credits either individually
or in the aggregate under this (S) 2(m) shall exceed $3,000,000. In furtherance
of the foregoing, and notwithstanding anything in this Agreement to the
contrary, the Buyer acknowledges and agrees that it shall have no right to
terminate this Agreement by reason of the existence of any violations of laws,
ordinances, orders, requirements, or regulations of any governmental authority
relating to the Shopping Centers, including Chargeable Violations and Seller
shall have no obligation to cure or remove any violations of laws, ordinances,
orders, requirements or regulations of any governmental authority including
Chargeable Violations.
3. Representations and Warranties of the Company. The Company represents and
warrants to the Buyer and the Transitory Subsidiary that the statements
contained in this (S) 3 are correct and complete as of the date of this
Agreement, except as set forth in the disclosure schedule accompanying this
Agreement and initialed by the Parties (the "Disclosure Schedule"). The
Disclosure Schedule will be arranged in paragraphs corresponding to the lettered
and numbered paragraphs contained in this (S) 3 (and the other provisions of
this Agreement to which it relates).
(a) Organization, Qualification and Corporate Power. Each of the Company
and its Subsidiaries is a corporation duly organized, validly existing and in
good standing under the laws of the jurisdiction of its incorporation, as set
forth in the Disclosure Schedule. Each of the Company and its Subsidiaries is
duly authorized to conduct business and is in good standing under the laws of
those jurisdictions set forth in the Disclosure Schedule, which are the only
jurisdictions where such qualification is required, except where the lack of
such qualification, individually or in the aggregate and together with any other
absent qualifications referred to in (S) 3(c), would not have a Material Adverse
Effect. Each of the Company and its Subsidiaries has full corporate power and
authority to carry on the business in which it is engaged and to own or lease
the properties owned or leased by it. The Company has delivered to the Buyer
complete and correct copies of its Restated Certificate of Incorporation and By-
laws, as amended.
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(b) Capitalization. The entire authorized capital stock of the Company
consists of 940,000 Company Common Shares, of which 798,160.466 shares are
issued and outstanding and 13,712.569 shares are held in treasury, 70,000 Class
A Shares, of which 59,311.758 shares are issued and outstanding and no shares
are held in treasury, and 100,000 Preferred Shares, none of which are issued or
outstanding or held in treasury. All of the issued and outstanding Company
Shares have been duly authorized and are validly issued, fully paid and
nonassessable. There are no outstanding or authorized options, warrants,
purchase rights, subscription rights, preemptive rights, conversion rights,
exchange rights or other contracts or commitments that could require the Company
to issue, sell or otherwise cause to become outstanding any of its capital
stock. There are no outstanding or authorized stock appreciation, phantom stock,
profit participation or similar rights with respect to the Company, and there
are no agreements or arrangements to which the Company is a party or by which it
is bound for the redemption or repurchase of any Company Shares. There are no
agreements or arrangements governing the rights and/or duties of any Company
Stockholders nor any voting trusts, stockholder or similar agreements, proxies
or other agreements in effect with respect to the voting or transfer of any
equity or other interests in the Company to which the Company is a party or by
which it is bound.
(c) PCI; the Venture; the Trust. PCI is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and is duly authorized to conduct business and is in good standing under the
laws of those jurisdictions set forth in the Disclosure Schedule, which are the
only jurisdictions where such qualification is required, except where the lack
of such qualification would not, together with any other such absent
qualifications referred to in (S) 3(a), have a Material Adverse Effect.
Immediately prior to the Effective Time, the Company will own a 50% interest in
the Venture directly (or indirectly through Company Sub) and the remaining 50%
interest in the Venture indirectly through Parcity Inc., in each case, free and
clear of any Liens other than in respect of payment of the PCI Allocable
Portion. The Venture is a partnership duly organized and validly existing under
the laws of the State of Illinois, the sole partners of which are Parcity, Inc.,
a wholly-owned Subsidiary of the Company, and PCI, each of which owns a 50%
interest in the Venture. Each of PCI and the Venture has full power and
authority (corporate or otherwise) to carry on the business in which it is
engaged and to own or lease the properties owned or leased by it. Since its
formation, the Venture has conducted no business other than its ownership of
100% of the beneficial interest in Park City Center and activities related
thereto. The Company has delivered to the Buyer complete and correct copies of
the Certificate of Incorporation and Bylaws of PCI and a complete and correct
copy of the Amended and Restated Partnership Agreement of the Venture (the
"Venture Agreement"), in each case as amended. The Trust is duly established
under the laws of the State of Illinois. The Company has delivered to the Buyer
a complete and correct copy of the Indenture of Trust pursuant to which the
Trust was established, as amended.
(d) Subsidiaries; Other Equity Interests. Each Subsidiary of the Company
and each other Person, including the Venture, in which the Company or any of its
Subsidiaries has an equity or other interest (of record or beneficially) is
listed in the Disclosure Schedule. The authorized, issued and outstanding shares
of the capital stock of each Subsidiary and the record
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and beneficial ownership of the outstanding shares thereof are as set forth in
the Disclosure Schedule; all outstanding shares of each Subsidiary have been
duly and validly issued, are fully paid and nonassessable and are owned free and
clear of all Liens. There are no agreements or arrangements to which any
Subsidiary or the Venture is a party or by which it is bound for the redemption,
repurchase or issuance of such Subsidiary's or the Venture's equity or other
interests. There are no outstanding or authorized options, warrants, puts,
calls, purchase rights, subscription rights, preemptive rights, conversion
rights or exchange rights or other contracts or commitments that could require
any Subsidiary or the Venture to issue, sell or otherwise cause to become
outstanding any equity or other interests, except as contemplated by this
Agreement. There are no outstanding or authorized stock appreciation, phantom
stock, profit participation or similar rights with respect to any Subsidiary or
the Venture. There are no agreements or arrangements governing the rights and/or
duties of any stockholders of any Subsidiary nor any voting trusts, stockholder
or similar agreements, proxies or other agreements or arrangements in effect
with respect to the voting or transfer of any equity or other interests in any
Subsidiary or the Venture. The Company has delivered to the Buyer complete and
correct copies of the Certificate of Incorporation and Bylaws of each of its
Subsidiaries, as amended.
(e) Authorization of Transaction. Each of the Company, PCI and Park City,
to the extent it is a party thereto, has full power and authority (including
full corporate power and authority) to execute and deliver this Agreement, the P
City Agreement, the Post-Closing Escrow Agreement and the Deposit Escrow
Agreement and the other agreements contemplated hereby and to perform its
obligations hereunder and thereunder, and all necessary corporate action has
been taken by the Company, PCI and Park City (except as described below) to
approve the execution, delivery and performance hereof and thereof by the
Company, PCI and Park City, except that the Company cannot consummate the Merger
unless and until it receives the Requisite Stockholder Approval and the
transactions contemplated by the P City Agreement must be approved by the
stockholders of Park City. This Agreement has been duly executed and delivered
by the Company and, assuming the due authorization, execution and delivery
hereof by the other Parties and subject to the receipt of the Requisite
Stockholder Approval, which is the only vote required in respect of the Company
(including its stockholders) in order to approve the Merger and the other
transactions contemplated hereby, constitutes the valid and legally binding
obligation of the Company, enforceable in accordance with its terms. The P City
Agreement and the Deposit Escrow Agreement have been, and the other agreements
contemplated hereby will, prior to the Closing be, duly executed and delivered
by the Company, PCI and/or Park City, as the case may be, and constitute, or
will constitute, as the case may be, the valid and legally binding obligations
of the Company, PCI and/or Park City, as the case may be, enforceable in
accordance with their respective terms.
(f) Noncontravention. Neither the execution and the delivery of this
Agreement, the P City Agreement, the Deposit Escrow Agreement, the Post-Closing
Escrow Agreement or any other agreement contemplated hereby nor the consummation
of the transactions contemplated hereby and thereby will (i) violate any
statute, regulation, rule, injunction, judgment, order or decree of any
government, governmental agency or court to which any of the Company, its
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Subsidiaries, PCI or the Venture is subject or by which it or its assets may be
bound, or (ii) result in a breach or default under any provision of the charter,
bylaws or other organizational documents of any of the Company, its Subsidiaries
or PCI or of the Venture Agreement or the Indenture of Trust for the Trust or
(iii) conflict with, result in a breach of, constitute a default under, result
in the acceleration of, create in any party the right to accelerate, terminate,
modify or cancel or require any notice under any agreement, note, bond,
mortgage, contract, lease, license, permit or instrument to which any of the
Company, its Subsidiaries, PCI or the Venture is a party or by which it is bound
or to which any of its assets is subject or any Service Contract (or result in
the imposition of any Lien upon any of its assets), except where, in the cases
of clauses (i) and (iii), any such violations, conflicts, breaches, defaults,
accelerations, terminations, modifications, cancellations, failures to give
notice or Liens would not, individually or in the aggregate, have a Material
Adverse Effect. Other than as required by the Delaware General Corporation Law,
none of the Company and its Subsidiaries, PCI or the Venture needs to give any
notice to, make any filing with or obtain any authorization, consent or approval
of any government or governmental agency or other Person in order for the
Parties to execute and deliver this Agreement, the P City Agreement and the
other agreements contemplated hereby or consummate the transactions contemplated
hereby and thereby, except where the failure to give notice, to file or to
obtain any authorization, consent or approval would not, individually or in the
aggregate, have a Material Adverse Effect. The execution, delivery and
performance of this Agreement, the P City Agreement and the other agreements
contemplated hereby and the consummation of the transactions contemplated hereby
and thereby will not permit any stockholder, partner, joint venturer or other
holder of an interest in the Company, any Subsidiary, PCI or the Venture to
exercise or invoke any buy-sell, right of first refusal or first offer, purchase
option or other purchase or option right.
(g) Financial Statements. The Company has previously provided the Buyer
with an audited consolidated balance sheet and consolidated statement of
operations, and related consolidated statements of shareholders equity and cash
flows, as at and for the fiscal year ended December 31, 1997 (the "Most Recent
Fiscal Period End") and audited consolidated balance sheets and consolidated
statements of operations, and related consolidated statements of shareholders
equity and cash flows, as at and for each of the fiscal years ended December 31,
1994, 1995 and 1996 (collectively, the "Financial Statements"). The Financial
Statements (including the related notes and schedules) have been prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered thereby (except as may be indicated in the notes thereto) and present
fairly the consolidated financial condition of the Company and its Subsidiaries
as of the indicated dates and the consolidated results of operations of the
Company and its Subsidiaries for the indicated periods. With respect to the
Venture, the Company has also previously provided the Buyer with an audited
balance sheet and statement of operations and related statement of the
venturers' deficit and cash flows as at and for the Most Recent Fiscal Period
End and audited balance sheets and statements of operations and related
statement of venturers' deficit and cash flows as at and for each of the fiscal
years ended December 31, 1994, 1995 and 1996 (collectively, the "Venture
Financial Statements"). The Venture Financial Statements (including, the related
notes and schedules) have been prepared in accordance with GAAP applied on a
consistent basis throughout the periods covered thereby (except as may be
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indicated in the notes thereto) and present fairly the financial condition of
the Venture as of the indicated dates and the results of operations of the
Venture for the indicated periods. Except as set forth in the Financial
Statements or the Venture Financial Statements (including in each case, the
related notes), except for liabilities and obligations incurred since the Most
Recent Fiscal Period End in the Ordinary Course of Business and except for
liabilities under contracts and Leases which are disclosed in the Disclosure
Schedule, neither the Company nor any of its Subsidiaries or the Venture has any
liabilities or obligations of any nature (whether accrued, absolute, contingent
or otherwise) which, individually or in the aggregate, are material to the
Company, the Subsidiaries, and the Venture taken as a whole.
(h) Events Subsequent to Most Recent Fiscal Period End. Since the Most
Recent Fiscal Period End, there has not been any:
(i) Material Adverse Effect;
(ii) change in the accounting methods, principles or practices
(including, without limitation, any change in depreciation or amortization
policies or rates) of the Company or any of its Subsidiaries or of the
Venture, except insofar as required by a change in GAAP (which changes are
described in the Disclosure Schedule);
(iii) sale or transfer of any assets of the Company or any of its
Subsidiaries or the Venture, except in the Ordinary Course of Business and
involving less than $25,000 for each item individually;
(iv) any loan made by the Company or any of its Subsidiaries or the
Venture to any Person or guaranty by the Company or any of its Subsidiaries
or the Venture of any loan, in an amount exceeding $10,000, in each case,
except for inter-company loans (which inter-company loans shall be paid off
or otherwise satisfied prior to the Closing);
(v) cancellation made by the Company or any of its Subsidiaries or
the Venture, without full payment, of any note, loan or other obligation
owing to the Company or any of its Subsidiaries or the Venture in an amount
exceeding $25,000;
(vi) mortgage, pledge or other encumbrance of any assets of the
Company, any of its Subsidiaries or the Venture or the PCI Venture
Interest, except for Liens for Taxes not yet due and payable and for which
appropriate accruals have been reflected in the books and records of the
Company or the Venture;
(vii) waiver or release of any claim of the Company or any of its
Subsidiaries or the Venture with a value in excess of $25,000 for each item
individually, except in the Ordinary Course of Business;
(viii) capital expenditure, including the incurrence of any liability
therefor, by the Company, any of its Subsidiaries or the Venture other than
in accordance with the
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Company's capital expenditures budget, a copy of which has previously been
delivered to the Buyer, and tenant improvements contemplated by Leases
disclosed in (S) 3(l) of the Disclosure Schedule.
(ix) execution of any real estate lease as tenant or personal
property lease as lessee, including the incurrence of any liability
therefor, by the Company, any of its Subsidiaries or the Venture involving
in excess of $25,000 per year, provided that any leases described on the
Disclosure Schedule in relation to this clause (ix) were entered into in
the Ordinary Course of Business and on an arm's length basis;
(x) failure to repay any indebtedness for borrowed money of the
Company, any of its Subsidiaries or the Venture;
(xi) physical damage, destruction or loss (whether or not covered by
insurance) affecting the properties of the Company or any of its
Subsidiaries or of the Venture, which physical damage, destruction or loss,
individually or in the aggregate, had or could reasonably be expected to
have a Material Adverse Effect;
(xii) indebtedness for borrowed money incurred by the Company or any
of its Subsidiaries or by the Venture, or any commitment to incur
indebtedness for borrowed money entered into by the Company or any of its
Subsidiaries or the Venture, other than with respect to the Revolving
Credit Agreements and inter-company loans which shall be paid off or
otherwise satisfied prior to Closing.
(xiii) payment, discharge or satisfaction of any liabilities of the
Company, any of its Subsidiaries or the Venture other than in the Ordinary
Course of Business and consistent with past practice and in respect of
inter-company loans which shall be paid off or otherwise satisfied prior to
Closing;
(xiv) declaration or payment of any dividend or other distribution in
respect of the capital stock or other interests of the Company, any of its
Subsidiaries or the Venture (it being acknowledged that after the date
hereof and prior to the Closing, such entities may pay cash dividends,
subject to the last sentence of (S) 7(d)); or
(xv) agreement, commitment or obligation of the Company or any of
its Subsidiaries or the Venture or PCI to do, or undertaking which may
cause, any of the matters described in the preceding clauses (i) through
(xiv) to occur.
(i) Tax Returns and Liabilities.
(i) (A) Each of the Company, its Subsidiaries and the Venture has
filed all Tax Returns and Reports which it is required to file (taking into
account any applicable filing extensions), (B) all such Tax Returns and
Reports are correct and complete in all material respects, (C) each of the
Company, its Subsidiaries and the Venture has paid (or
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the Company has paid on its behalf) all Taxes shown on such Tax Returns and
Reports as required to be paid by it, and (D) the Financial Statements and
the Venture Financial Statements reflect adequate accruals, for all
material Taxes payable by the Company, its Subsidiaries and the Venture for
all taxable periods and portions thereof through the Most Recent Fiscal
Period End and the general ledgers, which have been prepared in a manner
consistent with prior practices, of the Company, its Subsidiaries and the
Venture reflect adequate accruals for all material Taxes that have accrued
thereafter. True, correct and complete copies of the federal tax returns
for the Company and the Venture for the taxable years 1994, 1995 and 1996
have been delivered or made available to representatives of the Buyer, and
no deficiencies for any Taxes have, to the Knowledge of the Company, been
proposed, asserted or assessed against the Company, any of its Subsidiaries
or the Venture, and no requests for waivers of the time to assess any such
Taxes are pending.
(ii) The Company (A) for all taxable years commencing with the
taxable year ended December 31, 1989 through December 31, 1997 has been
organized in conformity with the requirements for qualification as a real
estate investment trust (a "REIT") (within the meaning of the Code) under
the Code, has been subject to taxation as a REIT and has satisfied all
requirements to qualify as a REIT for such years, (B) has operated, and
intends to continue to operate, in such a manner as to qualify as a REIT
for the taxable period through and including the Closing Date and (C) has
not taken or omitted to take any action which would reasonably be expected
to result in a challenge to its status as a REIT and no such challenge is
pending or, to the Knowledge of the Company, threatened. Each Person which
is a partnership, joint venture or limited liability company and in which
the Company, any of its Subsidiaries or the Venture owns (either directly
or together with any of the Company's Subsidiaries) 5% or more of the
equity interests has been since its formation and continues to be for
federal income tax purposes a partnership and not a corporation or an
association taxable as a corporation. Each Subsidiary with respect to which
all of the outstanding capital stock is owned solely by the Company (or
solely by any of its Subsidiaries that is a corporation wholly owned by the
Company) is a "qualified REIT subsidiary," as defined in Section 856(i) of
the Code. Neither the Company nor any of its Subsidiaries holds any asset
that is subject to a consent filed pursuant to Section 341(f) of the Code
and the regulations thereunder. None of the Company, any of its
Subsidiaries or the Venture owns 5% or more of the stock of any corporation
which is not a "qualified REIT subsidiary" as defined in Section 856(i) of
the Code.
(iii) The Venture has been since its formation and continues to be
for federal income tax purposes a partnership and not a corporation or an
association taxable as a corporation.
(iv) None of the Company or its Subsidiaries has been at any time a
member of a consolidated, combined or unitary group for federal, state,
local or foreign tax purposes.
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(v) None of the Company, its Subsidiaries or the Venture is bound by any
private letter ruling or closing agreement with the Internal Revenue
Service or any other taxing authority, and no applications or requests for
such rulings or closing agreements are outstanding.
(j) Litigation. There is no suit, action, proceeding (including
arbitration), governmental investigation, CAM or environmental audit or labor
dispute pending or, to the Knowledge of the Company, threatened against or
affecting the Company or any of its Subsidiaries or the Venture or any of their
respective properties or assets (including the Shopping Centers), nor is there
any judgment, decree, injunction, writ or order of any court, government,
governmental agency or arbitrator outstanding against the Company or any of its
Subsidiaries or the Venture or any of their respective properties or assets.
(k) Real and Personal Property. The Company has previously delivered to
the Buyer a complete list and brief description of all real and personal
property (or where indicated, the leasehold estate therein) having a value of
over $5,000 per item owned or leased by the Company or by any of its
Subsidiaries or the Venture, in each case indicating the entity or entities
owning or leasing such property. All real property reflected in the most recent
Financial Statements and Venture Financial Statements is listed on the
Disclosure Schedule and is the only real property owned or leased by the
Company, any Subsidiary or the Venture. With respect to all such real property,
the Company, the Subsidiary or the Venture (through the Trust) (as applicable)
owning such property has good title in fee simple (or where indicated, the
leasehold estate) thereto, including all improvements thereon, free and clear of
all Liens, except for the Permitted Exceptions. The Company, each Subsidiary
and the Venture (as applicable) owns its personal property (including capital
stock and other interests in entities) free and clear of any Liens, except for
Permitted Exceptions. All leases referred to in this clause (k) are in full
force and effect and none of the Company, any Subsidiary, the Venture or, to the
Knowledge of the Company, any other party thereto is in default thereunder.
(l) Shopping Centers - Service Contracts; Leases; REAs; and Brokerage
Commissions; Other Material Contracts.
(i) Service Contracts. All service, maintenance, supply and
management contracts affecting each Shopping Center or entered into by the
Company, any of its Subsidiaries or the Venture which are not terminable
without payment of premium or penalty or which cannot be terminated without
more than thirty (30) days notice ("Service Contracts") and any
modifications thereto are set forth in the Disclosure Schedule, and the
information set forth therein is accurate as of the date hereof. Each of
the Service Contracts is valid and subsisting and none of the Company, any
of its Subsidiaries or the Venture or, to the Knowledge of the Company, any
other party thereto is in breach or default thereunder. None of the
Company, its Subsidiaries or the Venture has received or given any written
notice from or to any party to any such Service Contract claiming the
existence of any default or breach thereunder.
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(ii) Leases. (A) A list of all leases, occupancy agreements,
concessions, and licenses (and any modifications, supplements, amendments
and guarantees relating thereto) affecting each Shopping Center on the
date hereof (the "Leases"), showing the name of each tenant, the space
demised (including square footage), the lease commencement and expiration
date, the base monthly rent (including sales break point and percentage
rent rate), any percentage or additional rent, any outstanding rent
abatements, tenant improvement allowances and other tenant concessions and
applicable security deposits (the "Rent Roll"), is accurately set forth in
the Disclosure Schedule. True and complete copies of all Leases (including
all amendments, modifications, supplements and guaranties relating thereto)
have previously been delivered or made available to the Buyer. Except as
otherwise set forth in the Leases, the Disclosure Schedule or Estoppel
Certificates, as applicable, each of the Leases is valid and enforceable
and is in full force and effect and neither the Company, any of its
Subsidiaries or the Venture nor, to the Knowledge of the Company, any of
the tenants thereunder is in default of any of its obligations under any
of the Leases. No tenant has paid any base rent more than 30 days in
advance.
(B) Each Lease, together with any modifications, amendments and
supplements thereto, constitutes the entire agreement between the Company,
any of its Subsidiaries or the Venture and each other party thereto, and
neither the Company, any of its Subsidiaries nor the Venture has made any
oral promises or agreements amending or modifying the same;
(i) There are no leases executed by or on behalf of the
Company, any of its Subsidiaries or the Venture or other rights of
occupancy or use granted by or on behalf of the Company, any of its
Subsidiaries or the Venture for any portion of the Shopping Centers
other than (A) the Leases, (B) subleases or subtenancies granted by
tenants, or (C) occupancy agreements for the operation of any cart or
kiosk. As of the Closing, except for any collateral assignment of
leases and rents pursuant to any financing which will continue after
the Closing, no rents due under, or any other interest of the Company,
any of its Subsidiaries or the Venture in, any of the Leases will be
held by any party other than the Company, any of its Subsidiaries or
the Venture or otherwise pledged or encumbered or subject to any other
Lien in any way.
(ii) (1) No tenant has made any written claim which has been
received by the Company, any of its Subsidiaries or the Venture (A)
that the Company, any of its Subsidiaries or the Venture has defaulted
in performing any of its obligations under any of the Leases which has
not heretofore been cured, (B) that the Company, any of its
Subsidiaries or the Venture is or will be in default under any Lease
as a result of any condition claimed therein to exist which with the
passage of time or notice, or both, would constitute such a default,
(C) that such tenant is entitled to any reduction in, refund of or
counterclaim or offset against, or is otherwise disputing, any rents
or other charges (including CAM) paid, payable
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or to become payable by such tenant or (D) that such tenant is
entitled to cancel its Lease or to be relieved of its operating
covenants, if any, therein; and (2) to the Knowledge of the Company,
(x) no "event of default" or "default" (as defined in the respective
Lease) by a tenant exists under any Lease and (y) no condition exists
that with the passage of time or notice, or both, reasonably forms a
basis for which any Lease may be terminated by the tenant thereunder.
(iii) (1) There are no rent abatements or other tenant
concessions or inducements, including, without limitation, lease
assumptions or buy-outs, applicable to any of the Leases; (2) neither
the Company, any of its Subsidiaries nor the Venture has granted any
rights, options or rights of first refusal of any kind to any tenant,
which are in effect, to purchase or otherwise acquire the Shopping
Centers or any part thereof; and (3) all of the improvements to be
constructed by the landlord under each of the Leases have been fully
completed and paid for.
(C) The REAs constitute the entire agreement between the Company, any
of its Subsidiaries or the Venture and each REA Party thereto, and neither
the Company, any of its Subsidiaries nor the Venture has made any oral or
written promises or agreements amending or modifying the same;
(i) The REAs are valid and in full force and effect. As of the
Closing (except for any collateral assignments of leases and rents
pursuant to any financing which will continue after the Closing), no
amounts due under, or any other interest of the Company, any of its
Subsidiaries or the Venture in, the REAs will be held by any party
other than the Company, any of its Subsidiaries or the Venture or
otherwise pledged or encumbered or subject to any other Lien in any
way.
(ii) (1) None of the REA Parties has made any written claim
which has been received by the Company, any of its Subsidiaries or the
Venture (A) that the Company, any of its Subsidiaries or the Venture
has defaulted in performing any of its obligations under any of the
REAs which has not heretofore been cured, (B) that the Company, any of
its Subsidiaries or the Venture is or will be in default under any REA
as a result of any condition claimed therein to exist which with the
passage of time or notice, or both, would constitute such a default,
(C) that such REA Party is entitled to any reduction in, refund of or
counterclaim or offset against, or is otherwise disputing, any amounts
or other charges paid, payable or to become payable by such REA Party
or (D) that such REA Party is entitled to cancel its REA or to be
relieved of its operating covenants, if any, therein; (2) to the
Knowledge of the Company, (x) no "event of default" or "default" (as
defined in the respective REA) by a party to an REA exists under any
REA and (y) no condition exists that with the passage of time or
notice, or
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both, reasonably forms a basis for which any REA may be terminated by
any party thereto; and (3) each REA is in full force and effect.
(iii) (A) None of the Company, any of its Subsidiaries or the
Venture has granted any rights, options or rights of first refusal of
any kind to any of the REA Parties, which are in effect, to purchase
or to otherwise acquire the Shopping Centers or any part thereof, (B)
all of the improvements to be constructed by the Company, any of its
Subsidiaries or the Venture under any REA have been fully completed
and paid for and (C) there are no abatements or other concessions or
inducements applicable to any REA.
(iv) None of the Company, any of its Subsidiaries or the
Venture has entered into any reciprocal easement agreements other than
the REAs.
(D) Brokerage Commissions. There are no brokerage commissions or
finder's fees payable by the Company, any of its Subsidiaries or the
Venture with respect to the current or any renewal term of any of the
Leases or the negotiation of any new lease, and none of the Company, any of
its Subsidiaries or the Venture has any agreement with any broker with
respect to any renewal term of any Lease.
(E) Other Material Contracts. The Company has made available to
Buyer for review correct and complete copies of all Other Material
Contracts. All Other Material Contracts entered into by or on behalf of the
Company, any of its Subsidiaries or the Venture or by which any of them or
their assets may be bound and any modifications, supplements or amendments
thereto are set forth in the Disclosure Schedule, and the information set
forth therein is accurate. Each of the Other Material Contracts is valid
and subsisting and none of the Company, any of its Subsidiaries or the
Venture or, to the Knowledge of the Company, any other party thereto is in
breach or default thereunder. None of the Company, any of its Subsidiaries
or the Venture has received from, or given any written notice to, any party
to any Other Material Contract claiming the existence of any default or
breach thereunder.
(m) Shopping Centers - Representations Pertaining to the Premises and
Legal Matters.
(i) Insurance. The Disclosure Schedule lists all insurance policies
(the "Insurance Policies") affording coverage with respect to each Shopping
Center, and the information contained therein is accurate. The Company has
delivered or caused to be delivered to the Buyer a certificate or
certificates of insurance with respect to each blanket insurance policy for
the Shopping Centers. Each insurance policy set forth on the Disclosure
Schedule is, and as of the Closing Date will be, in full force and effect,
without any material amendments or modifications having been made thereto
and with all premiums having been paid. None of the Company, any of its
Subsidiaries or the Venture has received any notification of cancellation
or non-renewal or notice of violation in connection with any insurance
policy.
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(ii) Laws and Ordinances. None of the Company, any of its
Subsidiaries or the Venture has received written notice that any of the
Shopping Centers or the present use and condition thereof violate any
applicable deed restrictions, zoning or subdivision regulations or urban
redevelopment plans applicable to such Shopping Center, as modified by any
duly issued variances. No action or proceeding relating to the foregoing is
pending or, to the Knowledge of the Company, threatened with respect to the
Shopping Centers. No written notices of violations of law, ordinances,
regulations or orders relating to the Shopping Centers have been received
by the Company, any of its Subsidiaries or the Venture which have not been
cured or complied with. No written notice from any insurance company,
insurance rating organization or Board of Fire Underwriters requiring any
alterations, improvements or changes at the Shopping Centers, or any
portion thereof, which has not heretofore been complied with has been
received by the Company, any of its Subsidiaries or the Venture.
(iii) Condemnation. There is no pending or, to the Knowledge of the
Company, threatened condemnation, expropriation, eminent domain or similar
proceeding affecting all or any portion of any of the Shopping Centers, and
none of the Company, any of its Subsidiaries or the Venture has received
any written or, to the Knowledge of the Company, oral notice of any of the
same.
(iv) Environmental. To the Knowledge of the Company, none of the
Shopping Centers is in material violation of any Environmental Law. During
the time in which the Company, any of its Subsidiaries or the Venture has
owned the Shopping Centers, neither the Company, any of its Subsidiaries
nor the Venture nor, to the Knowledge of the Company, any third party has
used, generated, manufactured, stored, released or disposed of on, under or
about the Shopping Centers or transported to or from the Shopping Centers
any flammable explosives, radioactive materials, hazardous wastes, toxic
substances or related materials ("Hazardous Materials"), except for the
storage and use of substances commonly present at or used in the operation
and maintenance of shopping centers and in compliance with all applicable
laws. Hazardous Materials shall include, but not be limited to, substances
defined as "hazardous substances", "hazardous materials" or "toxic
substances" in the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, 42 U.S.C. Sec. 9601, et seq; the
Hazardous Materials Transportation Act, 49 U.S.C. Sec. 1801, et seq; the
Resource Conservation and Recovery Act, 42 U.S.C. Sec. 6901, et seq; and
those substances defined as "hazardous wastes" in relevant state laws and
in the regulations adopted and publications promulgated pursuant to said
laws. Neither the Company, any of its Subsidiaries, PCI nor the Venture
has received any written notice from any governmental authority having
jurisdiction or other Person that (i) it, any other occupant of the
Shopping Centers or the Shopping Centers are not in compliance with any
Environmental Law or that it has any liability with respect thereto or (ii)
there are administrative, regulatory or judicial proceedings pending with
respect to the Shopping Centers pursuant to, or alleging any violation of
or liability under, any Environmental Law. Neither the Company, any of its
Subsidiaries, PCI nor the Venture has installed or maintained any
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underground or above ground storage tanks on, under or about the Shopping
Centers. Neither the Company, any of its Subsidiaries, PCI nor the Venture
has received written notice that there is a facility located on or at the
Shopping Centers that is subject to the reporting requirements of Section
312 of the Federal Emergency Planning and Community Right to Know Act of
1986 and the federal regulations promulgated thereunder (42 U.S.C.
(S)11022). None of the Company, any of its Subsidiaries, PCI or the
Venture has received any written notice of pending or threatened claims,
liabilities or proceedings, nor, to the Knowledge of the Company have there
been any violations of or failures to comply with Environmental Laws or any
releases of Hazardous Materials (except for releases of materials commonly
present at or used in the operation and maintenance of shopping centers and
in compliance with all applicable laws), in each case, with respect to any
properties formerly owned or leased (in whole or in part) by any of such
entities or any predecessors of such entities during the period such
properties were so-owned or so-leased by the Company, any of the
Subsidiaries or the Venture (or their predecessors) or prior thereto.
(n) Debt Instruments. Set forth in the Disclosure Schedule is a list of
all loan or credit agreements, notes, bonds, mortgages, indentures or other
agreements or instruments pursuant to which any indebtedness of the Company or
any of its Subsidiaries or the Venture for money borrowed is outstanding or may
be incurred and any agreements relating to the deferred purchase price of
property and the respective principal amounts outstanding thereunder on March
31, 1998. Neither the Company nor any of its Subsidiaries or the Venture is in
violation of or in default under (nor does there exist any condition which upon
the passage of time or the giving of notice, or both, would cause such a
violation of or default under) any such loan or credit agreement, note, bond,
mortgage, indenture or other agreement or instrument, except for violations that
are not, individually or in the aggregate, material to the Company, its
Subsidiaries and the Venture, taken as a whole, and which will not prevent,
materially hinder or delay consummation of the transactions contemplated hereby.
The Disclosure Schedule lists all letters of credit and performance bonds to
which the Company, any of its Subsidiaries or the Venture is a party or under
which any of them is obligated or which otherwise relate to properties or assets
of the Company, any Subsidiary or the Venture.
(o) ERE Yarmouth Agreement. Set forth in the Disclosure Schedule is a
list of all arrangements, agreements or contracts (written or oral) entered into
by the Company or any of its Subsidiaries or by PCI or the Venture with ERE
Yarmouth or any of its Affiliates, complete and correct copies of which have
been previously delivered or made available to the Buyer. All fees (and
expenses) payable to ERE Yarmouth or any of its Affiliates under such agreements
or in connection with the execution, delivery and performance of this Agreement
and the agreements contemplated hereby and the consummation of the transactions
contemplated hereby and thereby shall be paid by the Company Stockholders and
PCI or from the Closing Expense Fund, in each case prior to or concurrently with
the Closing.
(p) Xxxx-Xxxxx-Xxxxxx Act. For purposes of determining compliance with
the Xxxx-Xxxxx-Xxxxxx Act, the Company confirms that the conduct of its business
consists solely of
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investing in, owning and operating shopping centers and office buildings for the
benefit of its stockholders.
(q) Employees. Except as set forth in (S) 3(q) of the Disclosure Schedule,
to the Knowledge of the Company, (a) no employee of ERE Yarmouth or its
Affiliates who is employed at the Shopping Centers (an "Employee") is a member
of a collective bargaining unit, (b) there are no threatened or contemplated
attempts to organize for collective bargaining purposes any of the Employees,
(c) no unfair labor practice charge or complaint or sex, age, disability,
gender, race or religious discrimination claim is pending against the Company,
any Subsidiary or the Venture before the National Labor Relations Board or any
other federal state or local governmental authority, (d) there is no work
stoppage, strike or other concerted action by Employees, (e) the Company, the
Subsidiaries and the Venture and their employee benefit plans are in compliance
in all material respects with all applicable laws, rules, regulations,
ordinances, orders, judgments and decrees relating to the employment of labor
and benefit plans, (f) ERE Yarmouth and its Affiliates have paid in full to all
Employees all wages, salaries, commissions, bonuses, benefits and other
compensation due or to become due on behalf of such Employees, and (g) all
contributions and/or premiums to or on behalf of all benefit plans which are due
and owing have been paid, (h) no notice of intent to terminate any pension plan
has been filed and no amendment to treat such plan as terminated has been
adopted, nor has the Pension Benefit Guaranty Corporation instituted proceedings
to terminate any pension plan, and no other event or condition has occurred
which might constitute grounds under Sections 4041 or 4042 of the Employee
Retirement Income Security Act of 1974, as amended, for the termination of, or
the appointment of a trustee to administer any pension plan, and (i) each
benefit plan which is qualified under Section 401(a) of the Code has received a
determination letter from the IRS that it is so qualified in form, and no fact
or event has occurred since the date of such determination letter that could
adversely affect the qualified status of such benefit plan in operation or form.
(r) Brokers' Fees. Except as described in (S) 3(o), none of the Company,
any of its Subsidiaries or the Venture has any liability or obligation to pay
any fees or commissions to any broker, finder or agent with respect to the
transactions contemplated by this Agreement or the P City Agreement.
(s) Promotional Funds. None of the Company, any of its Subsidiaries or the
Venture is under any obligation to make contributions or otherwise provide
assistance to any promotional association or promotional fund.
(t) Violations. None of the Company, any of its Subsidiaries, PCI or the
Venture has received any written notice that there exists any violation of any
restriction, condition or agreement contained in any easement, restrictive
covenant or any similar instrument or agreement recorded against the Shopping
Centers or any portion thereof and, to the Knowledge of the Company, there is no
such violation. To the Knowledge of the Company, without having made any
governmental investigation or inquiry, the Company, its Subsidiaries and the
Venture are in compliance with all applicable laws, statutes, ordinances and
regulations, whether federal, state or local, relating to such entities or their
businesses, properties, assets or operations, other
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than those as to which failure to comply would not, individually or in the
aggregate, have a Material Adverse Effect, or prevent, materially hinder or
delay consummation of the transactions contemplated hereby.
(u) Licenses and Permits. The Disclosure Statement contains a list of all
licenses and permits (collectively, the "Licenses and Permits") currently
maintained with respect to the Shopping Centers. None of the Company, any of its
Subsidiaries, PCI or the Venture has received any written notice of violation of
any such Licenses and Permits from any federal, state or municipal entity that
has not been cured or otherwise resolved to the satisfaction of such
governmental entity, and to the Knowledge of the Company, there is no such
uncured violation. To the Knowledge of the Company, without having done any
governmental investigation or inquiry, the Company has all material Licenses and
Permits necessary for the Company, each of its Subsidiaries and the Venture to
conduct their businesses as presently conducted and to own their properties and
assets.
(v) Tenant Bankruptcy. Neither the Company, any of its Subsidiaries, PCI
nor the Venture has received any written notice that any tenant or REA Party is
the subject of any bankruptcy, reorganization, insolvency or similar proceedings
or has ceased or reduced or intends to cease or reduce operations at the
Shopping Centers (other than temporarily due to casualty, remodeling, renovation
or similar cause) and, to the Knowledge of the Company, no tenant or REA Party
is the subject of any such proceedings or has so ceased or reduced or intends to
so cease or reduce operations at the Shopping Centers.
(w) Intellectual Property. Neither the Company, any of its Subsidiaries,
PCI nor the Venture has received any written notice that the conduct of the
Company's, any of its Subsidiaries' or the Venture's business infringes upon the
patents, trademarks, copyrights or other intellectual property rights of any
third party, and neither the Company, any of its Subsidiaries nor the Venture
has given any written notice to any third party that such third party is
infringing upon the patents, copyrights, trademarks or other intellectual
property rights of the Company, any of its Subsidiaries or the Venture, and, to
the Knowledge of the Company, there is no such infringement. The Company, its
Subsidiaries, and the Venture have all right, title and interest in, or licenses
to use, all intellectual property necessary to conduct their business as
presently conducted.
(x) Tax Assessments. Copies of current real estate tax bills with respect
to each of the Shopping Centers, other than tax bills sent to tenants or REA
Parties who have the obligation to pay such Taxes to the collecting authority,
have been delivered or made available to the Buyer. No application or proceeding
is pending with respect to a reduction of or an increase in any such Taxes. None
of the Company, any of its Subsidiaries, PCI or the Venture has received any
written notice of or, to the Knowledge of the Company, otherwise been made aware
of (i) any special tax or assessment to be levied or proposed to be levied
against any of the Shopping Centers or (ii) any change or proposed change in the
tax assessment of any of the Shopping Centers.
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(y) Bank Accounts and Powers of Attorney. The Disclosure Schedule
identifies all bank accounts (or other accounts with financial institutions)
and safe deposit boxes of the Company, the Subsidiaries and the Venture,
together with account numbers and all current signatories thereon and persons
with access thereto, and the names of all persons holding powers of attorney or
similar grants of authority from the Company, any of its Subsidiaries or the
Venture which are not otherwise disclosed in agreements or other instruments
identified in the Disclosure Schedule. Copies of all said powers of attorney
and similar authorizations have been delivered to the Buyer.
(z) Records. The minute books and records of the Company, each
Subsidiary, and the Venture in the possession of the Representative have been
provided or made available to Buyer. The minute books, stock ledgers and stock
records of the Company, each Subsidiary, and the Venture are or will, as of the
Closing Date, be true, correct and complete. Complete and accurate copies of
the foregoing have been or will, prior to the Closing, be provided or made
available to the Buyer.
4. Representations and Warranties of the Buyer and the Transitory Subsidiary.
The Buyer and the Transitory Subsidiary jointly and severally represent and
warrant to the Company, for the benefit of the Company and the Company
Stockholders, that the statements contained in this (S) 4 are correct and
complete as of the date of this Agreement.
(a) Organization. The Buyer is a limited partnership, and the Transitory
Subsidiary is a limited liability company, in each case, duly organized, validly
existing and in good standing under the laws of the State of Delaware. Each of
the Buyer and the Transitory Subsidiary has full limited partnership or limited
liability company, as the case may be, power and authority to carry on the
business in which it is engaged and to own or lease the properties owned or
leased by it.
(b) Financial Ability to Perform. The Buyer has or, at the Closing Date,
will have currently available cash funds sufficient to consummate the
transactions contemplated by this Agreement.
(c) Authorization of Transaction. Each of the Buyer and the Transitory
Subsidiary has full power and authority to execute and deliver this Agreement
and the agreements contemplated hereby to which it is a party and to perform its
obligations hereunder and thereunder, and all necessary corporate or limited
liability company action has been taken by the Buyer and the Transitory
Subsidiary to approve the execution, delivery and performance hereof and thereof
by the Buyer and the Transitory Subsidiary, respectively. This Agreement has
been duly executed and delivered by the Buyer and the Transitory Subsidiary
under applicable Delaware law and in accordance with its partnership agreement
or operating agreement, as the case may be, and, assuming the due authorization,
execution and delivery hereof by the other Parties, constitutes the valid and
legally binding obligation of each of the Buyer and the Transitory Subsidiary,
enforceable in accordance with its terms. The Deposit Escrow Agreement has been,
and the other agreements contemplated hereby to which the Buyer or the
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Transitory Subsidiary will be parties, will prior to the Closing be duly
executed and delivered by the Buyer and/or the Transitory Subsidiary, as the
case may be, and constitute or will constitute, as the case may be, the valid
and legally binding obligations of the Buyer and/or the Transitory Subsidiary,
as the case may be, enforceable in accordance with their respective terms.
(d) Noncontravention. Neither the execution and the delivery of this
Agreement and the agreements contemplated hereby nor the consummation of the
transactions contemplated hereby and thereby will (i) violate any statute,
regulation, rule, injunction, judgment, order or decree of any government,
governmental agency or court to which the Buyer or the Transitory Subsidiary is
subject or by which it or its assets may be bound or any provision of the
limited partnership agreement or operating agreement of the Buyer and the
Transitory Subsidiary, respectively, or (ii) conflict with, result in a breach
of, constitute a default under, result in the acceleration of, create in any
party the right to accelerate, terminate, modify or cancel, or require any
notice under any agreement, note, bond, mortgage, contract, lease, license,
permit or instrument to which the Buyer or the Transitory Subsidiary is a party
or by which it is bound or to which any of its assets is subject (or result in
the imposition of any Lien upon any of its assets), except where the violation,
conflict, breach, default, acceleration, termination, modification,
cancellation, failure to give notice or Lien would not have a material adverse
effect on the ability of the Buyer or the Transitory Subsidiary to consummate
the transactions contemplated by or perform its obligations under this
Agreement. Except for the filing of the Certificate of Merger in Delaware,
neither the Buyer nor the Transitory Subsidiary needs to give any notice to,
make any filing with or obtain any authorization, consent or approval of any
government or governmental agency or other Person in order for such Parties to
execute and deliver this Agreement and the other agreements contemplated hereby
to which they are parties or to consummate the transactions contemplated hereby
and thereby.
(e) Litigation. There is no suit, action or proceeding pending or, to the
knowledge of the Buyer or the Transitory Subsidiary, threatened against or
affecting the Buyer or the Transitory Subsidiary that, individually or in the
aggregate, could reasonably be expected to have a material adverse effect on the
ability of the Buyer or the Transitory Subsidiary to consummate the transactions
contemplated by or perform its obligations under this Agreement, nor is there
any judgment, decree, injunction, writ rule or order of any court, government,
governmental agency or arbitrator outstanding against the Buyer or the
Transitory Subsidiary or any of their respective properties or assets having, or
which would reasonably be expected to have, any such effect.
(f) The Transitory Subsidiary. The Transitory Subsidiary was formed solely
for the purpose of engaging in the transactions contemplated by this Agreement
and has not engaged in any business activities or conducted any operations other
than in connection with such transactions.
(g) Brokers' Fees. Neither the Buyer nor the Transitory Subsidiary has any
liability or obligation to pay any fees or commissions to any broker, finder or
agent with respect to the transactions contemplated by this Agreement.
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5. Survival of Representations and Warranties. No representations and
warranties of the Company or the Buyer and the Transitory Subsidiary set forth
in this Agreement or in any instrument or document delivered or to be delivered
pursuant to this Agreement shall survive the Closing, other than the
representations and warranties of the Company set forth in (S) 3(a), (b), (c),
(d), (e), (f), (g), (h) (only with respect to clauses (ii), (iv), (v), (vii),
(x), (xii), (xiii), (xiv) and clause (xv) but only insofar as clause (xv)
relates to the foregoing clauses of subsection (h)), (i), (o), (p), (q), (r),
(y) and (z), those of the Buyer and the Transitory Subsidiary set forth in (S)
4(a), (c), (d) and (g) and those set forth in any certificate delivered on
behalf of the Company pursuant to (S) 9(a)(v) or on behalf of the Buyer pursuant
to (S) 9(b)(iv), but only to the extent that such representations and warranties
in such certificates relate to the foregoing sections and subsections of this
Agreement, which shall survive the Closing until the first anniversary of the
Closing Date ("Survival Termination Date"). Any representation or warranty
which expires at the Closing shall, notwithstanding anything to the contrary
herein, not be deemed to limit in any respect any representation, warranty or
other provision of this Agreement or the agreements contemplated hereby which
does not so expire. No Party hereto may assert any claim with respect to any
breach of any representation or warranty after the date on which such
representation or warranty ceases to survive pursuant to this Section 5. All
covenants, to the extent relating to periods following the Closing, and
indemnities of the Parties shall survive the Closing.
6. Claims Against the Escrow Fund. (a) The Parties hereby acknowledge and
agree that none of the Buyer, the Transitory Subsidiary or the Surviving
Corporation is permitted to assert against any Schedule I Stockholder or PCI or
Park City any claim with respect to representations, warranties, indemnities or
covenants contained herein or in the P City Agreement or in any instrument or
document delivered or to be delivered pursuant to this Agreement except in
accordance with the Post-Closing Escrow Agreement and their sole remedy with
respect to such matters shall be pursuant to the Post-Closing Escrow Agreement.
7. Covenants. The Parties agree as follows with respect to the period from
and after the execution of this Agreement and to the Effective Time or earlier
termination of this Agreement:
(a) General. Except as otherwise provided herein, each of the Parties will
use its reasonable best efforts to take all actions and to do all things
necessary, proper or advisable in order to consummate and make effective the
transactions contemplated by this Agreement (including satisfaction, but not
waiver, of the closing conditions set forth in (S) 9 below).
(b) Notices and Consents. The Company will give any notices (and will
cause each of its Subsidiaries, PCI, the Venture and ERE Yarmouth and its
Affiliates to give any notices) to third parties and will use its reasonable
best efforts to obtain (and will cause each of its Subsidiaries, PCI, the
Venture and ERE Yarmouth and its Affiliates to use its reasonable best efforts
to obtain) any third party consents that are required as disclosed in the
Disclosure Schedule in connection with the matters referred to in (S) 3(f)
above.
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(c) Regulatory Matters; Stockholder Approval. Each of the Parties will
(and will cause each of its Subsidiaries and, in the case of the Company, PCI
and the Venture to) give any notices to, make any filings with and use its
reasonable best efforts to obtain any authorizations, consents and approvals of
governments and governmental agencies in connection with the matters referred to
in (S) 3(f) or (S) 4(d) above, as the case may be. In addition, the Company
will call a special meeting of its stockholders (the "Special Meeting") in
accordance with its Bylaws and the Delaware General Corporation Law as soon as
practicable in order that Company Stockholders may consider and vote upon the
adoption of this Agreement and the approval of the Merger in accordance with the
Delaware General Corporation Law. The notice of such meeting shall contain the
recommendation of the Board of Directors of the Company that the Company
Stockholders adopt this Agreement and approve the transactions contemplated
hereby.
(d) Conduct of Business by the Company. The Company will not (and will
not cause or permit any of its Subsidiaries, PCI or the Venture to) engage in
any practice, take any action or enter into any transaction outside the Ordinary
Course of Business except with the written consent of the Buyer, which consent
shall be given or withheld by the Buyer acting in accordance with its business
judgment, exercised in good faith after giving due consideration to the
Company's recommendations. Without limiting the generality of the foregoing:
(i) none of the Company or its Subsidiaries will authorize or
effect any change in its charter or by-laws and none of the Company,
Parcity, Inc. or PCI will authorize or effect any change in the Venture
Agreement or cause the termination of the Venture;
(ii) none of the Company or its Subsidiaries will grant any options,
warrants or other rights to purchase or obtain any of its capital stock,
securities convertible into or exchangeable therefor or other equity
interests or issue, sell or otherwise dispose of any of its capital stock,
securities convertible into or exchangeable therefor or other equity
interests;
(iii) none of the Company, its Subsidiaries or the Venture will
declare, set aside or pay any non-cash dividend or non-cash distribution
with respect to its capital stock or other equity interests, except to the
extent required in order for the Company or Park City to maintain its
status as a "real estate investment trust" under the Code, or redeem,
repurchase or otherwise acquire any of its capital stock or other equity
interests;
(iv) except as expressly contemplated by this Agreement, none of the
Company, its Subsidiaries or PCI will merge or consolidate with or into any
Person;
(v) none of the Company, its Subsidiaries or the Venture will issue
any note, bond or other debt security, create, incur, assume or guarantee
any indebtedness for borrowed money or capitalized lease obligations or
enter into any sale-leaseback or similar off-balance sheet financing , in
each case which will continue to be outstanding or otherwise remain in
effect following the Closing.
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(vi) none of the Company, its Subsidiaries or the Venture will
impose any Lien or permit to exist any new Lien upon any of its assets
outside the Ordinary Course of Business (other than new Liens which do not
exceed $25,000, individually or $50,000, in the aggregate);
(vii) none of the Company, its Subsidiaries or the Venture will make
any capital investment in, make any loan to or acquire the securities or
assets of any other Person outside the Ordinary Course of Business except
as contemplated by the current capital expenditure budgets of the Company
and its Subsidiaries or of the Venture, as previously approved by the Board
of Directors of the Company or the Venturers, as the case may be, and
provided to the Buyer;
(viii) none of the Company, its Subsidiaries or the Venture will
settle pending or threatened litigation in an amount exceeding $25,000
individually, or $50,000 in the aggregate (excluding amounts covered by
insurance);
(ix) none of the Company, its Subsidiaries or the Venture will
sell, assign or transfer any of its assets that has a fair market value in
excess of $25,000 individually, or $100,000 in the aggregate, whether or
not in the Ordinary Course of Business and;
(x) none of the Company, its Subsidiaries or the Venture will
cancel any indebtedness for borrowed money owed to it, other than in return
for full payment thereof, whether or not in the Ordinary Course of
Business;
(xi) none of the Company, its Subsidiaries or the Venture will
engage in any new transaction outside of the Ordinary Course of Business or
not on an arm's-length basis or enter into any new line of business;
(xii) the Company will not waive any rights under, or enter into any
amendment or modification of, the P City Agreement; and
(xiii) none of the Company, the Subsidiaries or the Venture will hire
any employees; and
(xiv) none of the Company, its Subsidiaries or the Venture will
commit to any of the foregoing.
The Company shall, and shall cause each of its Subsidiaries and the Venture
to, use its reasonable best efforts to preserve its business organization and
reputation intact, to maintain its assets and properties in good working order
and condition, ordinary wear and tear excepted, to preserve its relationships
with tenants and other occupiers of properties, customers, suppliers, lenders,
partners and others having significant business dealings with such entity. The
Company shall prepare and file prior to the Closing Date all federal, state,
local or foreign Tax Returns and Reports relating to the Company, any Subsidiary
or the Venture for the period ending
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December 31, 1997 and pay all Tax due in connection therewith prior to the
Closing Date. Such Tax Returns and Reports shall be prepared on a basis
consistent with those prepared for prior tax years unless a different treatment
of any item is required by an intervening change in law. Notwithstanding the
foregoing, with respect to each year in which Parcity Inc. or PCI owned an
interest in the Venture, the Company shall cause Parcity Inc. and PCI, or, if
applicable, their respective parents, prior to Closing to file corporate Tax
Returns with the Pennsylvania Department of Revenue and to pay the corporate
capital stock/franchise Taxes and corporate net income Taxes shown to be due on
such Tax Returns. The Taxes shown to be due on such corporate Tax Returns (i)
shall be calculated on the basis that the Venture was the legal and beneficial
owner of the Park City Center located in Lancaster, Pennsylvania for each
applicable year, and (ii) shall include interest and all penalties except those
waived in writing by the Pennsylvania Department of Revenue. In addition, prior
to Closing, the Company shall cause the Venture to file a Pennsylvania
partnership information return with the Pennsylvania Department of Revenue for
each year in which the Venture was in existence. The Company shall furnish the
Buyer with a copy of any such Tax Returns and Reports at least 5 Business Days
prior to the Closing. The Company will enforce its rights under the P City
Agreement and will use its reasonable best efforts to cause Net Quick Assets as
of the Closing not to be less than zero.
(e) Full Access. The Company will (and will cause each of its
Subsidiaries and the Venture to) permit representatives and agents of the Buyer
to have full access at all reasonable times, and in a manner so as not to
interfere with the normal business operations of the Company, its Subsidiaries
or the Venture, to all premises, properties, personnel, officers, accountants,
agents, books, records (including tax records), contracts and documents of or
pertaining to the Company, its Subsidiaries and the Venture and to make
photocopies of any such books, records, contracts and documents at no cost to
the Company or the Schedule I Stockholders and PCI. The Buyer will treat and
hold any Confidential Information it receives from the Company or any of its
Subsidiaries or the Venture in the course of the reviews contemplated by this
(S) 7(e), in accordance with the terms of the Confidentiality Agreement. The
Company shall deliver or cause to be delivered promptly to the Buyer each
report, statement, schedule and other document filed with any governmental
agency or authority by the Company, any Subsidiary or the Venture.
(f) Notice of Developments. Each Party will give prompt written notice to
the others of any information which comes to its attention indicating a breach
of any of its own or any other Party's representations and warranties in (S) 3
or (S) 4 above or covenants herein or that is necessary to correct or complete
any information in any representation or warranty contained in (S) 3 or (S) 4.
No disclosure by any Party pursuant to this (S) 7(f), however, shall be deemed
to amend or supplement the Disclosure Schedule or to qualify any representation,
warranty, covenant, indemnity or other agreement contained herein or in the
agreements contemplated hereby or any condition to the obligations of the
Parties hereto. In addition, it is acknowledged and agreed that:
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(i) The Company shall deliver or cause to be delivered to the Buyer,
promptly upon receipt thereof by the Company, any of its Subsidiaries, PCI
or the Venture, copies of any notices received or given by the Company, any
of its Subsidiaries, PCI or the Venture from or to any Person alleging or
relating to any violation of applicable law or any default, or the
occurrence of any event which could result in a default, under any of the
Leases, the REAs or the Service Contracts.
(ii) The Company shall advise the Buyer promptly in writing of the
receipt, by the Company, any of its Subsidiaries, PCI or the Venture, of
notice of the institution of any litigation or judicial, quasi-judicial or
administrative inquiry or proceeding with respect to any of the Shopping
Centers or the Company, any of its Subsidiaries, PCI or the Venture,
including any legal proceedings or condemnation proceedings, any notice of
a violation issued by any governmental authority with respect to any of the
Shopping Centers, any actual or proposed special assessment or change in
the assessed value of any of the Shopping Centers or any portion thereof,
any notice from any insurance company or fire rating bureau of any material
defects or inadequacies in any of the Shopping Centers or any part thereof
or any notice of the unavailability of any licenses or permits hereafter
required in connection with the ownership or operation of any of the
Shopping Centers. Without the written consent of the Buyer, which shall be
given or withheld by the Buyer acting in accordance with its business
judgment, exercised in good faith after giving due consideration to the
Company's recommendations, neither the Company, any of its Subsidiaries,
PCI nor the Venture will withdraw, settle or otherwise compromise any
protest or reduction proceeding affecting real estate taxes or the charges
assessed against any of the Shopping Centers.
(g) Indemnification; Directors' and Officers' Insurance
(i) For a period of six (6) years from and after the Effective Time,
the Buyer and the Surviving Corporation (collectively, the "Indemnifying
Parties") shall indemnify, defend and hold harmless each person who is now
or has been at any time prior to the date hereof, or who becomes prior to
the Effective Time, an officer or director of the Company, any of its
Subsidiaries or the Venture or a trustee of the Trust (the "Indemnified
Parties") against all losses, claims, damages, liabilities, judgments,
amounts that are paid or to be paid in settlement with the approval of the
Indemnifying Party (which approval shall not be unreasonably withheld or
delayed), costs or expenses (including reasonable attorneys' fees and
expenses), or assessments that are incurred or otherwise suffered by any
Indemnified Party in connection with any threatened or actual claim,
action, suit, proceeding or investigation based on or arising out of the
fact that such Person is or was an officer or director of the Company or
any of its Subsidiaries at or prior to the Effective Time, whether asserted
or claimed prior to, or at or after, the Effective Time, which arises out
of any action occurring at or prior to the Effective Time ("Indemnified
Liabilities"), including all Indemnified Liabilities based on, or arising
out of, or pertaining to this Agreement or the transactions contemplated by
this Agreement, in each case to the full extent a corporation is permitted
under the Delaware General
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Corporation Law to indemnify its own directors or officers. The
Indemnifying Party shall pay expenses in advance of the final disposition
of any such action or proceeding to each Indemnified Party to the full
extent permitted by law, provided that the Person to whom expenses are
advanced provides an undertaking to repay such advance if it is ultimately
determined that such Person is not entitled to indemnification. Any
Indemnified Parties proposing to assert the right to be indemnified under
this (S) 7(g) shall, promptly after receipt of notice of commencement of
any action against such Indemnified Parties in respect of which a claim is
to be made under this (S) 7(g) against the Buyer or the Surviving
Corporation, notify the Indemnifying Parties of the commencement of such
action, enclosing a copy of all papers served. The failure to so notify
the applicable Indemnifying Party shall not relieve such Indemnifying Party
from any liability which it may have under this Section, except to the
extent such failure prejudices such Indemnifying Party. If any such action
is brought against any of the Indemnified Parties and such Indemnified
Parties notify the Indemnifying Parties of its commencement, the
Indemnifying Parties will be entitled to participate in and, to the extent
that they elect, by delivering written notice to such Indemnified Parties
promptly after receiving notice of the commencement of the action from the
Indemnified Parties, to assume the defense of the action, and, after notice
from the Indemnifying Parties to the Indemnified Parties of their election
to assume the defense, the Indemnifying Parties will not be liable to the
Indemnified Parties for any legal expenses with respect to such action
except as provided below. If the Indemnifying Parties assume the defense,
the Indemnifying Parties shall have the right to settle such action without
the consent of the Indemnified Parties; provided, however, that the
Indemnifying Parties shall be required to obtain such consent (which
consent shall not be unreasonably withheld or delayed) if the settlement
includes any admission of wrongdoing on the part of the Indemnified Parties
or any decree or restriction on the Indemnified Parties; provided, further,
that no Indemnifying Parties in the defense of any such action shall,
except with the consent of the Indemnified Parties (which consent shall not
be unreasonably withheld), consent to entry of any judgment or enter into
any settlement that does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Parties of a
release from all liability with respect to such action. The Indemnified
Parties will have the right to employ their own counsel in any such action,
and the fees, expenses and other charges of such counsel will be at the
expense of the Indemnified Parties unless (i) the employment of counsel by
the Indemnified Parties has been authorized in writing by the Indemnifying
Parties, (ii) the Indemnified Parties have reasonably concluded (based on
advice of counsel) that there may be legal defenses available to them that
are different from or in addition to those available to the Indemnifying
Parties, (iii) a conflict or potential conflict exists (based on advice of
counsel to the Indemnified Parties) between the Indemnified Parties and the
Indemnifying Parties (in which case the Indemnifying Parties will not have
the right to direct the defense of such action on behalf of the Indemnified
Parties) or (iv) the Indemnifying Parties have not in fact employed counsel
to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases
the reasonable fees, disbursements and other charges of counsel will be at
the expense of the Indemnifying Parties. It is understood that the
Indemnifying
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Parties shall not, in connection with any proceeding or related proceedings
in the same jurisdiction, be liable for the reasonable fees, disbursements
and other charges of more than one separate firm admitted to practice in
such jurisdiction at any one time from all such Indemnified Parties unless
(a) the employment of more than one counsel has been authorized in writing
by the Indemnifying Parties or (b) there is, under applicable standards of
professional conduct (based on advice of counsel), a conflict on any
significant issue between the positions of any two or more Indemnified
Parties, in each of which cases the Indemnifying Parties shall be obligated
to pay the reasonable and appropriate fees and expenses of one additional
counsel. The Indemnifying Parties will not be liable for any settlement of
any action or claim effected without their written consent (which consent
shall not be unreasonably withheld or delayed).
(ii) The provisions of this (S) 7(g) are intended to be for the
benefit of, and shall be enforceable by, each Indemnified Party, his or her
heirs and his or her personal representatives and shall be binding on all
successors and assigns of the Buyer and the Surviving Corporation.
(iii) The Buyer shall either (A) cause the Surviving Corporation to
extend the Company's existing directors and officers liability insurance
policy as of the date hereof (or a policy providing coverage on comparable
terms and conditions) for acts or omissions occurring prior to the
Effective Time by Persons who are covered as of the date of this Agreement
by such insurance policy maintained by the Company for a period of six (6)
years following the Effective Time, or (B) add such Persons to the existing
directors and officers liability insurance policy of the Buyer or an
Affiliate; provided, however, that, for purposes of this clause (B), such
insurance shall provide officers and directors of the Company the same
coverage as similarly situated officers and directors of the Buyer and such
insurance shall be maintained by the Buyer for a period of six years
following the Effective Time. Notwithstanding the preceding sentence, in no
event shall the Buyer or the Surviving Corporation be required to expend on
average over such six year period in excess of 125% of the annual premium
currently paid by the Company for such coverage and, if the premium for
such coverage on average over such six year period exceeds such amount, the
Buyer or the Surviving Company shall purchase a policy with the greatest
coverage available for such 125% of the annual premium.
(iv) In the event that the Buyer or any of its successors or assigns
consolidates with or merges into any other Person and shall not be the
continuing or surviving corporation or entity of such consolidation or
merger or transfers all or substantially all of its properties and assets
to any Person, then, and in each such case, the successors and assigns of
such entity shall, as a condition precedent to such consolidation, merger
or transfer, assume the obligations set forth in this (S) 7(g), which
obligations are expressly intended to be for the irreversible benefit of,
and shall be enforceable by, each officer and director covered hereby.
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(h) Contracts, Transfers and Encumbrances. The Company will not (and will
cause each of its Subsidiaries and the Venture not to), without the prior
written consent of the Buyer, which consent shall be given or withheld by the
Buyer acting in accordance with its business judgment, exercised in good faith
after giving due consideration to the Company's recommendations:
(i) extend, renew, terminate, replace, amend, supplement or modify
any Service Contract (other than as may be required pursuant to its
existing terms), or enter into any new Service Contract with respect to any
of the Shopping Centers which will survive the Closing or otherwise affect
the use, operation or enjoyment of the Shopping Centers after the Closing
or increase the obligations of the Company, any Subsidiary or the Venture
thereunder;
(ii) waive any material rights of the Company, any of its
Subsidiaries or the Venture under any Service Contracts;
(iii) sell, transfer, convey or encumber, or cause or permit to be
sold, transferred, conveyed or encumbered, any of the Shopping Centers, or
any part thereof or interest therein, or agree to or support any adoption
of, amendment to or revocation of any environmental, zoning, subdivision,
land use, building or similar law affecting the Shopping Centers or enter
into any easements or restrictive covenants which burden any of the
Shopping Centers; or
(iv) perform or permit any act which shall diminish, encumber or
adversely affect the Company's, any of its Subsidiaries' or the Venture's
rights in and to the Shopping Centers or prevent the Company from
performing its obligations hereunder.
(i) Tenant Leases and REAs. The Company, each of its Subsidiaries and the
Venture shall fully and faithfully perform all of the landlord's covenants,
agreements and obligations under the Leases and the REAs to which it is a party,
consistent with past practice. Neither the Company or any of its Subsidiaries
nor the Venture will, without the prior written consent of the Buyer, which
consent shall be given or withheld by the Buyer acting in accordance with its
business judgment, exercised in good faith after giving due consideration to the
Company's recommendations:
(i) Enter, or commit to enter, into any new reciprocal easement
agreement or lease or sublease for space in any of the Shopping Centers
which is in excess of 1,000 square feet.
(ii) Agree to any alteration, amendment, supplement, extension,
termination, cancellation or revision of any REA or Lease involving any
space in any of the Shopping Centers which is in excess of 1,000 square
feet and for a term of more than 90 days heretofore entered into or which
may hereafter be entered into as provided in this (S) 7(i).
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(iii) Accept any rent more than one month in advance or any security
deposit not reflected in a Lease.
(iv) Release any of the material obligations of the tenants under
the Leases or the REA Parties under the REAs.
(v) Consent to any assignment or sublease of any Lease except to
the extent required by the terms of the Lease.
(j) Notice. In connection with any action set forth in (S) 7(h) or (i)
above that requires the Buyer's consent, the Company shall deliver to the Buyer
a written notice of each proposed action hereunder stating, if applicable,
whether the Company is willing to consent to such action and setting forth the
relevant information relating thereto and, if applicable, the number of days
within which the Company must respond to the proposed action under the terms of
the applicable Lease, REA or Service Contract, together with any other material
information supplied to the Company as to the proposed action. The Buyer shall,
except as provided in the last sentence of this (S) 7(j), have ten (10) days
after delivery to it of such notice and information to determine whether or not
to approve such action. If the Buyer shall not give notice of its disapproval
within such ten (10) day period, the Buyer shall be deemed to have approved such
action and the Company may proceed to take such action in its discretion. If
any Lease, REA or Service Contract provides the Company, by its express terms,
with fewer than ten (10) days within which to grant any such approval or
disapproval, such ten (10) day period provided for above shall be reduced to one
(1) Business Day less than the number of days provided for in such Lease, REA or
Service Contract and the written notice to the Buyer shall specifically state
the time period for the Buyer's approval.
(k) Estoppel Letters; Rent Roll. (i) The Company agrees to request
estoppel certificates from all tenants, REA parties, the ground lessor at
Northgate Mall and from Connecticut General Life Insurance Company as lender at
Xxxxxxx Mall.
(ii) On or before the date that is five (5) Business Days prior to the
Closing Date, the Company shall furnish to the Buyer, an estoppel certificate
completed by each anchor tenant (as identified on Exhibit L-1 hereto) who is
required to deliver an estoppel certificate pursuant to its Lease, each REA
Party who is required to deliver an estoppel certificate pursuant to its REA,
not less than seventy five percent (75%) of the tenants, other than the anchors,
who are required to deliver an estoppel certificate pursuant to their Lease, the
ground lessor at the Northgate Mall and Connecticut General, as lender with
respect to Xxxxxxx Mall. The estoppels shall be either (x) on the form
specified in the Lease, REA, or mortgage, as the case may be, or (y) on the form
attached hereto and incorporated herein as Exhibit L-2 for tenants (a "Tenant
Estoppel"), or the form attached hereto and incorporated herein as Exhibit L-3
for each REA Party (an "REA Estoppel"), or the form attached hereto and
incorporated herein as Exhibit L-4 for the ground lessor (the foregoing are
hereinafter collectively referred to as the "Estoppels"). The Company shall use
its reasonable best efforts to obtain and deliver the Estoppels specified in
this clause (ii) it being understood and agreed, however, that if an estoppel
certificate is received
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which is in a form different from the form specified in the Lease, REA or
mortgage, as the case may be, or different from the form specified herein, said
estoppel certificate shall nevertheless be deemed duly received for purposes of
this Agreement and the Company's obligations hereunder provided the Estoppel
does not contain information which is materially different from that previously
disclosed in writing to the Buyer.
(iii) Prior to the Closing an updated version of the Rent Roll shall be
delivered by the Company to the Buyer which shall be dated as of a date no more
than five (5) Business Days prior to the Closing.
(l) Taxes; Notices; Lease Negotiations; and Insurance. The Company shall,
at all times:
(i) pay or cause to be paid when due all real estate taxes, special
assessments, sales taxes and other Taxes, brokerage commissions and other
charges required to be paid by the Company, any of its Subsidiaries or the
Venture, except for any real estate taxes, special assessments, sales taxes
or other Taxes, brokerage commissions or other charges that are being
contested in good faith, and for which appropriate accruals on the
Company's financial statements and general ledgers have been established
and which are disclosed in writing to the Buyer;
(ii) advise the Buyer from time to time, at the request of the
Buyer, of the status of any negotiations with prospective tenants of the
Shopping Centers or with other parties with whom contracts or agreements
are being negotiated; and
(iii) file all returns and reports required by any governmental
authority with respect to the Shopping Centers or the ownership, use or
occupancy thereof and provide copies thereof to the Buyer.
(m) Other Obligations. The Company shall, and shall cause its
Subsidiaries, PCI and the Venture to, perform all obligations required by the
terms of this Agreement, the P City Agreement and the other agreements
contemplated hereby to be performed by them, shall perform or cause to be
performed when due all of the Company's, its Subsidiaries' and the Venture's
obligations under, and shall comply and cause its Subsidiaries and the Venture
to comply with all applicable provisions of, the Service Contracts, the
insurance policies, governmental approvals and all Licenses and Permits and
other agreements, encumbrances and restrictions relating to the Shopping Centers
and shall comply with all applicable laws, including, without limitation, the
requirements of any governmental authority with respect to any tax abatement or
exemption benefitting the Shopping Centers. The Company shall not cause or
permit any Hazardous Materials to be stored, released or disposed of on, under
or at the Shopping Centers or any part thereof and shall promptly notify the
Buyer in writing if any Hazardous Materials are discovered at the Shopping
Centers.
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(n) Contest. If any proceedings are filed seeking to enjoin or otherwise
prevent or declare unlawful the occupancy, maintenance or operation of any of
the Shopping Centers or any portion thereof, the Company shall (i) notify the
Buyer of such proceedings, (ii) cause such proceedings to be vigorously
contested in good faith and (iii) in the event of an adverse ruling or decision,
prosecute all allowable appeals therefrom.
(o) Transfer Taxes. The Buyer and the Company shall cooperate in the
preparation, execution and filing of all returns, reports or other documents
regarding any real property transfer or gains, sales, use, transfer, value
added, stock transfer and stamp Taxes, any transfer, recording, registration
and other fees, and any similar Taxes which become payable in connection with
the transactions contemplated by this Agreement and the P City Agreement
("Transfer Taxes") and the Schedule I Stockholders and PCI shall be responsible
for the payment thereof, other than any Pennsylvania Commonwealth Transfer Tax,
which shall be the responsibility of the Buyer. In particular, the Company
shall use its reasonable best efforts to obtain prior to Closing a final
settlement regarding any applicable Pennsylvania local real estate Transfer
Taxes on the transactions contemplated by this Agreement and the P City
Agreement. Such settlement shall document the names of the relevant Affiliates
and shall be binding on the City of Lancaster, the School District of Lancaster,
and any other subdivision of the Commonwealth of Pennsylvania in which the Park
City Center is located. The Company shall keep the Buyer informed of its
discussions and written filings with the local taxing authorities and shall
reasonably consult in good faith with the Buyer before making or accepting any
settlement offer or submitting any written filings. The Closing Expense Fund
shall reflect the amount of any local real estate Transfer Tax which is agreed
to be due with the local taxing authorities or, in the absence of such an
agreement, such amount as the Company shall in good faith estimate to be due
upon a determination or settlement plus actual and estimated legal and
accounting fees and expenses relating thereto; provided that the Buyer
Indemnified Parties (as defined in the Post-Closing Escrow Agreement) shall be
indemnified pursuant to Section 4.1(c) of the Post-Closing Escrow Agreement in
respect of any amount which becomes due in excess of such estimates.
(p) Exclusivity. The Company shall notify the Buyer promptly if any
proposal or offer, or any inquiry or other contact with any Person with respect
to the acquisition of any of the capital stock (or other interests) or any
material assets of any of the Company, any Subsidiary, PCI or the Venture
(including any acquisition structured as a merger, consolidation or share
exchange), is made and shall, in any such notice to the Buyer, indicate in
reasonable detail the identity of the Person making such proposal, offer,
inquiry or contact and the terms and conditions of such proposal, offer, inquiry
or other contact. The Company shall immediately cease and cause to be
terminated all existing discussions, conversations, negotiations and other
communications with any Persons other than with the Buyer and its Affiliates and
representatives with respect to the foregoing. The Company will not (and will
not cause or permit any of its Subsidiaries or the Venture or any of their
officers, directors, employees, financial advisors or other representatives) to
provide Confidential Information to any third party (other than representatives
of Buyer and its Affiliates). The Company agrees not to, and to cause each
Subsidiary, PCI and the Venture not to, without the prior written consent of the
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Buyer, release any Person from, or waive any provision of, any confidentiality
or standstill agreement to which the Company, any Subsidiary or the Venture is a
party.
(q) Governmental Entities. Without the prior written consent of the
Company, such consent not to be unreasonably withheld or delayed, prior to the
Closing, the Buyer shall not contact any governmental entity having jurisdiction
over the Shopping Centers or any part thereof with respect to any matter
relating to the condition or operation of the Shopping Centers; provided, that,
in the event the Company so consents to such contact, the Buyer shall indemnify
and hold harmless the Company, its Subsidiaries, PCI and the Venture from any
costs, losses and claims arising from any note or notice of violation from such
governmental authority related to such contact. The foregoing indemnity shall
not cover any such contact made by the Title Company that is not directed by the
Buyer.
(r) Employees. (i) As of the Closing Date, the Representative shall
terminate or cause the termination of the employment of all of its and its
Affiliates' employees who are employed in the conduct of the business of the
Company, its Subsidiaries and the Venture, except for the employees of the
General Maintenance Group at the Mayfair Shopping Center (the "Represented
Employees"), and any and all obligations of the Representative with respect to
such terminated employees shall end as of the date on which the employment of
such employees is terminated by the Representative or its Affiliates. The Buyer
may offer employment thereafter to such terminated employees as it shall
determine in its sole discretion and shall be solely responsible for any and all
obligations arising out its employment of any such terminated employees.
(ii) As of the Closing Date, the Buyer or an Affiliate thereof shall (a)
assume the obligations of Mayfair and ERE Yarmouth under the Agreement between
Mayfair and the Local 150, Service Employees International Union AFL-CIO, CLC
(the "CBA"), (b) adopt the Froedtert-Mayfair, Inc. Retirement Income Plan for
Employees Represented by Local #125 for the benefit of the Represented Employees
and (c) continue the employment of the Represented Employees pursuant to the
CBA.
8. Delivery of Title Commitments and Surveys.
(a) Prior to the date hereof, the Company has caused the Title Company to
deliver the Title Commitments and the Surveyors to deliver the Surveys to the
Buyer. The cost of the title examinations related to the Title Commitments and
the Surveys and the premiums for basic coverage in respect of the Title Policies
shall be borne by the Schedule I Stockholders. The cost of coverage in excess
of basic coverage under the Title Policies shall be borne by the Buyer.
(b) If any update of the Title Commitments or the Surveys delivered to the
Buyer after the date hereof disclose any matters other than the Permitted
Exceptions, the Buyer shall notify the Company in writing (a "Disapproval
Notice") within fifteen (15) days after the Buyer's receipt of such update. The
Disapproval Notice shall specify the title objections. The Buyer's failure to
give such notice shall be deemed an election by the Buyer to waive such title
-50-
objections without compensation or offset or abatement to or of the Merger
Consideration and without warranty by or recourse against the Company, any of
its Subsidiaries or the Venture of any nature whatsoever with respect thereto,
and the Buyer shall thereupon take and accept title to the Shopping Centers "as
is".
The Company (A) shall cause all Mandatory Cure Items (as hereinafter
defined) to be removed or, in the case of clause (2)(I)(y) or (z) of the
definition of Mandatory Cure Item, bonded or insured over by the Title Company,
at or prior to the Closing and the Company shall deposit with the Buyer or the
Title Company releases, bonds or other appropriate instruments, in recordable
form (where appropriate), sufficient to cause the removal of such Liens from the
respective Shopping Center or to cause the Title Company to insure over said
Liens or omit them as exceptions to coverage under the Title Policy and (B)
shall notify the Buyer in writing within fifteen (15)Business Days after receipt
of the Disapproval Notice whether the Company will cause all or any of the
matters other than Mandatory Cure Items to be removed, bonded insured over or
cured at or prior to Closing. The term "Mandatory Cure Items" shall mean (1)
mortgages or deeds of trust granted by the Company, any of its Subsidiaries or
the Venture, or (2) monetary liens that (I) are (x) affirmatively placed on the
Shopping Centers by the Company, any of its Subsidiaries or the Venture, (y)
judgment liens against the Company, any of its Subsidiaries or the Venture that
would require the expenditure by the Company any of its Subsidiaries or the
Venture of an aggregate amount of not more than $1,000,000 for each Shopping
Center to remove such judgment liens from title, or (z) mechanics' liens that
result from labor or materials contracted for or required to be paid (whether by
allowances, credit reimbursement, payment or otherwise) by the Company, any of
its Subsidiaries or the Venture, (II) are of a fixed and ascertainable amount
and (III) may be removed solely by the payment of money (other than any such
matters that are the responsibility of any tenant under a Lease, any REA Party
under an REA or any other Person other than the Company, any of its Subsidiaries
or the Venture). The Company shall be deemed to have elected to remove, bond or
cure any matters other than Mandatory Cure Items if the Company does not
affirmatively notify the Buyer to the contrary as aforesaid. If the Company
elects not to remove, bond or cure all such matters which are not Mandatory Cure
Items, the Buyer may elect, in its sole discretion, (m) subject to satisfaction
of the other conditions to Closing, to close the transactions contemplated by
this Agreement without adjustment of the Merger Consideration and take title
subject to any such matters which are not Mandatory Cure Items that the Company
elects not to remove, bond or cure, or (n) to terminate this Agreement. The
Company shall have until the Closing or such later date as may be needed to
remove, bond or cure any matter that it has elected or is required to remove,
bond or cure. The Closing Date may be extended by the Company as necessary to
permit the Company to fulfill its obligations pursuant to this (S) 8(b) but not
beyond ninety (90) days. With respect to title objections which are not
Mandatory Cure Items, the Company agrees to cooperate in good faith with the
Buyer in order to cure said title objections. Except with respect to Mandatory
Cure Items, nothing contained in this Agreement shall require the Company to
bring or defend any action or proceeding, or to incur any expense, or to make
any payment or to do any acts or things of any nature whatsoever in order to
cure any alleged title objection, regardless of the manner in which the same
arose. Notwithstanding anything in this Agreement to the contrary, any action by
the Company resulting in the issuance of
-51-
affirmative coverage or the omission of any alleged title objection from the
Title Policy, whether or not the same are removed of record, shall be deemed a
"cure" for purposes of this Agreement.
(c) If any matter that is not a Mandatory Cure Item that the Company has
elected, or is required, to remove or cure has not been removed or cured on or
prior to Closing (as the same may be extended pursuant to clause (b) above), or
provision for their removal or cure to the Buyer's reasonable satisfaction has
not been made at or prior to Closing, the Buyer may elect (no later than the
Closing Date as the same may be adjourned pursuant to clause (b) above), in its
sole discretion and as its exclusive remedy: (x) subject to satisfaction of the
other conditions to Closing, to close the transactions contemplated hereby
without adjustment to the Merger Consideration and take title subject to any
matters that have not been cured or removed at or before Closing other than in
respect of Mandatory Cure Items as to which the Buyer shall be allowed a credit
against the Merger Consideration for all costs incurred or reasonably estimated
to cure such Mandatory Cure Item or (y) to terminate this Agreement.
9. Conditions to Obligation to Close.
(a) Conditions to Obligations of the Buyer and the Transitory Subsidiary.
The obligation of each of the Buyer and the Transitory Subsidiary to consummate
the transactions to be performed by it in connection with the Closing is subject
to satisfaction, at or prior to the Closing, of the following conditions:
(i) this Agreement and the Merger shall have received the Requisite
Stockholder Approval;
(ii) the representations and warranties set forth in (S) 3 above
(except for (S) 3(h)(xiv) insofar as it relates to cash dividends or cash
distributions made after the date hereof) which are not qualified by
materiality shall be true and correct in all material respects and the
representations and warranties set forth in (S) 3 above which are so
qualified shall be true and correct, in each case, at and as of the date
hereof and the Closing Date;
(iii) the Company shall have performed and complied with all of its
covenants hereunder in all material respects through the Closing;
(iv) there shall not be any judgment, order, decree, legislation,
stipulation or injunction pending, threatened or in effect which would
prevent or hinder consummation of any of the transactions contemplated by
this Agreement, the P City Agreement and the other agreements contemplated
hereby;
(v) the Company shall have delivered to the Buyer and the
Transitory Subsidiary a certificate to the effect that each of the
conditions specified above in
-52-
(S) 9(a)(i)-(iii) is satisfied, signed by the President or a Vice President
and the chief financial officer of the Company;
(vi) the Parties shall have received all authorizations, consents
and approvals of governments and governmental agencies referred to in
(S)3(f) and (S) 4(d) above and those non-governmental authorizations,
consents or approvals, including those consents to transfers of Service
Contracts in the name of the Representative relating to or used primarily
in the operation or maintenance of the Shopping Centers, identified on the
Disclosure Schedule under (S) 9(a)(vi);
(vii) the Buyer and the Transitory Subsidiary shall have received
from counsel to the Company, PCI and the Schedule I Stockholders opinions
in form and substance reasonably acceptable to them relating to the
transactions described herein, in the P City Agreement, and in the
agreements contemplated hereby and thereby, and the status of the Company
as a REIT under the Code, addressed to the Buyer and the Transitory
Subsidiary and dated as of the Closing Date;
(viii) Estoppels shall have been obtained in accordance with (S)
7(k)(ii);
(ix) (a) all management and advisory or other agreements between
ERE Yarmouth, and/or its Affiliates, on the one hand, and the Company, any
Subsidiary and/or the Venture, on the other hand, shall have been
terminated, with the Company, the Subsidiaries and the Venture having no
further obligations thereunder and the managers and advisors thereunder
shall have returned all books and records to General Growth Management,
Inc. and (b) ERE Yarmouth and its Affiliates shall have duly assigned,
transferred and conveyed to General Growth Management, Inc. all service
contracts and personal property relating to or used primarily in the
operation or maintenance of the Shopping Centers which are assignable
without consent of a third party or for which consent to assignment has
been obtained.
(x) all intercompany agreements and arrangements between or among
any of the Company, the Subsidiaries, and/or the Venture, or between or
among any of such entities on the one hand, and PCI, Park City or any
Affiliates of any of the entities described in this clause (x), on the
other hand, shall have been terminated;
(xi) the PCI Venture Interest shall have been transferred to the
Company (or Company Sub) in accordance with the P City Agreement, free and
clear of any Liens other than the right of PCI to receive the PCI Allocable
Portion from the Company pursuant to the terms of the P City Agreement;
(xii) the Revolving Credit Proceeds and the Park City Proceeds shall
have been applied to discharge the Company's obligations under the
Revolving Credit Agreements and the Park City Center mortgage indebtedness
and to release all Liens created thereby, and all other indebtedness
(including intercompany indebtedness, interest rate swap and
-53-
cap agreements and other hedging agreements, but excluding the Xxxxxxx Mall
Loan and the Xxxxxxx Mall Mortgage) shall have been discharged or
terminated and all Liens created thereby shall have been released;
(xiii) the parties to the Post-Closing Escrow Agreement, other than
the Company, shall have delivered duly executed counterparts thereof;
(xiv) the aggregate amount of Dissenting Shares shall represent less
than 10% of the Company Stock outstanding at the Effective Time;
(xv) all persons who are directors or officers of any of the
Subsidiaries or trustees of the Trust shall have resigned such
directorships, trusteeships or such offices and new trustees of the Trust
designated by the Buyer shall have been appointed as of the Effective Time;
(xvi) all agreements between the Company and any of the Company
Stockholders shall have been terminated to Buyer's reasonable satisfaction,
and the Company shall have been released from all obligations thereunder;
(xvii) PCI and each Company Stockholder who or which is not a
"foreign person" for purposes of Section 1445 of the Code shall have
delivered to the Buyer a certificate in the form attached hereto as Exhibit
I certifying that PCI or such Company Stockholder, as the case may be, is
not a "foreign person" within the meaning of Section 1445 of the Code.
(xviii) the Title Company shall have issued, or be irrevocably
committed to issue a Title Policy with respect to each Shopping Center;
(xix) since the date hereof no event or events shall have occurred,
other than any event or events directly resulting from actions or omissions
of the Buyer in the exercise of its rights to give or withhold consents
pursuant to Article 7, which individually or in the aggregate has had a
Material Adverse Effect;
(xx) ERE Yarmouth and its Affiliates shall have assigned all
confidentiality agreements and standstill agreements relating to the
Company, any Subsidiaries or the Venture to the Buyer;
(xxi) the Company shall have prepared and delivered to the Buyer, at
the Company's cost and expense, a report (which shall be reasonably
acceptable to the Buyer) which demonstrates that Froedtert-Mayfair Inc. did
not have any current or accumulated earnings and profits as of September
30, 1991 (provided that, if the cost and expense of such report exceeds
$25,000, the Buyer shall bear the cost and expense of such report in excess
of $25,000), or such other supporting material reasonably satisfactory to
the Buyer demonstrating that, as of the end of the Company's taxable year
-54-
ended December 31, 1991, the Company had no earnings and profits
accumulated in any non-REIT year, within the meaning of Section 857(a)(3)
of the Internal Revenue Code of 1986, as amended and as in effect for the
Company's taxable year ended December 31, 1991;
(xxii) the Company shall have satisfied, or made arrangements to
satisfy, any realty Transfer Tax obligations in Pennsylvania (other than
Pennsylvania Commonwealth Transfer Taxes) and any capital stock/franchise
Tax and corporate net income Tax obligations in Pennsylvania (as described
in the last paragraph of (S) 7(d)); and
(xxiii) all actions to be taken by the Company, its Subsidiaries, PCI
and the Venture in connection with the consummation of the transactions
contemplated hereby and all certificates, opinions, instruments and other
documents required or deemed reasonably required by the Buyer or its
counsel to effect the transactions contemplated hereby shall, in all
reasonable respects, be satisfactory in form and substance to the Buyer.
The Buyer and the Transitory Subsidiary may waive, in their sole and absolute
discretion, any condition specified in this (S) 9(a) if they execute a writing
so stating at or prior to the Closing.
(b) Conditions to Obligation of the Company. The obligation of the Company
to consummate the transactions to be performed by it in connection with the
Closing is subject to satisfaction of the following conditions:
(i) the representations and warranties set forth in (S)4 above which
are not qualified by materiality shall be true and correct in all material
respects and the representations and warranties set forth in (S) 4 above
which are so qualified shall be true and correct, in each case, at and as
of the date hereof and the Closing Date;
(ii) each of the Buyer and the Transitory Subsidiary shall have
performed and complied with all of its covenants hereunder in all material
respects through the Closing;
(iii) there shall not be any judgment, order, decree, legislation,
stipulation or injunction pending, threatened or in effect which would
prevent or materially hinder consummation of any of the transactions
contemplated by this Agreement, the P City Agreement and the other
agreements contemplated hereby;
(iv) the Buyer and the Transitory Subsidiary shall have delivered to
the Company a certificate to the effect that each of the conditions
specified above in (S) 9(b)(i)-(iii) is satisfied, signed by the President
or a Vice President and the chief financial officer of the general partner
of the Buyer on behalf of the Buyer and the Transitory Subsidiary;
-55-
(v) this Agreement and the Merger shall have received the Requisite
Stockholder Approval;
(vi) the Parties shall have received all authorizations, consents,
and approvals of governments and governmental agencies referred to in (S)
3(f) and (S) 4(d) above;
(vii) the Company, PCI and the Schedule I Stockholders shall have
received from counsel to the Buyer and the Transitory Subsidiary an opinion
in form and substance reasonably acceptable to them relating to the
transactions described herein and in the agreements contemplated hereby,
addressed to the Company, PCI and the Schedule I Stockholders, and dated as
of the Closing Date;
(viii) the Revolving Credit Proceeds and the Park City Proceeds shall
have been applied to discharge the Company's obligations under the
Revolving Credit Agreements and the Park City Center mortgage indebtedness;
(ix) new trustees of the Trust designated by the Buyer shall have
been appointed as of the Effective Time; and
(x) all actions to be taken by the Buyer and the Transitory
Subsidiary in connection with the consummation of the transactions
contemplated hereby and all certificates, opinions, instruments and other
documents required to effect the transactions contemplated hereby will, in
all reasonable respects, be satisfactory in form and substance to the
Company.
The Company may waive, in its sole and absolute discretion, any condition
specified in this (S) 9(b) if it executes a writing so stating at or prior to
the Closing.
10. Termination.
(a) Termination of Agreement and Remedies. Any of the Parties may
terminate this Agreement (whether before or after stockholder approval) as
provided below:
(i) the Parties may terminate this Agreement by mutual written
consent at any time prior to the Effective Time;
(ii) the Buyer and the Transitory Subsidiary may terminate this
Agreement by giving written notice to the Company at any time prior to the
Effective Time (A) in the event the Company has breached any
representation, warranty or covenant contained in this Agreement, the P
City Agreement or the other agreements contemplated hereby in any material
respect, the Buyer or the Transitory Subsidiary has notified the Company of
the breach and the breach has continued without cure for a period of 20
days after the notice of breach, or as otherwise provided herein, (B) if
the Closing shall not have occurred on or before August 31, 1998 by reason
of the failure of any condition
-56-
precedent under (S) 9(a) hereof (unless the failure results primarily from
the Buyer or the Transitory Subsidiary breaching any representation,
warranty or covenant contained in this Agreement) or (C) if the P City
Agreement has terminated;
(iii) the Company may terminate this Agreement by giving written
notice to the Buyer and the Transitory Subsidiary at any time prior to the
Effective Time (A) in the event the Buyer or the Transitory Subsidiary has
breached any representation, warranty or covenant contained in this
Agreement in any material respect, the Company has notified the Buyer and
the Transitory Subsidiary of the breach and the breach has continued
without cure for a period of 20 days after the notice of breach or (B) if
the Closing shall not have occurred on or before August 31, 1998, by reason
of the failure of any condition precedent under (S) 9(b) hereof (unless the
failure results primarily from the Company breaching any representation,
warranty, or covenant contained in this Agreement); or
(iv) any Party may terminate this Agreement by giving written notice
to the other Parties at any time after the Special Meeting in the event
this Agreement and the Merger fail to receive the Requisite Stockholder
Approval.
(b) Effect of Termination. If any Party terminates this Agreement pursuant
to (S) 10(a) above, all rights and obligations of the Parties hereunder shall
terminate without any liability of any Party to any other Party (subject to (S)
2(h) and 10(c) hereof and except for any liability of any Party then in breach
for actual but not consequential damages); provided, however, that the
confidentiality provisions contained in (S) 7(e) above and the provisions of
(S)(S) 3(r), 4(g), 11(a) and this (S) 10(b) shall survive any such termination.
(c) Remedies. Notwithstanding anything to the contrary set forth herein,
the Company shall be entitled to retain the Deposit as the Company's liquidated
damages (and not as a penalty) and as the Company's exclusive remedy for the
Buyer's default in the event of termination of this Agreement pursuant to
Section 10(a)(iii)(A), it being agreed by the parties that it would be
impracticable and extremely difficult to ascertain the actual damages suffered
by the Company as a result of the Buyer's failure to complete the transactions
contemplated by this Agreement and that, under the circumstances existing as of
the date hereof, the liquidated damages provided for herein represent a
reasonable estimate of the damages which the Company would incur as a result of
such failure.
11. Miscellaneous.
(a) Press Releases and Public Announcements. No Party shall issue any
press release or make any public announcement relating to the subject matter of
this Agreement nor permit any of its Affiliates, representatives or agents to do
the same without the prior written approval of the other Parties which shall not
be unreasonably withheld; provided, however, that any Party may make any public
disclosure it believes in good faith is required by applicable law or any
-57-
listing agreement concerning its publicly-traded securities (in which case the
disclosing Party will use its reasonable best efforts to advise the other Party
prior to making the disclosure).
(b) No Third-Party Beneficiaries. This Agreement shall not confer any
rights or remedies upon any Person other than the Parties and their respective
successors and permitted assigns; provided, however, that (i) the provisions in
(S)(S) 2, 4, 5 and 6 above are intended for the benefit of the Company
Stockholders and PCI and (ii) the provisions in (S) 7(g) above concerning
insurance and indemnification are intended for the benefit of the individuals
specified therein and their respective legal representatives.
(c) Entire Agreement. This Agreement (including the documents referred to
herein) and the Confidentiality Agreement constitute the entire agreement among
the Parties concerning the subject matter hereof and supersede any prior
understandings, agreements, or representations by or among the Parties, written
or oral, to the extent they related in any way to the subject matter hereof.
(d) Succession and Assignment. This Agreement shall be binding upon and
inure to the benefit of the Parties named herein and their respective successors
and permitted assigns. No Party may assign either this Agreement or any of its
rights, interests or obligations hereunder without the prior written approval of
the other Parties; provided, however, that the Buyer or the Transitory
Subsidiary may assign its respective rights and obligations to any wholly-owned
direct or indirect subsidiary of the Buyer, but no such assignment shall relieve
the Buyer of its obligations hereunder.
(e) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
(f) Headings. The section headings contained in this Agreement are
inserted for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
(g) Notices. All notices and other communications hereunder shall be
deemed to have been duly given and made if in writing and (i) served by personal
delivery upon the party for whom it was intended or (ii) delivered by courier
service or telecopier, return receipt received, to the relevant party at the
following addresses (or at such other address for a party as shall be specified
by like notice):
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If to the Company:
-----------------
U.S. Prime Property Inc.
c/o ERE Yarmouth, Inc.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn.: Ms. Xxxxx Xxxxx-Xxxxxxx
Fax No.: (000) 000-0000
Copy to:
-------
Coudert Brothers
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxx, Esq.
Fax No.: (000) 000-0000
If to the Buyer:
---------------
GGP Limited Partnership
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxxx Xxxxxxxxx
Fax No.: (000) 000-0000
Copy to:
-------
Xxxx, Xxxxxx & Xxxxxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn.: Xxxxxxxx X. Xxxxxxxxx, Esq.
Fax No.: (000) 000-0000
If to the Transitory Subsidiary:
-------------------------------
GGP Acquisition, L.L.C.
000 Xxxxx Xxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn: Xx. Xxxxxxx Xxxxxxxxx
Fax No.: (000) 000-0000
Copy to:
-------
-00-
Xxxx, Xxxxxx & Xxxxxxxxx
Xxx Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attn.: Xxxxxxxx X. Xxxxxxxxx, Esq.
Fax No.: (000) 000-0000
Any Party may change the address to which notices, requests, demands, claims and
other communications hereunder are to be delivered by giving the other Parties
notice in the manner herein set forth.
(h) Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware.
(i) Amendments and Waivers. The Parties may mutually amend any provision
of this Agreement at any time prior to the Effective Time with the prior
authorization of the Board of Directors, in the case of the Company and the
general partner of the Buyer in the case of the Buyer and the Transitory
Subsidiary; provided, however, that any amendment effected subsequent to
stockholder approval will be subject to the restrictions contained in the
Delaware General Corporation Law. No amendment of any provision of this
Agreement shall be valid unless the same shall be in writing and signed by all
of the Parties. No waiver by any Party of any default, misrepresentation or
breach of warranty or covenant hereunder, whether intentional or not, shall be
deemed to extend to any prior or subsequent default, misrepresentation or breach
of warranty or covenant hereunder or affect in any way any rights arising by
virtue of any prior or subsequent such occurrence. The Closing shall not be
deemed to constitute a waiver by the Buyer of any of its rights hereunder except
as otherwise expressly provided in this Agreement. Whenever this Agreement
requires or permits consent by or on behalf of any Party hereto, such consent
shall be given in writing in a manner consistent with the requirements for a
waiver of compliance set forth in this (S)11(i). The Transitory Subsidiary
hereby agrees that any consent or waiver of compliance given by the Buyer
hereunder shall be conclusively binding upon it, whether given expressly on its
behalf or not.
(j) Severability. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
(k) Construction. The Parties have participated jointly in the negotiation
and drafting of this Agreement. In the event an ambiguity or question of intent
or interpretation arises, this Agreement shall be construed as if drafted
jointly by the Parties and no presumption or burden of proof shall arise
favoring or disfavoring any Party by virtue of the authorship of any of the
provisions of this Agreement. Any reference to any federal, state, local or
foreign statute or law shall be deemed to refer to such statute or law as
amended and also to refer to all rules and regulations promulgated thereunder,
unless the context otherwise requires. The word "including" shall mean including
without limitation.
-60-
(l) Consent of the Buyer. The Buyer, as the sole member of the Transitory
Subsidiary, by executing this Agreement, consents to the execution, delivery and
performance of this Agreement by the Transitory Subsidiary, and such consent
shall be treated for all purposes as a vote duly adopted at a meeting of the
members of the Transitory Subsidiary held for such purpose.
(m) Expenses. Except as otherwise provided herein, each Party shall be
liable for its own costs and expenses incurred in connection with the
negotiation, preparation, execution and performance of this Agreement and the
agreements contemplated hereby, whether or not the transactions contemplated
hereby are consummated.
(n) Enforcement of Agreement. The Company agrees that irreparable damage
would occur in the event that any of the provisions of this Agreement binding
upon it were not performed in accordance with their specified terms or were
otherwise breached. It is accordingly agreed that the Buyer and the Transitory
Subsidiary shall be entitled to an injunction or injunctions to prevent breaches
of this Agreement and to enforce specifically the terms and provisions hereof in
any court of competent jurisdiction, this being in addition to any other remedy
to which they are entitled at law or in equity.
(o) Waiver of Jury Trial. EACH OF THE PARTIES HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, FOR ITSELF AND FOR THE THIRD
PARTY BENEFICIARIES HEREUNDER, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(p) Incorporation of Exhibits and Schedules. The Exhibits and Schedules
identified in this Agreement are incorporated herein by reference and made a
part hereof.
*****
-61-
IN WITNESS WHEREOF, the Parties hereto have executed this Agreement on
the date first above written.
GGP LIMITED PARTNERSHIP
By: GENERAL GROWTH PROPERTIES, INC.,
General Partner
By:
-------------------------------
Name:
Title:
GGP ACQUISITION, L.L.C.
By: GGP LIMITED PARTNERSHIP,
Member
By: GENERAL GROWTH PROPERTIES, INC.,
General Partner
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
U.S. PRIME PROPERTY INC.
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
-62-
EXHIBIT A
---------
1. That certain property known as the Landmark Mall located in
Alexandria, Virginia, together with the buildings and improvements thereon.
2. Those certain properties known as Mayfair Mall, North Tower Office
Building, Bank Tower Office Building, Atrium Building and the Professional
Building Garden Suites East located in Wauwatosa, Wisconsin, together with the
buildings and improvements thereon.
3. That certain property known as Xxxxxxx Mall located in Las Vegas,
Nevada, together with the buildings and improvements thereon.
4. That certain property known as the Northgate Mall located in
Chattanooga, Tennessee, together with buildings and improvements thereon.
5. That certain property known as Oglethorpe Mall located in Savannah,
Georgia, together with the buildings and improvements thereon.
6. That certain property known as the Park City Center located in
Lancaster, Pennsylvania, together with the buildings and improvements thereon.
