SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) June 24, 1999
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McNEIL REAL ESTATE FUND IX, LTD.
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(Exact name of registrant as specified in its charter)
California 0-9026 94-2491437
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(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
13760 Noel Road, Suite 600, LB70, Dallas, Texas, 75240
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(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (972) 448-5800
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Item 5. Other Events
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On June 24, 1999, McNeil Real Estate Fund IX, Ltd. (the "Partnership"), McNeil
Real Estate Fund X, Ltd., McNeil Real Estate Fund XI, Ltd., McNeil Real Estate
Fund XII, Ltd., McNeil Real Estate Fund XIV, Ltd., McNeil Real Estate Fund XV,
Ltd., McNeil Real Estate Fund XX, L.P., McNeil Real Estate Fund XXI, L.P.,
McNeil Real Estate Fund XXII, L.P., McNeil Real Estate Fund XXIII, L.P., McNeil
Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P., McNeil Real
Estate Fund XXVI, L.P., McNeil Real Estate Fund XXVII, L.P., Hearth Hollow
Associates, L.P., McNeil Midwest Properties I, L.P., Regency North Associates,
L.P., Fairfax Associates II, Ltd. ("Fairfax"), McNeil Summerhill I, L.P ("Summer
hill" and, collectively, the "McNeil Partnerships"), McNeil Partners, L.P., the
general partner of the Partnership (the "General Partner"), McNeil Investors,
Inc., McNeil Real Estate Management, Inc. ("McREMI"), McNeil Summerhill, Inc.
and Robert A. McNeil entered into a definitive acquisition agreement (the
"Master Agreement") with WXI/McN Realty L.L.C. ("Newco"), an affiliate of
Whitehall Street Real Estate Limited Partnership XI, a real estate investment
fund managed by Goldman, Sachs & Co., whereby Newco and its subsidiaries will
acquire the McNeil Partnerships. The Master Agreement provides that the McNeil
Partnerships (other than Fairfax and Summerhill which are wholly-owned by Robert
A. McNeil and related parties) will be merged with subsidiaries of Newco. The
Master Agreement also provides for the acquisition by Newco and its subsidiaries
of the general partnership interests and limited partnership interests in
Fairfax and Summerhill and the assets of McREMI. The aggregate consideration in
the transaction, including the assumption or prepayment of all outstanding
mortgage debt of the McNeil Partnerships, is $644,439,803.
Pursuant to the terms of the Master Agreement, the limited partners in the
Partnership will receive cash on the closing date of the transaction (the
"Closing Date") in exchange for their limited partnership interests. In
addition, the Partnership will declare a special distribution to its limited
partners on the Closing Date equal to its then positive net working capital
balance, if any. The estimated aggregate consideration and net working capital
distribution to be received per unit of limited partnership interest in the
Partnership is currently estimated as $424.
On the Closing Date, McNeil Partners, L.P., the general partner of the
Partnership, will receive an equity interest in Newco in exchange for its
contribution to Newco of the general partnership interests in the McNeil
Partnerships, the limited partnership interests in Fairfax and Summerhill and
the assets of McREMI.
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The Partnership's participation in the transaction is subject to, among other
conditions, the approval by a majority of the limited partners of the
Partnership.
The foregoing is a summary only and is qualified in its entirety by reference to
the Master Agreement, which is filed as an exhibit hereto.
On June 25, 1999, the General Partner issued a press release announcing the
signing of the Master Agreement. A copy of the press release is filed as an
exhibit hereto.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
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(c) Exhibits.
The following exhibits are filed as part of this report:
2.1 Master Agreement, dated as of June 24, 1999, by and among
WXI/McN Realty, L.L.C., McNeil Real Estate Fund IX, Ltd.,
McNeil Real Estate Fund X, Ltd., McNeil Real Estate Fund XI,
Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real Estate
Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real
Estate Fund XX, L.P., McNeil Real Estate Fund XXI, L.P.,
McNeil Real Estate Fund XXII, L.P., McNeil Real Estate Fund
XXIII, L.P., McNeil Real Estate Fund XXIV, L.P., McNeil Real
Estate Fund XXV, L.P., McNeil Real Estate Fund XXVI, L.P.,
McNeil Real Estate Fund XXVII, L.P., Hearth Hollow Associates,
L.P., McNeil Midwest Properties I, L.P., Regency North
Associates, L.P., Fairfax Associates II, Ltd., McNeil
Summerhill I, L.P, McNeil Investors, Inc., McNeil Partners,
L.P., McNeil Real Estate Management, Inc., McNeil Summerhill,
Inc. and Robert A. McNeil.
99.1 Press release of McNeil Partners, L.P. dated June 25, 1999.
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McNEIL REAL ESTATE FUND IX, Ltd.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized:
McNEIL REAL ESTATE FUND IX, Ltd.
June 29, 1999 By: /s/ Brandon K. Flaming
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Date Brandon K. Flaming
Vice President of McNeil Investors, Inc.
(Principal Accounting Officer)
MASTER AGREEMENT
by and among
WXI/McN Realty L.L.C.
THE McNEIL PARTNERSHIPS
(as defined herein),
McNEIL PARTNERS, L.P.,
McNEIL INVESTORS, INC.,
McNEIL REAL ESTATE MANAGEMENT, INC.
and
ROBERT A. McNEIL
Dated as of June 24, 1999.
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TABLE OF CONTENTS
Page
ARTICLE I
THE ACQUISITION
Section 1.1 The Acquisition; Consideration.................................4
Section 1.2 Closing........................................................7
Section 1.3 Allocation of the Aggregate Consideration......................8
Section 1.4 Additional Consideration.......................................9
Section 1.5 Indebtedness..................................................10
Section 1.6 Reservation of Right to Revise Transaction....................11
ARTICLE II
TRANSACTIONS RELATED TO THE MERGERS
Section 2.1 Certain Company Acquisition Vehicles..........................12
Section 2.2 Contributions to MPLP.........................................13
Section 2.3 Contributions by MPLP.........................................14
Section 2.4 Pre-Closing Distribution......................................17
ARTICLE III
THE MERGERS
Section 3.1 The Mergers...................................................23
Section 3.2 Effective Time................................................23
Section 3.3 Effects of the Mergers; LLC Agreement.........................24
Section 3.4 Conversion of Partnership Interests...........................24
Section 3.5 Payment of Merger Consideration...............................25
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Section 4.1 Organization, Standing and Power..............................30
Section 4.2 Capital Structure; Title and Ownership
of McREMI Assets...................................32
Section 4.3 Authority; Noncontravention; Consents.........................35
Section 4.4 Compliance with Laws..........................................38
Section 4.5 SEC Documents; Financial Statements;
Undisclosed Liabilities............................39
Section 4.6 Absence of Certain Changes....................................42
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Page
Section 4.7 Litigation....................................................44
Section 4.8 Properties....................................................45
Section 4.9 Environmental Matters.........................................53
Section 4.10 Taxes.........................................................54
Section 4.11 No Payments to Employees, Officers
or Directors.......................................56
Section 4.12 Related Party Transactions....................................56
Section 4.13 Employee Benefits.............................................56
Section 4.14 Employee Matters..............................................58
Section 4.15 Contracts; Debt Instruments...................................59
Section 4.16 Brokers.......................................................62
Section 4.17 Management Agreements.........................................62
Section 4.18 INTENTIONALLY OMITTED.........................................62
Section 4.19 State Takeover Statutes.......................................62
Section 4.20 Investment Company Act of 1940................................62
Section 4.21 Insurance.....................................................63
Section 4.22 Year 2000.....................................................63
Section 4.23 Books and Records.............................................63
Section 4.24 Personal Property.............................................63
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
Section 5.1 Organization, Standing and Power of
the Company, the Company LLCs and
the Transitory Partnerships........................64
Section 5.2 Capital Structure.............................................66
Section 5.3 Authority; Noncontravention; Consents.........................67
Section 5.4 Compliance with Laws..........................................70
Section 5.5 Litigation....................................................71
Section 5.6 Brokers.......................................................71
Section 5.7 Investment Company Act of 1940................................72
Section 5.8 Financing.....................................................72
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Page
ARTICLE VI
CONDUCT OF BUSINESS PENDING MERGER
Section 6.1 Conduct of Business of Sellers Prior to the
Effective Time................................................73
Section 6.2 Conduct of Business of the Company, the
Transitory Partnerships and the Company
LLCs Prior to the Effective Time...................78
Section 6.3 Reimbursable Proposals........................................82
ARTICLE VII
ADDITIONAL COVENANTS
Section 7.1 Preparation of the Proxy Statement;
Recommendation of Mergers.....................................84
Section 7.2 Acquisition Proposals.........................................87
Section 7.3 Access to Information; Confidentiality........................89
Section 7.4 Reasonable Best Efforts; Notification.........................90
Section 7.5 Public Announcements..........................................92
Section 7.6 Benefit Plans and Other Employee Arrangements.................93
Section 7.7 Ancillary Agreements..........................................98
Section 7.8 Support Agreements; Financing.................................98
Section 7.9 Fees and Expenses.............................................99
Section 7.10 Allocations..................................................100
Section 7.11 Related Party Transactions...................................101
Section 7.12 Stanger Reports..............................................101
Section 7.13 Estoppels....................................................102
Section 7.14 Harbour Club.................................................103
Section 7.15 Material Encumbrances........................................105
Section 7.16 Additional Seller Tax Covenant...............................106
Section 7.17 Title Deliveries.............................................106
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to
Effect the Mergers................................107
Section 8.2 Conditions to Obligations of the Company.....................109
Section 8.3 Conditions to Obligations of Sellers.........................113
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Page
Section 8.4 Certain Exclusions from Conditions to Closing................115
Section 8.5 Removal Notices..............................................116
ARTICLE IX
TERMINATION
Section 9.1 Termination of this Agreement Prior to the
Effective Time...............................................118
Section 9.2 Effect of Termination Pursuant to
Section 9.1.......................................119
Section 9.3 Termination of Certain Rights and
Obligations Prior to the Effective Time...........120
Section 9.4 Effect of Termination Pursuant to Section 9.3................123
Section 9.5 Payment of Break-Up Fee......................................124
Section 9.6 Reimbursement of Expenses....................................127
ARTICLE X
CERTAIN DEFINITIONS; OTHER MATTERS
Section 10.1 Definitions..................................................128
Section 10.2 Seller Disclosure Letter.....................................141
Section 10.3 Interpretation...............................................141
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Nonsurvival of Representations, Warranties
and Covenants.....................................142
Section 11.2 Non-Recourse.................................................142
Section 11.3 Amendment....................................................144
Section 11.4 Extension; Waiver............................................144
Section 11.5 Notices......................................................145
Section 11.6 Counterparts.................................................146
Section 11.7 Entire Agreement; No Third Party
Beneficiaries.....................................146
Section 11.8 GOVERNING LAW................................................146
Section 11.9 Assignment...................................................147
Section 11.10 Consent to Jurisdiction......................................147
Section 11.11 Severability.................................................147
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Page
Section 11.12 Arbitration..................................................148
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INDEX OF DEFINED TERMS
Section
1940 Act....................................................................4.20
Acquisition Proposal........................................................10.1
Additional McNeil Contribution...............................................2.3
Affected Employee ...........................................................7.6
affiliate...................................................................10.1
Aggregate Consideration.....................................................10.1
Agreement................................................................Heading
Allocated McNeil Value......................................................10.1
Allocation Analysis.........................................................10.1
Allocations.................................................................10.1
Ancillary Agreements........................................................10.1
Appraisals..................................................................10.1
Archon.......................................................................7.7
Assignment Agreement........................................................10.1
Assumption Fees..............................................................1.5
Audit Date...................................................................4.6
Board of Managers............................................................7.9
business day................................................................10.1
Buyer Plans..................................................................7.6
California Partnerships.....................................................10.1
Capital Expenditure Reimbursement............................................6.3
Capital Expenditure Reimbursement Amount.....................................6.3
Capitalized McNeil Expenses..................................................7.9
Certificates.................................................................3.5
Closing......................................................................1.2
Closing Date.................................................................1.2
COBRA........................................................................7.6
Code........................................................................4.10
Commercial Leases............................................................4.8
Commercial Tenants...........................................................4.8
Commitment Letter............................................................5.8
Company..................................................................Heading
Company Interests ...........................................................1.1
Company LLCs.................................................................2.1
Company Person..............................................................10.1
Company Reimbursable Expenses...............................................10.1
Completed Amount.............................................................6.3
Confidentiality Agreement....................................................7.3
Construction Contracts......................................................4.15
Contributing Partners.......................................................10.1
Corporate Employees.........................................................10.1
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Corporate Listed Employees...................................................7.6
CPA Firm.....................................................................2.4
CRLPA.......................................................................10.1
Designated Partnership Matters...............................................8.5
Designated Partnership Properties............................................8.5
Discretionary Closing Conditions............................................10.1
DLLCA.......................................................................10.1
DRULPA......................................................................10.1
Eastdil.....................................................................10.1
Eastdil Engagement Letter...................................................10.1
Eastdil Opinions............................................................10.1
Effective Time...............................................................3.2
Employment List..............................................................7.6
Encumbrance Notice..........................................................7.15
Encumbrances.................................................................4.8
Environmental Complaints.....................................................4.9
Environmental Law............................................................4.9
ERISA.......................................................................4.13
Estoppel.....................................................................8.2
Excess Cash Balance..........................................................2.4
Excess Cash Balance Schedule.................................................2.4
Exchange Act.................................................................4.5
Excluded McNeil Partnership..................................................9.3
Excluded McREMI Assets......................................................10.1
Excluded MPLP Assets........................................................10.1
Existing Loans...............................................................1.5
Existing Support Agreements.................................................10.1
Expiration Time.............................................................7.15
Fairfax..................................................................Heading
First McNeil Threshold......................................................10.1
FRULPA......................................................................10.1
GAAP.........................................................................2.4
Governing Laws..............................................................10.1
Governmental Entity..........................................................4.3
GP Allocation Amount.........................................................1.3
GP Interest.................................................................10.1
Ground Leases................................................................4.8
Guarantee....................................................................5.8
Harbour Club I..............................................................7.14
Hazardous Material...........................................................4.9
Hearth Hollow............................................................Heading
Higher Acquisition Proposal.................................................10.1
HSR Act......................................................................4.3
Included McNeil Partnership..................................................8.5
Included Partnership Matter..................................................8.5
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Indebtedness................................................................4.15
Indemnification Agreement...................................................10.1
Insurance Policies..........................................................4.21
Knowledge of Sellers........................................................10.1
Knowledge of the Company....................................................10.1
Known Defects...............................................................10.1
KRULPA......................................................................10.1
laws.........................................................................4.3
Leases.......................................................................4.8
Liens.......................................................................10.1
Listed Employee..............................................................7.6
LLC Agreement...............................................................10.1
LP Allocation Amount.........................................................1.3
LP Interest.................................................................10.1
Management Agreements.......................................................4.17
Management LLC...............................................................2.1
Managing Member..............................................................5.2
Material Contract...........................................................4.15
Material Encumbrance........................................................7.15
Matter Removal Notice........................................................8.5
Matter Removal Notice Date...................................................8.5
Matter Removal Notice Time...................................................8.5
McNeil Cash Contribution.....................................................2.3
McNeil Limited Partner Meeting...............................................7.1
McNeil Partnership Properties................................................4.8
McNeil Partnership Statements................................................4.5
McNeil Partnerships......................................................Heading
McNeil Person...............................................................10.1
McREMI...................................................................Heading
McREMI Assets...............................................................10.1
McREMI ERISA Affiliate......................................................4.13
McREMI 401(k) Savings Plan...................................................7.6
McREMI Plans................................................................4.13
McREMI Reduction Amount.....................................................10.1
McREMI Transaction Expenses.................................................10.1
Merger Certificate...........................................................3.2
Merger Consideration.........................................................3.5
Merger Expense Reimbursement.................................................3.5
Merger Fund..................................................................3.5
Mergers......................................................................3.1
Merging Partnership.........................................................10.1
Merging Private Partnerships................................................10.1
Midwest Properties.......................................................Heading
MII......................................................................Heading
MPLP.....................................................................Heading
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MPLP Allocation Amount.......................................................1.3
MPLP Contributions...........................................................2.3
MPLP GP Subsidiaries........................................................10.1
MPLP Interests...............................................................2.2
MPLP Subsidiary Corporation.................................................10.1
MREF IX..................................................................Heading
MREF X...................................................................Heading
MREF XI..................................................................Heading
MREF XII.................................................................Heading
MREF XIV.................................................................Heading
MREF XV..................................................................Heading
MREF XX..................................................................Heading
MREF XXI.................................................................Heading
MREF XXII................................................................Heading
MREF XXIII...............................................................Heading
MREF XXIV................................................................Heading
MREF XXV.................................................................Heading
MREF XXVI................................................................Heading
MREF XXVII...............................................................Heading
MULPL.......................................................................10.1
Negative Excess Cash Balance.................................................2.4
Net McREMI Allocated Value..................................................10.1
Net Operating Income........................................................10.1
Net Per Partnership Allocated Value..........................................1.3
New GP LLC...................................................................2.1
New Preliminary Excess Cash Balance..........................................2.4
New Preliminary Excess Cash Balance Schedule.................................2.4
New Preliminary Pre-Closing Balance Sheet....................................2.4
Non-Terminated Loans.........................................................1.5
NOI Amount..................................................................10.1
NOI Determination Date.......................................................8.2
Objection Period.............................................................2.4
Objection Statement..........................................................2.4
Option Price................................................................7.14
Order........................................................................8.1
Original LLC Agreement......................................................10.1
Other Consents..............................................................7.13
Other Estoppels.............................................................7.13
Other Interests..............................................................4.2
Other Harbour Club Properties...............................................7.14
Other Items..................................................................4.8
Paid Assumption Fees.........................................................1.5
Partial McREMI Allocated Value...............................................1.3
Participating McNeil Partnership............................................10.1
Participating Merging Partnership...........................................10.1
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Participating Partnership Consideration Amount..............................10.1
Partnership Break-Up Fee....................................................10.1
Partnership Percentage......................................................10.1
Payment Agent................................................................3.5
Per Partnership Allocated Value..............................................1.3
Per Partnership Transaction Expenses........................................10.1
Per Unit Allocation Amount...................................................1.3
Per Unit Consideration Amount...............................................10.1
Permitted Restrictions and Encumbrances......................................4.8
person......................................................................10.1
Portfolio Advisory Agreement................................................10.1
Positive Excess Cash Balance.................................................2.4
Post-Allocation Upstream Amounts............................................10.1
Post-Allocation Upstream Payables...........................................10.1
Pre-Allocation Upstream Payable.............................................10.1
Pre-Closing Balance Sheet....................................................2.4
Pre-Closing Removable Partnership............................................8.5
Preferred Equity Financing..................................................10.1
Preliminary Excess Cash Balance.............................................10.1
Preliminary Excess Cash Balance Schedule.....................................2.4
Preliminary Pre-Closing Balance Sheet........................................2.4
Prepayment Fees..............................................................1.5
Private McNeil Partnership..................................................10.1
Property Employees..........................................................10.1
Property Listed Employees....................................................7.6
Property Restrictions........................................................4.8
Proxy Statement..............................................................7.1
Proxy Mailing Date...........................................................7.6
Public McNeil Partnership Statements.........................................4.5
Public McNeil Partnerships...................................................4.5
Regency North............................................................Heading
Reimbursable Proposal........................................................6.3
Reimbursable Proposal Amount.................................................6.3
Related Party Transaction...................................................10.1
Removable Partnership........................................................8.5
Pre-Closing Removal Notice...................................................8.5
Pre-Closing Removal Notice Date..............................................8.5
Pre-Closing Removal Notice Time..............................................9.3
Rent Roll....................................................................4.8
Replacement Support Agreements...............................................7.8
Residential Leases...........................................................4.8
Resolution Period............................................................2.4
SNDA Agreements.............................................................7.13
Schedule 13E-3...............................................................7.1
SEC..........................................................................4.3
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Second McREMI Allocated Value................................................1.3
Securities Act...............................................................4.5
Seller Disclosure Letter..............................................Article IV
Seller Material Adverse Effect..............................................10.1
Seller Reimbursable Expenses................................................10.1
Seller SEC Documents.........................................................4.5
Seller Statements............................................................4.5
Seller Subsidiaries.........................................................10.1
Sellers..................................................................Heading
Severance Obligations.......................................................4.11
Shortfall Agreement.........................................................10.1
Stanger.................................................................Recitals
Stanger Determination Date..................................................10.1
Stanger Engagement Letter...................................................10.1
Stanger Opinions............................................................10.1
Sub LLC......................................................................2.1
subsidiary..................................................................10.1
Subsidiary Corporations.....................................................10.1
Subsidiary Financial Statements..............................................4.5
Subsidiary Partnerships.....................................................10.1
Summerhill...............................................................Heading
Summerhill GP............................................................Heading
Summerhill Note.............................................................7.11
Superior Acquisition Proposal...............................................10.1
Support Agreements..........................................................10.1
Survey Materials............................................................7.15
Surviving Partnership........................................................3.1
Takeover Statute............................................................4.19
Taxes.......................................................................4.10
Terminated Employees.........................................................7.6
Terminated Loans.............................................................1.5
Termination Date.............................................................9.1
Threshold Amount.............................................................7.6
Title Commitments............................................................4.8
Title Insurance Policies.....................................................4.8
Title Policies...............................................................8.2
Total Allocated Partnership Value............................................1.3
Total McREMI Allocated Value.................................................1.3
Tranche A Terminated Loans...................................................1.5
Tranche B Terminated Loans...................................................1.5
Transaction Documents.......................................................10.1
Transaction Expenses........................................................10.1
Transitory Partnership.......................................................2.1
TRLPA.......................................................................10.1
Underbudgeted Amount.........................................................6.3
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Upstream Payables ..........................................................10.1
Waiver Letter...............................................................10.1
Whitehall....................................................................5.2
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MASTER AGREEMENT
MASTER AGREEMENT (this "Agreement"), dated as of June 24,
1999, by and among WXI/McN Realty L.L.C., a Delaware limited liability company
(the "Company"), McNeil Real Estate Fund IX, Ltd., a California limited
partnership ("MREF IX"), McNeil Real Estate Fund X, Ltd., a California limited
partnership ("MREF X"), McNeil Real Estate Fund XI, Ltd., a California limited
partnership ("MREF XI"), McNeil Real Estate Fund XII, Ltd., a California limited
partnership ("MREF XII"), McNeil Real Estate Fund XIV, Ltd., a California
limited partnership ("MREF XIV"), McNeil Real Estate Fund XV, Ltd., a California
limited partnership ("MREF XV"), McNeil Real Estate Fund XX, L.P., a California
limited partnership ("MREF XX"), McNeil Real Estate Fund XXI, L.P., a California
limited partnership ("MREF XXI"), McNeil Real Estate Fund XXII, L.P., a
California limited partnership ("MREF XXII"), McNeil Real Estate Fund XXIII,
L.P., a California limited partnership ("MREF XXIII"), McNeil Real Estate Fund
XXIV, L.P., a California limited partnership ("MREF XXIV"), McNeil Real Estate
Fund XXV, L.P., a California limited partnership ("MREF XXV"), McNeil Real
Estate Fund XXVI, L.P., a California limited partnership ("MREF XXVI"), McNeil
Real Estate Fund XXVII, L.P., a Delaware limited partnership ("MREF XXVII"),
Fairfax Associates II, Ltd., a Florida limited partnership ("Fairfax"), Hearth
Hollow Associates, L.P., a Kansas limited partnership ("Hearth Hollow"), McNeil
Midwest Properties I, L.P., a Missouri limited partnership ("Midwest
Properties"), Regency North Associates, L.P., a Missouri limited partnership
("Regency North"), McNeil Summerhill I, L.P., a Texas limited partnership
("Summerhill" and, together with MREF IX, MREF X, MREF XI, MREF XII, MREF XIV,
MREF XV, MREF XX, MREF XXI, MREF XXII, MREF XXIII, MREF XXIV, MREF XXV, MREF
XXVI, MREF XXVII, Fairfax, Hearth Hollow, Midwest Properties and Regency North,
the "McNeil Partnerships"), McNeil Partners, L.P., a Delaware limited
partnership ("MPLP"), McNeil Investors, Inc., a Delaware corporation ("MII"),
McNeil Real Estate Management, Inc., a Delaware corporation ("McREMI"), McNeil
Summerhill, Inc., a Texas corporation ("Summerhill GP" and, together with MII,
MPLP, McREMI and the McNeil Partnerships, "Sellers") and
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Robert A. McNeil. Certain capitalized and uncapitalized terms used in this
Agreement shall have the meanings ascribed to such terms in Section 10.1 hereof.
W I T N E S S E T H:
WHEREAS, the governing body of each of the parties to this
Agreement which are legal entities has determined that it is in the best
interests of such party's partners, limited partners, stockholders or members,
as the case may be, to enter into this Agreement and the Ancillary Agreements to
which it is a party;
WHEREAS, subject to the terms and conditions of this
Agreement, in respect of each Participating Merging Partnership, (i) the Company
or, at the direction of the Company, a subsidiary of the Company will acquire
all of the LP Interests in such Participating Merging Partnership in
consideration for (A) cash equal to the Participating Partnership Consideration
Amount for such Participating Merging Partnership, (B) the Company's repayment
of the Tranche A Terminated Loans and the Tranche B Terminated Loans of such
Participating Merging Partnership and the Company's payment of certain related
fees in accordance with Section 1.5 hereof and (C) the Company's indirect
assumption of the Non-Terminated Loans to which the properties of such
Participating Merging Partnership are subject, and (ii) a subsidiary of the
Company, at the direction of the Company, will acquire all of the GP Interests
in such Participating Merging Partnership and certain assets of MPLP relating to
such Participating Merging Partnership (including, without limitation, all of
the GP Interests and shares of capital stock owned by MPLP in any Seller
Subsidiaries of such Participating Merging Partnership) in consideration for the
Company's issuance of Company Interests to MPLP (or another designee of the
Contributing Partners), and MPLP (or another designee of the Contributing
Partners) will receive credit for a capital contribution to the Company in an
amount equal to the GP Allocation Amount for such Participating Merging
Partnership in accordance with Section 1.1 hereof;
WHEREAS, subject to the terms and conditions of this
Agreement, if Fairfax or Summerhill or both are a Participating McNeil
Partnership, (i) the Company or, at the
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direction of the Company, a subsidiary of the Company will acquire all of the LP
Interests in such Participating McNeil Partnership in consideration for the
Company's issuance of Company Interests to MPLP (or another designee of the
Contributing Partners), and MPLP (or another designee of the Contributing
Partners) will receive credit for a capital contribution to the Company in an
amount equal to the LP Allocation Amount for such Participating McNeil
Partnership in accordance with Section 1.1 hereof and (ii) a subsidiary of the
Company, at the direction of the Company, will acquire all of the GP Interests
in such Participating McNeil Partnership and certain assets of MPLP relating to
such Participating McNeil Partnership (including, without limitation, all of the
GP Interests and shares of capital stock owned by MPLP in any Seller
Subsidiaries of such Participating McNeil Partnership) in consideration for the
Company's issuance of Company Interests to MPLP (or another designee of the
Contributing Partners), and MPLP (or another designee of the Contributing
Partners) will receive credit for a capital contribution to the Company in an
amount equal to the GP Allocation Amount for such Participating McNeil
Partnership in accordance with Section 1.1 hereof;
WHEREAS, subject to the terms and conditions of this
Agreement, a subsidiary of the Company, at the direction of the Company, will
acquire the McREMI Assets in consideration for the Company's issuance of Company
Interests to MPLP (or another designee of the Contributing Partners), and MPLP
(or another designee of the Contributing Partners) will receive credit for a
capital contribution to the Company in an amount equal to the Net McREMI
Allocated Value in accordance with Section 1.1 hereof;
WHEREAS, subject to the terms and conditions of this
Agreement, immediately prior to the Effective Time, in consideration for certain
cash contributions (if any) to the Company and certain expenses incurred by
Sellers, the Company will issue Company Interests to MPLP (or another designee
of the Contributing Partners) in accordance with Section 1.4 hereof, and MPLP
(or another designee of the Contributing Partners) will receive credit for a
capital contribution to the Company in an amount equal to the sum of the McNeil
Cash Contribution (if any), the Capitalized McNeil Expenses and the Additional
McNeil Contribution (if any);
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WHEREAS, subject to the terms and conditions of this
Agreement, on the Closing Date and immediately prior to the Effective Time, a
distribution will be declared to the limited partners in each Participating
McNeil Partnership in an amount in cash equal to the Positive Excess Cash
Balance (if any) for such Participating McNeil Partnership;
WHEREAS, subject to the terms and conditions of this
Agreement, after the date of this Agreement and prior to the Effective Time,
Robert A. Stanger & Co., Inc. ("Stanger") will allocate the Aggregate
Consideration in accordance with Section 1.3 hereof; and
WHEREAS, the consideration being paid by the Company for the
LP Interests, the Allocations and certain related matters will be the subject of
"fairness" opinions by Stanger confirming that the Aggregate Consideration, the
Allocations and such matters are fair from a financial point of view to the
limited partners of each of the McNeil Partnerships.
NOW, THEREFORE, for and in consideration of the mutual
representations, warranties, covenants, agreements and undertakings set forth
below, the parties to this Agreement, intending to be legally bound hereby,
agree as follows:
ARTICLE I
THE ACQUISITION
Section 1.1 The Acquisition; Consideration.
Upon the terms and subject to the conditions set forth in this Agreement, the
parties hereto agree that:
(a) With respect to each Participating Merging Partnership,
subsidiaries of the Company, at the direction of the Company, shall acquire all
of the GP Interests in such Participating Merging Partnership, and the Company
or, at the direction of the Company, one or more of its subsidiaries shall
acquire all of the LP Interests in such Participating Merging Partnership and
certain assets of MPLP relating to such Participating Merging Partnership
(including without limitation all of the GP Interests and
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shares of capital stock owned by MPLP in any Seller Subsidiaries of such
Participating Merging Partnership). In consideration for all of the GP Interests
and all of the LP Interests in such Participating Merging Partnership and such
MPLP assets, the Company shall:
(i) at the Effective Time, in accordance with Section
3.5 hereof, deliver to the Payment Agent cash in an amount equal to the
Participating Partnership Consideration Amount for such Participating
Merging Partnership;
(ii) immediately prior to the Effective Time, in
accordance with Section 2.3 hereof and Section 6.1 of the LLC
Agreement, issue to MPLP (or another designee of the Contributing
Partners) membership interests in the Company (the "Company
Interests"), and MPLP (or another designee of the Contributing
Partners) shall receive credit for a capital contribution to the
Company in an amount equal to the GP Allocation Amount for such
Participating Merging Partnership. Such Company Interests shall upon
issuance be duly authorized, validly issued, fully paid and
nonassessable and free and clear of all Liens (except as provided in
the Indemnification Agreement, the LLC Agreement or the DLLCA), and
shall be issued to MPLP (or another designee of the Contributing
Partners); and
(iii) at the Effective Time, in accordance with
Sections 1.5(b) and 1.5(c) hereof, pay all Tranche A Terminated Loans
secured by McNeil Partnership Properties of such Participating Merging
Partnership and all Prepayment Fees relating thereto and pay all
Tranche B Terminated Loans secured by McNeil Partnership Properties of
such Participating Merging Partnership.
(b) If Fairfax or Summerhill or both are a Participating
McNeil Partnership, with respect to each such Participating McNeil Partnership,
subsidiaries of the Company, at the direction of the Company, shall acquire all
of the GP Interests in such Participating McNeil Partnership, and the Company
or, at the direction of the Company, one or more of its subsidiaries shall
acquire all
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of the LP Interests in such Participating McNeil Partnership and certain assets
of MPLP relating to such Participating McNeil Partnership (including without
limitation all of the GP Interests and shares of capital stock owned by MPLP in
any Seller Subsidiaries of such Participating McNeil Partnership). In
consideration for all of the GP Interests and all of the LP Interests in such
Participating McNeil Partnership and such MPLP assets, the Company shall:
(i) immediately prior to the Effective Time, in
accordance with Section 2.3 hereof and Section 6.1 of the LLC
Agreement, issue to MPLP (or another designee of the Contributing
Partners) Company Interests, and MPLP (or another designee of the
Contributing Partners) shall receive credit for a capital contribution
to the Company in an amount equal to the Participating Partnership
Consideration Amount for such Participating McNeil Partnership. Such
Company Interests shall upon issuance be duly authorized, validly
issued, fully paid and nonassessable and free and clear of all Liens
(except as provided in the Indemnification Agreement, the LLC Agreement
or the DLLCA), and shall be issued to MPLP (or another designee of the
Contributing Partners);
(ii) immediately prior to the Effective Time, in
accordance with Section 2.3 hereof and Section 6.1 of the LLC
Agreement, issue to MPLP (or another designee of the Contributing
Partners) Company Interests, and MPLP (or another designee of the
Contributing Partners) shall receive credit for a capital contribution
to the Company in an amount equal to the GP Allocation Amount for such
Participating McNeil Partnership. Such Company Interests shall upon
issuance be duly authorized, validly issued, fully paid and
nonassessable and free and clear of all Liens (except as provided in
the Indemnification Agreement, the LLC Agreement or the DLLCA), and
shall be issued to MPLP (or another designee of the Contributing
Partners); and
(iii) at the Effective Time, in accordance with
Sections 1.5(b) and 1.5(c) hereof, pay all Tranche A Terminated Loans
secured by McNeil Partnership Properties of such Participating McNeil
Partnership and
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all Prepayment Fees relating thereto and pay all Tranche B Terminated
Loans secured by McNeil Partnership Properties of such Participating
McNeil Partnership.
(c) A subsidiary of the Company, at the direction of the
Company, shall acquire all of the McREMI Assets. In consideration for the McREMI
Assets, the Company shall issue to MPLP (or another designee of the Contributing
Partners) Company Interests, and MPLP (or another designee of the Contributing
Partners) shall receive credit for a capital contribution to the Company in an
amount equal to the Net McREMI Allocated Value. Such Company Interests shall
upon issuance be duly authorized, validly issued, fully paid and nonassessable
and free and clear of all Liens (except as provided in the Indemnification
Agreement, the LLC Agreement or the DLLCA), and shall be issued to MPLP (or
another designee of the Contributing Partners).
Section 1.2 Closing. The closing of the Mergers and the other
transactions contemplated by this Agreement to take place at the Effective Time
(the "Closing") shall take place at a time and on a date (the "Closing Date") to
be specified by the parties hereto, which shall be no later than the fifth
business day after the later of (i) the date upon which the last unsatisfied or
unwaived condition to Closing set forth in Sections 8.1, 8.2 and 8.3 hereof is
satisfied or waived and (ii) the Pre- Closing Removal Notice Date, at the
offices of Sullivan & Cromwell, 125 Broad Street, New York, New York 10004,
unless another time, date or place is agreed to in writing by Sellers and the
Company.
Section 1.3 Allocation of the Aggregate
Consideration.
(a) As promptly as practicable following the date hereof and
prior to the Effective Time, Sellers shall cause Stanger to allocate the
Aggregate Consideration between (i) certain assets of McREMI, taken as a whole
(the "Partial McREMI Allocated Value"), and (ii) all of the McNeil Partnerships,
taken as a whole, including certain other assets of MPLP (assuming the
contributions in Section 2.2 hereof have been consummated)(the matters in this
clause
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(ii), collectively, the "Total Allocated Partnership Value").
(b) Upon the completion of the allocation described in Section
1.3(a) hereof, the Total Allocated Partnership Value shall be allocated among
the McNeil Partnerships (the portion of the Total Allocated Partnership Value
attributable to a McNeil Partnership pursuant to this Section 1.3(b), the "Per
Partnership Allocated Value" for such McNeil Partnership), by multiplying, with
respect to each McNeil Partnership (i) the Total Allocated Partnership Value by
(ii) the Partnership Percentage of such McNeil Partnership.
(c) As promptly as practicable following the completion of the
allocations described in Sections 1.3(a) and 1.3(b) hereof and assuming that the
contributions described in Section 2.2 hereof have been consummated, Sellers
shall cause Stanger to allocate the Net Per Partnership Allocated Value of each
McNeil Partnership among (i) the GP Interests, taken as a whole, in such McNeil
Partnership and certain other assets of MPLP (for each McNeil Partnership, the
"MPLP Allocation Amount" for such McNeil Partnership) and (ii) each class of LP
Interests, taken as a whole, in such McNeil Partnership (for each class of LP
Interests in each McNeil Partnership, the "LP Allocation Amount" for such class
of LP Interests in such McNeil Partnership). For purposes of this Agreement,
"Net Per Partnership Allocated Value" of a McNeil Partnership means an amount
equal to the difference determined by subtracting (i) the aggregate outstanding
principal amount, determined as of the Stanger Determination Date, of all
Existing Loans of such McNeil Partnership from (ii) the Per Partnership
Allocated Value of such McNeil Partnership.
(d) As promptly as practicable following the completion of the
allocations described in Sections 1.3(a), 1.3(b) and 1.3(c) hereof, (i) Sellers
shall cause Stanger to render a per unit allocation of the LP Allocation Amount
for each LP Interest for each class of LP Interests in each McNeil Partnership
(the "Per Unit Allocation Amount" for such LP Interest) and (ii) Sellers shall
cause Stanger to allocate the MPLP Allocation Amount for each McNeil Partnership
among (1) certain McREMI Assets (the "Second McREMI Allocated Value") and (2)
the GP Interests, taken as
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a whole, in such McNeil Partnership (the "GP Allocation Amount" for such McNeil
Partnership). For purposes of this Agreement, the "Total McREMI Allocated Value"
shall equal the sum of the Partial McREMI Allocated Value and the aggregate of
the Second McREMI Allocated Values.
(e) Each party to this Agreement agrees to be unconditionally
and irrevocably bound by the Allocations, except for manifest error in the
allocation described in Section 1.3(d) hereof.
Section 1.4 Additional Consideration. Immediately prior to the
Effective Time, in accordance with Sections 2.3 and 7.9(b) hereof and Section
6.1 of the LLC Agreement, the Company shall issue to MPLP (or another designee
of the Contributing Partners) Company Interests, and MPLP (or another designee
of the Contributing Partners) shall receive credit for a capital contribution to
the Company in an amount equal to the sum of (A) the McNeil Cash Contribution
(if any), (B) the Capitalized McNeil Expenses and (C) the Additional McNeil
Contribution (if any). Such Company Interests shall upon issuance be duly
authorized, validly issued, fully paid and nonassessable and free and clear of
all Liens (except as provided in the Indemnification Agreement, the LLC
Agreement or the DLLCA), and shall be issued to MPLP (or another designee of the
Contributing Partners). Nothing in this Section 1.4 shall offset, or affect in
any manner, the Company Interests being issued to MPLP (or another designee of
the Contributing Partners) pursuant to Section 1.1 hereof.
Section 1.5 Indebtedness.
(a) Schedule 1.5 of the Seller Disclosure Letter sets forth
all of the indebtedness of each of the McNeil Partnerships, which indebtedness
is secured by the McNeil Partnership Properties (the "Existing Loans"), the
outstanding principal balance thereof, all accrued and unpaid interest thereon,
the interest rate thereof and the remaining term thereof, in each case, as of
the date specified on such Schedule 1.5.
(b) Notwithstanding anything to the contrary in this
Agreement, the Company shall repay at the Effective Time (including all accrued
but unpaid interest thereon
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through to the Effective Time) all of the Existing Loans set forth on Annex A
hereto which are secured by McNeil Partnership Properties of the Participating
McNeil Partnerships (the "Tranche A Terminated Loans"). Notwithstanding anything
to the contrary in this Agreement, the Company shall pay at the Effective Time
all Prepayment Fees relating to the Tranche A Terminated Loans. For purposes of
this Agreement, the term "Prepayment Fees" means any fees, costs and premiums
charged by the lender of an Existing Loan in connection with its prepayment.
(c) Notwithstanding anything to the contrary in this
Agreement, the Company shall repay at the Effective Time (including all accrued
but unpaid interest thereon through to the Effective Time) all of the Existing
Loans set forth on Annex B hereto which are secured by McNeil Partnership
Properties of the Participating McNeil Partnerships (the "Tranche B Terminated
Loans" and, together with the Tranche A Terminated Loans, the "Terminated
Loans"). Notwithstanding anything to the contrary in this Agreement, each
Participating McNeil Partnership shall pay at the Effective Time all Prepayment
Fees relating to the Tranche B Terminated Loans secured by McNeil Partnership
Properties of such Participating McNeil Partnership.
(d) Other than the Terminated Loans, all Existing Loans
outstanding immediately prior to the Effective Time shall continue to remain
outstanding at and after the Effective Time until their expiration or prepayment
(all Existing Loans other than the Terminated Loans, the "Non- Terminated
Loans").
(e) Notwithstanding anything to the contrary in this
Agreement, each Participating McNeil Partnership shall pay at the Effective Time
all Assumption Fees relating to those Non-Terminated Loans set forth on Annex C
hereto which are secured by McNeil Partnership Properties of such Participating
McNeil Partnership in an amount with respect to each such Non-Terminated Loan
(the aggregate amount of all Assumption Fees payable in respect of all such Non-
Terminated Loans, the "Paid Assumption Fees") equal to the lesser of (1) the
Assumption Fees for such Non-Terminated Loan and (2) the Prepayment Fees for
such Non-Terminated Loan; provided, however, that the Company shall pay a
portion of such Assumption Fees equal to the lesser of (1)
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one-half of the Paid Assumption Fees and (2) two hundred fifty thousand dollars
($250,000). For purposes of this Agreement, the term "Assumption Fees" means any
fees, costs and premiums charged by the lender of a Non-Terminated Loan as a
result of the change of control of the GP Interests of any Participating McNeil
Partnership, the change in the ownership of a majority of the LP Interests in
any Participating McNeil Partnership, the change (or change in control) of the
management company for the properties of any Participating McNeil Partnership,
the Merger in respect of such Participating McNeil Partnership or the other
transactions expressly contemplated by this Agreement with respect to such
Participating McNeil Partnership.
Section 1.6 Reservation of Right to Revise Transaction. If
Sellers and the Company agree in writing, the method of effecting the business
combination between any one or more Sellers and the Company may be changed, and
each party hereto shall cooperate in such efforts, including to provide for
different forms of merger; provided, however, that no such change shall (i)
alter or change the amount or kind of consideration to be received by holders of
LP Interests and holders of GP Interests in the Participating McNeil
Partnerships, (ii) adversely affect the proposed tax treatment to holders of LP
Interests and holders of GP Interests in the Participating McNeil Partnerships
or (iii) materially delay the consummation of any of the Mergers or the other
transactions contemplated by this Agreement.
ARTICLE II
TRANSACTIONS RELATED TO THE MERGERS
Section 2.1 Certain Company Acquisition Vehicles.
(a) Prior to the consummation of any of the transactions
contemplated by Section 2.3(a) hereof, the Company shall (or, in only the case
of clause (i) below, may) form or cause to be formed the following entities:
(i) a single Delaware limited liability company (the
"Sub LLC") which prior to the Effective Time shall have as its sole
member the Company and at
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and after the Effective Time shall have as its members the Company and
after the Effective Time may have as its members one or more third
persons;
(ii) separate Delaware limited liability companies
(each, a "New GP LLC") each of which shall have as its sole member the
Company or the Sub LLC; and, a New GP LLC shall be the sole general
partner, together with the Company or the Sub LLC as the sole limited
partner, of the Transitory Partnership for each Participating Merging
Partnership;
(iii) for each Participating Merging Partnership, a
separate limited partnership (each, a "Transitory Partnership") formed
in the state of formation of such Participating Merging Partnership, as
set forth on Schedule 4.1(c) of the Seller Disclosure Letter, for which
its corresponding New GP LLC shall be its sole general partner and for
which the Company or the Sub LLC shall be its sole limited partner; and
(iv) an additional single Delaware limited liability
company (the "Management LLC" and, together with the Sub LLC (if the
Sub LLC is formed) and the New GP LLCs, the "Company LLCs") which shall
have as its sole member the Company or the Sub LLC.
(b) On or prior to the Effective Time, no person shall have
any interest in the Company, any Company LLC or any Transitory Partnership
except as expressly provided in this Agreement or, in the case of the Sub LLC,
except as expressly provided in the limited liability company operating
agreement of the Sub LLC.
Section 2.2 Contributions to MPLP. Following the Allocations
of the Aggregate Consideration pursuant to Section 1.3 hereof and following the
holding of all of the McNeil Limited Partner Meetings, but prior to the
Effective Time:
(a) if Fairfax is a Participating McNeil Partnership, then
Robert A. McNeil shall contribute, transfer and assign to MPLP, free and clear
of all Liens, (i) all of the GP Interests in Fairfax owned by him and (ii) all
of the LP Interests in Fairfax owned by him (which shall
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not include any rights to receive any Positive Excess Cash Balance). In
consideration of the contribution of such GP Interests and such LP Interests,
MPLP shall issue LP Interests in MPLP ("MPLP Interests") in such names and
denominations as Robert A. McNeil may request. Such MPLP Interests shall upon
issuance be duly authorized, validly issued, fully paid and nonassessable and
free and clear of all Liens;
(b) if Regency North is a Participating McNeil Partnership,
then Robert A. McNeil shall contribute, transfer and assign to MPLP, free and
clear of all Liens, all of the GP Interests in Regency North owned by him. In
consideration of the contribution of such GP Interests, MPLP shall issue MPLP
Interests in such names and denominations as Robert A. McNeil may request. Such
MPLP Interests shall upon issuance be duly authorized, validly issued, fully
paid and nonassessable and free and clear of all Liens;
(c) if Summerhill is a Participating McNeil Partnership, then
(i) Summerhill GP shall contribute, transfer and assign to MPLP, free and clear
of all Liens, all of the GP Interests in Summerhill owned by Summerhill GP, and
(ii) Robert A. McNeil and Carole J. McNeil shall contribute, transfer and assign
to MPLP, free and clear of all Liens, all of the LP Interests in Summerhill
(which shall not include any rights to receive any Positive Excess Cash
Balance). In consideration of the contribution of such GP Interests and such LP
Interests, MPLP shall issue MPLP Interests in such names and denominations as
Robert A. McNeil and Carole J. McNeil may request. Such MPLP Interests shall
upon issuance be duly authorized, validly issued, fully paid and nonassessable
and free and clear of all Liens; and
(d) McREMI shall contribute, transfer and assign to MPLP, free
and clear of all Liens, the McREMI Assets. In consideration of the contribution
of the McREMI Assets, MPLP shall issue MPLP Interests in such names and
denominations as McREMI may request. Such MPLP Interests shall upon issuance be
duly authorized, validly issued, fully paid and nonassessable and free and clear
of all Liens.
(e) All contributions, transfers and assignments described in
this Section 2.2 shall be effected pursuant to
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an instrument of assignment in the form of the Assignment Agreement.
Section 2.3 Contributions by MPLP.
(a) Following the contributions described in
Section 2.2 hereof:
(i) immediately prior to the Effective Time, at the
direction of the Company, MPLP shall contribute, transfer and assign to
the applicable New GP LLC, free and clear of all Liens, with the
delivery of any applicable certificate or power of transfer (A) all of
the GP Interests owned by MPLP in the Participating McNeil Partnership
corresponding to such New GP LLC, (B) all of the GP Interests and
shares of capital stock owned by MPLP in any Seller Subsidiaries of the
Participating McNeil Partnership corresponding to such New GP LLC, (C)
all rights of MPLP related to the GP Interests in the Participating
McNeil Partnership corresponding to such New GP LLC (other than the
Excluded MPLP Assets and the McREMI Assets) and (D) all of MPLP's
rights, title and interest in and to the other assets of MPLP (other
than the Excluded MPLP Assets and the McREMI Assets) (clauses (A)
through (D), collectively, the "MPLP Contributions"). In consideration
of the contribution, transfer and assignment of the MPLP Contributions,
the Company shall issue Company Interests to MPLP (or another designee
of the Contributing Partners) in accordance with Section 1.1 hereof;
(ii) immediately prior to the Effective Time, at the
direction of the Company, MPLP shall contribute, transfer and assign to
the Company or the Sub LLC, free and clear of all Liens, (A) all of the
LP Interests owned by MPLP in Fairfax if Fairfax is a Participating
McNeil Partnership and (B) all of the LP Interests owned by MPLP in
Summerhill if Summerhill is a Participating McNeil Partnership. In
consideration of the contribution, transfer and assignment of such LP
Interests, the Company shall issue Company Interests to MPLP (or
another designee of the Contributing Partners) in accordance with
Section 1.1 hereof;
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(iii) immediately prior to the Effective Time, at the
direction of the Company, MPLP shall contribute, transfer and assign to
Management LLC, free and clear of all Liens, the McREMI Assets. In
consideration of the contribution, transfer and assignment of the
McREMI Assets to Management LLC, the Company shall issue Company
Interests to MPLP (or another designee of the Contributing Partners) in
accordance with Section 1.1 hereof;
(iv) at the Effective Time, in the event that the
Allocated McNeil Value is less than the First McNeil Threshold, MPLP
(or another designee of the Contributing Partners) shall contribute to
the Company cash in an amount equal to the difference (such difference,
the "McNeil Cash Contribution") determined by subtracting the Allocated
McNeil Value from the First McNeil Threshold. In consideration of the
contribution of the McNeil Cash Contribution, the Company shall issue
Company Interests to MPLP (or another designee of the Contributing
Partners) in accordance with Section 1.4 hereof; and
(v) at the Effective Time, in the event that the sum
of the Allocated McNeil Value and the McNeil Cash Contribution is less
than one hundred million dollars ($100,000,000), MPLP (or another
designee of the Contributing Partners) shall have the right, in its
sole discretion, but not the obligation, to contribute to the Company,
upon at least thirty (30) days notice to the Company prior to the
estimated Closing Date, additional cash (the "Additional McNeil
Contribution") in an aggregate amount not to exceed the difference
determined by subtracting (i) an amount equal to the sum of the
Allocated McNeil Value and the McNeil Cash Contribution (if any) from
(ii) one hundred million dollars ($100,000,000). In consideration of
the contribution of the Additional McNeil Contribution, the Company
shall issue Company Interests to MPLP (or another designee of the
Contributing Partners) in accordance with Section 1.4 hereof.
(b) Immediately following the MPLP Contributions, each
applicable New GP LLC shall be the sole general partner of its corresponding
Participating McNeil Partnership, and,
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immediately following the contributions, transfers and assignments described in
Section 2.3(a)(ii) hereof, the Company or the Sub LLC shall be the sole limited
partner of each of Fairfax and Summerhill. Immediately following the
contributions, transfers and assignments described in Section 2.3(a) hereof,
none of McREMI, MII, MPLP, Summerhill GP, Robert A. McNeil or Carole J. McNeil
shall have any interest as a partner, stockholder or other equity holder in any
Participating McNeil Partnership or any Seller Subsidiary of a Participating
McNeil Partnership, other than as holders of LP Interests in the Participating
Merging Partnerships and other than as a result of the beneficial ownership of
Company Interests by MPLP (or another designee of the Contributing Partners).
(c) All contributions, transfers and assignments described in
Sections 2.3(a)(i), 2.3(a)(ii) and 2.3(a)(iii) hereof shall be effected pursuant
to an instrument of assignment in the form of the Assignment Agreement.
Section 2.4 Pre-Closing Distribution.
(a) No less than ten (10) business days prior to the estimated
Closing Date, MPLP shall cause to be prepared and delivered to the Company an
unaudited balance sheet for each McNeil Partnership as of the last day (which
shall be a date within forty-five (45) days of the estimated Closing Date) of
the most recently completed fiscal month for which an unaudited balance sheet
for such McNeil Partnership is available (each, a "Preliminary Pre-Closing
Balance Sheet"). The Preliminary Pre-Closing Balance Sheet for each McNeil
Partnership shall be prepared in accordance with generally accepted accounting
principles ("GAAP") applied consistently with past practice. The Preliminary
Pre-Closing Balance Sheet for each McNeil Partnership shall be accompanied by a
schedule setting forth the Preliminary Excess Cash Balance for such McNeil
Partnership in the form attached as Annex D hereto (the "Preliminary Excess Cash
Balance Schedule"), which shall be prepared in accordance with the methodology
and principles set forth on Annex D hereto.
(b)(i) Within four (4) business days (the "Objection Period")
after the delivery by MPLP to the Company of the Preliminary
Pre-Closing Balance Sheet and Preliminary Excess Cash Balance Schedule
for a
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McNeil Partnership and all relevant books and records and any work
papers (including those of Arthur Andersen LLP, Sellers' accountants)
relating to the preparation of such Preliminary Pre-Closing Balance
Sheet and such Preliminary Excess Cash Balance Schedule (including
unaudited statements of operations and cash flows (prepared in
accordance with GAAP applied consistently with past practice), bills,
receipts and other written correspondence evidencing any amounts of
Transaction Expenses), the Company and its accountants shall complete
their review of such Preliminary Pre-Closing Balance Sheet and such
Preliminary Excess Cash Balance Schedule. Sellers shall make readily
available to the Company, on a timely basis during the Objection
Period, all relevant books and records and any work papers (including
those of Arthur Andersen LLP, Sellers' accountants) relating to the
preparation of the Preliminary Pre-Closing Balance Sheets and the
Preliminary Excess Cash Balance Schedules (including unaudited
statements of operations and cash flows, bills, receipts and other
written correspondence evidencing any amounts of Transaction Expenses)
and all other items reasonably requested by the Company. In addition,
Sellers and the Company shall make their relevant personnel reasonably
available to each other to respond to inquiries relating to any of the
materials described in the preceding sentence or any matters raised by
the Company. On or before the last day of the Objection Period, the
Company shall deliver to MPLP a reasonably detailed written statement
of any objections or disagreements, including the reasons therefor,
with respect to any Preliminary Pre-Closing Balance Sheet and
Preliminary Excess Cash Balance Schedule (the "Objection Statement")
(it being understood that neither the inclusion on any Preliminary
Excess Cash Balance Schedule of any line item not listed on Annex D
hereto nor the exclusion from any Preliminary Excess Cash Balance
Schedule of any line item listed on Annex D hereto shall be the subject
of any such objection or disagreement). If the Company does not provide
MPLP with the Objection Statement with respect to the Preliminary
Pre-Closing Balance Sheet or the Preliminary Excess Cash Balance
Schedule with respect to a McNeil Partnership within the Objection
Period, the parties hereto shall be
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deemed to have unconditionally accepted and agreed to, and shall be
unconditionally bound by, the Preliminary Pre-Closing Balance Sheet,
the Preliminary Excess Cash Balance Schedule and the Preliminary Excess
Cash Balance set forth on such Preliminary Excess Cash Balance
Schedule, in each case, with respect to such McNeil Partnership, other
than with respect to the Specified Transaction Expenses which shall be
updated to a subsequent date in accordance with Note 17 to the Excess
Cash Balance Schedule.
(ii) In the event that the Company delivers to MPLP
an Objection Statement with respect to a Preliminary Pre-Closing
Balance Sheet or the Preliminary Excess Cash Balance Schedule with
respect to a McNeil Partnership within the Objection Period, the
Company and MPLP shall have two (2) business days (the "Resolution
Period") following the receipt by MPLP of such Objection Statement to
resolve any disagreements set forth in the Objection Statement. If the
Company and MPLP are unable to resolve all of their disagreements set
forth in the Objection Statement within the Resolution Period, the
Company and MPLP shall, promptly following the Resolution Period,
submit their remaining differences to a nationally recognized firm of
independent public accountants which shall be chosen by mutual
agreement of the Company and MPLP or, in the event the Company and MPLP
are unable to agree, a firm chosen jointly by the accountants of each
of them (the "CPA Firm"). The CPA Firm, acting as experts and not as
arbitrators, shall determine, by applying the methodology and
principles set forth on Annex D hereto, and only with respect to the
remaining differences so submitted, whether and to what extent, if any,
the Preliminary Pre-Closing Balance Sheet or the amounts set forth on
the Preliminary Excess Cash Balance Schedule should be revised. The
Company and MPLP shall instruct the CPA Firm to deliver its written
determination to the Company and MPLP no later than two (2) business
days after such remaining differences are referred to the CPA Firm
(unless the Company and MPLP agree in writing, upon request of the CPA
Firm, to provide the CPA Firm with additional time to make its
determination); provided, however, that such determination shall be
made no later than the day
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immediately prior to the estimated Closing Date. The CPA Firm's
determination relating to each Preliminary Pre-Closing Balance Sheet
and each Preliminary Excess Cash Balance Schedule submitted to it shall
be conclusive and binding upon the parties hereto. The fees and
disbursements of the CPA Firm shall be shared equally by the Company,
on the one hand, and Sellers, on the other hand. Sellers shall make
readily available to the CPA Firm, on a timely basis during the period
the CPA Firm is making its determination pursuant to this Section
2.4(b)(ii), all relevant books and records and any work papers
(including those of Arthur Andersen LLP, Sellers' accountants) relating
to the preparation of the Preliminary Pre-Closing Balance Sheets and
Preliminary Excess Cash Balance Schedules (including unaudited
statements of operations and cash flows, bills, receipts and other
written correspondence evidencing any amounts of Transaction Expenses)
and all other items reasonably requested by the CPA Firm. In addition,
Sellers and the Company shall make their relevant personnel reasonably
available to the CPA Firm and each other to respond to any inquiries
relating to the disagreements submitted to the CPA Firm.
(iii) Each Preliminary Pre-Closing Balance Sheet,
Preliminary Excess Cash Balance Schedule and Preliminary Excess Cash
Balance set forth on such Preliminary Excess Cash Balance Schedule
after having been deemed to be accepted by the parties hereto pursuant
to the last sentence of Section 2.4(b)(i) hereof or the CPA Firm's
determinations in respect thereof pursuant to Section 2.4(b)(ii) hereof
are, respectively, referred to herein as the "Pre-Closing Balance
Sheet," "Excess Cash Balance Schedule" and the "Excess Cash Balance."
(c) For each Participating McNeil Partnership for which the
Excess Cash Balance is greater than zero (a "Positive Excess Cash Balance"),
MPLP shall cause such Participating McNeil Partnership, on the Closing Date and
immediately prior to the consummation of any of the transactions contemplated by
Section 2.3(a) hereof, to irrevocably declare a cash distribution, in an amount
equal to the Positive Excess Cash Balance for such Participating McNeil
Partnership, to the persons who were limited partners
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(prior to the consummation of any of the transactions contemplated by Section
2.3(a) hereof) of such Participating McNeil Partnership as a special
distribution in accordance with the limited partnership agreement of such
Participating McNeil Partnership. For each Participating McNeil Partnership for
which the Excess Cash Balance is less than zero, the "Negative Excess Cash
Balance" in respect of such Participating McNeil Partnership shall be an amount
equal to such negative Excess Cash Balance. The Company and the Participating
McNeil Partnerships agree to take such actions as may be necessary to effect the
distributions contemplated by this Section 2.4(c) concurrently with the payment
of the Merger Consideration to former holders of LP Interests pursuant to
Section 3.5 hereof.
(d) On and following the date of the Preliminary Pre-Closing
Balance Sheet for a McNeil Partnership, such McNeil Partnership shall not
declare any distributions with respect to any GP Interest or LP Interest in such
McNeil Partnership prior to the Effective Time, except for the distributions
contemplated by Section 2.4(c) hereof in the event such McNeil Partnership is a
Participating McNeil Partnership and except for Post-Allocation Upstream
Payables accruing through to the Closing Date.
(e) The parties hereto acknowledge and agree that immediately
upon the declaration of the Positive Excess Cash Balance, the amount of such
special distribution shall become final and binding upon the parties hereto and
shall not be offset against any other amounts due, payable or owing by any
person under this Agreement or the Ancillary Agreements (regardless of any
subsequent recalculation of the Excess Cash Balance).
(f) If the estimated Closing Date is delayed for more than ten
(10) business days and such estimated Closing Date falls more than forty-five
days after the last date of the fiscal month for which the preceding Preliminary
Pre- Closing Balance Sheet and Preliminary Pre-Closing Excess Cash Schedule for
a McNeil Partnership were prepared, MPLP and the Company shall each have the
right to cause to be reprepared and redelivered, in accordance with Section
2.4(a) hereof, a new Preliminary Pre-Closing Balance Sheet (the "New Preliminary
Pre-Closing Balance Sheet") and a new Preliminary Excess Cash Balance Schedule
(the "New
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Preliminary Excess Cash Balance Schedule"), setting forth a new Preliminary
Excess Cash Balance (the "New Preliminary Excess Cash Balance"), for such McNeil
Partnership. Each such New Preliminary Pre-Closing Balance Sheet, New
Preliminary Excess Cash Balance Schedule and New Preliminary Excess Cash Balance
shall be subject to the provisions of Sections 2.4(a) through 2.4(e) hereof and
shall become final and binding on the parties hereto in accordance with Section
2.4(b) hereof; provided, however, that each party hereto acknowledges and agrees
that none of the preparation, delivery, acceptance or resolution of
disagreements with respect to any New Preliminary Pre-Closing Balance Sheet, New
Preliminary Excess Cash Balance Schedule or New Preliminary Excess Cash Balance
shall delay the Closing if the Closing would otherwise be required to occur
pursuant to the terms of this Agreement had the preparation and delivery of such
items not been requested. If the Closing would otherwise be required to occur,
or has otherwise occurred prior to the time at which the New Preliminary
Pre-Closing Balance Sheet, New Preliminary Excess Cash Balance Schedule and New
Preliminary Excess Cash Balance for a McNeil Partnership becomes final and
binding on the parties hereto in accordance with Section 2.4(b) hereof, the
parties acknowledge and agree that they shall be bound by the immediately
preceding Pre-Closing Balance Sheet, Excess Cash Balance Schedule and Excess
Cash Balance for such McNeil Partnership which has become final and binding on
the parties hereto in accordance with Section 2.4(b) hereof. Without limiting
the foregoing, in the event that prior to the Closing a New Preliminary
Pre-Closing Balance Sheet, a New Preliminary Excess Cash Balance Schedule and a
New Preliminary Excess Cash Balance for a McNeil Partnership have been deemed to
be accepted by all parties hereto pursuant to the last sentence of Section
2.4(b)(i) hereof or all disputes in connection therewith are resolved pursuant
to Section 2.4(b)(ii) hereof, respectively, references herein to the
"Pre-Closing Balance Sheet," the "Excess Cash Balance Schedule" and the "Excess
Cash Balance" for such McNeil Partnership shall be deemed to refer to such New
Preliminary Pre-Closing Balance Sheet, such New Excess Cash Balance Schedule and
such New Excess Cash Balance, respectively.
(g) Notwithstanding anything to the contrary set forth in
this Agreement, in connection with the matters
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contemplated by this Section 2.4, the parties hereto acknowledge and agree that
Sellers shall not be required to deliver any work papers of Arthur Andersen LLP
if the recipients thereof do not execute a confidentiality agreement
substantially comparable to the one entered into by representatives of the
Company prior to the date hereof.
ARTICLE III
THE MERGERS
Section 3.1 The Mergers. Upon the terms and subject to the
conditions set forth in this Agreement, and in accordance with the applicable
Governing Laws, the Transitory Partnership corresponding to each Participating
Merging Partnership shall merge with and into its respective Participating
Merging Partnership at the Effective Time. Following the Effective Time, (i)
each such Participating Merging Partnership shall be the surviving partnership
(the "Surviving Partnership") in such merger and (ii) the applicable New GP LLC
that was the general partner of such Participating Merging Partnership
immediately following the MPLP Contributions and immediately prior to the
Effective Time shall be the sole general partner of its corresponding Surviving
Partnership and the Company or the Sub LLC shall be the sole limited partner of
each Surviving Partnership. The mergers described in this Section 3.1 are
collectively referred to in this Agreement as the "Mergers."
Section 3.2 Effective Time.
(a) Subject to the terms and conditions set forth in this
Agreement, for each Participating Merging Partnership and its respective
Transitory Partnership, a certificate of merger, articles of merger, certificate
of cancellation, statement of merger or such other documents as may be required
by the Governing Law applicable to such Participating Merging Partnership and
its corresponding Transitory Partnership (each, a "Merger Certificate"), shall
be duly executed and acknowledged by the applicable New GP LLC (or its
designee), as the general partner of such Participating Merging Partnership and
its corresponding Transitory Partnership, and thereafter delivered to the
Secretary of State of the state of formation of such
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Participating Merging Partnership, as set forth on Schedule 4.1(c) of the Seller
Disclosure Letter.
(b) The Mergers shall become effective at such time on the
Closing Date (or such later time as the parties may agree upon and set forth in
each of the Merger Certificates) (the "Effective Time" in respect of each such
Merger) as specified in properly executed and certified copies of the Merger
Certificate for each Participating Merging Partnership and its corresponding
Transitory Partnership are duly filed with the Secretary of State of the state
of formation of such Participating Merging Partnership, as set forth on Schedule
4.1(c) of the Seller Disclosure Letter, in accordance with the Governing Law
applicable to each such Merger. To the extent permitted by the applicable
Governing Law, each Merger Certificate shall be so filed at least one (1)
business day prior to the Closing Date.
Section 3.3 Effects of the Mergers; LLC Agreement.
(a) Each of the Mergers shall have the effects set forth under
the Governing Law applicable to such Merger.
(b) At the Effective Time, the Original LLC Agreement shall be
amended and restated in its entirety in the form of the LLC Agreement. The LLC
Agreement shall be the organizational document of the Company from and after the
Effective Time, until thereafter amended as provided therein or pursuant to
applicable law.
Section 3.4 Conversion of Partnership Interests. As of the
Effective Time, by virtue of the Mergers and without any action on the part of
any party hereto, any of the Transitory Partnerships, any Company LLC, any
holder of any LP Interest or any holder of any GP Interest:
(a) Each LP Interest of each class of LP Interests in each of
the Participating Merging Partnerships outstanding immediately prior to the
Effective Time shall be converted into and shall become the right to receive
cash (without interest thereon) in an amount equal to the Per Unit Consideration
Amount to which such LP Interest is
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entitled under the respective limited partnership agreement of such
Participating Merging Partnership upon surrender of the Certificate(s)
representing such LP Interest for cancellation (or, in the case of an LP
Interest in a Participating Merging Partnership which is a Merging Private
Partnership, upon the delivery of the affidavit made in accordance with Section
3.5(d) hereof) to the Payment Agent. As of the Effective Time, each such LP
Interest in each of the Participating Merging Partnerships shall no longer be
outstanding and shall automatically be cancelled and retired and shall cease to
exist, and each holder of an LP Interest shall cease to have any rights with
respect thereto, except the right to receive the Per Unit Consideration Amount
and the Positive Excess Cash Balance (if any) in respect of such Participating
Merging Partnership, in each case, without interest thereon, to which such LP
Interest is entitled.
(b) As of the Effective Time, each LP Interest in each
Transitory Partnership issued and outstanding as of the Effective Time shall be
converted into one fully issued and nonassessable LP Interest in the Surviving
Partnership in each Merger between such Transitory Partnership and its
corresponding Participating Merging Partnership.
(c) Each GP Interest in each of the Participating Merging
Partnerships outstanding immediately prior to the Effective Time shall be
converted into and shall become one fully paid and nonassessable GP Interest in
the Surviving Partnership in each Merger. As of the Effective Time, each GP
Interest in each Transitory Partnership shall no longer be outstanding and shall
automatically be cancelled and retired and shall cease to exist, and each holder
of such GP Interests shall cease to have any rights in respect thereto.
Section 3.5 Payment of Merger Consideration.
(a) At the Effective Time, as required by Section 3.5(b)
hereof, the Company shall deposit with such agent or agents as may be appointed
by the Company (the "Payment Agent") for the benefit of the holders of LP
Interests in the Participating Merging Partnerships, cash in an aggregate amount
equal to the sum of the Participating Partnership Consideration Amounts for each
Participating McNeil Partnership (such sum, the "Merger Consideration," and the
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Merger Consideration deposited with the Payment Agent is referred to as the
"Merger Fund").
(b) Immediately following the Effective Time, the Payment
Agent shall mail to each holder of record of certificate(s) which immediately
prior to the Effective Time represented outstanding LP Interests in the
Participating Merging Partnerships (the "Certificates") and which were converted
into the right to receive the Merger Consideration pursuant to Section 3.4
hereof (or, in the case of any Participating Merging Partnership which is a
Merging Private Partnership, each holder of record of an LP Interest in such
Merging Private Partnership): (i) a letter of transmittal (which shall specify
that delivery shall be effected and risk of loss and title to the LP Interests
shall pass to the Company only upon delivery of the Certificates (or, in the
case of any Participating Merging Partnership which is a Merging Private
Partnership, upon the delivery by such holder of record of appropriate
documentation and the delivery by MPLP of the affidavit specified in Section
3.5(d) hereof) to the Payment Agent and shall be in such form and have such
other provisions as the Company may reasonably specify); and (ii) instructions
for effecting the surrender of the Certificates (or delivery of such appropriate
documentation and affidavit) in exchange for the Per Unit Consideration Amount
which such holder has the right to receive pursuant to Section 3.4 hereof
(taking into account different classes (if any) of LP Interests in such
Participating Merging Partnership). Upon surrender of a Certificate for
cancellation (or delivery of such appropriate documentation and affidavit) to
the Payment Agent together with such letter of transmittal duly executed, the
holder of such LP Interests shall be entitled to receive in exchange therefor a
check representing the Per Unit Consideration Amount which such holder has the
right to receive pursuant to Section 3.4 hereof, and any Certificates so
surrendered shall forthwith be cancelled. In the event of a transfer of
ownership of LP Interests in a Participating Merging Partnership which is not
registered in the transfer records of such Participating Merging Partnership,
payment of the Per Unit Consideration Amount which such holder has the right to
receive pursuant to Section 3.4 hereof may be made to a transferee if the
Certificate representing such LP Interests (or, in the case of any Participating
Merging Partnership which is a Merging
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Private Partnership, if the affidavit specified in Section 3.5(d) hereof and a
suitable bond or indemnity) is presented to the Payment Agent accompanied by all
documents required to evidence and effect such transfer. Until surrendered as
contemplated by this Section 3.5, each Certificate shall be deemed at and after
the Effective Time to represent only the right to receive upon such
Certificate's surrender the Per Unit Consideration Amount which the holder of
such Certificate has the right to receive pursuant to Section 3.4 hereof. The
Surviving Partnerships shall have the right to, and shall, take all steps
necessary to ensure compliance, and shall comply, with all withholding
obligations with respect to any foreign holders of LP Interests in connection
with the payment of any Per Unit Consideration Amount. No interest will be paid
or will accrue on any Per Unit Consideration Amount upon the surrender of any
Certificate.
(c) In the event that any Certificate shall have been lost,
stolen or destroyed, the Payment Agent shall issue in exchange therefor, upon
the making of an affidavit of that fact by the holder thereof, the Per Unit
Consideration Amount which the holder of such Certificate has the right to
receive pursuant to Section 3.4 hereof; provided, however, that the Payment
Agent shall (unless the Company determines otherwise) require the delivery of a
suitable bond or indemnity, the form of which bond or indemnity shall be
acceptable to the Company.
(d) In the case of LP Interests in the Participating Merging
Partnerships which are Merging Private Partnerships, the Payment Agent shall
issue in exchange therefor, upon the making of an affidavit as to the identity
of each owner of LP Interests in such Merging Private Partnership by MPLP (in
the case of Hearth Hollow and Midwest Properties) and Robert A. McNeil (in the
case of Regency North), the Per Unit Consideration Amount which the holder of LP
Interests therein has the right to receive pursuant to Section 3.4 hereof.
(e) All Merger Consideration paid upon the surrender for
exchange of LP Interests in the Participating Merging Partnerships in accordance
with the terms of this Agreement shall be deemed to have been paid in full
satisfaction of all rights pertaining to such LP Interests; provided, however,
that notwithstanding anything to the
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contrary contained in this Agreement, the Surviving Partnership in each of the
Mergers shall continue to have an obligation following the Effective Time (i) to
pay distributions with a record date prior to the Effective Time which may have
been declared by a Participating Merging Partnership on LP Interests in such
Participating McNeil Partnership in accordance with the terms of this Agreement
or declared prior to the date of this Agreement and, in either case, which
remain unpaid at the Effective Time and (ii) to distribute to the former limited
partners of each Participating Merging Partnership the Positive Excess Cash
Balance (if any) in respect of such Participating Merging Partnership in
accordance with Section 2.4(c) hereof. From and after the Effective Time, there
shall be no further registration of transfers on the transfer books of the
Surviving Partnerships of LP Interests in the Participating Merging Partnerships
which were outstanding immediately prior to the Effective Time. If, after the
Effective Time, Certificates are presented to the Surviving Partnerships for any
reason, such Certificates shall be canceled and exchanged as provided in this
Section 3.5. If, after the Effective Time, owners of LP Interests in any Merging
Private Partnerships who are identified on the affidavits described in Section
3.5(d) hereof request payment in respect of such LP Interests from the Surviving
Partnerships for any reason, the Per Unit Consideration Amount which such owner
has the right to receive pursuant to Section 3.4 hereof and which has not
theretofore been paid to such owner shall be delivered to such owner in exchange
for such LP Interests.
(f) None of the Payment Agent, the parties to this Agreement,
the Transitory Partnerships, the Company LLCs or any of their respective
affiliates shall be liable to any holder of an LP Interest in a Participating
Merging Partnership for cash from the Merger Fund delivered to a public official
pursuant to any applicable abandoned property, escheat or similar law.
(g) Any portion of the Merger Fund which remains undistributed
to the holders of LP Interests in the Participating Merging Partnerships for a
period of six months after the Effective Time shall be delivered to the Company,
upon demand of the Company, and any such holder who has not theretofore complied
with this Section 3.5 shall
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thereafter look only to the Company for payment of the Per Unit Consideration
Amount which such holder had the right to receive pursuant to Section 3.4
hereof, and any unpaid distributions, subject to applicable escheat and other
similar laws. The McNeil Partnerships shall pay all charges and expenses
relating to the Mergers, and the Company shall reimburse the McNeil
Partnerships, on the Closing Date and immediately prior to the distributions
contemplated by Section 2.4(c) hereof, in an amount in cash equal to one-half of
the amount of the charges and expenses relating to the Payment Agent (the
"Merger Expense Reimbursement").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLERS
Except as set forth in the disclosure letter delivered by
Sellers to the Company prior to the execution of this Agreement (the "Seller
Disclosure Letter") and referenced in the particular section of this Agreement
to which exception is being taken, (i) MPLP, in its capacity as general partner
of each of the McNeil Partnerships (other than Fairfax, Regency North and
Summerhill), represents and warrants to the Company as of the date of this
Agreement as to each of the McNeil Partnerships (other than Fairfax, Regency
North and Summerhill) and such McNeil Partnership's respective Seller
Subsidiaries (if any), (ii) MII, in its capacity as general partner of MPLP,
represents and warrants to the Company as of the date of this Agreement as to
MPLP and as to each of the McNeil Partnerships (other than Fairfax, Regency
North and Summerhill) and such McNeil Partnership's respective Seller
Subsidiaries (if any), (iii) each McNeil Partnership severally (and not jointly)
represents and warrants to the Company as of the date of this Agreement as to
itself and its respective Seller Subsidiaries (if any), (iv) Robert A. McNeil,
in his capacity as the general partner of Fairfax and a general partner of
Regency North, represents and warrants to the Company as of the date of this
Agreement as to each of Fairfax and Regency North and Regency North's Seller
Subsidiaries, (v) Fairfax represents and warrants to the Company as of the date
of this Agreement as to itself, (vi) Regency North represents and warrants to
the Company as of the date of this Agreement as to itself and its Seller
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Subsidiaries, (vii) Summerhill GP, in its capacity as general partner of
Summerhill, represents and warrants to the Company as of the date of this
Agreement as to Summerhill, (viii) Summerhill represents and warrants to the
Company as of the date of this Agreement as to itself and its Seller
Subsidiaries, (ix) MPLP represents and warrants to the Company as of the date of
this Agreement as to itself, (x) MII represents and warrants to the Company as
of the date of this Agreement as to itself, (xi) Summerhill GP represents and
warrants to the Company as of the date of this Agreement as to itself and (xii)
McREMI represents and warrants to the Company as of the date of this Agreement
as to itself, in each case, as follows:
Section 4.1 Organization, Standing and Power.
(a) Each of McREMI and MII is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware,
and Summerhill GP is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Texas, and each of McREMI, MII and
Summerhill GP has the requisite corporate power and authority to carry on its
business as now being conducted and is duly qualified or licensed to do business
as a foreign corporation and is in good standing (with respect to jurisdictions
which recognize such concept) in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed or to be in good standing, individually or in the
aggregate, would not have a Seller Material Adverse Effect.
(b) MPLP is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware, has the
requisite partnership power and authority to carry on its business as now being
conducted and is duly qualified or licensed to do business as a foreign limited
partnership and is in good standing (with respect to jurisdictions which
recognize such concept) in each jurisdiction in which the nature of its business
or the ownership or leasing of its properties makes such qualification or
licensing necessary, other than in such jurisdictions where the failure to be so
qualified or
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licensed or to be in good standing, individually or in the aggregate, would not
have a Seller Material Adverse Effect.
(c) Each McNeil Partnership is a limited partnership duly
formed, validly existing and in good standing under the laws of the state of
formation set forth opposite the name of such partnership on Schedule 4.1(c) of
the Seller Disclosure Letter, has the requisite partnership power and authority
to carry on its business as now being conducted and is duly qualified or
licensed to do business as a foreign limited partnership and is in good standing
(with respect to jurisdictions which recognize such concept) in each
jurisdiction in which the nature of its business or the ownership or leasing of
its properties makes such qualification or licensing necessary, other than in
such jurisdictions where the failure to be so qualified or licensed or to be in
good standing, individually or in the aggregate, would not have a Seller
Material Adverse Effect.
(d) Complete and correct copies of the respective charters and
bylaws of McREMI, MII and Summerhill GP and complete and correct copies of the
respective certificate of limited partnership and limited partnership agreements
of MPLP and the McNeil Partnerships, in each case as amended or supplemented to
the date of this Agreement, have been made available to the Company.
(e) Each Subsidiary Corporation is a corporation duly
incorporated and validly existing under the laws of its jurisdiction of
incorporation and has the requisite corporate power and authority to carry on
its business as now being conducted, and each Subsidiary Partnership is a
partnership duly formed and validly existing under the laws of its jurisdiction
of formation and has the requisite partnership power and authority to carry on
its business as now being conducted. Each Seller Subsidiary is duly qualified or
licensed to do business and is in good standing (with respect to jurisdictions
which recognize such concept) in each jurisdiction in which the nature of its
business or the ownership or leasing of its properties makes such qualification
or licensing necessary, other than in such jurisdictions where the failure to be
so qualified or licensed, individually or in the aggregate, would not have a
Seller Material Adverse Effect. True and correct copies of the respective
certificate of incorporation, by-laws,
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partnership agreement, limited partnership agreement, certificate of partnership
and certificate of limited partnership, as applicable, and other organizational
documents of each Seller Subsidiary, in each case as amended or supplemented to
the date of this Agreement, have been made available to the Company.
Section 4.2 Capital Structure; Title and Ownership of
McREMI Assets.
(a) Schedule 4.2(a) of the Seller Disclosure Letter sets forth
the following information with respect to MPLP and each of the McNeil
Partnerships, opposite the name of such partnership: (i) the capital structure
of such partnership (including, with respect to each McNeil Partnership, the
number of limited partners of such partnership as of the date specified in such
Schedule 4.2(a)); (ii) as of the date specified in such Schedule 4.2(a), to the
best Knowledge of Sellers, the ownership of any holders of five percent or more
of the partnership interests of such partnership; (iii) the general partners of
such partnership; (iv) any other names such partnership was formerly known as;
and (v) with respect to each McNeil Partnership, each real property owned
directly by such McNeil Partnership or owned by a Seller Subsidiary of such
McNeil Partnership. MII is the sole general partner of MPLP. Except as set forth
in this Section 4.2 or on Schedule 4.2(a) of the Seller Disclosure Letter and
except as contemplated by the terms of this Agreement, no other units of
partnership interest or other equity interests in the McNeil Partnerships were
issued, reserved for issuance or outstanding. All outstanding units of
partnership interest or other equity interest of each McNeil Partnership (i)
have been duly authorized and are validly issued, fully paid and nonassessable
and (ii) are subject to no restrictions except as set forth in the limited
partnership agreement of such McNeil Partnership. Except as set forth on
Schedule 4.2(a) of the Seller Disclosure Letter, none of the McNeil Partnerships
has issued or granted or is a party to any outstanding commitments, agreements,
options, arrangements or undertakings of any kind relating to units of
partnership interest or any other equity interest of such McNeil Partnership or
securities convertible into units of partnership interest or any other equity
interest of such McNeil Partnership.
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(b) Except as set forth on Schedule 4.2(b) of the Seller
Disclosure Letter, as of the date of this Agreement, McREMI has, and immediately
prior to the contributions described in Section 2.3(a)(iii) hereof MPLP will
have, good and marketable title to all of the McREMI Assets free and clear of
all Liens.
(c) As of the date of this Agreement, except as set forth on
Schedule 4.2(c) of the Seller Disclosure Letter, (i) Robert A. McNeil has good
and valid title to all of the GP Interests in Fairfax, (ii) Robert A. McNeil has
good and valid title to all of the GP Interests in Regency North owned by him,
(iii) Summerhill GP has good and valid title to all of the GP Interests in
Summerhill, (iv) MPLP has good and valid title to (A) all of the GP Interests in
each McNeil Partnership (other than Fairfax, Regency North and Summerhill), (B)
all of the GP Interests in the MPLP GP Subsidiaries, and (C) all of the shares
of capital stock in the MPLP Subsidiary Corporations, (v) Robert A. McNeil has
good and valid title to all of the LP Interests in Fairfax owned by him, and
(vi) Robert A. McNeil and Carole J. McNeil have good and valid title to all of
the LP Interests in Summerhill, in the case of each of clauses (i) through (vi)
above, free and clear of all Liens.
(d) Immediately prior to the contributions described in
Sections 2.3(a)(i), 2.3(a)(ii) and 2.3(a)(iii) hereof, MPLP shall have (i) good
and valid title to (A) all of the GP Interests in each Participating McNeil
Partnership, (B) all of the GP Interests in the MPLP GP Subsidiaries of the
Participating McNeil Partnerships, and (C) all of the shares of capital stock in
the MPLP Subsidiary Corporation of the Participating McNeil Partnerships, in
each case, free and clear of all Liens, (ii) good and valid title to all of the
LP Interests in Fairfax, free and clear of all Liens, if Fairfax is a
Participating McNeil Partnership, (iii) good and valid title to all of the LP
Interests in Summerhill, free and clear of all Liens, if Summerhill is a
Participating McNeil Partnership, and (iv) good and marketable title to all of
the McREMI Assets, free and clear of all Liens.
(e) Except as set forth on Schedule 4.2(e) of the Seller
Disclosure Letter, all distributions to holders of LP
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Interests in the McNeil Partnerships which have been declared by any McNeil
Partnership prior to the date of this Agreement have been paid in full.
(f) Except as set forth on Schedule 4.2(f) of the Seller
Disclosure Letter and except for interests in certain of the Seller Subsidiaries
and certain of the McNeil Partnerships, none of the McNeil Partnerships or MPLP
owns directly or indirectly any interest or investment (whether equity or debt)
in any corporation, partnership, joint venture, business trust or other entity
(other than investments in investment securities) ("Other Interest"). None of
the Seller Subsidiaries owns directly or indirectly any Other Interest other
than its interest (if any) in other Seller Subsidiaries.
(g) Schedule 4.2(a) of the Seller Disclosure Letter sets
forth, with respect to each Seller Subsidiary: (i) the identity (including any
names it was formerly known as) and equity interest of any person with any
equity interest in such Seller Subsidiary and (ii) each real property owned by
such Seller Subsidiary. Except as set forth in this Section 4.2, no other shares
of capital stock, partnership interests or other equity interests in the Seller
Subsidiaries were issued, reserved for issuance or outstanding. Each of the
outstanding shares of capital stock or outstanding partnership interests in each
of the Seller Subsidiaries of the McNeil Partnerships is duly authorized,
validly issued, fully paid and nonassessable (other than to secure any
outstanding indebtedness to third party lenders with respect to any McNeil
Partnership Property owned directly or indirectly by such Seller Subsidiary).
Other than as set forth on Schedule 4.2(a) of the Seller Disclosure Letter, each
Seller Subsidiary of a McNeil Partnership is wholly-owned, directly or
indirectly, by MPLP, such McNeil Partnership or other Seller Subsidiaries of
such McNeil Partnership, free and clear of all Liens. None of the Seller
Subsidiaries has issued or granted or is a party to any outstanding commitments,
agreements, options, arrangements or undertakings of any kind relating to shares
of capital stock, partnership interests or other equity interests of such Seller
Subsidiary or securities convertible into shares of capital stock, partnership
interests or other equity interests of such Seller Subsidiary.
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Section 4.3 Authority; Noncontravention;
Consents.
(a) Each of MII, McREMI and Summerhill GP has the requisite
corporate power and authority to enter into this Agreement and the other
Transaction Documents to which it is a party and to consummate the transactions
contemplated by this Agreement and the other Transaction Documents to which it
is a party. MPLP has the requisite partnership power and authority to enter into
this Agreement and the other Transaction Documents to which it is a party and to
consummate the transactions contemplated by this Agreement and the other
Transaction Documents to which it is a party. Each McNeil Partnership has the
requisite partnership power and authority to enter into this Agreement and the
other Transaction Documents to which it is a party and, subject to the requisite
approvals of its partners, to consummate the transactions contemplated by this
Agreement and the other Transaction Documents to which it is a party. The
execution and delivery by each Seller of this Agreement and the other
Transaction Documents to which such Seller is a party and the consummation by
such Seller of the transactions contemplated by this Agreement and the other
Transaction Documents to which such Seller is a party have been duly authorized
by all necessary action on the part of such Seller, except for and subject to
the approval by each Merging Partnership of the Merger in respect of such
Merging Partnership, the MPLP Contributions in respect of such Merging
Partnership and the appointment of the applicable New GP LLC as the successor
general partner of such Merging Partnership by the requisite approval of the
limited partners of such Merging Partnership. This Agreement has been duly
executed and delivered by each Seller, and each of the other Transaction
Documents has been duly executed and delivered by each Seller which is a party
thereto, and, assuming the due execution and delivery of this Agreement and each
such other Transaction Document by every other party hereto and thereto,
respectively, this Agreement and each of such other Transaction Documents each
constitutes a valid and binding obligation of such Seller, enforceable against
such Seller in accordance with and subject to its terms, subject, as to
enforcement, to (i) applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws now or hereinafter in effect affecting
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creditors' rights generally and (ii) general principles of equity. The board of
directors of MII (as general partner of the general partner of each of the
McNeil Partnerships, other than Fairfax, Regency North and Summerhill), the
board of directors of Summerhill GP (as the general partner of Summerhill),
Robert A. McNeil (as the general partner of Fairfax and a general partner of
Regency North) and the limited partners of Summerhill have duly and validly
approved, and taken all action required to be taken by them for the consummation
of, the Mergers, the MPLP Contributions, the appointments of the applicable New
GP LLCs as the successor general partners of the McNeil Partnerships and the
other transactions contemplated by this Agreement and the other Transaction
Documents.
(b) With respect to each Seller, except as set forth on
Schedule 4.3(b) of the Seller Disclosure Letter, the execution, delivery and
performance by such Seller of this Agreement and the other Transaction Documents
to which such Seller is a party do not, and the consummation by such Seller of
the transactions contemplated by this Agreement and the other Transaction
Documents to which such Seller is a party and compliance by such Seller with the
provisions of this Agreement and the other Transaction Documents to which such
Seller is a party shall not, conflict with, or result in any violation of, or
default (with or without notice or lapse of time, or both) under, or give rise
to a right of termination, cancellation or acceleration of any obligation or to
loss of a benefit under, or any other change in rights or obligations of any
party under (including the right to amend or modify or refuse to perform or
comply with), or result in the creation of any Lien upon any of the properties
or assets of such Seller or its Seller Subsidiaries under, (i) (A) in the case
of McREMI, MII, Summerhill GP and each Subsidiary Corporation, the respective
charter and bylaws of McREMI, MII, Summerhill GP and each such Subsidiary
Corporation, each as amended or supplemented to the date of this Agreement, and
(B) in the case of MPLP, each McNeil Partnership and each such Subsidiary
Partnership, the respective certificate of partnership, certificate of limited
partnership, partnership agreement or limited partnership agreement of MPLP,
each McNeil Partnership and each such Subsidiary Partnership, each as amended or
supplemented to the date of this Agreement, (ii) any loan or credit agreement,
note, bond,
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mortgage, indenture, lease or other material agreement or obligation applicable
to such Seller or its Seller Subsidiaries or their respective properties or
assets, or (iii) subject to the governmental filings and other matters referred
to in the following sentence of this Section 4.3(b), any judgment, order,
decree, statute, law, ordinance, rule, regulation, arbitration award, agency
requirement, license or permit of any Governmental Entity (collectively, "laws")
applicable to such Seller or its Seller Subsidiaries or their respective
properties or assets, other than, in the case of clause (ii) or (iii) above, any
such conflicts, violations, defaults, rights, losses, changes or Liens that,
individually or in the aggregate, would not have a Seller Material Adverse
Effect or prevent the consummation by such Seller of the transactions
contemplated by this Agreement and the other Transaction Documents to which such
Seller is a party. With respect to each Seller, no consent, approval, order or
authorization of, or filing with, any federal, state or local government or any
court, administrative or regulatory agency or commission or other governmental
authority or agency, domestic or foreign (each, a "Governmental Entity"), or
third party is required by or with respect to such Seller or its Seller
Subsidiaries in connection with the execution and delivery by such Seller of
this Agreement or the other Transaction Documents to which such Seller is a
party, or the consummation by such Seller of the transactions contemplated by
this Agreement and the other Transaction Documents to which such Seller is a
party, except for (i) the filing with the Securities and Exchange Commission
(the "SEC") by the Public McNeil Partnerships of the Proxy Statements and, if
required by applicable law, the Schedule 13E-3, (ii) the acceptance for record
of the Merger Certificate and any other documents required by the Governing Law
applicable to each Merging Partnership and each Transitory Partnership, by the
Secretary of State of the state of formation of such Merging Partnership and
such Transitory Partnership, (iii) requisite approval of the limited partners of
the Merging Partnerships, and (iv) such other consents, approvals, orders or
authorizations of, or filings with, any Governmental Entity or third party (A)
as are set forth on Schedule 4.3(b) of the Seller Disclosure Letter or (B)
which, if not obtained or made, would not have, individually or in the
aggregate, a Seller Material Adverse Effect or prevent the consummation by such
Seller of
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the transactions contemplated by this Agreement and the other Transaction
Documents to which such Seller is a party.
(c) Solely for purposes of determining compliance with the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), each Seller confirms that the conduct of its business consists solely of
investing in, owning, developing and operating, directly or indirectly through
its subsidiaries, real estate for the benefit of its stockholders or partners,
as the case may be, and that the McREMI Assets consist of management contracts
relating to the McNeil Partnership Properties owned by the Participating McNeil
Partnerships or their Seller Subsidiaries and other assets directly relating to
the Participating McNeil Partnerships or their Seller Subsidiaries.
Section 4.4 Compliance with Laws. Other than in respect of
Environmental Laws and except as set forth on Schedule 4.4 of the Seller
Disclosure Letter, Sellers and the Seller Subsidiaries are not violating or
failing to comply with, and have not violated or failed to comply with, any law
of any Governmental Entity applicable to their business, properties or
operations, except to the extent that such violation or failure to comply,
individually or in the aggregate, would not have a Seller Material Adverse
Effect or prevent the consummation by any Seller of the transactions
contemplated by this Agreement and the other Transaction Documents to which such
Seller is a party. Except as set forth in the Seller SEC Documents filed prior
to the date hereof, and, except as set forth on Schedules 4.4, 4.7, 4.8(b),
4.8(c), 4.9 and 4.10 of the Seller Disclosure Letter, no investigation or review
by any Governmental Entity with respect to any of Sellers or Seller Subsidiaries
is pending or, to the Knowledge of Sellers, threatened, nor has any Governmental
Entity indicated an intention to conduct the same, except for those the outcome
of which would not, individually or in the aggregate, have a Seller Material
Adverse Effect or prevent the consummation by any Seller of the transactions
contemplated by this Agreement and the other Transaction Documents to which such
Seller is a party. To the Knowledge of Sellers, no material change is required
in Sellers' or the Seller Subsidiaries' processes, properties or procedures in
connection with any such laws, and except as set forth on Schedules 4.4, 4.7,
4.8(b), 4.8(c), 4.9 and 4.10 of the Seller Disclosure
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Letter, Sellers have not received any written notice or communication of any
material noncompliance with any such laws that has not been cured. Except as set
forth on Schedules 4.4, 4.8(a), 4.8(b), 4.8(c), 4.8(e) and 4.9 of the Seller
Disclosure Letter, each of Sellers and each of the Seller Subsidiaries has all
permits, licenses, trademarks, trade names, copyrights, service marks,
franchises, variances, exemptions, orders and other authorizations, consents and
approvals from Governmental Entities necessary to conduct its business as
presently conducted except those the absence of which would not, individually or
in the aggregate, have a Seller Material Adverse Effect or prevent the
consummation by any Seller of the transactions contemplated by this Agreement
and the other Transaction Documents to which such Seller is a party.
Section 4.5 SEC Documents; Financial Statements;
Undisclosed Liabilities.
(a) The McNeil Partnerships that are required to file reports
with the SEC pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), are identified on Schedule 4.5(a) of the
Seller Disclosure Letter (collectively, the "Public McNeil Partnerships"), and
have filed all required reports, schedules, forms, statements and other
documents with the SEC since January 1, 1996 (collectively, including any such
reports filed in the period subsequent to the date hereof but prior to the
Closing Date, and as amended, the "Seller SEC Documents," and the financial
statements of the Public McNeil Partnerships included in the Seller SEC
Documents, the "Public McNeil Partnership Statements"). All of the Seller SEC
Documents (other than preliminary material), as of their respective filing
dates, complied (or, in the case of any Seller SEC Documents filed in the period
subsequent to the date hereof but prior to the Closing Date, will comply as of
their respective filing dates) in all material respects with all applicable
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the Exchange Act, and, in each case, the rules and regulations promulgated
thereunder applicable to such Seller SEC Documents. None of the Seller SEC
Documents at the time of filing contained (or, in the case of any Seller SEC
Documents filed in the period subsequent to the date hereof but prior to the
Closing Date, will contain at the time of
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filing) any untrue statement of a material fact or at the time of filing omitted
(or, in the case of any Seller SEC Documents filed in the period subsequent to
the date hereof but prior to the Closing Date, will omit at the time of filing)
to state any material fact required to be stated therein or necessary in order
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
(b) Each of the Private McNeil Partnerships has made available
to the Company copies of its unaudited balance sheets as of March 31, 1999 and
December 31, 1998 and its related unaudited statements of operations and cash
flows for the three-month period ended March 31, 1999 and for the year ended
December 31, 1998 (such financial statements, collectively with the Public
McNeil Partnership Statements, the "McNeil Partnership Statements"). In
addition: Regency North has made available to the Company copies of the audited
balance sheet as of December 31, 1998 and the related audited statements of
operations and cash flows for the year ended December 31, 1998 for Regency North
Apartments Limited Partnership, a Subsidiary Partnership of Regency North;
Hearth Hollow has made available to the Company copies of the audited balance
sheet as of December 31, 1998 and the related audited statements of operations
and cash flows for the year ended December 31, 1998 for Hearth Hollow Apartments
Limited Partnership, a Subsidiary Partnership of Hearth Hollow; and Midwest
Properties has made available to the Company copies of its audited balance sheet
as of December 31, 1998 and its audited statements of operations and cash flows
for the year ended December 31, 1998 and copies of the audited balance sheets as
of December 31, 1998 and the related audited statements of operations and cash
flows for the year ended December 31, 1998 for each of Cedarwood Hills
Associates and East Bay Village Apartments Limited Partnership, each of which is
a Subsidiary Partnership of Midwest Properties (all such financial statements
described in this sentence, the "Subsidiary Financial Statements"). McREMI has
made available to the Company copies of its unaudited balance sheet as of March
31, 1999 and its audited balance sheet as of December 31, 1998, and its related
unaudited statements of operations and cash flows for the three-month period
ended March 31, 1999 and its related audited statements of operations and cash
flows for the year ended December 31,
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1998. MII and MPLP have made available to the Company copies of their unaudited
consolidated balance sheet as of March 31, 1999 and their audited consolidated
balance sheet as of December 31, 1998, and their related unaudited consolidated
statements of operations and cash flows for the three-month period ended March
31 1999 and their related audited consolidated statements of operations and cash
flows for the year ended December 31, 1998. The financial statements of McREMI
and the consolidated financial statements of MII and MPLP made available to the
Company in accordance with this paragraph (b), together with the McNeil
Partnership Statements, are referred to in this Agreement as the "Seller
Statements."
(c) The Public McNeil Partnership Statements complied (or, in
the case of Public McNeil Partnership Statements contained in any Seller SEC
Documents filed in the period subsequent to the date hereof but prior to the
Closing Date, will comply) as to form in all material respects with the
published rules and regulations of the SEC with respect thereto in effect at the
time of such filing, and the audited Seller Statements have been prepared (or,
in the case of any Seller Statements prepared for any period subsequent to the
date hereof but prior to the Closing Date, will be prepared) in accordance with
GAAP in effect at the time of such preparation applied on a consistent basis
during the periods involved (except as may be indicated in the notes thereto).
Each of the Seller Statements fairly presented (or, in the case of any Seller
Statements for such Seller prepared for any period subsequent to the date hereof
but prior to the Closing Date, will fairly present) in all material respects the
financial position of the applicable Seller (and its consolidated subsidiaries,
if applicable) for which such Seller Statements were prepared as of the date
thereof and fairly presented (or, in the case of any Seller Statements for such
Seller prepared for any period subsequent to the date hereof but prior to the
Closing Date, will fairly present) in all material respects the results of
operations, cash flows and changes in financial position of such Seller or the
consolidated results of operations, cash flows and changes in financial position
of the applicable Seller or Seller Subsidiary for which such Seller Statements
were prepared for the period then ended (subject, in the case of unaudited
statements, to normal year-end audit adjustments).
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(d) Except for liabilities and obligations set forth in the
Seller SEC Documents filed prior to the date hereof, in the Seller Statements
(including the notes thereto) made available to the Company or contained in
Seller SEC Documents filed prior to the date hereof or in the Subsidiary
Financial Statements (including the notes thereto) or on Schedule 4.5(d) of the
Seller Disclosure Letter and except for liabilities and obligations incurred in
the ordinary course since the respective dates of the balance sheets included in
the Seller Statements made available to the Company or contained in Seller SEC
Documents filed prior to the date hereof, there are no liabilities or
obligations of the Seller (or its consolidated subsidiaries, if applicable) in
respect of which such Seller Statement was prepared of any nature (whether
accrued, absolute, contingent or otherwise) required by GAAP to be set forth on
the respective balance sheets of such Seller (and its consolidated subsidiaries,
if applicable) included in the Seller Statements made available to the Company
or contained in the Seller SEC Documents filed prior to the date hereof or in
the notes thereto and which, individually or in the aggregate, would have a
Seller Material Adverse Effect or prevent the consummation by Sellers of the
transactions contemplated by this Agreement and the other Transaction Documents
to which Sellers are parties.
Section 4.6 Absence of Certain Changes. Except as
disclosed in the Seller SEC Documents filed prior to the date hereof, in the
Seller Statements (including the notes thereto) made available to the Company
prior to the date hereof or the Subsidiary Financial Statements (including the
notes thereto) or on Schedule 4.6 of the Seller Disclosure Letter, since
December 31, 1998 (the "Audit Date"), the McNeil Partnerships have conducted
their businesses only in the ordinary course and there has not been: (i)(x) any
change in the financial condition, properties, businesses or results of
operations of the McNeil Partnerships and their consolidated subsidiaries (taken
as a whole) or (y) to the Knowledge of Sellers, any development or combination
of developments with respect to the McNeil Partnerships and their consolidated
subsidiaries (taken as a whole) that in the case of clause (x) or (y),
individually or in the aggregate, has had or would have a Seller Material
Adverse
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Effect; (ii) any damage, destruction, loss, whether or not covered by insurance,
or other event with respect to the McNeil Partnerships and their consolidated
subsidiaries (taken as a whole) which, individually or in the aggregate, has had
or would have a Seller Material Adverse Effect; (iii) except for regular
semiannual distributions in an amount not to exceed ten million dollars
($10,000,000) in the aggregate for each such semiannual period or except as
otherwise provided in this Agreement, any authorization, declaration, setting
aside or payment of any dividend or other distribution (whether in cash, stock
or property) with respect to the units of partnership interest of the McNeil
Partnerships; (iv) any reclassification of the units of partnership interest of
the McNeil Partnerships or any issuance or the authorization of any issuance of
any other securities in respect of, in lieu of or in substitution for units of
partnership interest in the McNeil Partnerships; (v) any change in accounting
methods, principles or practices of the McNeil Partnerships materially affecting
the assets, liabilities or business of the McNeil Partnerships (taken as a
whole), except insofar as may have been required by a change in Law or GAAP;
(vi) except as permitted by the terms of this Agreement, any amendment of any
employment, consulting, severance, retention or any other similar agreement
between the McNeil Partnerships and any officer or director of the McNeil
Partnerships; or (vii) any acquisition or disposition of any real property of
the McNeil Partnerships or their Seller Subsidiaries, or any commitment to do
so, made by any Seller or the Seller Subsidiaries. Since the date of this
Agreement, there has not been any increase in the compensation payable or that
would become payable by the McNeil Partnerships or their Seller Subsidiaries to
officers or key employees of Sellers or the Seller Subsidiaries, or any
amendment of any compensation or benefit plans (if any) of, McREMI, the McNeil
Partnerships or their Seller Subsidiaries, other than regular year-end bonuses
consistent with past practice, budgeted salary increases, increases in salary in
the ordinary course consistent with past practice, any such increase in
compensation or amendment that would not result in any liability or obligation
of the Company or any of the Participating McNeil Partnerships or their
respective subsidiaries after the Closing Date.
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Section 4.7 Litigation. Schedule 4.7 of the Seller Disclosure
Letter sets forth a list of all litigation in which service of process has been
received by any Seller or any Seller Subsidiary or which, to the Knowledge of
Sellers, is threatened against any Seller or any Seller Subsidiary or affects
any Seller, any Seller Subsidiary or any McNeil Partnership Property, in each
case as of the date specified in such Schedule 4.7. Except as disclosed on
Schedule 4.7 of the Seller Disclosure Letter, as of the date of this Agreement,
there is no suit, action or proceeding pending in which service of process has
been received by the McNeil Partnerships or any Seller Subsidiary or, to the
Knowledge of Sellers, threatened against any McNeil Partnership or any Seller
Subsidiary or affects any McNeil Partnership, any Seller Subsidiary or any
McNeil Partnership Property. Other than as indicated on Schedule 4.7 of the
Seller Disclosure Letter, (i) none of the suits, actions or proceedings pending
with respect to which service of process has been received by any McNeil
Partnership or any Seller Subsidiary or, to the Knowledge of Sellers, threatened
against any McNeil Partnership or any Seller Subsidiary or affecting any McNeil
Partnership, any Seller Subsidiary or any McNeil Partnership Property,
individually or in the aggregate, would have a Seller Material Adverse Effect or
prevent the consummation by any Seller of the transactions contemplated by this
Agreement and the other Transaction Documents to which such Seller is a party,
and (ii) there is no judgment, decree, rule or order of any Governmental Entity
or arbitrator outstanding against or affecting any McNeil Partnership or any
Seller Subsidiary or any McNeil Partnership Property having, or which in the
future would have, a Seller Material Adverse Effect or prevent the consummation
by any Seller of the transactions contemplated by this Agreement and the other
Transaction Documents to which such Seller is a party.
Section 4.8 Properties.
(a)(i) Except as set forth on Schedule 4.8(a) of the
Seller Disclosure Letter, the McNeil Partnerships or the Seller
Subsidiaries own good and insurable fee simple title (or, with respect
to those real properties listed on Schedule 4.8(a) of the Seller
Disclosure Letter as being leasehold interests, own good and valid
leasehold estates) to each of the real
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properties identified on Schedule 4.8(a) of the Seller Disclosure
Letter (the "McNeil Partnership Properties"), which are all of the real
estate properties owned by them as of the date of this Agreement, and
no other person has any ownership interest in the McNeil Partnership
Properties or any contract, option, right of first refusal or other
agreement to purchase any McNeil Partnership Property or any part
thereof, except as set forth on such Schedule 4.8(a) or otherwise
provided in this Agreement. As of the date of this Agreement, Schedule
4.8(a) of the Seller Disclosure Letter contains a list of the latest
surveys and owner's title policies obtained by Sellers with respect to
each of the McNeil Partnership Properties, true and complete copies of
which surveys and title policies have been made available to the
Company. Each of the McNeil Partnership Properties is owned by the
McNeil Partnerships or the Seller Subsidiaries, free and clear of all
Liens, mortgages or deeds of trust, security interests or other
encumbrances on title (collectively, "Encumbrances") and is not subject
to any rights of way, easements, restrictive covenants, declarations,
written agreements, laws, ordinances and regulations affecting building
use or occupancy, or reservations of any interest in title
(collectively, "Property Restrictions"), except for the following
(collectively, except for the matters set forth under the caption
"Other Items" on Schedule 4.8(a) of the Seller Disclosure Letter (such
matters, the "Other Items"), the "Permitted Restrictions and
Encumbrances"): (i) Property Restrictions and Encumbrances disclosed on
the title commitments attached to the letter agreement between Lawyer's
Title Insurance Corporation and Arent Fox Kintner Plotkin & Kahn PLLC,
dated as of June 23, 1999 (such title commitments, as marked, together
with such letter agreement, the "Title Commitments"), or of which the
Company has knowledge (other than the Other Items, matters disclosed by
new surveys of a McNeil Partnership Property obtained by the Company
after June 1, 1999 (unless such matters were specifically and expressly
disclosed by, and were readily and directly apparent from, the existing
surveys referenced on Schedule 4.8(a)), matters marked "omit", "delete"
or otherwise noted as being required to be omitted or
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satisfied on the Title Commitments, and matters identified as the "Task
List" (excluding the matters listed on Schedule A to the Task List) on
Schedule 4.8(a) of the Seller Disclosure Letter); (ii) Property
Restrictions imposed or promulgated by law or any Governmental Entity
with respect to real property, including zoning regulations, which
would not materially and adversely affect the continued use or value of
any McNeil Partnership Property as it is being used as of the date of
this Agreement; (iii) mechanics', carriers', workmen's and repairmen's
liens, which are being contested in good faith, have heretofore been
bonded or which, individually or in the aggregate, do not exceed one
hundred thousand dollars ($100,000); (iv) Property Restrictions and
Encumbrances which (A) could not reasonably preclude the continued use
of such McNeil Partnership Property as it is being used as of the date
of this Agreement or (B) could not reasonably materially and adversely
affect the value of such McNeil Partnership Property as it is being
used as of the date of this Agreement; (v) Taxes that are not yet
delinquent; (vi) as of the date of this Agreement, the Existing Loans;
and (vii) as of the Closing Date, the Non-Terminated Loans.
(ii) Schedule 4.8(a) of the Seller Disclosure Letter
contains a true and complete list of all of the ground leases affecting
the McNeil Partnership Properties (the "Ground Leases"). To the
Knowledge of Sellers, each such Ground Lease is in full force and
effect, has not been modified or amended in any way except by a
document listed in Schedule 4.8(a) of the Seller Disclosure Letter.
Each of Sellers and its Seller Subsidiaries has fully performed all of
their material obligations under such Ground Leases. Except as set
forth on Schedule 4.8(a) of the Seller Disclosure Letter, neither any
of Sellers nor any of the Seller Subsidiaries has received any written
notice of any default by it, as tenant, under any Ground Lease and, to
the Knowledge of Sellers, there is no fact or circumstance which, with
the giving of notice or the passage of time, would result in a material
default under such Ground Lease.
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(b) Except for Permitted Restrictions and Encumbrances, except
as disclosed on Schedule 4.8(b) or 4.8(o) of the Seller Disclosure Letter or in
the documents referenced in such Schedule 4.8(b) or 4.8(o) and except as
otherwise set forth in the most recent capital expenditure budget of the McNeil
Partnerships, true and complete copies of which have been made available to the
Company: (i) there is no certificate, permit or license from any Governmental
Entity having jurisdiction over the McNeil Partnership Properties, and there is
no agreement, easement or other right which is necessary to permit the lawful
use and operation of the buildings and improvements on the McNeil Partnership
Properties as they are being used as of the date of this Agreement, or which is
necessary to permit the lawful use and operation of all driveways, roads and
other means of lawful egress and ingress to and from the McNeil Partnership
Properties, that has not been obtained and is not in full force and effect, and
there is no pending threat of modification or cancellation thereof, except where
the failure to obtain the same would not have a Seller Material Adverse Effect
or prevent the consummation by any Seller of the transactions contemplated by
this Agreement and the other Transaction Documents to which such Seller is a
party; (ii) to the Knowledge of Sellers, all of the McNeil Partnership
Properties have sufficient parking that complies with all laws and that is part
of the McNeil Partnership Properties; (iii) none of Sellers or the Seller
Subsidiaries has received any written notice of any violation of any federal,
state or municipal Law issued by a Governmental Entity materially and adversely
affecting any portion of any McNeil Partnership Property; (iv) to the Knowledge
of Sellers, except for Known Defects, there are no structural defects relating
to any individual McNeil Partnership Property which would cost more than twenty
thousand dollars ($20,000) to repair or which, individually or in the aggregate,
would have a Seller Material Adverse Effect; (v) to the Knowledge of Sellers,
except for Known Defects, there are no individual McNeil Partnership Properties
whose building systems and fixtures are not in working order and repair and
which would cost more than twenty thousand dollars ($20,000) to repair or which,
individually or in the aggregate, would have a Seller Material Adverse Effect;
(vi) there is no physical damage to any McNeil Partnership Property for which
there is no insurance in effect covering the cost of restoration, except for
such physical damage
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that would not have a Seller Material Adverse Effect; and (vii) each McNeil
Partnership Property is an independent property that does not rely on any
facilities (other than public facilities and public roads) located on any
property not included in such McNeil Partnership Property to fulfill any
requirement of any Governmental Entity or for the furnishing to such McNeil
Partnership Property of any essential building systems or utilities, except for
any such reliance for which such McNeil Partnership Property has a legal or
equitable right with respect thereto.
(c) Except for Permitted Restrictions and Encumbrances and
except as disclosed on Schedule 4.8(a) or 4.8(c) of the Seller Disclosure Letter
or in the documents referenced in such Schedule 4.8(a) or 4.8(c), none of the
McNeil Partnerships has received written notice to the effect that there are,
and, to the Knowledge of Sellers, there are no, (i) condemnation or rezoning
proceedings that are pending or threatened with respect to the McNeil
Partnership Properties that would have a Seller Material Adverse Effect or (ii)
any zoning, building or similar laws, codes, ordinances, orders or regulations
or condition or agreements contained in any easement, restrictive covenant or
any similar instrument or agreement affecting any McNeil Partnership Property
that are or will be violated by the continued maintenance, operation or use of
any buildings or other improvements on the McNeil Partnership Properties or by
the continued maintenance, operation or use of the parking areas where such
violation would have a Seller Material Adverse Effect. Except for Known Defects
and except as disclosed on Schedule 4.8(a) or 4.8(c) of the Seller Disclosure
Letter, in the documents referenced in such Schedule 4.8(a) or 4.8(c) or in the
Seller Statements (including the notes thereto) or the Subsidiary Financial
Statements (including the notes thereto) made available to the Company or
contained in Seller SEC Documents filed prior to the date hereof, or except as
would not have a Seller Material Adverse Effect, all work to be performed,
payments to be made and actions to be taken by Sellers or the Seller
Subsidiaries prior to the date of this Agreement pursuant to any agreement
entered into with a Governmental Entity in connection with a site approval,
zoning reclassification or similar action relating to any McNeil Partnership
Property (e.g., Local Improvement District or Road Improvement District, but
excluding any such approval, reclassification
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or action relating to environmental matters) or as required as a condition to
the issuance of any building permit, certificate of occupancy or zoning variance
relating to any McNeil Partnership Property (e.g., off-site improvements or
services or zoning proffers), has been performed, paid or taken, as the case may
be, and, to the Knowledge of Sellers, there is no planned or proposed work,
payments or actions that may be required after the date of this Agreement
pursuant to such agreements.
(d) As of the date hereof, to the Knowledge of Sellers, other
than Permitted Restrictions and Encumbrances, there are no Encumbrances or
defects in title to any McNeil Partnership Property or any matters affecting
title to, or ownership of, the McNeil Partnership Properties which would
materially and adversely affect the continued use or value of the McNeil
Partnership Properties as they are being used as of the date of this Agreement.
(e) Except as disclosed on Schedule 4.8(e) of the Seller
Disclosure Letter, (i) as of the date hereof, valid policies of title insurance
(the "Title Insurance Policies") have been issued insuring the applicable McNeil
Partnership's or Seller Subsidiary's fee simple (or ground leasehold, as
applicable) title to each of the McNeil Partnership Properties in amounts at
least equal to the purchase price thereof paid by such Seller or Seller
Subsidiary or their respective predecessor, (ii) the Title Insurance Policies
are in full force and effect and (iii) as of the date hereof, to the Knowledge
of Sellers, no claim has been made against any Title Insurance Policy.
(f) Each of the rent rolls for each McNeil Partnership
Property as set forth in Schedule 4.8(f) of the Seller Disclosure Letter dated
as of May 1999 (except for a date otherwise indicated therein) and each of the
updated rent rolls to be made available to the Company within 15 days prior to
the estimated Closing Date (each, a "Rent Roll") is true, complete and accurate
as of its date.
(g) Sellers have made available to the Company true, complete
and accurate copies of all leases for space as of the date of this Agreement in
the McNeil Partnership Properties identified on Annex E hereto as "Commercial
Properties" (the "Commercial Leases"), and all amendments,
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modifications and supplements thereto through to the date hereof. Sellers have
made available to the Company true, complete and accurate copies of (i) all
Commercial Leases as of the date of this Agreement and (ii) the form of lease
for leases for space as of the date of this Agreement in the McNeil Partnership
Properties not identified on Annex E hereto as "Commercial Properties" (the
"Residential Leases" and, together with the Commercial Leases, the "Leases"). As
of the date of each Rent Roll, there are no Leases not shown on such Rent Roll,
and, to the Knowledge of Sellers, except for Permitted Restrictions and
Encumbrances, as of the date of each Rent Roll no third party has any occupancy
or use rights with respect to any McNeil Partnership Properties except pursuant
to the Leases shown on such Rent Roll. As of the date of the Rent Roll, except
as set forth on Schedule 4.8(g) of the Seller Disclosure Letter, all Leases
shown on the Rent Roll are in full force and effect, each tenant has commenced
paying rent thereunder, and all construction and other obligations of the
landlord to be performed as of the date hereof in connection with the
commencement of each Lease have been performed in full, except where the failure
to be in full force or effect, the failure to commence payment of rent or to
perform such obligations would not have a Seller Material Adverse Effect.
(h) Except as set forth on Schedule 4.8(h) of the Seller
Disclosure Letter, as of the date specified in such Schedule 4.8(h), no tenant
is in default under its Lease for failure to pay rent or other sums when due
under its Lease. To the Knowledge of Sellers, except as set forth on Schedule
4.8(h) of the Seller Disclosure Letter, no tenant is in default under its Lease
which default would have a Seller Material Adverse Effect. To the Knowledge of
Sellers, as of the date of each Rent Roll, no tenant thereunder is entitled to
any free rent, rebate, rent concession, deduction or offset not set forth in the
Leases or not otherwise approved as a Reimbursable Proposal.
(i) (A) No Seller nor any Seller Subsidiary has failed to
perform its material obligations under any Lease, (B) no Seller nor any Seller
Subsidiary has received any written notice of its default under any of the
Leases, and (C) except as set forth in the Leases, as of the date of each Rent
Roll, no tenant thereunder is entitled to receive money, or any contribution
from any Seller or any Seller
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Subsidiary, either in money or in kind, on account of the construction of any
improvements, or setoff any amounts against its rental obligations, which has
not otherwise been approved as a Reimbursable Proposal, except in the case of
clauses (A), (B) and (C) as set forth on Schedule 4.8(i) of the Seller
Disclosure Letter or except where such failure to perform, such default or such
entitlement would not have a Seller Material Adverse Effect. Except as set forth
on Schedule 4.8(i) of the Seller Disclosure Letter, to the Knowledge of Sellers,
there are no bankruptcy, reorganization, insolvency or similar proceedings
pending against any tenants under Commercial Leases (the "Commercial Tenants").
(j) To the Knowledge of Sellers, as of the date of each Rent
Roll, there are no verbal agreements with any tenant, and, to the Knowledge of
Sellers, there are no parties in adverse possession of any part of any McNeil
Partnership Property.
(k) INTENTIONALLY OMITTED.
(l) (i) All tenant improvements and other tenant inducement
costs that are the responsibility of the landlord under any Lease executed prior
to the date hereof have been completed or fully paid or will be completed or
fully paid by the McNeil Partnerships or their respective Seller Subsidiaries,
as applicable, on or prior to the Closing Date and (ii) there is no tenant
improvement work in process for which the landlord is responsible nor any
unspent tenant allowance, other than, in the case of clauses (i) and (ii), for
Reimbursable Proposals.
(m) All tenant security deposits are noted in the accounting
records of the applicable McNeil Partnerships or their respective Seller
Subsidiaries and are held in segregated accounts identified as set forth on
Schedule 4.8(m) of the Seller Disclosure Letter.
(n) Except as set forth on Schedule 4.8(n) of the Seller
Disclosure Letter, there has been no delivery of any written notice to the
McNeil Partnerships or the Seller Subsidiaries regarding any, and to the
Knowledge of Sellers there is no, pending cancellation of any insurance on any
McNeil Partnership Property or repairs, alterations or other
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work thereon which have been required by any insurance policy or any
Governmental Entities.
(o) Schedule 4.8(o) of the Seller Disclosure Letter sets forth
a true and complete list, as of the date of this Agreement, of all structural
reports regarding the McNeil Partnership Properties that have been ordered and
secured by Sellers or the Seller Subsidiaries, and true and complete copies of
such reports have been made available to the Company. The parties hereto
acknowledge and agree that all Known Defects are deemed to be incorporated by
reference into such Schedule 4.8(o).
(p) All of the McNeil Partnership Properties are managed by
McREMI or are self-managed.
(q) Schedule 4.8(q) of the Seller Disclosure Letter sets forth
a true and complete list, as of the date of this Agreement, of all delinquent
real property tax bills for the McNeil Partnership Properties, true and complete
copies of which have been made available to the Company prior to the date
hereof. True and complete copies of all real property tax bills for the McNeil
Partnership Properties for the most recent fiscal year have been made available
to the Company prior to the date hereof. To the Knowledge of Sellers, true and
complete copies of all real property tax bills for the McNeil Partnership
Properties for the fiscal year ended December 31, 1997 have been made available
to the Company prior to the date hereof. To the Knowledge of Sellers, none of
Sellers nor any Seller Subsidiary has received any written notice of any
proposed special assessments or proposed reassessments relating to the McNeil
Partnership Properties.
Section 4.9 Environmental Matters. For purposes of this
Section 4.9, the term "Hazardous Material" means any substance, material or
waste which is regulated in any concentration or is otherwise defined by any
federal, state or local governmental body under Environmental Law as a
"hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste," "contaminant," "toxic waste" or
"toxic substance" under any provision of Environmental Law, which includes
petroleum, petroleum products or by-products, asbestos, presumed
asbestos-containing material or asbestos- containing material, lead-containing
paint or plumbing, radioactive material or radon, urea formaldehyde and
polychlorinated biphenyls. Except as disclosed on Schedule 4.9 of the Seller
Disclosure Letter or in the reports referenced in such Schedule 4.9 and except
for Known Defects and except for matters which would not have, individually or
in the aggregate, a Seller Material Adverse Effect:
(a) To the Knowledge of Sellers, there is not present in, on
or under any McNeil Partnership Property any Hazardous Material in such form or
quantities as to create, and Sellers and the Seller Subsidiaries have not
created, any liability or obligation under federal, state, local or other
governmental statute, law (including common law), ordinance or regulation,
relating to, or dealing with the protection of human health or the environment
in effect as of the date of this Agreement ("Environmental Law") for any McNeil
Partnership;
(b) There is no pending request, claim, written notice,
investigation, demand, administrative proceeding, hearing or litigation, nor, to
the Knowledge of Sellers, is one threatened, alleging liability under, violation
of, or noncompliance with any Environmental Law or any license, permit or other
authorization issued pursuant thereto ("Environmental Complaints") relating to
any McNeil Partnership Property (or any real property formerly owned or operated
by any of the McNeil Partnerships or any of the Seller Subsidiaries) and against
Sellers or the Seller Subsidiaries, and there is no reasonable basis for
believing that circumstances or conditions exist which would support any such
Environmental Complaint against Sellers or the Seller Subsidiaries relating to
the McNeil Partnership Properties;
(c) Sellers have developed and implemented appropriate
operation and maintenance programs for all of the McNeil Partnership Properties
which contain "Asbestos Containing Materials," have complied with all applicable
regulations of the Occupational Health and Safety Administration regarding
asbestos notification to workers and tenants, and have complied with all
applicable provisions of the Lead Based Paint Hazard Reduction Act of 1992 and
all regulations promulgated thereto;
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(d) The McNeil Partnership Properties comply with all
Environmental Laws;
(e) To the actual knowledge, without any inquiry of or
investigation by, the individuals listed on Schedule 10.1(a) of the Seller
Disclosure Letter, no real property formerly owned or operated by any of the
McNeil Partnerships or any of the Seller Subsidiaries was contaminated with any
Hazardous Material during or prior to such period of ownership or operations;
and
(f) Sellers have made available to the Company copies of all
material environmental reports, studies, assessments, sampling data and other
environmental information, in each case, that is in their possession and that
relates to Sellers or the Seller Subsidiaries or their respective current
properties or operations.
Section 4.10 Taxes.
(a) Except as set forth on Schedule 4.10 of the Seller
Disclosure Letter, each McNeil Partnership and its respective Seller
Subsidiaries has prepared in good faith and timely filed all Tax returns and
reports required to be filed by it (after giving effect to any filing extension
properly granted by a Governmental Entity having authority to do so) and has
paid (or has had paid on its behalf) all Taxes shown on such returns and reports
as required to be paid by it or that each McNeil Partnership is obligated to
withhold from amounts owing to any employee, creditor or third party. Except as
set forth on Schedule 4.10 of the Seller Disclosure Letter, to the Knowledge of
Sellers, all Tax returns are complete, correct and accurate and the McNeil
Partnerships and their respective Seller Subsidiaries are not required to pay
any Taxes other than as shown on such returns. Except for Taxes that are being
contested in good faith by appropriate proceedings and for which such McNeil
Partnership shall have set aside on its books adequate reserves, which are set
forth on Schedule 4.10 of the Seller Disclosure Letter, none of the McNeil
Partnerships is being audited by any Governmental Entity and there are no
pending or, to the Knowledge of Sellers, threatened audits, examinations,
investigations or other proceedings in respect of Taxes or Tax matters. The most
recent audited McNeil Partnership Statements contained in
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the Seller SEC Documents or made available to the Company, as the case may be,
reflect an adequate reserve for all material Taxes payable by the McNeil
Partnerships and their respective Seller Subsidiaries for all taxable periods
and portions thereof through the date of such financial statements, which Taxes
are material to the McNeil Partnerships and their respective Seller Subsidiaries
taken as a whole. Except as set forth on Schedule 4.10 of the Seller Disclosure
Letter, to the Knowledge of Sellers, no deficiencies for any Taxes have been
proposed, asserted or assessed against the McNeil Partnerships and their
respective Seller Subsidiaries, and no requests for waivers of the time to
assess any such Taxes are pending. As used in this Agreement, "Taxes" includes
all federal, state, local and foreign income, property, franchise, employment,
excise and other taxes together with penalties, interest or additions to Tax
with respect thereto (but shall not include any sales or use taxes).
(b) The McNeil Partnerships and the Seller Subsidiaries that
have been partnerships, joint ventures or disregarded entities or limited
liability companies since formation have at all times qualified as partnerships
or disregarded entities for federal income tax purposes. The McNeil Partnerships
and the Seller Subsidiaries that have been partnerships, joint ventures or
disregarded entities or limited liability companies since formation are not
publicly traded partnerships within the meaning of Section 7704 of the Internal
Revenue Code of 1986, as amended (the "Code"), or otherwise taxable as an
association for federal income tax purposes.
Section 4.11 No Payments to Employees, Officers or Directors.
Except for the contracts listed on Schedule 4.11 of the Seller Disclosure Letter
or as otherwise provided for in this Agreement, there is no employment or
severance contract, or other plan, arrangement or agreement, entitling any
employees of McREMI or the officers of any Seller Corporation to severance pay,
or requiring, accelerating the time of payment or vesting, increasing or
triggering payments or funding (through a grantor trust or otherwise) of
compensation or benefits, cancellation of indebtedness or other obligation
(collectively, "Severance Obligations") to be made on a change of control or
otherwise as a result of the consummation of the transactions
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contemplated by this Agreement and the other Transaction Documents, with respect
to any present or former employee, officer or director of McREMI or such Seller
Corporation.
Section 4.12 Related Party Transactions. Set forth on Schedule
4.12 of the Seller Disclosure Letter is a list of all Related Party Transactions
as of the date of this Agreement. Complete and correct copies, to the extent
available, documenting the Related Party Transactions have been made available
to the Company.
Section 4.13 Employee Benefits.
(a) Schedule 4.13 of the Seller Disclosure Letter contains a
true and complete list as of the date of this Agreement of each: "welfare plan,"
fund, contract, policy or program (within the meaning of section 3(1) of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA")); "pension
plan," fund or program (within the meaning of section 3(2) of ERISA);
employment, termination or severance agreement; and other employee benefit plan,
fund, program, contract agreement or arrangement, in each case, that is
sponsored, maintained or contributed to or required to be contributed to by
McREMI or by any trade or business, whether or not incorporated, that together
with McREMI would be deemed a "single employer" within the meaning of section
4001(b) of ERISA (a "McREMI ERISA Affiliate"), or to which McREMI or any McREMI
ERISA Affiliate is party, for the benefit of any employee or former employee of
McREMI (the "McREMI Plans").
(b) With respect to each McREMI Plan, McREMI has heretofore
made available to the Company true and complete copies of such McREMI Plan and
any amendments thereto, any related trust insurance contract or other funding
vehicle, any reports or summaries required under ERISA or the Code and the most
recent determination letter received from the Internal Revenue Service with
respect to each McREMI Plan intended to qualify under section 401 of the Code.
(c) No liability under Title IV or section 302 of ERISA has
been incurred by McREMI or any McREMI ERISA Affiliate with respect to any
ongoing, frozen or terminated "single-employer plan," within the meaning of
Section 4001(a)(15) of ERISA, currently or formerly maintained by
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any of them, or the single-employer plan of a McREMI ERISA Affiliate, that has
not been satisfied in full, and, to the Knowledge of Sellers, no condition
exists that presents a material risk to McREMI or any McREMI ERISA Affiliate of
incurring any such liability, other than liability for premiums due the Pension
Benefit Guaranty Corporation (which premiums have been paid when due).
(d) No McREMI Plan is a "multiemployer pension plan," as
defined in section 3(37) of ERISA, and neither McREMI nor any McREMI ERISA
Affiliate has contributed to a multiemployer plan at any time on or after
September 1, 1980. No notice of a "reportable event", within the meaning of
Section 4043 of ERISA for which the 30-day reporting requirement has not been
waived, has been required to be filed for any McREMI Plan or by any McREMI ERISA
Affiliate within the twelve-month period ending on the date hereof or will be
required to be filed in connection with the transactions contemplated by this
Agreement.
(e) Each McREMI Plan has been operated and administered in all
material respects in accordance with its terms and applicable law, including but
not limited to ERISA and the Code.
(f) Each McREMI Plan intended to be "qualified" within the
meaning of section 401(a) of the Code has received a favorable determination
letter from the Internal Revenue Service stating that it is so qualified, and,
to the Knowledge of Sellers, no event has occurred since the date of such
determination that would adversely affect such determination.
(g) There are no pending or, to the Knowledge of Sellers,
anticipated claims by or on behalf of any McREMI Plan, by any employee or
beneficiary covered under any such McREMI Plan, or otherwise involving any such
McREMI Plan (other than routine claims for benefits). None of Sellers nor any of
the Seller Subsidiaries has engaged in a transaction with respect to any McREMI
Plan that, assuming the taxable period of such transaction expired as of the
date hereof or as of the Closing Date, could subject McREMI, any McNeil
Partnership or any Seller Subsidiary to a tax or penalty imposed by either
Section 4975 of the Code or
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Section 502(i) of ERISA in an amount which would be material.
(h) All contributions required to be made under the terms of
any McREMI Plan have been timely made or have been reflected on the audited or
unaudited balance sheet of McREMI made available to the Company.
(i) McREMI has no obligations for retiree health and life
benefits under any McREMI Plan. McREMI may amend or terminate any such McREMI
Plan at any time without incurring any liability thereunder, other than claims
for benefits accrued prior to the Effective Time.
Section 4.14 Employee Matters.
(a) Except for the officers of the Seller Corporations set
forth on Schedule 4.14(a) of the Seller Disclosure Letter, none of the McNeil
Partnerships nor any of their respective Seller Subsidiaries has any employees.
(b) Schedule 4.14(b) of the Seller Disclosure Letter lists the
employee handbooks of McREMI in effect as of the date of this Agreement. A copy
of each such employee handbook has been made available to the Company. Except as
set forth on Schedule 4.14(b) of the Seller Disclosure Letter, such handbooks
fairly and accurately summarize all material employee policies, vacation
policies and payroll practices of McREMI.
Section 4.15 Contracts; Debt Instruments.
(a) Except as set forth on Schedule 4.15(a) of the Seller
Disclosure Letter, none of Sellers or the Seller Subsidiaries has received a
written notice that any Seller or any Seller Subsidiary 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 loan or credit agreement, note, bond, mortgage, indenture, lease,
permit, concession, franchise, license or any other material contract,
agreement, arrangement or understanding (each, a "Material Contract"), to which
it is a party or by which it or any of its properties or assets is bound, nor
does such a violation or default exist, except to the extent that such
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violation or default, individually or in the aggregate, would not have a Seller
Material Adverse Effect or prevent the consummation of the transactions
contemplated by this Agreement and the other Transaction Documents to which such
Seller is a party. Each Material Contract which has not been filed as an exhibit
to any of the Seller SEC Documents has been previously made available to the
Company (except as noted on Schedule 4.15(a) of the Seller Disclosure Letter)
and a list of all Material Contracts that have not been so filed is set forth in
Schedule 4.15(a) of the Seller Disclosure Letter. Except as set forth in the
Seller SEC Documents filed prior to the date hereof or on Schedule 4.15(a) of
the Seller Disclosure Letter, there is no contract or agreement that purports to
limit in any material respect the geographic location in which McREMI, any of
the McNeil Partnerships or any of the Seller Subsidiaries may conduct its
business.
(b) Except for any of the following expressly identified in
the Seller SEC Documents, Schedule 4.15(b) of the Seller Disclosure Letter sets
forth a list, as of the date of this Agreement, of each loan or credit
agreement, note, bond, mortgage, indenture, security agreement, financing
statement and any other material agreement and instrument and all amendments
thereto pursuant to which any Indebtedness of Sellers or any Seller Subsidiary
is outstanding or may be incurred or secured. For purposes of this Agreement,
"Indebtedness" means (i) indebtedness for borrowed money, whether secured or
unsecured, (ii) obligations under conditional sale or other title retention
agreements relating to property purchased by such person, (iii) capitalized
lease obligations, (iv) obligations under any interest rate cap, swap, collar or
similar transaction or currency hedging transactions (valued at the termination
value thereof) and (v) guarantees of any such Indebtedness of any other person.
(c) Except as set forth on Schedule 4.15(b) of the Seller
Disclosure Letter, as of the date of this Agreement, there is no interest rate
cap, interest rate collar, interest rate swap, currency hedging transaction or
any other agreement relating to a similar transaction to which any Seller or any
Seller Subsidiary is a party or an obligor with respect thereto.
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(d) Except as set forth on Schedule 4.15(d) of the Seller
Disclosure Letter, none of Sellers nor any Seller Subsidiary is party to any
agreement which would restrict any of them from prepaying any of their material
Indebtedness without penalty or premium at any time or which requires any of
them to maintain any amount of Indebtedness with respect to any McNeil
Partnership Property.
(e) Except as set forth on Schedule 4.15(e) of the Seller
Disclosure Letter, none of Sellers nor any Seller Subsidiary is a party to any
agreement relating to the management or leasing of any McNeil Partnership
Property by any person other than McREMI, except the commercial listing
agreements listed on Schedule 4.15(e) of the Seller Disclosure Letter and except
for any service agreement which either (i) is cancellable upon no greater than
sixty (60) days' notice or (ii) which requires Sellers to make annual payments
pursuant thereto not in excess of fifty thousand dollars ($50,000) per year.
Complete and correct copies of such commercial listing agreements and such
service agreements have been made available to the Company.
(f) None of Sellers nor any Seller Subsidiary is a party to
any agreement pursuant to which any Seller or any Seller Subsidiary manages any
real properties other than the McNeil Partnership Properties, except for the
agreements listed on Schedule 4.15(f) of the Seller Disclosure Letter.
(g) Except for budgeted construction disclosed in the most
recent capital expenditure budget of the McNeil Partnership Properties (a true
and complete copy of which has been made available to the Company), Schedule
4.15(g) of the Seller Disclosure Letter lists all agreements entered into by any
Seller or any Seller Subsidiary relating to the development or construction of,
or additions or expansions to, any McNeil Partnership Property which are
currently in effect as of the date specified in such Schedule 4.15(g)
(collectively, the "Construction Contracts") and under which Sellers or any
Seller Subsidiary currently has, or expects to incur, an obligation in excess of
twenty-thousand dollars ($20,000). Complete and correct copies of Construction
Contracts in effect as of the date specified in Schedule 4.15(g) of the Seller
Disclosure Letter and under which Sellers or any Seller Subsidiary currently
has, or expects to incur, an obligation in excess of fifty thousand dollars
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($50,000) in any calendar year have been made available to the Company.
(h) Schedule 4.15(h) of the Seller Disclosure Letter lists all
agreements, which are currently in effect as of the date hereof, entered into by
any Seller or any Seller Subsidiary or affecting any McNeil Partnership Property
providing for the sale of, or option to sell, any McNeil Partnership Properties
or the purchase of, or option to purchase, any real estate.
(i) Except as set forth on Schedule 4.15(i) of the Seller
Disclosure Letter, none of Sellers nor any Seller Subsidiary has any continuing
contractual liability (i) for indemnification or otherwise under any agreement
relating to the sale of real estate previously owned, whether directly or
indirectly, by any Seller or any Seller Subsidiary or (ii) to pay any additional
purchase price for any McNeil Partnership Property.
Section 4.16 Brokers. No broker, investment banker, financial
advisor or other person, other than PaineWebber Incorporated, Eastdil, Susan
Barlow, Stanger, and Houlihan, Lokey, Howard & Zukin, the arrangements with
which have previously been made available to the Company, is entitled to any
broker's, finder's, financial advisor's, valuation or other similar fee or
commission in connection with the transactions contemplated by this Agreement or
the other Transaction Documents based upon arrangements made by or on behalf of
Sellers, and Sellers shall pay all such fees at or prior to the Closing.
Section 4.17 Management Agreements. The management agreements
listed on Schedule 4.17 of the Seller Disclosure Letter (the "Management
Agreements") are in full force and effect and no violations of such agreements
currently are occurring by Sellers or the Seller Subsidiaries or, to the
Knowledge of Sellers, parties other than Sellers or the Seller Subsidiaries.
Section 4.18 INTENTIONALLY OMITTED.
Section 4.19 State Takeover Statutes. Each Seller has
taken all actions necessary to exempt the transactions contemplated by this
Agreement and the other
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Transaction Documents to which it is a party from the operation of any "fair
price," "moratorium," "control share acquisition" or any other anti-takeover
statute or similar statute that applies to such Seller (a "Takeover Statute") or
any antitakeover provision contained in the limited partnership agreement,
certificate of incorporation or by-laws of any Seller.
Section 4.20 Investment Company Act of 1940. None of Sellers
or the Seller Subsidiaries is, or at the Effective Time will be, required to be
registered under the Investment Company Act of 1940, as amended (the "1940
Act").
Section 4.21 Insurance.
(a) Schedule 4.21(a) of the Seller Disclosure Letter sets
forth a true, correct and complete list, as of the date of this Agreement, of
all material fire and casualty, general liability, business interruption,
product liability, and sprinkler and water damage insurance policies maintained
by Sellers (the "Insurance Policies"). To the Knowledge of Sellers, such
Insurance Policies have been in full force and effect since January 1, 1999.
(b) To the Knowledge of Sellers, Schedule 4.21(b) sets forth a
true and correct list of all Insurance Policies (together with the names of the
respective carriers of such Insurance Policies) maintained by Sellers for any
period since January 1, 1992.
Section 4.22 Year 2000. Sellers are taking steps to institute
a program which is intended to ensure (it being acknowledged and agreed by the
parties hereto that such intention may never be realized) that software systems
of Sellers do not cause the McNeil Partnerships or the Seller Subsidiaries to
experience invalid or incorrect results or abnormal software operation related
to calendar year 2000 except where such invalid or incorrect results or abnormal
software operation would not, individually or in the aggregate, have a Seller
Material Adverse Effect.
Section 4.23 Books and Records. The books and records of
each of Sellers and the Seller Subsidiaries (including, without limitation, the
books of account, minute books and LP Interest record books) are complete and
correct
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in all material respects. The minute books of each of Sellers and the Seller
Subsidiaries contain accurate and complete records in all material respects of
all meetings held of, and corporate or other action taken by, the equity holders
and the boards of directors (or similar governing body) of the respective
entities and no meetings of or actions by such equity holders or any such boards
of directors (or similar governing body) have been held or taken for which
minutes have not been prepared and are not contained in such minute books.
Section 4.24 Personal Property. The McNeil Partnerships or the
Seller Subsidiaries have good title to, or a valid leasehold interest in, or
other good and sufficient right to use, all tangible personal properties that
are material to the business and operations of the McNeil Partnerships and the
Seller Subsidiaries taken as a whole.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to each Seller as follows:
Section 5.1 Organization, Standing and Power of the
Company, the Company LLCs and the Transitory Partnerships.
(a) The Company is a limited liability company duly formed and
validly existing under the laws of the State of Delaware and has the requisite
power and authority to carry on its business as now being conducted and on or
prior to the Effective Time will be duly qualified or licensed to do business
and will be in good standing (with respect to jurisdictions which recognize such
concept) in each jurisdiction in which the nature of its business or the
ownership, leasing or use of its properties makes such qualification or
licensing necessary, other than in jurisdictions where the failure to be so
qualified or licensed or to be in good standing, individually or in the
aggregate, would not prevent the consummation by the Company of the transactions
contemplated by this Agreement and the
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other Transaction Documents to which the Company is a party. The Company has
delivered to Sellers complete and correct copies of the Original LLC Agreement,
as amended or supplemented to the date of this Agreement. The Company 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 as expressly provided for in this Agreement. Other than
the Transitory Partnerships and the Company LLCs upon their formation, the
Company has never owned any capital stock or other equity interests in any other
person.
(b) Prior to the contributions described in Section 2.3(a)
hereof and in Section 6.1 of the LLC Agreement, the Company will have no assets
or liabilities or obligations whatsoever (other than the rights and obligations
set forth in this Agreement, the LLC Agreement, the Commitment Letter and any
debt commitment letter the Company may obtain) (the parties hereto acknowledge
and agree that nothing in this Section 5.1(b) shall affect or be deemed to amend
or modify any provision of this Agreement, including Sections 8.1, 8.2 and 8.3
hereof).
(c) From the time of their formation through to the Effective
Time, each Company LLC and each Transitory Partnership will be an entity duly
formed and validly existing under the laws of the state of its formation and
shall have the requisite power and authority to carry on its business and will
be duly qualified or licensed to do business and will be in good standing (with
respect to jurisdictions which recognize such concept) in each jurisdiction in
which the nature of its business or the ownership, leasing or use of its
properties makes such qualification or licensing necessary, other than in such
jurisdictions where the failure to be so qualified or licensed or to be in good
standing, individually or in the aggregate, would not prevent the consummation
of the transactions contemplated by this Agreement. The Company will deliver to
Sellers complete and correct copies of the formation documents of each Company
LLC and each Transitory Partnership. Each Company LLC and each Transitory
Partnership will be formed solely for the purpose of engaging in the
transactions contemplated by this Agreement and will not engage in any business
activities or conduct
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any operations other than as expressly provided for in this Agreement. Other
than as expressly contemplated by this Agreement, from the date of their
formation through to the Effective Time, each of the Company LLCs and each of
the Transitory Partnerships will not own any capital stock or other equity
interests in any other person (other than the Transitory Partnerships and the
Company LLCs), will conduct no business and will have no assets or liabilities
or obligations whatsoever.
(d) The Company has delivered to Sellers complete and correct
copies of the certificate of formation, limited liability company operating
agreement and other organizational documents of the Company, each as amended and
supplemented to the date of this Agreement. The Company will deliver to Sellers
upon formation complete and correct copies of the certificate of limited
partnership, limited partnership agreement, certificate of formation, limited
liability company operating agreement and other organizational documents of each
of the Company LLCs and each of the Transitory Partnerships, each as amended and
supplemented to the date of this Agreement.
Section 5.2 Capital Structure.
(a) As of the date of this Agreement and as of the time
immediately prior to the contributions described in Section 2.3(a) hereof,
WXI/MCN Real Estate, L.L.C., a Delaware limited liability company (the "Managing
Member"), owns all of the outstanding interests in and is the sole member of the
Company. As of the date of this Agreement and as of the Closing Date, Whitehall
Street Real Estate Limited Partnership XI, a Delaware limited partnership
("Whitehall"), is the managing member of the Managing Member. At any and all
times prior to the Effective Time, Whitehall shall continue to be the managing
member of the Managing Member, and the Managing Member shall continue to own all
of the outstanding interests in the Company and shall be the sole member of the
Company. All outstanding interests in the Company (i) have been duly authorized
and are validly issued, fully paid and nonassessable and (ii) are subject to no
restriction, except as provided in the Original LLC Agreement. Except as set
forth in this Section 5.2, no interests in the Company are issued, reserved for
issuance or outstanding, and none of the Managing Member,
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the Company or any affiliate or subsidiary of the Company has outstanding any
obligations the holders of which have the right to vote (or which are
convertible, exchangeable or exercisable for interests having the right to vote)
with members of the Company on any matter. Except as set forth above, there are
no outstanding securities, interests, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind obligating the
Managing Member, the Company or any affiliate or subsidiary of the Company to
issue, deliver or sell, or cause to be issued, delivered or sold, additional
interests in the Company or securities or interests convertible, exchangeable or
exercisable into interests in the Company. There are no agreements, arrangements
or understandings of any kind with respect to the voting of interests in the
Company or which restrict the transfer of any such interests, except as provided
in the Original LLC Agreement.
(b) Upon the formation of each Company LLC and each Transitory
Partnership, all outstanding interests in each Company LLC and each Transitory
Partnership (i) will have been duly authorized and validly issued, fully paid
and nonassessable and (ii) will be subject to no restriction, except as provided
in the organizational documents of such entities. As of its formation and
through to the Effective Time, the Company will own all of the outstanding
interests in the Sub LLC (if the Sub LLC is formed), and the Company or the Sub
LLC will own all of the outstanding interests in the other Company LLCs. As of
their formation and through to the Effective Time, the Company or the Sub LLC
will own all of the outstanding LP Interests in, and the applicable New GP LLC
will own all of the outstanding GP Interests in, each Transitory Partnership.
Except as expressly provided for in this Agreement, from their formation through
to the Effective Time, no interests in the Company LLCs or the Transitory
Partnerships will be issued, reserved for issuance or outstanding, and there
will be no outstanding securities, interests, options, warrants, calls, rights,
commitments, agreements, arrangements or undertakings of any kind obligating any
such entity to issue, deliver or sell, or cause to be issued, delivered or sold,
additional interests in such entity or securities or interests convertible,
exchangeable or exercisable into interests in such entity.
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Section 5.3 Authority; Noncontravention;
Consents.
(a) The Company has the requisite power and authority to enter
into this Agreement and the other Transaction Documents to which it is a party,
and to consummate the transactions contemplated by this Agreement and the other
Transaction Documents to which it is a party. The execution and delivery by the
Company of this Agreement and the other Transaction Documents to which it is a
party and the consummation by the Company of the transactions contemplated by
this Agreement and the other Transaction Documents to which it is a party have
been duly authorized by all necessary action on the part of the Company. This
Agreement has been duly executed and delivered by the Company, and each of the
other Transaction Documents to which the Company is a party has been duly
executed and delivered by the Company, and, assuming the due execution and
delivery of this Agreement and such other Transaction Documents by every other
party hereto and thereto, respectively, this Agreement and such other
Transaction Documents each constitutes a valid and binding obligation of the
Company enforceable against the Company in accordance with and subject to its
terms, subject, as to enforcement, to (i) applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws now or hereinafter in effect
affecting creditors' rights generally and (ii) general principles of equity. The
governing body of the Company has duly and validly approved, and taken all
action required to be taken by them for the consummation of the Mergers, the
MPLP Contributions, the appointments of the applicable New GP LLCs as the
successor general partners of the McNeil Partnerships and the other transactions
contemplated by this Agreement and the other Transaction Documents.
(b) Prior to the Effective Time, the Company shall have taken
all necessary action to permit the issuance of the Company Interests required to
be issued to the Contributing Partners pursuant to Sections 1.1 and 1.4 hereof.
The issuance and delivery by the Company of such Company Interests shall be,
prior to any of the contributions described in Section 2.3(a) hereof, duly and
validly authorized by all necessary action on the part of the Company. Such
Company Interests, when issued to the Contributing Partners in accordance with
the terms of this
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Agreement and the LLC Agreement, shall have been duly authorized and shall be
validly issued, fully paid and nonassessable and not subject to any Liens or any
rights or restrictions other than such rights and restrictions with respect to
such Company Interests as set forth in the LLC Agreement, the Indemnification
Agreement or the DLLCA.
(c) The execution, delivery and performance by the Company of
this Agreement and the other Transaction Documents to which it is a party do
not, and the consummation by the Company of the transactions contemplated by
this Agreement and the other Transaction Documents to which it is a party and
compliance by the Company with the provisions of this Agreement and the other
Transaction Documents to which it is a party shall not, conflict with, or result
in any violation of, or default (with or without notice or lapse of time, or
both) under, or give rise to a right of termination, cancellation or
acceleration of any obligation or to loss of a benefit under, or any other
change in rights or obligations of any party under (including the right to amend
or modify or refuse to perform or comply with), or result in the creation of any
Lien upon any of the properties or assets of the Managing Member, the Company or
any of its subsidiaries under (i) the certificate of formation, operating
agreement or other organizational documents of the Company or the Managing
Member, the charter, bylaws or other organizational documents of any such
subsidiary which is a corporation or the partnership agreement, certificate of
partnership, or limited partnership agreement, certificate of limited
partnership or other organizational documents or operating or similar agreements
(as the case may be) of any such subsidiary which is an entity other than a
corporation, each as amended or supplemented to the date of this Agreement, (ii)
any loan or credit agreement, note, bond, mortgage, indenture, lease or other
material agreement or other obligation, applicable to the Managing Member, the
Company or to any of its subsidiaries or to their respective properties or
assets, or (iii) subject to the governmental filings and other matters referred
to in Section 5.3(d) hereof, any Laws applicable to the Managing Member, the
Company or to any of its subsidiaries or to their respective properties or
assets, other than, in the case of clause (ii) or (iii) above, any such
conflicts, violations, defaults, rights, losses or Liens that, individually or
in the aggregate, would not
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prevent the consummation of the transactions contemplated by this Agreement and
the other Transaction Documents to which the Company, any Company LLC or any
Transitory Partnership is a party.
(d) No consent, approval, order or authorization of, or filing
with any Governmental Entity or third party is required by or with respect to
the Managing Member, the Company or any of the Company's affiliates or
subsidiaries in connection with the execution and delivery of this Agreement or
the other Transaction Documents or the consummation by the Company of the
transactions contemplated by this Agreement and the other Transaction Documents,
except for (i) the acceptance for record of the Merger Certificate and any other
documents required by the Governing Law applicable to each Participating McNeil
Partnership and its respective Transitory Partnership, by the Secretary of State
of the state of formation of such Participating McNeil Partnership and such
Transitory Partnership or (ii) such other consents, approvals, orders or
authorizations of, or filings with, any Governmental Entity or third party
which, if not obtained or made, would not prevent the consummation of the
transactions contemplated by this Agreement and the other Transaction Documents
to which the Company, any Company LLC or any Transitory Partnership is a party.
(e) For purposes of determining compliance with the HSR Act
only, the Company confirms that the conduct of its business and the business of
its subsidiaries consists solely of investing in, owning, developing, managing
and operating real estate, directly or through one or more subsidiaries, for the
benefit of its stockholders or members, as the case may be.
Section 5.4 Compliance with Laws. None of the Managing Member,
the Company nor any of the Company's subsidiaries is violating or failing to
comply with, or has violated or failed to comply with, any Law of any
Governmental Entity applicable to its business, properties or operations, except
to the extent that such violation or failure to comply, individually or in the
aggregate, would not prevent the consummation of the transactions contemplated
by this Agreement and the other Transaction
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Documents to which the Company, any Company LLC or any Transitory Partnership is
a party. No investigation or review by any Governmental Entity with respect to
the Managing Member, the Company or any subsidiary of the Company is pending or,
to the Knowledge of the Company, threatened, nor has any Governmental Entity
indicated an intention to conduct the same, except for those the outcome of
which would not, individually or in the aggregate, prevent the consummation of
the transactions contemplated by this Agreement and the other Transaction
Documents to which the Company, any Company LLC or any Transitory Partnership is
a party. To the Knowledge of the Company, no material change is required in the
processes, properties or procedures of the Managing Member, the Company or any
subsidiary of the Company in connection with any such Laws, and neither the
Managing Member, the Company nor any subsidiary of the Company has received any
written notice or communication of any material noncompliance with any such Laws
that has not been cured. Each of the Managing Member, the Company and each of
the subsidiaries of the Company has all permits, licenses, trademarks, trade
names, copyrights, service marks, franchises, variances, exemptions, orders and
other authorizations, consents and approvals from Governmental Entities
necessary to conduct its business as presently conducted except those the
absence of which would not, individually or in the aggregate, prevent the
consummation of the transactions contemplated by this Agreement and the other
Transaction Documents to which the Company, any Company LLC or any Transitory
Partnership is a party.
Section 5.5 Litigation. (i) There is no suit, action or
proceeding pending in which service of process has been received by or, to the
Knowledge of the Company, threatened against or affecting, the Managing Member,
the Company or any subsidiary of the Company that, individually or in the
aggregate, would prevent the consummation of the transactions contemplated by
this Agreement and the other Transaction Documents to which the Company, any
Company LLC or any Transitory Partnership is a party, and (ii) there is no
judgment, decree, rule or order of any Governmental Entity or arbitrator
outstanding against the Managing Member, the Company or any subsidiary of the
Company as of the date of this Agreement which would prevent the consummation of
the transactions
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contemplated by this Agreement and the other Transaction Documents to which the
Company, any Company LLC or any Transitory Partnership is a party.
Section 5.6 Brokers. Neither the Managing Member, the Company
nor any affiliate or subsidiary of the Company has entered into any agreement
with any broker, investment banker, financial advisor or other person which
would require the Company or Sellers, individually or in the aggregate, to pay
any broker's, finder's, financial advisor's, valuation or other similar fee or
commission in connection with the transactions contemplated by this Agreement or
the other Transaction Documents.
Section 5.7 Investment Company Act of 1940. Neither the
Managing Member, the Company nor any subsidiary of the Company is, or at the
Effective Time will be, required to be registered under the 1940 Act.
Section 5.8 Financing. The Company has entered into a written
commitment letter for financing from Whitehall (the "Commitment Letter"), and
Sellers have received a written guarantee of the Company's obligations under
this Agreement from Whitehall (the "Guarantee"). Regardless of whether or not
the transactions contemplated by the Commitment Letter are consummated or the
obligations under the Guarantee are performed, immediately prior to the
Effective Time, the Company will have sufficient funds to consummate the
transactions contemplated to occur at or after the Effective Time by this
Agreement and the other Transaction Documents. A true, correct and complete copy
of the Commitment Letter and the Guarantee have been delivered to Sellers prior
to the date hereof. The Commitment Letter and the Guarantee are, and have been
at all times since entered into, in full force and effect and have not been
withdrawn or amended or breached by any party thereto. Notwithstanding anything
to the contrary in this Agreement or the other Transaction Documents or the
Commitment Letter or the Guarantee (in each case, whether express or implied),
the Company acknowledges and agrees that its obligation to effect the
transactions contemplated by this Agreement and the other Transaction Documents
is not subject to the availability to Whitehall, the Managing Member, the
Company or any of their respective affiliates or
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subsidiaries (including affiliates and subsidiaries both prior to and following
the Effective Time) of any debt or equity or other financing in any amount
whatsoever. The parties hereto acknowledge and agree that nothing in this
Section 5.8 shall affect the condition to Closing set forth in Section 8.2(d)(i)
hereof.
ARTICLE VI
CONDUCT OF BUSINESS PENDING MERGER
Section 6.1 Conduct of Business of Sellers Prior to the
Effective Time. Prior to the Effective Time, except as consented to in writing
by the Company (which consent shall not be unreasonably withheld or delayed),
except as expressly provided for in this Agreement or the other Transaction
Documents, and except as set forth in Schedule 6.1 of the Seller Disclosure
Letter, each Seller covenants that it shall, and shall cause each of its
respective Seller Subsidiaries to:
(a) conduct its business only in the ordinary course and in
substantially the same manner as conducted prior to the date of this Agreement
(including diligent performance of their landlord obligations);
(b) preserve intact its business organizations and goodwill
and use its reasonable efforts to keep available the services of its officers
and employees;
(c) confer on a regular basis with one or more representatives
of the Company to report on material operational matters (it being understood
that all such conversations and exchange of documents (if any) shall be subject
to the Confidentiality Agreement);
(d) promptly notify the Company of any material emergency or
other material change in the condition (financial or otherwise), of its
business, properties, assets, liabilities or the normal course of its businesses
or in the operation of its properties, or of any material governmental
complaints, investigations or hearings (including any fire or casualty losses or
receipt of any written violation notices);
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(e) maintain its books and records in accordance with GAAP
applied consistently with past practice and not change in any material manner
any of its methods, principles or practices of accounting in effect at the Audit
Date, except as may be (or may have been) required by applicable law or GAAP;
(f) duly and timely file all reports, tax returns and other
documents required to be filed with federal, state, local and other authorities,
under the Code and maintain existing insurance coverage;
(g) not make or rescind any express or deemed election
relating to Taxes;
(h) not amend its certificate of incorporation, bylaws,
certificate of limited partnership, limited partnership agreement, certificate
of partnership, partnership agreement or similar organizational documents, as
the case may be, except to cure any ambiguity, to correct or supplement any
provision therein which may be inconsistent with any other provision therein, or
with law, or as may otherwise be required in connection with the filing of the
Proxy Statements and the review of the Proxy Statements by the SEC;
(i) not make any change in the number of its shares of capital
stock or units of partnership interest issued and outstanding, other than with
respect to units of partnership interest abandoned by a limited partner and
cancelled by the partnership; provided, however, that nothing contained in this
paragraph (i) shall prevent MREF XXVII from repurchasing units of its LP
Interests in accordance with its limited partnership agreement in effect on the
date hereof;
(j) not grant any options or other right or commitment
relating to the issuance of its shares of capital stock or units of partnership
interest or any security convertible into its shares of capital stock or units
of partnership interest, or any security the value of which is measured by its
shares of capital stock or units of partnership interest or any security
subordinated to the claim of its general creditors;
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(k) not (i) authorize, declare, set aside or pay any non-cash
dividend or make any other non-cash distribution or payment with respect to any
of its shares of capital stock or units of partnership interest, (ii) directly
or indirectly redeem, purchase or otherwise acquire any of its shares of capital
stock or units of partnership interest or any option, warrant or right to
acquire, or security convertible into, its shares of capital stock or units of
partnership interest, other than units of partnership interest abandoned by a
limited partner and cancelled by the partnership or (iii) make any payment to
McREMI or MPLP in respect of any Pre-Allocation Upstream Payable; provided,
however, that nothing contained in this paragraph (k): (1) shall prevent any
Seller or any Seller Subsidiary from making or receiving cash distributions,
cash dividends or cash payments (including, without limitation, Post-Allocation
Upstream Payables); or (2) shall prevent MREF XXVII from repurchasing units of
its LP Interests in accordance with its limited partnership agreement in effect
on the date hereof;
(l) not sell, lease, or amend any existing lease (other than
Residential Leases on lease forms previously approved by the Company and in
conformance with rental guidelines previously approved by the Company), or grant
any easement, right of way, declaration, restriction, mortgage, encumber,
subject to any Lien or otherwise dispose of any of its real properties;
provided, however, that following a request by Sellers to enter into a new
Commercial Lease or to renew an existing Commercial Lease, the Company shall be
required to notify Sellers in writing as to whether or not the Company consents
to such new Commercial Lease or such renewal within five (5) business days after
Sellers' request therefor; provided further, however, that nothing contained in
this paragraph (l) shall prevent any Seller or any Seller Subsidiary from
replacing existing mortgage debt on any of its properties (whether real,
personal or intangible) prior to the Stanger Determination Date, without the
consent of the Company, so long as such replacement debt is prepayable at any
time without penalty, premium, exit fees or similar charges and has terms
substantially similar to those of mortgage debt incurred by any Seller or any
Seller
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Subsidiary in the ordinary course of business and does not contain any
participating or contingent interest features;
(m) not sell, lease, mortgage, subject to any Lien or
otherwise dispose of any of its personal property or intangible property, except
in the ordinary course of business or unless such property is replaced with
equal quality items;
(n) not make any loans, advances or capital contributions to,
or investments in, any other person, other than in the ordinary course of
business and other than with respect to Post-Allocation Upstream Payables;
provided, however, that nothing contained in this paragraph (n) shall prevent
any Seller or any Seller Subsidiary from replacing existing mortgage debt on any
of its properties (whether real, personal or intangible) prior to the Stanger
Determination Date, without the consent of the Company, so long as such
replacement debt is prepayable any time without penalty, premium, exit fees or
similar charges and has terms substantially similar to those of mortgage debt
incurred by any Seller or any Seller Subsidiary in the ordinary course of
business and does not contain any participating or contingent interest features;
(o) not pay, discharge or satisfy any claims, liabilities or
obligations (absolute, accrued, asserted or unasserted, contingent or
otherwise), other than the payment, discharge or satisfaction (i) of all
transaction costs in connection with the transactions contemplated by this
Agreement and the other Transaction Documents, (ii) of claims, liabilities and
obligations in the ordinary course of business consistent with past practice,
(iii) in accordance with their terms, of claims, liabilities and obligations
reflected or reserved against in, or contemplated by, the Seller Statements (or
the notes thereto) included in the Seller SEC Documents filed prior to the date
hereof or in the Seller Statements (or the notes thereto) made available to the
Company prior to the date hereof or in the Subsidiary Financial Statements (or
the notes thereto); (iv) of suits, actions or proceedings not subject to Section
6.1(v) hereof in the ordinary course of business; and (v) of Post-Allocation
Upstream Payables;
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(p) not guarantee the indebtedness of another person, enter
into any "keep well" or other agreement to maintain any financial statement
condition of another person or enter into any arrangement having the economic
effect of any of the foregoing;
(q) except for regular year-end bonuses consistent with past
practice, except for budgeted salary increases and except for increases in
salary in the ordinary course consistent with past practice, not increase any
compensation or enter into or amend any employment agreement with any of its
officers, directors or employees earning more than seventy thousand dollars
($70,000) per annum, other than waivers by employees of benefits under such
agreements and other than any such increase in compensation, agreement or
amendment that would not result in any increased liability or obligation upon
the Company or any of the Participating McNeil Partnerships or their
subsidiaries after the Closing Date;
(r) not adopt any new employee benefit plan or amend any
existing plans or rights, except for changes which are required by law, except
for changes which are not in the aggregate more favorable to participants than
provisions presently in effect, and except for changes which would not result in
any increased liability or obligation upon the Company or any of the
Participating McNeil Partnerships or their subsidiaries after the Closing Date;
(s) not merge or consolidate with any person;
(t) in any transaction or series of related transactions
involving capital, securities, other assets (including cash) or indebtedness of
such Seller or its respective Seller Subsidiaries, not acquire or agree to
acquire by merging or consolidating with, or by purchasing all or any portion of
the equity securities or all or any assets of, or by any other manner, any
business or any person;
(u) not enter into any new or amend any existing leasing
commission agreements, service contracts or management agreements, and not enter
into any new or
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amend any existing agreement with any Governmental Entity regarding any McNeil
Partnership Property, other than, in either case, (1) agreements entered into in
the ordinary course of business which are cancellable upon no greater than sixty
(60) days' notice and (2) agreements which are terminable upon the Closing
without causing the Company or its subsidiaries to incur fees and costs or
creating any liabilities for the Company or the Participating McNeil
Partnerships or their subsidiaries after the Closing Date;
(v) not settle or compromise any claim relating to the
transactions contemplated by this Agreement that is brought against any Seller
by any current, former or purported holder of any securities of any McNeil
Partnership without the prior written consent of the Company, which consent
shall not be unreasonably withheld or delayed, other than settlements or
compromises of such claim (i) which involve the making of a lump sum cash
payment as the only obligation of the applicable Sellers or Seller Subsidiaries
as a result of such settlements or compromises, (ii) which irrevocably and
unconditionally release the applicable Sellers, Seller Subsidiaries, the Company
and their affiliates in form consented to by the Company (which consent shall
not be unreasonably withheld or delayed) from all claims brought, (iii) where
any payment under clause (i) above is made prior to the date of the Pre-Closing
Balance Sheets or no payment is required to be paid by any Participating McNeil
Partnership or its Seller Subsidiaries, and (iv) which do not involve any
admission of wrongdoing on the part of the applicable Participating McNeil
Partnerships, their respective Seller Subsidiaries or the Company;
(w) not take any action which, at the time of the taking of
such action, such party knew or reasonably should have known would cause any
representation or warranty of Sellers set forth in Article IV hereof to become
untrue in any material respect;
(x) not increase the number of Property Employees or Corporate
Employees, in each case by more than 1% over the aggregate number of employees
projected in the most recent budget of McREMI; and
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(y) not agree in writing or otherwise to not take any of the
actions described in paragraphs (a) through (f) of this Section 6.1 or not agree
in writing or otherwise to take any of the actions described in paragraphs (g)
through (x) of this Section 6.1.
Section 6.2 Conduct of Business of the Company, the Transitory
Partnerships and the Company LLCs Prior to the Effective Time. Prior to the
Effective Time, except as consented to in writing by MPLP on behalf of Sellers
(which consent shall not be unreasonably withheld or delayed) or except as
expressly provided for in this Agreement or the other Transaction Documents, the
Company covenants that it shall and, as applicable, shall cause the Managing
Member and each of the Company's subsidiaries to:
(a) not conduct any business whatsoever directly or indirectly
through the Company, the Transitory Partnerships or the Company LLCs;
(b) promptly notify Sellers of any material emergency or other
material change in the condition (financial or otherwise) of its assets or the
incurrence of any liabilities or any material emergency or other material change
(financial or otherwise) in Whitehall;
(c) duly and timely file all reports, tax returns and other
documents required to be filed with federal state, local and other authorities;
(d) not amend the limited partnership agreement, certificate
of limited partnership, operating agreement or other organizational documents of
the Company, the Managing Member, any of the Transitory Partnerships or any of
the Company LLCs;
(e) not make any change (including without limitation in the
number thereof) in any membership or other equity interests in the Company, the
Managing Member, any of the Transitory Partnerships or any of the Company LLCs,
in each case, issued or outstanding;
(f) not grant any options or other right or commitment
relating to any membership or other equity
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interests in the Company, the Managing Member, any of the Transitory
Partnerships or any of the Company LLCs or any security convertible into any
membership or other equity interests in the Company, the Managing Member, any of
the Transitory Partnerships or any of the Company LLCs, or any security the
value of which is measured by any membership or other equity interests in the
Company, the Managing Member, any of the Transitory Partnerships or any of the
Company LLCs or any security subordinated to the claim of its general creditors;
provided, however, that nothing contained in this paragraph (f) shall prevent
the formation of the Sub LLC and the issuance of the Preferred Equity Financing
(the parties hereto acknowledge and agree that nothing in this Section 6.2(f)
shall affect or be deemed to amend or modify any provision of this Agreement,
including Sections 5.8, 8.1, 8.2 and 8.3 hereof);
(g) (i) not authorize, declare, set aside or pay any dividend
or make any other distribution or payment with respect to any membership or
other equity interests in the Company, the Managing Member, any of the
Transitory Partnerships or any of the Company LLCs and (ii) not directly or
indirectly redeem, purchase or otherwise acquire any membership or other equity
interests in the Company, the Managing Member, any of the Transitory
Partnerships or any of the Company LLCs or any option, warrant or right to
acquire, or security convertible into, membership or other equity interests in
the Company, the Managing Member, any of the Transitory Partnerships or any of
the Company LLCs;
(h) not permit the Company, the Managing Member, any of the
Transitory Partnerships or any of the Company LLCs to make any loans, advances
or capital contributions to, or investments in, any other person; provided,
however, that nothing contained in this paragraph (h) shall prevent the
formation of the Sub LLC and the issuance of the Preferred Equity Financing (the
parties hereto acknowledge and agree that nothing in this Section 6.2(h) shall
affect or be deemed to amend or modify any provision of this Agreement,
including Sections 5.8, 8.1, 8.2 and 8.3 hereof);
(i) not permit the Company, the Managing Member, any of the
Transitory Partnerships or any of the
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Company LLCs to incur any claims, liabilities or obligations (absolute, accrued,
asserted or unasserted, contingent or otherwise) of any kind or nature
whatsoever (other than claims, liabilities and obligations against any such
person for breaches of this Agreement or any other agreements to which any such
person is a party and other than the Preferred Equity Financing and other
financing that the Company or its subsidiaries may enter into to effect the
transactions contemplated by this Agreement) (the parties hereto acknowledge and
agree that nothing in this Section 6.2(i) shall affect or be deemed to amend or
modify any provision of this Agreement, including Sections 5.8, 8.1, 8.2 and 8.3
hereof);
(j) not permit the Company, the Managing Member, any of the
Transitory Partnerships or any of the Company LLCs to issue or sell any equity
interests, or grant, confer or award any options, warrants or rights of any kind
to acquire any equity interests, including securities convertible or
exchangeable for equity interests in one or more of the Company, the Managing
Member, any of the Transitory Partnerships or any of the Company LLCs; provided,
however, that nothing contained in this paragraph (j) shall prevent the
formation of the Sub LLC and the issuance of the Preferred Equity Financing (the
parties hereto acknowledge and agree that nothing in this Section 6.2(j) shall
affect or be deemed to amend or modify any provision of this Agreement,
including Sections 5.8, 8.1, 8.2 and 8.3 hereof);
(k) not permit the Company, the Managing Member, any of the
Transitory Partnerships or any of the Company LLCs to incur, guarantee the
indebtedness of another person, enter into any "keep well" or other agreement to
maintain any financial statement condition of another person or enter into any
arrangement having the economic effect of any of the foregoing;
(l) not permit the Company, the Managing Member, any of the
Transitory Partnerships or any of the Company LLCs to merge or consolidate with
any person;
(m) not permit the Company, the Managing Member, any of the
Transitory Partnerships or any of the Company LLCs to sell, assign, convey,
lease, mortgage,
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pledge, transfer or otherwise dispose of any of its assets or properties or
adopt any plan of liquidation, dissolution or winding-up;
(n) not take any action which, at the time of the taking of
such action, such party knew or reasonably should have known would cause any
representation or warranty of the Company set forth in Article V hereof to
become untrue in any material respect; and
(o) not agree in writing or otherwise to not take any of the
actions described in paragraphs (b) and (c) of this Section 6.2 or not agree in
writing or otherwise to take any of the actions described in paragraph (a) and
paragraphs (d) through (n) of this Section 6.2.
Section 6.3 Reimbursable Proposals.
(a) During the period from the date hereof through to the
Closing Date, Sellers shall have the option of presenting to the Company one or
more proposals for capital expenditures, tenant inducements (e.g., free rent,
other cash-equivalent inducements, and out-of-pocket inducements) or
commissions, specifying the budgeted amounts therefor, that one or more McNeil
Partnerships are contemplating in connection with one or more new Commercial
Leases or the lease of additional space to an existing Commercial Tenant (each
such capital expenditure, tenant inducement or commission proposal, a
"Reimbursable Proposal"). In addition, the parties hereto acknowledge that on or
prior to the date of this Agreement, Sellers have presented to the Company, and
the Company has approved, the Reimbursable Proposals and the budgeted amounts
therefor listed on Schedule 6.3 of the Seller Disclosure Letter.
(b) To the extent any one or more Reimbursable Proposals with
respect to any Participating McNeil Partnership have been approved by the
Company on or prior to the date hereof or are approved by the Company (which
approval shall not be unreasonably withheld or delayed) subsequent to the date
hereof, the Company shall make a cash contribution to such Participating McNeil
Partnership, prior to the distributions contemplated by
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Section 2.4(c) hereof, in an amount equal to the Capital Expenditure
Reimbursement for such Participating McNeil Partnership which shall be taken
into consideration in the determination of the Excess Cash Balance of such
Participating McNeil Partnership in accordance with the Excess Cash Balance
Schedule for such Participating McNeil Partnership.
(c) For purposes of this Agreement, the following terms shall
have the following meanings:
(i) "Capital Expenditure Reimbursement" means, for
any McNeil Partnership, the sum of the Capital Expenditure
Reimbursement Amounts for each Reimbursable Proposal for such McNeil
Partnership.
(ii) "Capital Expenditure Reimbursement Amount"
means, for each Reimbursable Proposal, an amount equal to the product
determined by multiplying (A) the Reimbursable Proposal Amount for such
Reimbursable Proposal by (B) a fraction (in no event shall such
fraction be greater than one (1)), the numerator of which is the number
of months (including any fraction thereof) in the period beginning on
the estimated Closing Date and ending on the last day of the initial
term of the applicable Commercial Lease and the denominator of which is
the aggregate number of months in the initial term of the applicable
Commercial Lease.
(iii) "Completed Amount" means, for any Reimbursable
Proposal, an amount equal to the aggregate amount expended or incurred
through to the estimated Closing Date in connection with such
Reimbursable Proposal.
(iv) "Reimbursable Proposal Amount" means, for any
Reimbursable Proposal, an amount equal to the lesser of (1) the
Completed Amount and (2) the total budgeted amounts for such
Reimbursable Proposal; provided, however, that for any Reimbursable
Proposal which will be uncompleted as of the estimated Closing Date,
the "Reimbursable Proposal Amount" for such Reimbursable Proposal shall
be an amount equal to the difference determined by subtracting (x) the
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Underbudgeted Amount (if any) for such Reimbursable Proposal from (y)
the Completed Amount for such Reimbursable Proposal.
(v) "Underbudgeted Amount" means, for any
Reimbursable Proposal, the excess (if any) of (1) the sum of (A) the
Completed Amount and (B) the estimated additional amount (which is
reasonably and in good faith jointly determined by the Company and
MPLP) required to be expended or incurred following the estimated
Closing Date to complete such Reimbursable Proposal over (2) the total
budgeted amounts for such Reimbursable Proposal.
ARTICLE VII
ADDITIONAL COVENANTS
Section 7.1 Preparation of the Proxy Statement;
Recommendation of Mergers.
(a) With respect to each Merging Partnership, Sellers shall
prepare (and, in the case of each of the Public McNeil Partnerships, file with
the SEC) as soon as practicable after the date of this Agreement, but in any
event not later than August 31, 1999, which date may be extended by Sellers
(subject to approval of the Company, which shall not be unreasonably withheld or
delayed) or by the Company, a proxy statement with respect to the McNeil Limited
Partner Meeting of such Merging Partnership to approve the Merger in respect of
such Merging Partnership, the MPLP Contributions with respect to such Merging
Partnership, the appointment of the applicable New GP LLC as the successor
general partner of such Merging Partnership and the other transactions
contemplated by this Agreement (each, a "Proxy Statement"). If required by law,
Sellers and any person that may be deemed to be an affiliate of any Public
McNeil Partnership shall prepare and file concurrently with the filing of the
Proxy Statement for such Public McNeil Partnership a Statement on Schedule 13E-3
(each, a "Schedule 13E-3") with the SEC with respect to such Public McNeil
Partnership. The Company shall, upon request by Sellers, furnish Sellers with
such information concerning itself, the Managing
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Member and Whitehall as may be required by law or by any Governmental Entity in
connection with any Proxy Statement, any Schedule 13E-3 or any other statement,
filing, notice or application made by or on behalf of the Company to any third
party or any Governmental Entity or both in connection with the Mergers, the
MPLP Contributions, the appointments of the applicable New GP LLCs as the
successor general partners of the McNeil Partnerships and the other transactions
contemplated by this Agreement. Sellers shall use their reasonable best efforts
to (i) promptly respond to any comments of the SEC and (ii) cause the respective
Proxy Statements to be mailed to the limited partners of the respective Merging
Partnerships as promptly as practicable after the date of this Agreement.
Sellers shall notify the Company promptly of the receipt of any comments from
the SEC and of any request by the SEC for amendments or supplements to any Proxy
Statement or any Schedule 13E-3 or for additional information and shall supply
the Company with copies of all correspondence between Sellers or any of their
representatives, on the one hand, and the SEC, on the other hand, with respect
to any Proxy Statement or any Schedule 13E-3. The Proxy Statements for the
Public McNeil Partnerships and the Schedule 13E-3s shall comply in all material
respects with all applicable requirements of law and the rules and regulations
of the SEC. Whenever any event occurs which is required to be set forth in an
amendment or supplement to any Proxy Statement, Sellers and the Company each
shall promptly inform the other of such occurrences and Sellers shall prepare
(and, in the case of the Public McNeil Partnerships, file with the SEC) and mail
to the limited partners of the applicable Merging Partnership such amendment or
supplement to such Proxy Statement. Whenever any event occurs which is required
to be set forth in an amendment or supplement to any Schedule 13E-3, Sellers
shall promptly inform the Company of such occurrence, and Sellers and the
affiliates of the applicable Public McNeil Partnership shall file such amendment
or supplement. The Proxy Statements (at the respective dates thereof and at the
dates of the respective McNeil Limited Partner Meetings) and Schedule 13E-3s (at
the respective dates thereof) will not include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the
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circumstances under which they were made, not misleading; provided, however,
that the foregoing shall not apply to the extent that any such untrue statement
of a material fact or omission to state a material fact was made by Sellers in
reliance upon and in conformity with information concerning the Company or any
affiliates of the Company or concerning the Transitory Partnerships or the
Company LLCs furnished to Sellers in writing by the Company specifically for use
in any such Proxy Statements or Schedule 13E-3s.
(b) Each Merging Partnership shall, as soon as practicable
following the date of this Agreement, subject to the time periods set forth in
its organizational documents and in applicable laws, duly call, give notice of,
convene and hold a meeting of its limited partners (a "McNeil Limited Partner
Meeting") to be held at the earliest practicable date following the date the
applicable Proxy Statement is mailed to its limited partners for the purpose of
obtaining requisite approval by its limited partners of the Merger in respect of
such Merging Partnership, the MPLP Contributions with respect to such Merging
Partnership, the appointment of the applicable New GP LLC as the general partner
of such Merging Partnership and the other transactions contemplated by this
Agreement. Unless otherwise prohibited by law, each Merging Partnership and its
general partner shall be required to hold the McNeil Limited Partner Meeting
with respect to such Merging Partnership, regardless of whether the general
partner of such Merging Partnership has withdrawn, amended or modified its
recommendation that the limited partners of such Merging Partnership approve the
Merger in respect of such Merging Partnership, the MPLP Contributions with
respect to such Merging Partnership, the appointment of the applicable New GP
LLC as the general partner of such Merging Partnership and the other
transactions contemplated by this Agreement, unless this Agreement has been
terminated in respect of such Merging Partnership pursuant to the provisions of
Section 9.3 hereof. The general partner of each of the Merging Partnerships
shall recommend to the limited partners of such Merging Partnership approval of
the Merger in respect of such Merging Partnership, the MPLP Contributions with
respect to such Merging Partnership, the appointment of the
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applicable New GP LLC as the successor general partner of such Merging
Partnership and the other transactions contemplated by this Agreement; provided,
however, that prior to the McNeil Limited Partner Meeting for such Merging
Partnership (or any adjournment thereof), the recommendation of the general
partner of such Merging Partnership may be withdrawn, modified or amended as a
result of the commencement or receipt of a proposal constituting a Superior
Acquisition Proposal with respect to such Merging Partnership, but only to the
extent expressly permitted under Section 7.2 hereof.
(c) If on the date of the McNeil Limited Partner Meeting for a
Merging Partnership, such Merging Partnership has not received duly executed
proxies which, when added to the number of votes represented in person at the
meeting by persons who intend to vote to adopt this Agreement, will constitute a
sufficient number of votes to adopt this Agreement (and limited partners holding
greater than a majority of the outstanding LP Interests in such Merging
Partnership have not indicated their intention to vote against, and have not
submitted duly executed proxies voting against, the adoption of this Agreement),
then such Merging Partnership and its general partner shall recommend the
adjournment of its McNeil Limited Partner Meeting until the date ten (10) days
after the originally scheduled date of such McNeil Limited Partner Meeting.
Section 7.2 Acquisition Proposals. Prior to the
Effective Time, each Seller agrees that:
(a) it shall not, directly or indirectly, through any of its
officers, directors, employees or agents or representatives (including any
investment banker, attorney or accountant) retained by it, and it shall not
authorize or permit its officers, directors, employees or agents or
representatives (including any investment banker, attorney or accountant)
retained by it to, initiate, solicit or encourage any inquiries or the making or
implementation of any Acquisition Proposal or engage in any negotiations
concerning or provide any confidential information or data to, or have any
discussions with, any person relating to an Acquisition Proposal, or otherwise
facilitate any efforts to attempt to make or implement an Acquisition Proposal;
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(b) it shall immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any Acquisition Proposal and shall take the necessary
steps to inform its officers, directors, employees or agents or representatives
(including any investment banker, attorney or accountant) retained by it of the
obligations undertaken in this Section 7.2; and
(c) it shall notify the Company immediately if it receives any
such inquiries or proposals, or any requests for such information, or if any
such negotiations or discussions are sought to be initiated or continued with
it;
provided, however, that nothing contained in this Section 7.2: (i) shall
prohibit the general partner of any McNeil Partnership from furnishing
information to or entering into discussions or negotiations with, any person
that makes an unsolicited Acquisition Proposal for such McNeil Partnership, if,
and only to the extent that, (A) such general partner determines in good faith
that such unsolicited Acquisition Proposal could result in a Superior
Acquisition Proposal and that such action is required for such general partner
to comply with its duties to its limited partners imposed by law, (B) prior to
furnishing such information to, or entering into discussions or negotiations
with, such person, such general partner provides written notice to the Company
to the effect that it is furnishing information to, or entering into discussions
with, such person and (C) (1) subject to clause (2) below, such general partner
keeps the Company informed of the status (not the terms) of any such discussions
or negotiations and (2) such general partner complies with the last sentence of
Section 9.3(b) hereof; or (ii) to the extent applicable, shall prohibit the
general partner of any McNeil Partnership from taking and disclosing to the
limited partners of such McNeil Partnership a position, with respect to such
McNeil Partnership, contemplated by Rules 14d-9 and 14e-2 under the Exchange Act
with regard to an Acquisition Proposal for such McNeil Partnership; provided
further, however, that the general partner of any McNeil Partnership may approve
and recommend a Superior Acquisition Proposal and,
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in connection therewith, withdraw or modify its approval or recommendation of
this Agreement, the Merger in respect of such McNeil Partnership, the MPLP
Contributions with respect to such McNeil Partnership, the appointment of the
applicable New GP LLC as the successor general partner of such McNeil
Partnership and the other transactions contemplated by this Agreement, prior to
the approval by the holders of LP Interests of such McNeil Partnership of this
Agreement, the Merger in respect of such McNeil Partnership, the MPLP
Contributions with respect to such McNeil Partnership, the appointment of the
applicable New GP LLC as the successor general partner of such McNeil
Partnerships and the other transactions contemplated by this Agreement at the
McNeil Limited Partner Meeting (or any adjournment thereof) of such McNeil
Partnership. Any disclosure that the general partner of any McNeil Partnership
may be compelled to make with respect to the receipt of an Acquisition Proposal
for such McNeil Partnership in order to comply with its duties to its limited
partners or that the general partner of any McNeil Partnership may be compelled
to make in order to comply with Rule 14d-9 or 14e-2, shall not constitute a
violation of this Section 7.2, provided that such disclosure states that no
action shall be taken by such general partner with respect to the withdrawal of
its recommendation of the transactions contemplated hereby or the approval or
recommendation of any Acquisition Proposal except in accordance with this
Section 7.2.
Section 7.3 Access to Information; Confidentiality.
(a) Subject to the requirements of confidentiality agreements
entered into with third parties and subject to all other legal limitations
(including attorney-client and work product privileges, confidentiality,
antitrust and fair trade limitations), Sellers shall (and shall cause their
respective Seller Subsidiaries to) afford to the Company and to the officers,
employees, accountants, counsel, financial advisors and other representatives of
the Company, reasonable access during normal business hours prior to the
Effective Time to such Sellers' and such Seller Subsidiaries' respective
properties, books, contracts, commitments, personnel and records, and Sellers
shall (and
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shall cause their respective Seller Subsidiaries to) promptly make available to
the Company or its representatives all information concerning such Sellers' and
such Seller Subsidiaries' respective business, properties and personnel as the
Company or its representatives may reasonably request; provided, however, that
no investigation pursuant to this Section 7.3 shall affect or be deemed to
modify any representation or warranty made by Sellers.
(b) Following the date of this Agreement and until and
including the Closing Date, Sellers will prepare in accordance with GAAP applied
consistently with past practice and make available to the Company (i) within
forty-five (45) days following the end of any fiscal quarter, a copy of the
unaudited quarterly balance sheet and related unaudited statements of operations
and cash flows for such quarter for each Private McNeil Partnership that is a
Participating McNeil Partnership at such time and (ii) within fifteen (15) days
following the end of each fiscal month, a copy of the unaudited monthly balance
sheet and related unaudited statements of operations and cash flows for such
month for each Participating McNeil Partnership and a Preliminary Excess Cash
Balance Schedule for each such Participating McNeil Partnership. Sellers and the
Company will use their best efforts to respond to any inquiries any such party
may have concerning such quarterly and monthly financial statements and monthly
Preliminary Excess Cash Balance Schedules. No such discussion or failure to
raise issues shall become final and binding upon any party hereto except
pursuant to Section 2.4(b) hereof.
(c) The Company shall, and shall cause its subsidiaries and
affiliates to, and shall cause each of their officers, employees, accountants,
counsel, financial advisors and other representatives to, hold any nonpublic
information relating to Sellers or the Seller Subsidiaries or any of their
respective businesses or properties in confidence to the extent required by, and
in accordance with, the provisions of the letter agreement dated as of March 25,
1999 among Whitehall, MPLP and McREMI (the "Confidentiality Agreement"),
regardless of whether such information was disclosed pursuant to this Section
7.3 or any other provision of this Agreement.
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Section 7.4 Reasonable Best Efforts; Notification.
(a) Subject to the terms and conditions provided in this
Agreement, Sellers, on the one hand, and the Company, on the other hand, shall
use their respective reasonable best efforts: (i) to cooperate with one another
in (A) determining which consents, approvals, orders or authorizations of, or
filings with, any Governmental Entities are required to be obtained or made
prior to the Effective Time in connection with the execution and delivery of
this Agreement and the other Transaction Documents, and the consummation of the
transactions contemplated hereby and thereby, and (B) timely making all such
filings and timely seeking all such consents, approvals, orders or
authorizations; (ii) subject to Section 7.8 hereof, without the payment of any
consideration therefor (except as expressly contemplated by this Agreement) and
without compromising their respective rights and without incurring additional
liabilities or obligations, to obtain in writing any consents, approvals, orders
or authorizations required from non-governmental third parties to effectuate the
Mergers, the MPLP Contributions, the appointments of the applicable New GP LLCs
as the successor general partners of the McNeil Partnerships and the other
transactions contemplated by this Agreement and the other Transaction Documents,
such consents, approvals, orders or authorizations to be in form reasonably
satisfactory to Sellers and the Company (it being acknowledged and agreed that
nothing in this Section 7.4(a)(ii) shall affect or be deemed to amend or modify
any provision of this Agreement, including Sections 5.8, 8.1, 8.2 and 8.3
hereof); and (iii) without the payment of any consideration therefor and without
compromising their respective rights and without incurring additional
liabilities or obligations, to take, or cause to be taken, all other action and
do, or cause to be done, all other things necessary, proper or appropriate to
consummate and make effective the transactions contemplated by this Agreement
and the other Transaction Documents (it being acknowledged and agreed that
nothing in this Section 7.4(a)(iii) shall affect or be deemed to amend or modify
any provision of this
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Agreement, including Sections 5.8, 8.1, 8.2 and 8.3 hereof).
(b) If at any time after the Effective Time any further action
is necessary or desirable to carry out the purpose of this Agreement, without
the payment of any consideration therefor and without compromising their
respective rights and without incurring additional liabilities or obligations,
each Seller and the Company shall, and each shall cause its respective
affiliates and subsidiaries to, take all such necessary action. Without the
payment of any consideration therefor and without compromising their respective
rights and without incurring additional liabilities or obligations, Sellers
shall use their reasonable efforts to cooperate with the Company in assisting
the Company in its efforts to correct or satisfy the items set forth on Schedule
A to the Seller's Task List. The Company shall indemnify and hold Sellers
harmless for any and all losses or damages (including reasonable attorneys'
fees) that Sellers may suffer in connection with such cooperative efforts.
(c) Promptly following the Effective Time, McREMI or MPLP
shall file Schedule K-1s with supporting documents (not including Form 15s) with
respect to the Participating McNeil Partnerships to reflect the change of status
of each Participating McNeil Partnership as a result of the transactions
contemplated hereby.
Section 7.5 Public Announcements.
(a) Sellers, on the one hand, and the Company, on the other
hand, shall consult with each other before the issuance by any of them or by any
of their affiliates, and shall provide each other the opportunity to review and
comment upon, any press release or other written public statements with respect
to the transactions contemplated by this Agreement and the other Transaction
Documents, and shall not, and shall cause their affiliates not to, issue any
such press release or make any such written public statement prior to such
consultation, except as may be required by applicable law, court process or by
obligations pursuant to any listing agreement with any national securities
exchange. The parties agree that the initial press release to be issued with
respect to the
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transactions contemplated by this Agreement and the other Transaction Documents
shall be in the form mutually agreed to by the parties to this Agreement prior
to the execution of this Agreement.
(b) Prior to the Closing, the Company shall not, and shall
cause its subsidiaries and affiliates not to, and shall cause each of their
respective partners, equity holders, members, officers, directors, managers,
employees, agents, accountants, counsel, financial advisors and other
representatives not to, publicly announce or disclose to any person (other than
to senior management of Sellers and, after notifying such lenders and
prospective third party property managers verbally of the confidential nature of
such proposal or intention, any existing or prospective lenders of the Company
and any prospective third party property managers for the Commercial
Properties), whether verbally or in writing, any proposal or intention to sell,
transfer or otherwise dispose of, in any manner (including by way of merger,
consolidation, exchange, business combination or any other transaction),
directly or indirectly, any of the McNeil Partnerships, Seller Subsidiaries,
McNeil Partnership Properties or assets of McREMI.
Section 7.6 Benefit Plans and Other Employee
Arrangements.
(a)(i) Prior to the date of the mailing of the Proxy
Statements for the Participating McNeil Partnerships (the "Proxy
Mailing Date"), the Company shall provide a written list (the
"Employment List") to Sellers of each employee of Sellers or any Seller
Subsidiary to whom, as of the Effective Time, the Company shall cause
Management LLC to offer employment (each such employee, a "Listed
Employee") provided that such employee is still an employee of McREMI
as of the Effective Time. The Listed Employees shall be comprised of
two groups: one group shall be comprised of Property Employees for
Multifamily Properties and shall be designated on the Employment List
as the "Property Listed Employees" (the "Property Listed Employees")
and the other group shall be comprised of Corporate Employees and shall
be designated on the Employment List as the
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"Corporate Listed Employees" (the "Corporate Listed Employees"). The
Property Listed Employees shall not constitute less than 75% of those
employees of McREMI who, as of the Proxy Mailing Date, were Property
Employees for Multifamily Properties with respect to the Participating
McNeil Partnerships. The Corporate Listed Employees shall not
constitute less than the Threshold Amount of those employees of McREMI,
who, as of the Proxy Mailing Date, were Corporate Employees. For
purposes of this Agreement, the "Threshold Amount" shall be an amount
equal to the product determined by multiplying (A) the number of
Corporate Employees as of the Proxy Mailing Date by (B) 0.5 by (C) a
fraction, the numerator of which is the total number of McNeil
Partnership Properties of the Participating McNeil Partnerships and
their Seller Subsidiaries and the denominator of which is the total
number of McNeil Partnership Properties of the McNeil Partnerships and
their Seller Subsidiaries. The Company shall cause Management LLC to
make such offers of employment on terms and conditions that are
considered reasonable and customary in the real estate asset/property
management industry as of the Closing Date, taking into account the
geographic location of the employee to whom such offer of employment is
being made. All such offers of employment may be made subject to drug
testing, criminal background checks and credit checks.
(ii) The Company shall cause Management LLC to
continue the employment of any Property Employee and any Corporate
Employee who accepts such offer of employment for a period ending on
December 31st of the calendar year following the calendar year in which
the Closing occurs subject to termination for cause, resignation,
retirement, performance reasons or business reasons. For purposes of
this Agreement, any employee that accepts an offer of employment from
the Company (or a subsidiary or affiliate of the Company) as of the
Closing Date shall be referred to as an "Affected Employee."
(iii) In addition to continuing the workforce of
McREMI in accordance with this Section
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7.6, the Company shall cause Management LLC, for a period ending on
December 31st of the calendar year following the calendar year in which
the Closing occurs to continue utilizing the McREMI Assets listed on
Annex H hereto to the extent those assets are transferred at Closing;
provided, however, that, to the extent the Company reasonably
determines that the continued utilization of a specific McREMI Asset is
not supported by sound business practices, Management LLC may cease
utilization of such asset and, if the Company reasonably determines
that a substitution (which can be accomplished by way of purchasing,
licensing, or leasing such substituted asset from a third party or an
affiliate of the Company or developing such substituted asset in
Management LLC) of such asset would be sound business practice,
substitute a more appropriate asset in its stead; provided further,
however, that if the Company determines not to substitute an asset for
a discontinued asset it will not permit Management LLC to utilize an
asset of Archon or its subsidiaries to provide the underlying function
of the discontinued asset. In the event that Management LLC requires
additional employees (because of any Affected Employee's termination,
resignation, death, or retirement), such additional employees shall
become employees of Management LLC.
(iv) Neither the Company (nor any subsidiary or
affiliate of the Company) shall have any obligation to continue the
employment of any Affected Employee that is not a Property Listed
Employee or a Corporate Listed Employee for any specified period of
time following the Closing.
(b) At the Effective Time, McREMI shall terminate the
employment of each Affected Employee and shall cause the termination of
employment of each other employee of the Participating McNeil Partnerships and
their respective Seller Subsidiaries, and the employment of each Affected
Employee by the Company, Management LLC or their respective subsidiaries, as the
case may be, shall commence. The Company shall, or shall cause the appropriate
subsidiary or affiliate to, provide health, pension, retirement, disability and
other employee
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benefits to each Affected Employee on the same terms as, or on terms not less
favorable in the aggregate than, those provided to such Affected Employee
immediately prior to the Effective Time (such benefits, the "Buyer Plans").
Prior to the Effective Time, McREMI and each applicable Seller Subsidiary shall
cause the cancellation of all employment related agreements (including, without
limitation, all of the agreements listed on Schedule 4.11 of the Seller
Disclosure Letter) between it and any of its officers or directors and shall pay
all fees and costs related to such cancellation. Subject to the provisions of
this Section 7.6(b), the Company retains the right to amend or terminate any of
the Buyer Plans at any time.
(c) As of the Effective Time, Affected Employees shall cease
to participate in the McREMI Plans and shall commence participation or shall
become eligible to participate in all Buyer Plans maintained after the Effective
Time in accordance with the second sentence of Section 7.6(b) hereof. McREMI
shall retain responsibility for all McREMI Plan claims incurred by Affected
Employees prior to the Effective Time regardless of when such claim is reported
or made. For purposes of this Section 7.6(c), a claim shall be deemed to have
been incurred when the medical or other service giving rise to the claim is
performed, except that disability claims shall be deemed to have been incurred
on the date the Affected Employee becomes disabled.
(d) The Company shall, or shall cause its appropriate
subsidiary or affiliate to, give each Affected Employee full credit for up to
five accrued vacation days (in accordance with Item I of Note 18 to the
applicable Participating McNeil Partnership's Excess Cash Balance Schedule) and
full credit for purposes of eligibility, vesting, accruing subsequent vacation
days and determination of the level of benefits under each Buyer Plan (other
than incentive compensation plans) for such Affected Employee's service with
McREMI to the same extent recognized by such Seller or Seller Subsidiary
immediately prior to the Effective Time.
(e) The Company shall, or shall cause its appropriate
subsidiary or affiliate to, waive all limitations as to preexisting conditions
exclusions and
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waiting periods with respect to participation and coverage requirements
applicable to each Affected Employee under any Buyer Plan (except for
preexisting conditions with respect to life insurance coverage), other than
limitations or waiting periods that are already in effect with respect to such
Affected Employee and that have not been satisfied as of the Effective Time
under any McREMI Plan maintained for the Affected Employee immediately prior to
the Effective Time.
(f) Prior to the Effective Time, McREMI shall terminate any
401(k) Savings Plan of McREMI (each, a "McREMI 401(k) Savings Plan"), and each
employee who is a participant in any such terminated McREMI 401(k) Savings Plan
shall have the right to elect to receive a distribution of all of such
employee's account balance in such McREMI 401(k) Savings Plan (subject to, and
in accordance with, the provisions of such McREMI 401(k) Savings Plan and
applicable law). The Company shall, or shall cause its appropriate subsidiary or
Archon to, take any and all necessary action (subject to, and in accordance
with, the provisions of the Buyer Plan and applicable law) to cause the trustee
of a defined contribution plan of the Company (or its subsidiaries or Archon),
if requested to do so by a distributee who is an Affected Employee, to accept
the direct "roll over" of all or a portion of any such distribution from any
McREMI 401(k) Savings Plan.
(g) Except as set forth in Section 7.6(h) hereof, McREMI shall
be liable for and be responsible for the administration of all claims, losses,
damages and expenses and other liabilities and obligations relating to or
arising out of all workers' compensation claims of Affected Employees pending as
of the Effective Time, or made after the Effective Time but relating to events
occurring prior to the Effective Time. The Company and its subsidiaries that
employ such Affected Employees shall be liable for and be responsible for the
administration of all claims, losses, damages and expenses and other liabilities
and obligations relating to or arising out of all workers' compensation claims
of Affected Employees made after the Effective Time and relating to events
occurring after the Effective Time.
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(h) McREMI shall give or arrange for written notice to be
provided to those employees (and their spouses) of McREMI who are not deemed
Affected Employees (the "Terminated Employees") of their right to elect to pay
continuation coverage under Section 4980B of the Code ("COBRA") in accordance
with applicable law. With respect to continuation coverage under COBRA required
to be provided by McREMI, the Company shall, if requested by McREMI, be
responsible following the Effective Time for administering on behalf of McREMI
(without cost to McREMI) the provision of such coverage for (A) all former
McREMI employees and their present or former dependents covered under COBRA at
the Effective Time and (B) all Terminated Employees and their present or former
dependents; provided, however, that the Company shall not be responsible for any
liabilities associated with COBRA benefit claims (other than liabilities
associated with the failure by the Company to pay-over to the appropriate
insurers the insurance premiums collected from COBRA participants).
(i) Sellers shall, or shall cause their respective Seller
Subsidiaries to, take all necessary action to satisfy, or set aside sufficient
funds to satisfy, all Severance Obligations for the Terminated Employees on or
prior to the Closing Date.
Section 7.7 Ancillary Agreements.
(a) Immediately prior to the Effective Time, each party hereto
shall, and shall cause its affiliates to, execute and deliver each Ancillary
Agreement to which such party or such party's affiliate is a party.
(b) At the Closing, the Company shall, and the Company shall
cause Archon Group, L.P. ("Archon") to, execute and deliver the Portfolio
Advisory Agreement.
Section 7.8 Support Agreements; Financing.
(a) The Company shall, and shall cause the Company's
subsidiaries to, deliver at the Closing such agreements, instruments and other
documents (collectively, the "Replacement Support Agreements") as may be
necessary to assume all of Sellers' and their affiliates' (other
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than the Participating McNeil Partnerships' and their subsidiaries') obligations
as an indemnitor under any and all Existing Support Agreements on terms no less
favorable than those under the Existing Support Agreements on the date hereof.
The Company shall use its reasonable efforts to ensure that the Replacement
Support Agreements shall contain provisions releasing Sellers and their
pre-Closing affiliates (other than the Participating McNeil Partnerships and
their subsidiaries) from all obligations thereunder. Without limiting the
foregoing, the Company hereby agrees to indemnify and hold harmless Sellers and
their pre-Closing affiliates (other than the Participating McNeil Partnerships
and their subsidiaries) from and against all obligations incurred under the
Existing Support Agreements from and after the Closing Date. MPLP, to the extent
that the obligations of MPLP or MII as an indemnitor under any Existing Support
Agreement are not discharged thereunder, agrees to indemnify and hold harmless
the Company from and against all obligations incurred by MPLP or MII as an
indemnitor under any such Existing Support Agreement prior to the Closing Date.
(b) Without the payment of any consideration therefor (other
than as expressly contemplated by this Agreement), without compromising any
rights and without incurring additional liabilities or obligations, Sellers
shall take all necessary action (including using their reasonable best efforts
to obtain any third party consents) and the Company shall, and shall cause its
subsidiaries and affiliates to, take all necessary action (including cooperating
with Sellers to obtain any third party consents), (i) to enable the Company to
repay all Terminated Loans at the Effective Time and (ii) to permit the
Non-Terminated Loans to continue to remain outstanding without penalty at and
after the Effective Time until their expiration or prepayment as indebtedness of
the persons which incurred the Non-Terminated Loans prior to the Effective Time
(it being acknowledged and agreed that nothing in this Section 7.8(b) shall
affect or shall be deemed to amend or modify any provision of this Agreement,
including Sections 1.5, 8.1, 8.2 and 8.3 hereof).
(c) Without limiting, amending or modifying any other
provision of this Agreement (including Sections 5.8, 8.1, 8.2 and 8.3 hereof),
without the payment of any
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consideration therefor, without compromising any rights and without incurring
additional liabilities or obligations, Sellers shall cooperate with the Company
to assist the Company in obtaining new financing in connection with the Mergers
and the other transactions contemplated by this Agreement and the other
Transaction Documents.
Section 7.9 Fees and Expenses.
(a) Except as expressly provided to the contrary in this
Agreement, whether or not the transactions contemplated by this Agreement or the
other Transaction Documents are consummated, all costs and expenses incurred in
connection with this Agreement and the other Transaction Documents including,
without limitation, the fees, expenses and disbursements of counsel, financial
advisors and accountants, shall be paid by the party incurring such costs and
expenses. Without limiting the generality of the foregoing, whether or not the
transactions contemplated by this Agreement or the other Transaction Documents
are consummated, McREMI agrees that it shall be liable for the McREMI
Transaction Expenses and each McNeil Partnership agrees that it shall be liable
for its Per Partnership Transaction Expenses; provided, however, that a McNeil
Partnership which becomes an Excluded McNeil Partnership pursuant to Section
9.3(a) hereof shall not be liable for its Per Partnership Transaction Expenses
incurred following the date on which such McNeil Partnership became an Excluded
McNeil Partnership pursuant to Section 9.3(a) hereof, and the Participating
McNeil Partnerships shall share such expenses ratably, based on their relative
Partnership Percentages.
(b) Any Assumption Fees, Prepayment Fees and Transaction
Expenses (including without limitation the McREMI Transaction Expenses) paid by
the Contributing Partners or any Seller (other than a McNeil Partnership) and
any fees, expenses and disbursements incurred and paid by the Contributing
Partners or any Seller (other than a McNeil Partnership) in connection with this
Agreement and the other Transaction Documents, subject to documentation and
approval (which shall not be unreasonably withheld or delayed) by the Board of
Managers of the Company (the
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"Board of Managers"), in an aggregate amount not to exceed one-half of the
aggregate amount of fees, expenses and disbursements charged to the Company, its
subsidiaries and affiliates by Sullivan & Cromwell with respect to negotiating
and documenting the transactions contemplated by this Agreement and the other
Transaction Documents, shall be treated as a contribution in-kind to the Company
(the "Capitalized McNeil Expenses") by MPLP (or another designee of the
Contributing Partners) in exchange for Company Interests in accordance with
Section 1.4 hereof.
Section 7.10 Allocations. The Company and Sellers each
covenant (which covenant shall survive the Closing and the Effective Time), and
the LLC Agreement shall provide (until thereafter changed in accordance with the
terms of the LLC Agreement or applicable law), that the Allocations shall be
binding on Sellers and on the Company, its subsidiaries and affiliates and shall
be adhered to by Sellers and by the Company, its subsidiaries and affiliates for
the purposes of reporting the book and tax basis of the Company's assets.
Section 7.11 Related Party Transactions.
(a) Prior to the Effective Time, except as consented to in
writing by the Company (which consent shall not be unreasonably withheld or
delayed), or except as expressly provided for in this Agreement or the other
Transaction Documents, Sellers shall, and shall cause the Seller Subsidiaries
to, settle all Related Party Transactions with respect to the Participating
McNeil Partnerships in the ordinary course of business prior to the Effective
Time. In the event that any Related Party Transaction is not settled prior to
the Effective Time, such Related Party Transaction shall be cancelled as of the
Effective Time, and all fees and costs related to such cancellation shall be
taken into consideration in calculating the Excess Cash Balance of the
applicable Participating McNeil Partnerships in accordance with the Excess Cash
Balance Schedule.
(b) Notwithstanding anything to the contrary in this
Agreement, if Summerhill is a Participating McNeil Partnership, the Company
shall contribute adequate cash to Summerhill to, and shall cause Summerhill to,
repay at the
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Effective Time (including all accrued but unpaid interest thereon through to the
Effective Time) the demand note, dated November 17, 1997, payable by Summerhill
to Robert A. McNeil and Carole J. McNeil (the "Summerhill Note"). The parties
hereto acknowledge and agree that in determining the Excess Cash Balance of
Summerhill, the Summerhill Note shall be deemed to be a current liability and no
adjustment shall be made to the cash line item to reflect any payment of the
Summerhill Note or any contribution of cash to effect such payment.
Section 7.12 Stanger Reports. Sellers shall use their
reasonable best efforts to obtain from Stanger the Stanger Opinions, the
Allocation Analysis and, if requested, the Appraisals, and to obtain from
Eastdil the Eastdil Opinions, in each case on or prior to the date on which the
Proxy Statements are mailed to the limited partners of the McNeil Partnerships
in accordance with Section 7.1 hereof.
Section 7.13 Estoppels.
(a) Without the payment of any consideration therefor (other
than as expressly contemplated by this Agreement), without compromising any
rights and without incurring additional liabilities or obligations, Sellers
shall use their reasonable best efforts to obtain (i) the consent and estoppel
certificates and the consents (in each case, in the forms attached as exhibits
to this Agreement) specified in Section 8.2(d) hereof, (ii) the Estoppels (in
each case, in the forms attached as exhibits to this Agreement) from all
Commercial Tenants and from all lessors under each Ground Lease and (iii)
subject to Section 7.13(b) hereof, subordination, non-disturbance and attornment
agreements (the "SNDA Agreements") in the event that the Company requests in
writing that Sellers assist in obtaining SNDA Agreements.
(b) In the event that the Company requests in writing that
Sellers assist in obtaining (i) any consents or estoppels specified in Section
8.2(d) hereof in a form other than the forms attached as Exhibits to this
Agreement ("Other Consents"), (ii) any Estoppels in a form other than the forms
attached as Exhibits to this Agreement ("Other Estoppels") or (iii) any SNDA
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Agreements, the parties hereto acknowledge and agree that Sellers shall have no
obligation to comply with such requests of the Company until Sellers and the
Company reach a mutually acceptable agreement as to the timing of the
solicitation of the Other Consents, Other Estoppels and SNDA Agreements in
relation to the requisite dating of the consents, the consent and estoppel
certificates and the Estoppels attached to this Agreement and as to the content
of the Other Consents, Other Estoppels and SNDA Agreements. Nothing in this
Section 7.13(b) shall limit, amend or modify any other provision of this
Agreement (including Sections 5.8, 8.1, 8.2 and 8.3 hereof), or shall require
the payment of any consideration therefor by any Seller, or shall require
compromising any rights of any Seller or shall require any Seller to incur
additional liabilities or obligations.
Section 7.14 Harbour Club.
(a) If (i) either MREF XXII or MREF XXIII or both are
Participating McNeil Partnerships and (ii) MREF XXV is an Excluded McNeil
Partnership, then MREF XXV hereby grants to the Company the right (which right
shall vest as of the Effective Time) to purchase the property known as Harbour
Club I Apartments, located at 49000 Denton Road, Belleville, Michigan, together
with the property known as the Harbour Club Golf Course (together, "Harbour Club
I"), at a price equal to eleven million nine hundred sixty thousand dollars
($11,960,000) (the "Option Price"). In the event that the Company desires to
exercise such right, the Company shall deliver a written notice to MREF XXV of
its election to do so promptly following the Effective Time, but in no event
later than the fifteenth business day following the Closing Date. In the event
that such notice has not been provided to MREF XXV by the Company by such
fifteenth business day, then, to the extent such right has vested in accordance
with this Section 7.14(a), such right shall irrevocably lapse and MREF XXV's
obligations in respect thereof shall be irrevocably discharged. The parties
hereto acknowledge and agree that the closing of the Company's purchase of
Harbour Club I must be completed within twenty (20) business days following the
Closing Date.
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(b) Notwithstanding anything to the contrary in this
Agreement, in the event that the Company exercises its right to purchase Harbour
Club I in accordance with Section 7.14(a) hereof, the Company shall pay at the
closing of such transaction any indebtedness outstanding which is secured by
Harbour Club I (including all accrued but unpaid interest thereon through to the
date of such closing) and all prepayment fees relating to such indebtedness on
Harbour Club I and the Option Price shall be reduced by the amount of such
indebtedness (and not the prepayment fees).
(c) The obligations of the Company to effect the closing of
the Company's purchase of Harbour Club I pursuant to Section 7.14(a) hereof is
subject to the fulfillment (or waiver by the Company) on the date of such
closing of the following conditions: (i) title to Harbour Club I shall be free
and clear of all Property Restrictions and Encumbrances other than the Permitted
Restrictions and Encumbrances and any matters arising after the Expiration Time
(or, in the case of the Survey Materials, after the Survey Materials Expiration
Time) which (A) would not preclude the continued use of Harbour Club I as it is
being used as of the date of this Agreement or (B) would not materially and
adversely affect the value of Harbour Club I as it is being used as of the date
of this Agreement and (ii) Lawyer's Title Insurance Company (or such other
nationally recognized title insurance company reasonably acceptable to Sellers
and the Company) shall be unconditionally obligated and prepared, subject to the
payment of the applicable title insurance premium and related charges at the
Company's sole cost and expense, to issue to or for the benefit of the Company
and one or more of its subsidiaries, a Title Policy (or the equivalent in the
applicable jurisdiction) for Harbour Club I in an amount requested by the
Company, which shall be a commercially reasonable amount, or, at the option of
the Company, a "date-down" to an existing policy of owner's title insurance.
Such Title Policy shall be issued in accordance with the Title Commitment for
Harbour Club I. In the event that one or both of the conditions set forth in the
immediately preceding clauses (i) and (ii) are not satisfied at the time of the
closing of the Company's purchase of Harbour Club I and the Company has not
waived any such unsatisfied condition prior to such
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time, MPLP and the Company agree to negotiate in good faith a fair reduction in
the Option Price to take into account the matters with respect to which such
conditions are not satisfied.
(d) At and after the Effective Time, the owner of Harbour Club
I agrees, for so long as such owner shall continue to own Harbour Club I, to
manage, or cause to be managed, either or both of the Other Harbour Club
Properties, if so requested by the respective owners thereof, at market terms
and at market rates, pursuant to a property management agreement in a form
substantially comparable to that used for comparable properties, subject to such
owner obtaining the consent or approval of each person whose consent or approval
shall be required to a change in the management of such property. For purposes
of this Agreement, "Other Harbour Club Properties" means the property known as
the Harbour Club II Apartments and the property known as the Harbour Club III
Apartments, each located at 49000 Denton Road, Belleville, Michigan.
Section 7.15 Material Encumbrances.
(a) In the event that Other Items, or surveys that were
received by the Company after June 1, 1999, with respect to McNeil Partnership
Properties, in each case received prior to the Expiration Time (the Other Items
and such surveys, collectively, the "Survey Materials"), disclose any Property
Restrictions, Encumbrances or other matters affecting title to such McNeil
Partnership Property (other than Permitted Restrictions and Encumbrances) which
reasonably could preclude the continued use of such McNeil Partnership Property
as it is being used as of the date of this Agreement or reasonably could
materially and adversely affect the value of such McNeil Partnership Property as
it is being used as of the date of this Agreement (each, a "Material
Encumbrance") (it being understood and agreed that the absence of legal access
to a public right of way or utilities shall be a Material Encumbrance), the
Company shall promptly, and in no event later than 5:00 p.m., New York City
time, on July 16, 1999 (the "Expiration Time"), deliver a written notice (the
"Encumbrance Notice") to Sellers of such Material Encumbrance, which notice
shall describe in reasonable detail such Material Encumbrance and the manner in
which
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such Material Encumbrance reasonably could preclude the continued use of such
McNeil Partnership Property as it was being used as of the date of this
Agreement or reasonably could materially and adversely affect the value of such
McNeil Partnership Property as it was being used as of the date of this
Agreement, and the Company shall include a copy of the Survey Materials
disclosing such Material Encumbrance; provided, however, that the failure to
provide such information and description shall not vitiate the legal effect of
having sent such Encumbrance Notice if such Encumbrance Notice was otherwise
sent in good faith.
(b) If the Company shall fail to deliver an Encumbrance Notice
prior to the Expiration Time with respect to one or more Material Encumbrances
on one or more McNeil Partnership Properties, then from and after the Expiration
Time (regardless of whether or not the Company was aware of any such Material
Encumbrance as of the Expiration Time, and regardless of whether or not the
Company has obtained all of the Other Items), (i) each such Material Encumbrance
shall automatically be deemed to be a Permitted Restriction and Encumbrance for
all purposes under this Agreement, (ii) each such Material Encumbrance shall not
be considered in determining whether or not a Seller Material Adverse Effect has
occurred for any and all purposes under this Agreement (including Article VIII
hereof) and (iii) the Company shall be deemed to have waived all conditions to
the Closing set forth in Article VIII hereof relating to such Survey Materials
(including, without limitation, whether or not the representations and
warranties contained in Section 4.8 hereof were true and correct and whether or
not the condition set forth in Section 8.2(e) hereof has been fulfilled).
Section 7.16 Additional Seller Tax Covenant. From the date of
this Agreement until the Closing Date, the McNeil Partnerships shall at all
times qualify, and Sellers shall cause any of the Seller Subsidiaries that have
been partnerships, joint ventures or disregarded entities or limited liability
companies since formation to continue to qualify, as partnerships or disregarded
entities for federal income tax purposes. From the date of this Agreement until
the Closing Date, the McNeil
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Partnerships shall not at any time become, and Sellers shall not permit any
Seller Subsidiaries that have been partnerships, joint ventures or disregarded
entities or limited liability companies since formation to become, publicly
traded partnerships within the meaning of Section 7704 of the Code or otherwise
taxable as an association for federal income tax purposes.
Section 7.17 Title Deliveries. The Sellers shall arrange for
the delivery of the documents, certificates, affidavits and undertakings
reasonably required by the title insurer for the issuance of the title insurance
coverage contemplated by Section 8.2(e) hereof (provided that the Company, the
Participating McNeil Partnerships and their respective subsidiaries shall not be
liable directly or indirectly for such certificates, affidavits or
undertakings).
ARTICLE VIII
CONDITIONS
Section 8.1 Conditions to Each Party's Obligation to Effect
the Mergers. Subject to Section 8.4 hereof, the obligations of each party to
effect the Mergers of the Participating McNeil Partnerships and the other
transactions relating to the Participating McNeil Partnerships which are
contemplated by this Agreement to be performed at or after the Effective Time
shall be subject to the fulfillment (or waiver by each party hereto) at or prior
to the Effective Time of the following conditions:
(a) Limited Partner Approvals. This Agreement and the
transactions contemplated hereby shall have been approved and adopted by the
requisite approval of the limited partners of each Participating McNeil
Partnership (other than Summerhill, whose approval has been obtained prior to
the date hereof).
(b) No Injunctions or Restraints. No court or other
Governmental Entity of competent jurisdiction shall have enacted, issued,
promulgated, enforced or entered any statute, rule, regulation, judgment,
decree, injunction or
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other order (whether temporary, preliminary or permanent) (i) that is in effect
and prohibits consummation of the Mergers of the Participating McNeil
Partnerships, the MPLP Contributions relating to the Participating McNeil
Partnerships, the appointment of each of the applicable New GP LLCs as the
general partner of its corresponding Participating McNeil Partnership or any
other transactions with respect to the Participating McNeil Partnerships
expressly contemplated by this Agreement or (ii) that is enacted, issued,
promulgated, enforced or entered after the date of this Agreement and, in any
such case, is in effect and imposes restrictions on the Company or the
Participating McNeil Partnerships with respect to the business operations of the
Participating McNeil Partnerships which would result in a Seller Material
Adverse Effect (clauses (i) and (ii), collectively, an "Order"), and no
Governmental Entity shall have instituted any proceeding or threatened to
institute any proceeding seeking any such Order, and no other person shall have
instituted any proceeding seeking any such Order which is reasonably likely to
succeed.
(c) Certain Actions and Consents. All material actions by, and
all consents, approvals, orders or authorizations from, or filings with,
Governmental Entities of competent authority necessary for the consummation of
the Mergers of the Participating McNeil Partnerships, the MPLP Contributions
relating to the Participating McNeil Partnerships, the appointment of each of
the applicable New GP LLCs as the general partner of its corresponding
Participating McNeil Partnership or any other transactions with respect to the
Participating McNeil Partnerships expressly contemplated by this Agreement shall
have been obtained or made, as the case may be.
(d) Settlement of Class Action Litigation. All claims with
respect to the Participating McNeil Partnerships, the general partners of the
Participating McNeil Partnerships and the McREMI Assets asserted in connection
with the action of James F. Schofield, Gerald C. Gillett, Donna S. Gillett,
Jeffrey Homburger, Louise C. Homburger, Elizabeth Jung, Robert Lewis, Morton
Farber and Warren Heller v. McNeil Partners, L.P., McNeil Investors, Inc.,
McNeil Real Estate Management, Inc., Robert A.
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McNeil, Carole J. McNeil, Donald K. Reed and McNeil Pacific Investors Fund 1972,
Ltd., McNeil Real Estate Fund IX, Ltd., McNeil Real Estate Fund X, Ltd., McNeil
Real Estate Fund XI, Ltd., McNeil Real Estate Fund XII, Ltd., McNeil Real Estate
Fund XIV, Ltd., McNeil Real Estate Fund XV, Ltd., McNeil Real Estate Fund XX,
L.P., McNeil Real Estate Fund XXI, L.P., McNeil Real Estate Fund XII, L.P.,
McNeil Real Estate Fund XXIV, L.P., McNeil Real Estate Fund XXV, L.P. McNeil
Real Estate Fund XXVI, L.P., and McNeil Real Estate Fund XXVII, L.P. (Case No.
BC133799), Superior Court of the State of California, County of Los Angeles,
shall have been settled on terms satisfactory to MPLP and such settlement shall
be substantially in the form of the settlement agreement delivered by Sellers to
the Company prior to the date hereof.
(e) Determination of Excess Cash Balances. The Excess Cash
Balance shall have been determined for each Participating McNeil Partnership in
accordance with Section 2.4 hereof.
Section 8.2 Conditions to Obligations of the Company. Subject
to Section 8.4 hereof, the obligations of the Company to effect the Mergers of
the Participating McNeil Partnerships and the other transactions relating to the
Participating McNeil Partnerships which are contemplated by this Agreement to be
performed at or after the Effective Time are further subject to the fulfillment
(or waiver by the Company) at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties.
(i) The representations and warranties of Sellers set
forth in Article IV of this Agreement (other than the representations
and warranties that are the subject of Section 8.2(a)(ii) below) shall
be true and correct at and as of the Closing Date (each such
representation and warranty shall be deemed to be amended as of the
Closing Date (i) in accordance with Section 8.4 hereof and (ii) so as
not to give effect to any materiality or Seller Material Adverse Effect
qualifiers contained therein), as though made on and as of the Closing
Date but immediately prior to the transfers of assets, rights and
interests and
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the other transactions contemplated by Articles II and III of this
Agreement, except to the extent any representation or warranty is
expressly limited by its terms to a specific date, in which case such
representation or warranty shall be true and correct at and as of such
date; provided, however, that the condition set forth in this Section
8.2(a) shall be deemed satisfied if the respects in which such
representations and warranties (as each has been deemed amended as of
the Closing Date) are not true and correct at and as of the Closing
Date but immediately prior to the transfers of assets, rights and
interests and the other transactions contemplated by Articles II and
III of this Agreement, or at and as of such other date, would not
constitute, individually or in the aggregate, a Seller Material Adverse
Effect.
(ii) The representations and warranties of Sellers
set forth in Sections 4.1(a), 4.1(d), 4.2(b), 4.3(a) and 4.3(c) hereof
(each such representation and warranty shall be deemed to be amended as
of the Closing Date in accordance with Section 8.4 hereof) shall be
true and correct in all material respects (other than the
representations and warranties having a materiality or Seller Material
Adverse Effect qualifier, which representations and warranties shall be
true and correct in all respects) at and as of the Closing Date, as
though made on and as of the Closing Date but immediately prior to the
transfers of assets, rights and interests and the other transactions
contemplated by Articles II and III of this Agreement, except to the
extent any representation or warranty is expressly limited by its terms
to a specific date, in which case such representation or warranty shall
be true and correct at and as of such date.
(b) Performance of Obligations of Sellers. Sellers shall have
performed in all material respects all obligations required to be performed by
them under this Agreement at or prior to the Effective Time (other than
obligations with respect to Excluded McNeil Partnerships), including the
execution and delivery of the Ancillary Agreements to which any Seller is a
party.
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(c) Officer's Certificate. The Company shall have received a
certificate signed on behalf of Sellers by an executive officer thereof
certifying the accuracy of the statements set forth in Sections 8.2(a) and
8.2(b) hereof.
(d) Consents.
(i) Sellers shall have obtained the consent and
estoppel certificate of each lender of the Non-Terminated Loans listed
on Schedule 8.2(d)(i) of the Seller Disclosure Letter, in the form of
the consent and estoppel certificate attached as Exhibit A hereto or in
the form(s) of a consent or estoppel certificate or both returned by
the person from whom such consent and estoppel certificate is being
sought pursuant to this Section 8.2(d)(i) provided such form(s) of
consent or estoppel certificate is substantially comparable to the form
of the consent and estoppel certificate attached as Exhibit A hereto.
(ii) Sellers shall have obtained any consents or
approvals which if not obtained would have, individually or in the
aggregate, a Seller Material Adverse Effect, in the form of the consent
attached as Exhibit B hereto or in the form of the consent returned by
the person whose consent is being sought pursuant to this Section
8.2(d)(ii) provided such form of consent is substantially comparable to
the form of the consent attached as Exhibit B hereto.
(e) Title. On the Closing Date, (i) title to each McNeil
Partnership Property owned by a Participating McNeil Partnership shall be free
and clear of all Encumbrances and Property Restrictions other than Permitted
Restrictions and Encumbrances and other than any matters disclosed after the
Expiration Time (other than the Survey Materials) which (A) would not reasonably
preclude the continued use of such McNeil Partnership Property as it is being
used as of the date of this Agreement or (B) would not reasonably materially and
adversely affect the value of such McNeil Partnership Property as it is being
used as of the date of this
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Agreement and (ii) Lawyer's Title Insurance Corporation (or such other
nationally recognized title insurance company reasonably acceptable to Sellers
and the Company) shall be unconditionally obligated and prepared, subject to the
payment of the applicable title insurance premium and related charges at the
Company's sole cost and expense, to issue to or for the benefit of the Company
and one or more of its subsidiaries, an extended coverage ATLA owner's policy of
title insurance effective as of the Closing Date (the "Title Policies") (or the
equivalent in the applicable jurisdiction) for each McNeil Partnership Property
owned by a Participating McNeil Partnership in an amount requested by the
Company, which amount shall be commercially reasonable, or, at the option of the
Company, a "date-down" to an existing policy of owner's title insurance. Such
Title Policies shall be issued in accordance with the Title Commitments;
provided, however, that, notwithstanding anything to the contrary set forth in
this Agreement or in the Title Commitments, the title exceptions listed on
Schedule A to the Task List need not be omitted from the Title Policies and the
title company requirements listed on Schedule A to the Task List need not be
satisfied in determining whether or not this Section 8.2(e) has been satisfied.
(f) Estoppels.
(i) Sellers shall have received from tenants (which
tenants shall include the tenants leasing space pursuant to the
Commercial Leases listed on Schedule 8.2(f)(i) of the Seller Disclosure
Letter) leasing at least seventy-five percent (75%) of the aggregate
square footage leased pursuant to all Commercial Leases, a certificate
(an "Estoppel"), addressed to the Company and its lender (as defined in
the Estoppel attached as Exhibit D hereto), dated not more than sixty
(60) days prior to the Closing Date, in either (A) the form of Estoppel
attached as Exhibit D hereto or (B) the form of Estoppel returned by
the tenant whose Estoppel is being sought pursuant to this Section
8.2(f)(i) provided such form of Estoppel is substantially comparable to
the form of Estoppel attached as Exhibit D hereto. The Company hereby
acknowledges and agrees that, in lieu of any one or more of such
Estoppels, MPLP may deliver a
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landlord Estoppel provided that (A) such form of landlord Estoppel is
in the form of Estoppel attached as Exhibit D hereto, (B) the landlord
Estoppels delivered by MPLP pursuant to this Section 8.2(f)(i) shall
not be given in respect of more than ten percent (10%) of the aggregate
square footage leased pursuant to all Commercial Leases and (C) such
landlord Estoppels delivered by MPLP shall not be delivered in respect
of the Commercial Leases listed on Schedule 8.2(f)(i) of the Seller
Disclosure Letter.
(ii) Sellers shall have received an Estoppel from
each lessor under a Ground Lease, addressed to the Company and its
lender (as defined in the Estoppel attached as Exhibit E hereto), dated
not more than sixty (60) days prior to the Closing Date in either (A)
the form of Estoppel attached as Exhibit E hereto or (B) the form of
Estoppel returned by the lessor whose Estoppel is being sought pursuant
to this Section 8.2(f)(ii) provided such form of Estoppel is
substantially comparable to the form of Estoppel attached as Exhibit E
hereto.
(g) Opinion Relating to the Pledge. The Company shall have
received an opinion from Skadden, Arps, Slate, Meagher & Flom LLP or other
counsel to Sellers reasonably acceptable to the Company, dated as of the Closing
Date, substantially in the form attached as Exhibit C hereto.
(h) Percentage Reduction in NOI. The sum of the Net Operating
Incomes for each Participating McNeil Partnership for the twelve months ended on
the NOI Determination Date shall be greater than or equal to the product
determined by multiplying (i) 0.8723 by (ii) an amount equal to the sum of the
NOI Amounts for each Participating McNeil Partnership. For purposes of this
Agreement, the term "NOI Determination Date" means the last day of the most
recently completed fiscal month prior to the Closing Date.
(i) Consummation of the Contributions. The transactions
contemplated by Sections 2.2 and 2.3(a) hereof shall have been consummated.
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Section 8.3 Conditions to Obligations of Sellers. Subject to
Section 8.4 hereof, the obligations of Sellers to effect the Mergers of the
Participating McNeil Partnerships and the other transactions contemplated by
this Agreement relating to the Participating McNeil Partnerships which are to be
performed at or after the Effective Time are further subject to the fulfillment
(or waiver by each Seller) at or prior to the Effective Time of the following
conditions:
(a) Representations and Warranties. The representations and
warranties of the Company set forth in Article V of this Agreement shall be true
and correct at and as of the Closing Date (each such representation and warranty
shall be deemed to be amended as of the Closing Date so as not to give effect to
any materiality qualifiers contained therein), as though made on and as of the
Closing Date but immediately prior to the transfers of assets, rights and
interests and the other transactions contemplated by Articles II and III of this
Agreement, except to the extent any representation or warranty is expressly
limited by its terms to a specific date, in which case such representation or
warranty shall be true and correct at and as of such date; provided, however,
that the condition set forth in this Section 8.3(a) shall be deemed satisfied if
the respects in which such representations and warranties (as each has been
deemed amended as of the Closing Date) are not true and correct at and as of the
Closing Date but immediately prior to the transfers of assets, rights and
interests and the other transactions contemplated by Articles II and III of this
Agreement, or at and as of such other date, would not prevent the Company, any
Company LLC or any Transitory Partnership from consummating the transactions
contemplated by this Agreement and the other Transaction Documents.
(b) Performance of Obligations of the Company. The Company
shall have performed in all material respects all obligations required to be
performed by it under this Agreement at or prior to the Effective Time (other
than obligations with respect to Excluded McNeil Partnerships), including the
execution and delivery of the Ancillary
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Agreements to which either the Company or any of its affiliates is a party.
(c) Officers' Certificate. Each Seller shall have received a
certificate signed on behalf of the Company by a senior officer of the Company
certifying the accuracy of the statements set forth in Sections 8.3(a) and
8.3(b) hereof.
(d) Fairness Opinions.
(i) Stanger shall have delivered to Sellers (A) the
Allocation Analysis, (B) the Appraisals (if they had been requested by
Sellers prior to the date of the mailing of the Proxy Statements) and
(C) the Stanger Opinions, in each case, prior to the date of the
mailing of the Proxy Statements for the Participating McNeil
Partnerships. The Sellers shall have received the Stanger Opinions to
the effect that each of the matters opined upon therein and each of the
Allocations is fair from a financial point of view to the holders of
each class of LP Interests in each McNeil Partnership.
(ii) Eastdil shall have delivered to the Special
Committee the Eastdil Opinions prior to the date of the mailing of the
Proxy Statements for the Participating McNeil Partnerships. The Special
Committee shall have received the Eastdil Opinions to the effect that
each of the matters opined upon therein is fair from a financial point
of view to the holders of each class of LP Interests in each McNeil
Partnership.
Section 8.4 Certain Exclusions from Conditions to
Closing.
(a) Notwithstanding anything to the contrary in this Agreement
(including Sections 8.1, 8.2 and 8.3 hereof), the parties hereto acknowledge and
agree that, in accordance with Section 9.4 hereof, none of the conditions to
Closing set forth in Sections 8.1, 8.2 and 8.3 hereof shall be deemed to be
unsatisfied because such condition was not satisfied with respect to an Excluded
McNeil Partnership (or such Excluded McNeil Partnerships'
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subsidiaries, properties, etc.) (i.e., since no Excluded McNeil Partnership is
subject to the Closing, the conditions to the Closing need not be satisfied with
respect to any Excluded McNeil Partnership, such Excluded McNeil Partnerships'
subsidiaries, properties, etc.).
(b) Notwithstanding anything to the contrary in this Agreement
(including Sections 8.1 and 8.2 hereof), the following shall not be considered
in determining whether or not any or all of the conditions set forth in Sections
8.1 and 8.2 hereof have been fulfilled: (i) any effect on any of the
Participating McNeil Partnerships' business, properties, financial condition or
results of operations resulting, directly or indirectly, from the Company's
failure to consent to a Commercial Lease or any amendment to any Commercial
Lease as requested by Sellers in good faith pursuant to Section 6.1(l) hereof;
and (ii) any effect on any of the Participating McNeil Partnerships' business,
properties, financial condition or results of operations resulting, directly or
indirectly, from the Company's failure to consent to a Reimbursable Proposal
proposed by Sellers in good faith.
(c) Notwithstanding anything to the contrary in this Agreement
(including Sections 8.1, 8.2 and 8.3 hereof), the parties hereto acknowledge and
agree that none of the Discretionary Closing Conditions shall be deemed to be
unsatisfied because such condition was not satisfied with respect to any one or
more Included McNeil Partnerships (or such Included McNeil Partnerships'
subsidiaries, properties, etc.).
(d) Notwithstanding anything to the contrary in this Agreement
(including Sections 8.1, 8.2 and 8.3 hereof), the parties hereto acknowledge and
agree that none of the Discretionary Closing Conditions shall be deemed to be
unsatisfied because such condition was not satisfied with respect to any one or
more Included Partnership Matters.
(e) Notwithstanding anything to the contrary in this Agreement
(including Sections 8.1, 8.2 and 8.3 hereof), the parties hereto acknowledge and
agree that Section 7.15(b) hereof shall be given effect prior to determining
whether or not any or all of the conditions
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set forth in Sections 8.1 and 8.2 hereof have been fulfilled.
Section 8.5 Removal Notices.
(a) In the case of any Participating McNeil Partnership, at
any time after the date of this Agreement through to the date of the McNeil
Limited Partner Meeting for such Participating McNeil Partnership, the Sellers
may provide a written notice (the "Matter Removal Notice") to the Company
identifying such Participating McNeil Partnership as a "Removable Partnership"
and which shall describe in reasonable detail certain matters relating to such
Participating McNeil Partnership as "Designated Partnership Matters" that
Sellers believe in good faith may cause the Participating McNeil Partnership to
become an Excluded McNeil Partnership.
(b) Upon the Company's receipt of the Matter Removal Notice
(the earlier of (1) the tenth full business day following the date of the
Company's receipt of the Matter Removal Notice and (2) the third full business
day following the date of the Company's receipt of the Pre- Closing Removal
Notice, the "Matter Removal Notice Date"), the Company shall have until 5:00
p.m., New York City time, on the Matter Removal Notice Date to provide written
notice to Sellers, which notice shall identify which (if any) of the Designated
Partnership Matters the Company designates as an "Included Partnership Matter."
(c) In the case of any Participating McNeil Partnership, at
any time following the date of the McNeil Limited Partner Meeting for a
Participating McNeil Partnership, the Sellers may provide a written notice (the
"Pre-Closing Removal Notice") to the Company identifying such Participating
McNeil Partnership as a "Pre-Closing Removable Partnership" which may or may not
(in the sole and absolute discretion of the Sellers) designate certain of the
McNeil Partnership Properties of such Pre-Closing Removable Partnership as
"Designated Partnership Properties."
(d) Upon the Company's receipt of the Pre- Closing Removal
Notice (the third full business day following the date of the Company's receipt
of the Pre- Closing Removal Notice, the "Pre-Closing Removal Notice Date"), the
Company shall have until 5:00 p.m., New York City time, on the Pre-Closing
Removal Notice Date to provide written notice to Sellers, which notice shall
identify which (if any) of the Pre-Closing Removable Partnerships the Company
designates as an "Included McNeil Partnership."
(e) The parties hereto acknowledge and agree that the exercise
(or lack of exercise) by any Seller of its rights under Sections 8.5(a) and
8.5(c) hereof and the exercise (or lack of exercise) by the Company of its
rights under Sections 8.5(b) and 8.5(d) hereof shall not be the basis of any
suit, action or proceeding by any person against any party to this Agreement or
their respective affiliates, and shall not constitute a presumption that any
McNeil Partnership has, in fact, violated any representation, warranty, covenant
or agreement in this Agreement or that the conditions to Closing with respect to
any McNeil Partnership were not, in fact, satisfied.
(f) If the Closing occurs and if one or more McNeil
Partnerships became an Excluded McNeil Partnership by operation of Section
9.3(f), 9.3(g) or 9.3(h) hereof, each party to this Agreement hereby waives any
rights it may have to file or commence any suit, action or proceeding against
each other party to this Agreement or their respective affiliates with respect
to any such Excluded McNeil Partnership and hereby irrevocably and
unconditionally releases each such other party and its affiliates from any and
all claims, known or unknown, it may have relating to the transactions
contemplated by this Agreement and the other Transaction Documents with respect
to any such Excluded McNeil Partnership.
ARTICLE IX
TERMINATION
Section 9.1 Termination of this Agreement Prior to the
Effective Time. This Agreement may be terminated at any time prior to the
Effective Time (regardless of whether or not the requisite approvals of
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the respective limited partners of each of the McNeil Partnerships have been
obtained) as follows:
(a) by the mutual written consent of each Seller and the
Company;
(b) by the Company, on the one hand, or any Seller, on the
other hand, upon written notice given to the other if any judgment, injunction,
order, decree or action by any Governmental Entity of competent authority
preventing the consummation of the transactions contemplated by this Agreement
(other than transactions relating to the Excluded McNeil Partnerships) shall
have become final and nonappealable;
(c) by the Company, on the one hand, or any Seller, on the
other hand, upon written notice given to the other if the Closing shall not have
occurred on or before the twelve (12)-month anniversary of the date of this
Agreement (the "Termination Date");
(d) by any Seller upon written notice given to the Company,
upon a material breach on the part of the Company of any representation,
warranty, covenant, obligation or agreement of the Company set forth herein that
is not curable or, if curable, is not cured within thirty (30) days after
written notice of such breach is given by any Seller to the party committing
such breach, if the conditions set forth in Section 8.3(a) or 8.3(b) hereof
would be incapable of being satisfied by the Termination Date ; or
(e) by the Company upon written notice given to Sellers, upon
a material breach on the part of Sellers of any representation, warranty,
covenant, obligation or agreement of Sellers set forth herein that is not
curable or, if curable, is not cured within thirty (30) days after written
notice of such breach is given by the Company to the party committing such
breach, if the conditions set forth in Section 8.2(a) or 8.2(b) hereof would be
incapable of being satisfied by the Termination Date.
Section 9.2 Effect of Termination Pursuant to Section 9.1.
In the event of the termination of this Agreement by any Seller or the Company
as provided in
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Section 9.1 hereof, this Agreement shall become null and void and of no further
force or effect, and there shall be no liability or obligation hereunder on the
part of Sellers or the Company, or any of their respective subsidiaries, or any
of their respective general partners, limited partners, partners, stockholders,
members, equity holders, directors, officers, employees, affiliates, agents,
representatives, successors or assigns, except (i) any obligations of the
parties to this Agreement under Sections 7.3(c), 7.9(a), 9.2, 9.4, 9.5 and 9.6
hereof and Article XI hereof shall survive such termination and (ii) one or more
of Sellers or the Company, as the case may be, may have liability to one or more
of Sellers or the Company, as the case may be, if the basis of the termination
is a willful, material breach by one or more of Sellers or the Company, as the
case may be, of one or more of the provisions of this Agreement. Furthermore, if
this Agreement is terminated pursuant to Section 9.1 hereof, the Company shall
not, and shall cause its affiliates not to, oppose or seek to prevent or
frustrate any transaction or agreement that Sellers or any of their subsidiaries
may propose or enter into relating to any business combination between Sellers
and any third party; provided, however, that if (1) Goldman, Sachs & Co. and its
affiliates (including, without limitation, Whitehall and the Managing Member)
are not using all or any portion of the Evaluation Material (as defined in the
Confidentiality Agreement) in violation of the Confidentiality Agreement, and
(2) Goldman, Sachs & Co. and its affiliates (including, without limitation,
Whitehall and the Managing Member) are not using all or any portion of the
Evaluation Material (as defined in the Confidentiality Agreement) in any of the
activities specified below and (3) Goldman, Sachs & Co. and its affiliates
(including, without limitation, Whitehall and the Managing Member) are not in
violation of Section 7.3(c) hereof, then nothing in this Agreement shall in any
manner apply to or restrict the activities of Goldman, Sachs & Co. and its
affiliates from engaging in asset management, brokerage, investment advisory,
investment banking, financial advisory, anti-raid advisory, financing, trading,
market making, arbitrage and other similar activities conducted in the ordinary
course of its and its affiliates' business.
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Section 9.3 Termination of Certain Rights and Obligations
Prior to the Effective Time. Certain rights and obligations under this Agreement
of one or more McNeil Partnerships (each, an "Excluded McNeil Partnership") and
of all of the parties hereto in respect of each such Excluded McNeil Partnership
may be terminated at any time prior to the Effective Time (regardless of whether
or not the requisite approvals of the respective limited partners of the McNeil
Partnerships have been obtained (except as indicated to the contrary below)) as
follows:
(a) by the Company, on the one hand, or any Seller, on the
other hand, upon written notice given to the other if, upon a vote at a duly
held McNeil Limited Partner Meeting (or any adjournment thereof) for such McNeil
Partnership, the requisite approval of the limited partners of such McNeil
Partnership of the Merger in respect of such McNeil Partnership, the MPLP
Contributions with respect to such McNeil Partnership, the appointment of the
applicable New GP LLC as the general partner of such McNeil Partnership and the
other transactions contemplated by this Agreement with respect to such McNeil
Partnership, shall not have been obtained as contemplated by Section 7.1 hereof;
(b) by any Seller upon written notice given to the Company,
if, prior to the approval by the holders of LP Interests of such McNeil
Partnership of this Agreement, the Merger in respect of such McNeil Partnership,
the MPLP Contributions with respect to such McNeil Partnership, the appointment
of the applicable New GP LLC as the successor general partner of such McNeil
Partnerships and the other transactions contemplated by this Agreement at the
McNeil Limited Partner Meeting (or any adjournment thereof) of such McNeil
Partnership, in the exercise of good faith judgment of the general partner of
such McNeil Partnership as to its fiduciary duties to the limited partners of
such McNeil Partnership as imposed by law, such general partner, as advised by
counsel, determines that such termination is required by reason of a Superior
Acquisition Proposal being made with respect to such McNeil Partnership. Each
McNeil Partnership agrees that it shall not enter into a binding written
agreement with respect to an Acquisition Proposal without providing the Company
with at least four business days prior notice of
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its intent to do so (which notice shall disclose the material terms of such
Acquisition Proposal).
(c) by the Company upon written notice given to the applicable
McNeil Partnership, if the general partner of such McNeil Partnership (A) has
failed to recommend to the limited partners of such McNeil Partnership the
approval of the Merger in respect of such McNeil Partnership, the MPLP
Contributions with respect to such McNeil Partnership, the appointment of the
applicable New GP LLC as the successor general partner of such McNeil
Partnership and the other transactions contemplated by this Agreement with
respect to such McNeil Partnership, in connection with an Acquisition Proposal
by a third party in respect of such McNeil Partnership, (B) has withdrawn or
modified in a manner adverse to the Company its approval or recommendation that
the limited partners of such McNeil Partnership approve the Merger in respect of
such McNeil Partnership, the MPLP Contributions with respect to such McNeil
Partnership, the appointment of the applicable New GP LLC as the successor
general partner of such McNeil Partnership and the other transactions
contemplated by this Agreement with respect to such McNeil Partnership, in
connection with an Acquisition Proposal for such McNeil Partnership, or (C) has
approved or recommended an Acquisition Proposal for such McNeil Partnership;
(d) by the Company, on the one hand, or any Seller, on the
other hand, with respect to a McNeil Partnership, upon written notice given to
the other if any judgment, injunction, order, decree or action by any
Governmental Entity of competent authority preventing the consummation of the
transactions contemplated by this Agreement with respect to such McNeil
Partnership shall have become final and nonappealable;
(e) by the mutual written consent of each Seller and the
Company;
(f) by any Seller upon written notice to the Company, in
respect of any McNeil Partnership which owns any McNeil Partnership Property in
respect of which an Encumbrance Notice has been delivered to Sellers pursuant to
Section 7.15 hereof;
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(g) after 5:00 p.m., New York City time, on the Pre-Closing
Removal Notice Date but at least two (2) business days prior to the estimated
Closing Date (such time, the "Pre-Closing Removal Notice Time"), by any Seller
upon written notice to the Company, in respect of any one or more of the
Pre-Closing Removable Partnerships which the Company has not designated in
writing as an Included McNeil Partnership by the Pre-Closing Removal Notice
Time;
(h) after 5:00 p.m., New York City time, on the Matter Removal
Notice Date but no later than the earlier of (1) the tenth business day
following the Matter Removal Notice Date and (2) the day which is at least two
(2) business days prior to the estimated Closing Date (such time, the "Matter
Removal Notice Time"), by any Seller upon written notice to the Company, in
respect of any one or more of the Removable Partnerships with respect to which
the Company has not designated in writing as Included Partnership Matters all of
the Designated Partnership Matters by the Matter Removal Notice Time; or
(i) in respect of Fairfax only, following the date which is
the tenth business day after the date of the mailing of the Proxy Statements for
the Participating McNeil Partnerships, by the Company, on the one hand, or any
Seller, on the other hand, upon written notice given to the other if the
requisite approval of the limited partners of Fairfax of the MPLP Contributions
with respect to Fairfax, the appointment of the applicable New GP LLC as the
general partner of Fairfax and the other transactions contemplated by this
Agreement with respect to Fairfax shall not have been obtained.
Section 9.4 Effect of Termination Pursuant to Section 9.3. In
the event of the termination of certain rights and obligations under this
Agreement of one or more Excluded McNeil Partnerships and of all of the parties
hereto in respect of such Excluded McNeil Partnerships as provided in Section
9.3 hereof, all of the rights and obligations under this Agreement of each such
Excluded McNeil Partnership and of all of the other parties hereto in respect of
each such Excluded McNeil Partnership shall become null and void and of no
further force or effect, and there shall be no liability or obligation hereunder
of
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such Excluded McNeil Partnership or of the other parties hereto in respect of
any such Excluded McNeil Partnership on the part of any other party hereto, or
their respective subsidiaries, or any of their respective general partners,
partners, stockholders, members, equity holders, directors, officers, employees,
affiliates, agents, representatives, successors or assigns, except (i) any
obligations of the parties to this Agreement under Sections 7.3(c), 7.4(b), 7.5,
7.9(a), 7.10, 7.14, 9.4, 9.5 and 9.6 hereof and Article XI hereof (other than
Section 11.3 hereof) shall survive such termination and (ii) one or more of
Sellers or the Company, as the case may be, may have liability to one or more of
Sellers or the Company, as the case may be, if the basis of the termination is a
willful, material breach by one or more of Sellers or the Company, as the case
may be, of one or more of the provisions of this Agreement; provided, however,
that except as provided in this Section 9.4, nothing in this Section 9.4 shall
otherwise affect any of the rights or obligations under this Agreement of any
party to this Agreement. Furthermore, if the obligations and liabilities under
this Agreement in respect of an Excluded McNeil Partnership are terminated
pursuant to Section 9.3 hereof, the Company shall not, and shall cause its
affiliates not to, oppose or seek to prevent or frustrate any transaction or
agreement that Sellers or any of their subsidiaries may propose or enter into
relating to any business combination between Sellers and any third party in
respect of such Excluded McNeil Partnership; provided, however, that if (1)
Goldman, Sachs & Co. and its affiliates (including, without limitation,
Whitehall and the Managing Member) are not using all or any portion of the
Evaluation Material (as defined in the Confidentiality Agreement) in violation
of the Confidentiality Agreement, and (2) Goldman, Sachs & Co. and its
affiliates (including, without limitation, Whitehall and the Managing Member)
are not using all or any portion of the Evaluation Material (as defined in the
Confidentiality Agreement) in any of the activities specified below and (3)
Goldman, Sachs & Co. and its affiliates (including, without limitation,
Whitehall and the Managing Member) are not in violation of Section 7.3(c)
hereof, then nothing in this Agreement shall in any manner apply to or restrict
the activities of Goldman, Sachs & Co. and its affiliates from engaging in asset
management, brokerage, investment
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advisory, investment banking, financial advisory, anti- raid advisory,
financing, trading, market making, arbitrage and other similar activities
conducted in the ordinary course of its and its affiliates' business.
Section 9.5 Payment of Break-Up Fee.
(a) If the rights and obligations under this Agreement in
respect of one or more Excluded McNeil Partnerships have been terminated
pursuant to Section 9.3(b) or 9.3(c) hereof, each such Excluded McNeil
Partnership shall be severally (and not jointly) liable for payment to the
Company of a fee equal to the Partnership Break-Up Fee determined in respect of
such Excluded McNeil Partnership. Each Excluded McNeil Partnership shall be
severally liable for payment of the Partnership Break-Up Fee in respect of
itself, and no other party to this Agreement shall have any liability to the
Company or an Excluded McNeil Partnership for the Partnership Break-Up Fee of
such Excluded McNeil Partnership. Any payment required to be made pursuant to
this Section 9.5(a) as a result of termination of this Agreement pursuant to
Section 9.3(b) or 9.3(c) hereof shall be made not later than the earlier of (A)
ninety (90) days after the date of the termination of this Agreement pursuant to
Section 9.3(b) or 9.3(c) hereof and (B) three (3) business days after the date
on which a definitive agreement relating to an Acquisition Proposal is entered
into. Any payment required to be made pursuant to this Section 9.5(a) with
respect to an Excluded McNeil Partnership shall accrue interest at ten percent
(10%) per annum, compounded annually, from the date of the termination under
Section 9.3(b) or 9.3(c) hereof and no distribution or other payment shall be
made to the general partner or any limited partner of such Excluded McNeil
Partnership until such payment pursuant to this Section 9.5(a) and such accrued
interest is paid in full.
(b) If (i) (A) either (1) a person who is not an affiliate of
the Company, Whitehall or the Managing Member consummates an acquisition of more
than 10% of the outstanding LP Interests of a McNeil Partnership following the
date of this Agreement or (2) a person who is not an affiliate of the Company,
Whitehall or the Managing Member makes an Acquisition Proposal for a McNeil
Partnership,
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and (B) such McNeil Partnership becomes an Excluded McNeil Partnership through
the operation of Section 9.3(a) hereof and (C) such McNeil Partnership enters
into a definitive agreement relating to a Higher Acquisition Proposal within six
months of such McNeil Partnership becoming an Excluded McNeil Partnership, or
(ii) (A) the general partner of a McNeil Partnership as of the date of this
Agreement is replaced and (B) such McNeil Partnership becomes an Excluded McNeil
Partnership through the operation of Section 9.3(a) or 9.3(i) hereof, then, in
the case of either clause (i) or (ii), each such Excluded McNeil Partnership
shall be severally (and not jointly) liable for payment to the Company of a fee
equal to the Partnership Break-Up Fee determined in respect of such Excluded
McNeil Partnership. Any payment required to be made pursuant to clause (i) of
the first sentence of this Section 9.5(b) shall be made not later than the
earlier of (A) ninety (90) days after the date of the termination of this
Agreement pursuant to Section 9.3(a) hereof and (B) three (3) business days
after the date on which a definitive agreement relating to a Higher Acquisition
Proposal is entered into. Any payment required to be made pursuant to clause
(ii) of the first sentence of this Section 9.5(b) shall be made not later than
three (3) business days after the date of the termination of this Agreement in
respect of such Excluded McNeil Partnership pursuant to Section 9.3 hereof. Any
payment required to be made pursuant to this Section 9.5(b) with respect to an
Excluded McNeil Partnership shall accrue interest at ten percent (10%) per
annum, compounded annually, from the date such payment is due and no
distribution or other payment shall be made to the general partner or any
limited partner of such Excluded McNeil Partnership until such payment pursuant
to this Section 9.5(b) and such accrued interest is paid in full.
(c) The payment of the Partnership Break-Up Fee with respect
to an Excluded McNeil Partnership shall be compensation and liquidated damages
for any loss suffered by the Company or any one or more of its affiliates or
subsidiaries as a result of the failure of the Merger of such Excluded McNeil
Partnership and the other transactions contemplated by this Agreement with
respect to such Excluded McNeil Partnership to be consummated and to avoid the
difficulty of determining damages under the
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circumstances, and shall be the sole and exclusive remedy of the Company, its
affiliates and subsidiaries against Sellers and the Seller Subsidiaries and
their respective subsidiaries, general partners, limited partners, partners,
stockholders, members, equity holders, directors, officers, employees,
affiliates, agents, representatives, successors and assigns with respect to the
occurrence giving rise to such payment.
(d) If at the time any party hereto terminates the rights and
obligations under this Agreement in respect of one or more Excluded McNeil
Partnerships pursuant to Section 9.3 hereof, there had been a breach of any
representation, warranty, covenant, obligation or agreement on the part of the
Company, such that the conditions set forth in Section 8.3(a) or 8.3(b) hereof
would be incapable of being satisfied by the Termination Date, the Company shall
not be entitled to any of the benefits of this Section 9.5 or Section 9.6
hereof.
Initials: /s/ J.L.
------------------------------------------
(Jonathan Langer on behalf of the Company)
/s/ R.A.M.
------------------------------------------
(Robert A. McNeil on behalf of himself and
Sellers)
Section 9.6 Reimbursement of Expenses.
(a) If (i) (A) notwithstanding the satisfaction or waiver of
all of the conditions set forth in Sections 8.1 and 8.3 hereof, Sellers
(exclusive of any Excluded McNeil Partnership) fail to consummate prior to the
Termination Date the Mergers of the Participating McNeil Partnerships and the
other transactions contemplated by this Agreement to occur at the Effective Time
or (B) Sellers have failed to use their reasonable best efforts in accordance
with Section 7.4(a) hereof to satisfy the conditions set forth in Sections 8.1
and 8.3 hereof, and (ii) the Company terminates this Agreement pursuant to
Section 9.1(c) or 9.1(e) hereof, then Sellers shall pay to the Company an amount
equal to the Company Reimbursable Expenses for which Sellers shall be jointly
and severally liable; provided, however, that no amount shall be payable by
Sellers to the Company pursuant to this Section 9.6(a)
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if, at the time of such termination, Sellers would have been entitled to
terminate this Agreement pursuant to Section 9.1(d) hereof. Any payment required
to be made by Sellers pursuant to this Section 9.6(a) shall be made not later
than ninety (90) days after Sellers have received reasonably detailed documents
from the Company evidencing such costs and expenses.
(b) If (i) (A) notwithstanding the satisfaction or waiver of
all of the conditions set forth in Sections 8.1 and 8.2 hereof, the Company
fails to consummate prior to the Termination Date the Mergers and the other
transactions contemplated by this Agreement to occur at the Effective Time or
(B) the Company has failed to use its reasonable best efforts in accordance with
Section 7.4(a) hereof to satisfy the conditions set forth in Sections 8.1 and
8.2 hereof, and (ii) Sellers terminate this Agreement pursuant to Section 9.1(c)
or 9.1(d) hereof, then the Company shall pay to Sellers an amount equal to the
Seller Reimbursable Expenses; provided, however, that no amount shall be payable
by the Company to Sellers pursuant to this Section 9.6(b) if, at the time of
such termination, the Company would have been entitled to terminate this
Agreement pursuant to Section 9.1(e) hereof. Any payment required to be made by
the Company pursuant to this Section 9.6(b) shall be made not later than ninety
(90) days after the Company has received reasonably detailed documents from
Sellers evidencing such costs and expenses.
(c) The parties hereto agree that any receipt by the Company
of any one or more Partnership Break-Up Fees shall offset any obligation of
Sellers to pay the Company Reimbursable Expenses.
ARTICLE X
CERTAIN DEFINITIONS; OTHER MATTERS
Section 10.1 Definitions. For purposes of this Agreement
and the Seller Disclosure Letter, the following terms shall have the following
meanings:
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"Acquisition Proposal" means any proposal or offer with
respect to a merger, acquisition, purchase, tender offer, exchange offer,
consolidation or similar transaction involving all or any significant portion of
the assets (whether owned directly or indirectly) or equity securities of, one
or more of Sellers, other than the transactions with the Company contemplated by
this Agreement and the other Transaction Documents.
"affiliate" of any person means another person that directly
or indirectly controls, is controlled by, or is under common control with, such
first person, where "control" means the possession, directly or indirectly, of
the power to direct or cause the direction of the management policies of a
person, whether through the ownership of voting securities, by contract, as
trustee or executor, or otherwise.
"Aggregate Consideration" means six hundred forty-four million
four hundred thirty-nine thousand eight hundred three dollars ($644,439,803).
"Allocated McNeil Value" means the sum of (i) the Net McREMI
Allocated Value, (ii) the sum of the GP Allocation Amounts for each
Participating McNeil Partnership, (iii) the Participating Partnership
Consideration Amount for Fairfax if Fairfax is a Participating McNeil
Partnership, and (iv) the Participating Partnership Consideration Amount for
Summerhill if Summerhill is a Participating McNeil Partnership.
"Allocation Analysis" shall have the meaning ascribed to such
term in the Stanger Engagement Letter.
"Allocations" means any and all of the allocations described
in Sections 1.3(a), 1.3(b), 1.3(c) and 1.3(d) hereof.
"Ancillary Agreements" means the LLC Agreement, the Portfolio
Advisory Agreement, the Indemnification Agreement, the Replacement Support
Agreements, the Shortfall Agreement and the Waiver Letter.
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"Appraisals" shall have the meaning ascribed to such term in
the Stanger Engagement Letter.
"Assignment Agreement" means the Instrument of Assignment
attached hereto as Exhibit H.
"business day" means any day excluding: Saturday, Sunday and
any day which is in the City of New York a legal holiday or a day upon which
banking institutions in the City of New York are required or authorized by law
or other governmental action to close.
"California Partnerships" means the following McNeil
Partnerships, each of which is a California limited partnership: MREF IX, MREF
X, MREF XI, MREF XII, MREF XIV, MREF XV, MREF XX, MREF XXI, MREF XXII, MREF
XXIII, MREF XXIV, MREF XXV and MREF XXVI.
"Company Person" means (i) Whitehall, (ii) the Managing
Member, (iii) any and all affiliates and subsidiaries of the Company, Whitehall
and the Managing Member and any and all indirect and direct holders of
beneficial interests in the Company, Whitehall or the Managing Member and (iv)
in respect of each person specified in clauses (i), (ii) and (iii), each such
person's respective directors, officers, partners, members, employees,
controlling persons, agents and representatives; provided, however, that in no
event shall the Company be a Company Person.
"Company Reimbursable Expenses" means an amount equal to the
lesser of (i) one million five hundred thousand dollars ($1,500,000) and (ii)
the Company's and its affiliates' actual, reasonable out-of-pocket expenses
incurred in connection with this Agreement and the transactions contemplated by
this Agreement (including, without limitation, all attorneys', accountants' and
investment bankers' fees and expenses).
"Contributing Partners" means Robert A. McNeil, Carole J.
McNeil, MPLP and MII.
"Corporate Employees" means any and all employees of McREMI
who are not Property Employees; provided that this definition shall not include
any
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persons hired by Sellers to conduct the proxy solicitation process.
"CRLPA" means the California Revised Limited Partnership Act.
"Discretionary Closing Conditions" means those closing
conditions set forth in Sections 8.2(a), 8.2(b), 8.2(d), 8.2(e), 8.2(f) and
8.2(h) hereof, after having taken into account the effects of Section 8.4
hereof.
"DLLCA" means the Delaware Limited Liability Company Act.
"DRULPA" means the Delaware Revised Uniform Limited
Partnership Act.
"Eastdil" means Eastdil Realty Company.
"Eastdil Engagement Letter" means the letter agreement between
the McNeil Partnerships and Eastdil, dated as of May 7, 1999, as the same may be
amended from time to time.
"Eastdil Opinions" shall mean the opinions of Eastdil
described in the Eastdil Engagement Letter.
"Excluded McREMI Assets" means assets relating to persons
which are not Participating McNeil Partnerships or to the properties of any such
person (e.g., Management Agreements for any McNeil Partnership Properties owned
by any Excluded McNeil Partnership), leased assets, all leases for space, any
McREMI Assets that were not transferrable, and any and all rights under the
Transaction Documents.
"Excluded MPLP Assets" means all of the GP Interests in McNeil
Pacific Investors Fund 1972, all of the GP Interests in McNeil Pension
Investment Fund, Ltd., all of the GP Interests in each Excluded McNeil
Partnership and all rights related thereto, all of the GP Interests and shares
of capital stock owned by MPLP in any Seller Subsidiary of an Excluded McNeil
Partnership, all assets relating to persons which are not Participating
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McNeil Partnerships, leased assets, and any and all rights under the Transaction
Documents.
"Existing Support Agreements" means all Support Agreements
listed on Schedule 10.1(c) of the Seller Disclosure Letter.
"Financial Advisor" shall mean, (i) in the case of a Higher
Acquisition Proposal in which the consideration offered to the limited partners
is solely cash consideration, Stanger (provided that Stanger shall make such
determination within ten (10) business days) and (ii) in the case of a Higher
Acquisition Proposal in which the consideration offered to the limited partners
involves non-cash consideration, an investment bank which has been selected by
the mutual agreement of the parties, or failing that, an investment bank which
has been selected jointly by an investment bank selected by MPLP and an
investment bank selected by the Company.
"First McNeil Threshold" means an amount equal to the product
determined by multiplying (i) sixty million dollars ($60,000,000) by (ii) the
sum of the Partnership Percentages for each Participating McNeil Partnership.
"FRULPA" means the Florida Revised Uniform Limited Partnership
Act.
"Governing Laws" means the CRLPA, DRULPA, MULPL, KRULPA, TRLPA
and FRULPA, as applicable.
"GP Interest" means: (i) with respect to any limited
partnership, a unit of general partnership interest in such partnership; and
(ii) with respect to a McNeil Partnership, the units of general partnership
interest held by the general partner of such McNeil Partnership and all of the
rights in respect thereof, including not only the general partner's
proportionate interest of the profits and losses of that McNeil Partnership
based on the general partner's capital contribution but also the rights and
other assets (if any) corresponding to such McNeil Partnership which are being
contributed to the applicable New GP LLC at the direction of the Company in
accordance with Article II hereof.
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"Higher Acquisition Proposal" means an Acquisition Proposal
made by one or more persons which are not affiliates of the Company, Whitehall
or the Managing Member with respect to a McNeil Partnership, which the Company
and the general partner of such McNeil Partnership jointly determine to be more
favorable to the limited partners of such McNeil Partnership from a financial
point of view than the Merger and the other transactions contemplated by this
Agreement with respect to such McNeil Partnership; provided, however, that the
payment of the Partnership Break-Up Fee by such person(s) shall not be taken
into consideration in determining whether or not such Acquisition Proposal is
more favorable to the limited partners of such McNeil Partnership from a
financial point of view than the Merger and the other transactions contemplated
by this Agreement with respect to such McNeil Partnership; provided further,
however, that if the Company and the general partner of the applicable McNeil
Partnership are unable to reach agreement as to whether or not such Acquisition
Proposal is more favorable to the limited partners of such McNeil Partnership
from a financial point of view than the Merger and the other transactions
contemplated by this Agreement with respect to such McNeil Partnership within
three (3) business days of such McNeil Partnership's execution of definitive
documents relating to such Acquisition Proposal, then the Company and such
McNeil Partnership agree to submit such dispute to the Financial Advisor whose
determination shall be final and binding upon all of the parties hereto.
"Indemnification Agreement" means the Indemnification and
Pledge Agreement, in the form attached as Exhibit F hereto, by and between MPLP
(or another designee of the Contributing Partners) and the Managing Member.
"Knowledge of Sellers" (or words of similar import) means the
actual knowledge, after due inquiry, of those individuals identified on Schedule
10.1(a) of the Seller Disclosure Letter.
"Knowledge of the Company" (or words of similar import) means
the actual knowledge, after due inquiry, of the officers of Whitehall, the
Managing Member, the Company and the Company's subsidiaries.
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"Known Defects" means any and all reports, and any and all
facts and conclusions set forth therein, which were commissioned or requested
and received by the Company or any of its affiliates in connection with the
transactions contemplated by this Agreement or the other Transaction Documents
and which relate to, or were prepared in connection with, environmental or
structural matters with respect to any one or more properties currently or
formerly owned, operated or leased by any Seller or any of its subsidiaries.
"KRULPA" means the Kansas Revised Uniform Limited Partnership
Act.
"Liens" means any and all options, claims, security interests,
pledges, liens, charges, encumbrances or restrictions (whether on voting, sale,
transfer, disposition or otherwise), whether imposed by agreement,
understanding, law or otherwise, other than, in the case of any of the McNeil
Partnerships, Liens created pursuant to the terms of the limited partnership
agreement for such McNeil Partnership, and other than Liens relating to Non-
Terminated Loans.
"LLC Agreement" means the First Amended and Restated Limited
Liability Company Agreement of the Company, in the form attached as Exhibit G to
this Agreement.
"LP Interest" means a unit of limited partnership interest in
a limited partnership.
"McNeil Person" means (i) Robert A. McNeil and Carole J.
McNeil, (ii) any and all affiliates and subsidiaries of each Seller, (iii) any
and all indirect and direct holders of beneficial interests in each Seller and
(iv) in respect of each Seller and each person specified in clauses (i), (ii)
and (iii), each of their respective directors, officers, partners, members,
employees, controlling persons, agents and representatives; provided, however,
that in no event shall the definition of McNeil Person include any party to this
Agreement (other than Robert A. McNeil); provided further, however, that the
definition of McNeil Person shall include Robert A. McNeil.
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"McREMI Assets" means all of McREMI's right, title and
interest in and to all of the assets of McREMI and all rights of McREMI relating
thereto, other than the Excluded McREMI Assets.
"McREMI Reduction Amount" means an amount equal to the sum of
(i) the product determined by multiplying (A) the Partial McREMI Allocated Value
by (B) the sum of the Partnership Percentages for each Excluded McNeil
Partnership (if any) and (ii) the sum of the Second McREMI Allocated Values for
each Excluded McNeil Partnership.
"McREMI Transaction Expenses" means the Transaction Expenses
incurred by McREMI on behalf of itself and not on behalf of the McNeil
Partnerships or their Seller Subsidiaries.
"Merging Partnership" means each McNeil Partnership other than
Fairfax and Summerhill.
"Merging Private Partnerships" means Hearth Hollow, Midwest
Properties and Regency North.
"MPLP GP Subsidiaries" means the Subsidiary Partnerships
designated as "MPLP GP Subsidiaries" on Annex G hereto.
"MPLP Subsidiary Corporation" means the Subsidiary Corporation
designated as a "MPLP Subsidiary Corporation" on Annex F hereto.
"MULPL" means the Missouri Uniform Limited Partnership Law.
"Net McREMI Allocated Value" means an amount equal to the
difference determined by subtracting (i) the McREMI Reduction Amount (if any)
from (ii) the Total McREMI Allocated Value.
"Net Operating Income" means, for any McNeil Partnership, the
adjusted net operating income of such McNeil Partnership calculated in
accordance with GAAP applied consistently with past practice and in accordance
with the methodology set forth in Schedule 10.1(b) of the Seller Disclosure
Letter.
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"NOI Amount" means, with respect to a McNeil Partnership, the
amount set forth on Schedule 8.2(h) of the Seller Disclosure Letter in the
column entitled "Adjusted NOI" opposite the name of such McNeil Partnership.
"Original LLC Agreement" means the limited liability company
agreement of the Company dated June 17, 1999, by the Managing Member as the sole
member thereof, a true and correct copy of which has been delivered by the
Company to Sellers prior to the date hereof.
"Participating McNeil Partnership" means, from time to time, a
McNeil Partnership which is not an Excluded McNeil Partnership at such time.
"Participating Merging Partnership" means each Participating
McNeil Partnership other than Fairfax and Summerhill.
"Participating Partnership Consideration Amount" means, with
respect to each Participating McNeil Partnership, an amount equal to the
difference determined by subtracting (i) an amount equal to the absolute value
of the Negative Excess Cash Balance (if any) for such Participating McNeil
Partnership from (ii) the sum of the LP Allocation Amounts for each class of LP
Interests in such Participating McNeil Partnership.
"Partnership Break-Up Fee" means, with respect to an Excluded
McNeil Partnership, an amount equal to the product determined by multiplying (i)
eighteen million dollars ($18,000,000) by (ii) the Partnership Percentage for
such McNeil Partnership.
"Partnership Percentage" means, with respect to a McNeil
Partnership, the percentage set forth below opposite the name of such McNeil
Partnership.
Hearth Hollow 0.6056%
Midwest Properties 1.9645%
Regency North 0.8364%
Fairfax 0.6451%
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Summerhill 1.0657%
MREF IX 15.4200%
MREF X 11.4113%
MREF XI 11.8272%
MREF XII 9.3507%
MREF XIV 6.8073%
MREF XV 6.6786%
MREF XX 0.9957%
MREF XXI 3.1957%
MREF XXII 2.1607%
MREF XXIII 1.0690%
MREF XXIV 2.5304%
MREF XXV 7.7808%
MREF XXVI 6.9517%
MREF XXVII 8.7036%
"Per Partnership Transaction Expenses" means, with respect to
a McNeil Partnership, the sum of (i) the amount of Transaction Expenses actually
incurred by such McNeil Partnership on behalf of itself and its Seller
Subsidiaries and (ii) in the case of Transaction Expenses incurred by Sellers
that are not specifically identifiable to individual McNeil Partnerships, an
amount equal to such McNeil Partnership's ratable share of such Transaction
Expenses based on its relative Partnership Percentage.
"Per Unit Consideration Amount" means, with respect to an LP
Interest in a McNeil Partnership, an amount equal to the difference determined
by subtracting (i) an amount equal to the absolute value of the applicable
portion of the Negative Excess Cash Balance (if any) for such Participating
McNeil Partnership attributable to such LP Interest from (ii) the Per Unit
Allocation Amount for such LP Interest.
"person" means an individual, corporation, partnership,
limited partnership, limited liability company, syndicate, trust, association,
unincorporated organization, governmental entity, political subdivision, or an
agency or instrumentality of a governmental entity.
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"Portfolio Advisory Agreement" shall have the meaning ascribed
to such term in the LLC Agreement.
"Post-Allocation Upstream Amounts" means any and all Upstream
Payables accruing in respect of the period commencing on the Stanger
Determination Date through to and ending on the Closing Date.
"Post-Allocation Upstream Payables" means the excess (if any)
of any and all Post-Allocation Upstream Amounts over an amount equal to the
product determined by multiplying the number of fiscal months between the
Stanger Determination Date (including any fraction thereof) and the Closing Date
by one hundred ninety thousand dollars ($190,000).
"Pre-Allocation Upstream Payable" means any Upstream Payable
accruing in respect of any period prior to the Stanger Determination Date.
"Preferred Equity Financing" shall have the meaning ascribed
to such term in the LLC Agreement.
"Preliminary Excess Cash Balance" shall have the meaning, for
a particular McNeil Partnership, ascribed to the term "Excess Cash Balance" on
the Excess Cash Balance Schedule for such McNeil Partnership.
"Private McNeil Partnership" means each Merging Private
Partnership and Summerhill and Fairfax.
"Property Employees" means any and all employees of McREMI
whose salaries are reimbursed to McREMI in whole or in part by the McNeil
Partnership Properties or the owners of the McNeil Partnership Properties.
"Related Party Transaction" means any agreement or
intercompany account between any Participating McNeil Partnership or its
subsidiaries, on the one hand, and any Seller or any of its affiliates or any of
their respective officers or directors, or any relative of any of the foregoing,
on the other hand; provided, however, that the definition of Related Party
Transactions shall not include (i) any Pre-Allocation Upstream Payables, (ii)
the Summerhill Note or (iii) any agreement or intercompany
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account among any Participating McNeil Partnership and any of its subsidiaries,
on the one hand, and any one or more Participating McNeil Partnerships and their
subsidiaries, on the other hand.
"Seller Material Adverse Effect" means a material adverse
effect on the business, properties, financial condition or results of operations
of the Participating McNeil Partnerships, taken as a whole; provided, however,
that the following shall be excluded from the definition of "Seller Material
Adverse Effect" and from any determination as to whether such Seller Material
Adverse Effect has occurred or may occur: (i) the effects of changes that are
generally applicable to (A) the residential real estate industry or the
commercial real estate industry or both or (B) any material change in the
financial, banking, currency or capital markets in general (either in the United
States or any international market); and (ii) any facts or circumstances
relating to the Company or its affiliates; provided further, however, that any
such adverse effect from and after the date hereof shall also be excluded from
such determination if such effect is clearly related to or caused by, the
execution of this Agreement, the transactions contemplated hereby or by the
other Transaction Documents or the announcement of this Agreement (including the
identity of the Company or any of its affiliates or subsidiaries) or the
transactions contemplated hereby or thereby.
"Seller Reimbursable Expenses" means an amount equal to the
lesser of (i) one million five hundred thousand dollars ($1,500,000) and (ii)
Sellers' actual, reasonable out-of-pocket expenses incurred in connection with
this Agreement and the transactions contemplated by this Agreement (including,
without limitation, all attorneys', accountants' and investment bankers' fees
and expenses and all Transaction Expenses).
"Seller Subsidiaries" means the subsidiary partnerships of the
McNeil Partnerships listed on Annex G to this Agreement (the "Subsidiary
Partnerships") and the subsidiary corporations listed on Annex F to this
Agreement (the "Subsidiary Corporations") which hold GP Interests in certain of
the Subsidiary Partnerships.
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"Shortfall Agreement" shall have the meaning ascribed to such
term in the LLC Agreement.
"Stanger Determination Date" means the final date prior to
which Stanger has taken Upstream Payables into account in determining the Total
McREMI Allocated Value or any Allocation. The parties hereto acknowledge and
agree that any dispute as to the Stanger Determination Date or whether or not
any Upstream Payable has been included in determining the Total McREMI Allocated
Value or any Allocation shall be submitted to and decided by Stanger.
"Stanger Engagement Letter" means the Amended and Restated
Agreement, dated as of May 7, 1999, by and among Stanger and the McNeil
Partnerships, as the same may be amended from time to time.
"Stanger Opinions" shall have the meaning ascribed to the term
"Opinions" in the Stanger Engagement Letter.
"subsidiary" of any person means another person, an amount of
the voting securities, other voting ownership or voting partnership interests of
which is sufficient to elect at least a majority of its Board of Directors or
other governing body (or, if there are no such voting interests, 50% or more of
the equity interests of which) is owned directly or indirectly by such first
person.
"Superior Acquisition Proposal" means a bona fide Acquisition
Proposal made by a third party for one or more of the McNeil Partnerships which
the general partner of each such McNeil Partnership determines in good faith to
be more favorable to the limited partners of such McNeil Partnership from a
financial point of view than the Mergers and the other transactions contemplated
by this Agreement with respect to such McNeil Partnership, and which such
general partner determines in good faith is reasonably likely to be consummated.
"Support Agreements" means any indemnification obligation or
agreement relating to one or more Non- Terminated Loans and any other agreement
with a lender of a Non-Terminated Loan (or an affiliate of such lender)
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whereby liability has been assumed on behalf of a Participating McNeil
Partnership or its subsidiaries for exceptions to nonrecourse provisions
contained in the Non- Terminated Loans.
"Transaction Documents" means this Agreement, Ancillary
Agreements, the Commitment Letter, the Guarantee and the other documents,
instruments and agreements entered into in connection with the transactions
contemplated by this Agreement or the Ancillary Agreements, including certain
letter agreements dated as of the date hereof between one or more of the parties
hereto and all assignment agreements executed in connection with the
transactions contemplated by Sections 2.2 and 2.3(a)(i), 2.3(a)(ii) and
2.3(a)(iii) hereof.
"Transaction Expenses" means, with respect to any person, the
aggregate amount of all costs, fees and expenses incurred by such person with
respect to the transactions contemplated by the Transaction Documents.
"TRLPA" means the Texas Revised Limited Partnership Act.
"Upstream Payables" means any accrued and unpaid asset
management amounts, management incentive distributions, deferred distributions,
advances, overhead reimbursements or other amounts owed or payable by McREMI,
MII, MPLP or any of the McNeil Partnerships to any one or more of McREMI, MII,
MPLP or to any of their respective stockholders or general partners (as the case
may be), or to any general partner of any McNeil Partnership.
"Waiver Letter" means the letter agreement, to be dated the
Closing Date, by and among MPLP, Summerhill and Robert A. McNeil, and
acknowledged by the Company.
Section 10.2 Seller Disclosure Letter. The parties hereto
agree that any information provided in any Schedule of the Seller Disclosure
Letter is considered disclosed in each and every other Schedule of the Seller
Disclosure Letter, and shall qualify the corresponding section of this
Agreement, to the extent it is clear from a reading of such information that
such information is applicable to such other section. Any disclosure in any
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Schedule of the Seller Disclosure Letter of any contract, document, liability,
default, breach, violation, limitation, impediment or other matter, although the
provision for such disclosure may require such disclosure only if such contract,
document, liability, default, breach, violation, limitation, impediment or other
matter be "material," shall not be construed against any party to this
Agreement, as an assertion by such party, that any such contract, document,
liability, default, breach, violation, limitation, impediment or other matter
is, in fact, material.
Section 10.3 Interpretation. When a reference is made in this
Agreement to a section, article, paragraph, clause, annex or exhibit, such
reference shall be to a reference to this Agreement unless otherwise clearly
indicated to the contrary. The descriptive article and section headings herein
are intended for convenience of reference only and are not intended to be a part
of or to affect the meaning or interpretation of this Agreement. Whenever the
words "transactions contemplated by this Agreement or the other Transaction
Documents" (or words of similar import) are used in this Agreement, they shall
be deemed not to include the Preferred Equity Financing or any other financing
contemplated by the Company or its affiliates either before, concurrently with
or following the Closing (it being understood that nothing in this sentence
shall affect or be deemed to amend or modify Section 8.2(d)(i) hereof). Whenever
the words "include", "includes" or "including" are used in this Agreement they
shall be deemed to be followed by the words "without limitation." The words
"hereof," "herein" and "herewith" and words of similar import shall, unless
otherwise stated, be construed to refer to this Agreement as a whole and not to
any particular provision of this Agreement. The meaning assigned to each term
used in this Agreement shall be equally applicable to both the singular and the
plural forms of such term, and words denoting any gender shall include all
genders. Where a word or phrase is defined herein, each of its other grammatical
forms shall have a corresponding meaning. The parties have participated jointly
in the negotiation and drafting of this Agreement and the other Transaction
Documents; consequently, in the event an ambiguity or question of intent or
interpretation arises, this Agreement and each
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of the other Transaction Documents shall be construed as if drafted jointly by
the parties thereto, and no presumption or burden of proof shall arise favoring
or disfavoring any party by virtue of the authorship of any provision of this
Agreement or of any of the other Transaction Documents.
ARTICLE XI
GENERAL PROVISIONS
Section 11.1 Nonsurvival of Representations, Warranties and
Covenants. Other than the covenants and agreements set forth in Sections 3.3,
3.5, 7.3(c) (except for rights and obligations thereunder with respect to
Participating McNeil Partnerships which shall not survive the Effective Time),
7.4(b), 7.6, 7.8(a), 7.9, 7.10, 7.11, 7.14, 9.4, 9.5 and 9.6 hereof and in this
Article XI, all of the representations, warranties, covenants, agreements and
undertakings set forth in this Agreement or in any instrument delivered pursuant
to this Agreement confirming the representations, warranties, covenants,
agreements and undertakings set forth in this Agreement shall terminate as of
the Effective Time and shall have no further force or effect. The parties hereto
hereby agree that, other than the representations and warranties contained in
Articles IV and V hereof, no representations or warranties are being made in
this Agreement by any party hereto.
Section 11.2 Non-Recourse. The Company (on behalf of itself
and each Company Person) acknowledges and agrees that notwithstanding anything
to the contrary in this Agreement or under applicable law: (i) this Agreement
shall not create or be deemed to create or permit any liability or obligation on
part of any McNeil Person and no McNeil Person shall be bound or have any
liability hereunder (other than Robert A. McNeil solely in respect of Sections
2.2(a), 2.2(b) and 2.2(c)(ii) hereof); and (ii) the Company and each Company
Person shall look solely to the assets of Sellers for satisfaction of any
liability of Sellers under this Agreement, and neither the Company nor any
Company Person shall seek recourse or commence any action against any McNeil
Person or any McNeil Person's assets, for the performance or payment of
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any obligation of Sellers (other than against Robert A. McNeil solely in respect
of his obligations under Sections 2.2(a), 2.2(b) and 2.2(c)(ii) hereof) under
this Agreement. This Agreement (except with respect to Sections 2.2(a), 2.2(b)
and 2.2(c)(ii) hereof), is executed on behalf of certain Sellers by Robert A.
McNeil in his capacity, as the case may be, as a general partner, stockholder,
officer or director of such Seller, or as a general partner, stockholder,
officer or director of a Seller which is a stockholder or general partner of
another Seller, and not individually or personally. The Company (on behalf of
itself and each Company Person) has conducted its own independent review and
analysis of the business, operations, technology, assets, liabilities, results
of operations, financial condition and prospects of the business of Sellers and
acknowledges that Sellers have provided the Company and the Company Persons with
access to certain personnel, properties, premises and books and records of such
business for this purpose. In entering into this Agreement, the Company has
relied solely upon the investigation and analysis of itself and the Company
Persons and the specific representations and warranties of Sellers set forth in
Article IV of this Agreement, and the Company (on behalf of itself and each
Company Person) acknowledges and agrees (i) that, except for the specific
representations and warranties of Sellers contained in Article IV hereof, no
Seller or McNeil Person makes or has made any representation or warranty, either
express or implied, as to the accuracy or completeness of any of the information
(including any projections, estimates or other forward-looking information)
provided (including in any management presentations, information memorandum,
supplemental information or other materials or information with respect to any
of the above) or otherwise made available to the Company or any Company Person,
and (ii) that, to the fullest extent permitted by law, none of the McNeil
Persons shall have any liability or responsibility whatsoever to the Company or
any Company Person on any basis (including in contract or tort, under federal or
state securities laws or otherwise) based upon any information provided or made
available, or statements made (or any omissions therefrom), to the Company or
any Company Person, including in respect of the specific representations and
warranties set forth in Article IV of this Agreement. Notwithstanding anything
to the contrary
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in this Section 11.2, nothing in this Section 11.2 shall be deemed to affect or
modify in any way the rights and obligations under the LLC Agreement or the
Indemnification Agreement of the parties thereto.
Section 11.3 Amendment. This Agreement may be amended in
writing by the parties hereto at any time (i) before or after any requisite
approvals of the respective partners, limited partners or stockholders, as the
case may be, of each of the parties are obtained and (ii) prior to the filing of
any of the Merger Certificates with the Secretary of State of any of the states
of formation of the McNeil Partnerships set forth on Schedule 4.1(c) of the
Seller Disclosure Letter; provided, however, that, after the requisite approvals
of the limited partners of any McNeil Partnership are obtained, no such
amendment, modification or supplement shall be made which by law requires the
further approval of such limited partners without obtaining such further
approval.
Section 11.4 Extension; Waiver. At any time prior to the
Effective Time, the parties may in writing (i) extend the time for the
performance of any of the obligations or other acts of any other party, (ii)
waive any inaccuracies in the representations and warranties of any other party,
or (iii) waive compliance with any of the agreements or conditions of any other
party, in each case, contained in this Agreement, the other Transaction
Documents or in any document delivered pursuant to this Agreement or the other
Transaction Documents. Any agreement on the part of a party to any such
extension or waiver shall be valid only if set forth in an instrument in writing
signed on behalf of such party. The failure of any party to this Agreement to
assert any of its rights under this Agreement or otherwise shall not constitute
a waiver of those rights.
Section 11.5 Notices. All notices, requests, claims, demands
and other communications under this Agreement shall be in writing and shall be
delivered personally, sent by overnight courier (providing proof of delivery or
refusal of delivery) to the parties or sent by telecopy (providing confirmation
of transmission) at the following addresses or telecopy numbers (or at such
other
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address or telecopy number for a party as shall be
specified by like notice):
(a) if to any McNeil Entity, to:
Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attention: Martha E. McGarry, Esq.
Telecopier No.: (212) 735-2000
(b) if to the Company, to:
WXI/McN Realty L.L.C.
85 Broad Street
New York, New York 10004
Attention: Ralph Rosenberg
Telecopier No.: (212) 357-5505
with copies to:
Sullivan & Cromwell
125 Broad Street
New York, New York 10004
Attention: Gary Israel, Esq.
Telecopier No.: (212) 558-3588
All notices shall be deemed given only when actually received. In no event shall
the provision of notice pursuant to this Section 11.5 constitute notice for
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service of any writ, process or summons in any suit, action or other proceeding.
Section 11.6 Counterparts. This Agreement may be executed in
one or more counterparts, all of which shall be considered one and the same
agreement and shall become effective when one or more counterparts have been
signed by each of the parties and delivered to the other parties.
Section 11.7 Entire Agreement; No Third Party Beneficiaries.
This Agreement (including the Seller Disclosure Letter), the other Transaction
Documents, the Confidentiality Agreement and the other agreements entered into
in connection with the Mergers and the other transactions contemplated by this
Agreement (i) constitute the entire agreement and supersede all prior agreements
and understandings, both written and verbal, between the parties with respect to
the subject matter thereof and (ii) are not intended to confer upon any person
(other than the parties to this Agreement and the Contributing Partners) any
rights or remedies whatsoever. Immediately following the Closing, the rights and
obligations under the Confidentiality Agreement of the parties thereto shall
terminate with respect to any Participating McNeil Partnership and the Seller
Subsidiaries of such Participating McNeil Partnership.
Section 11.8 GOVERNING LAW. THIS AGREEMENT SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, REGARDLESS OF THE LAWS THAT MIGHT OTHERWISE GOVERN UNDER APPLICABLE
PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
Section 11.9 Assignment. Neither this Agreement nor any of the
rights, interests or obligations under this Agreement shall be assigned or
delegated, in whole or in part, by operation of law or otherwise by any of the
parties without the prior written consent of the other parties. Subject to the
preceding sentence, this Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the parties and their respective successors and
assigns.
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Section 11.10 Consent to Jurisdiction. Each of the parties
hereto irrevocably and unconditionally submits to the non-exclusive jurisdiction
of the United States District Court for the Southern District of New York or, if
such court will not accept jurisdiction, the Supreme Court of the State of New
York or any court of competent civil jurisdiction sitting in New York County,
New York. In any action, suit or other proceeding, each of the parties hereto
irrevocably and unconditionally waives and agrees not to assert by way of
motion, as a defense or otherwise any claims that it is not subject to the
jurisdiction of the above courts, that such action or suit is brought in an
inconvenient forum or that the venue of such action, suit or other proceeding is
improper. Each of the parties hereto also agrees that any final and unappealable
judgment against a party hereto in connection with any action, suit or other
proceeding shall be conclusive and binding on such party and that such award or
judgment may be enforced in any court of competent jurisdiction, either within
or outside of the United States. A certified or exemplified copy of such award
or judgment shall be conclusive evidence of the fact and amount of such award or
judgment.
Section 11.11 Severability. Any term or provision of this
Agreement which is invalid or unenforceable in any jurisdiction shall, as to
that jurisdiction, be ineffective to the extent of such invalidity or
unenforceability without rendering invalid or unenforceable the remaining terms
and provisions of this Agreement or affecting the validity or enforceability of
any of the terms or provisions of this Agreement in any other jurisdiction. If
any provision of this Agreement is so broad as to be unenforceable, the
provision shall be interpreted to be only so broad as is enforceable.
Section 11.12 Arbitration. With respect to a determination of
the CPA Firm pursuant to Section 2.4(b) hereof and the determination of the
Financial Advisor with respect to a Higher Acquisition Proposal, each party
hereto agrees that such determination shall be final and binding upon such
party. Judgment on the determination may be entered in any court of competent
jurisdiction (within and outside the United States). In the event that any party
to this Agreement fails to comply, in the case
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of the determination of the CPA Firm, with the procedures set forth in Section
2.4(b) hereof or the orders of the CPA Firm or the determination of the CPA
Firm, or, in the case of the determination of the Financial Advisor, with the
orders of the Financial Advisor or the determination of the Financial Advisor
and in either case, with this Section 11.2, then such noncomplying party shall
be liable for all costs and expenses, including attorneys' fees, incurred by a
party in its effort to obtain either an order to compel compliance with such
procedures or such orders, or an enforcement of the determination, from a court
of competent jurisdiction.
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IN WITNESS WHEREOF, each of the parties has executed this
Master Agreement, or has caused this Master Agreement to be executed on its
behalf by its officer thereunto duly authorized, as of the date first above
written.
WXI/McN Realty L.L.C.
By: WXI/MCN Real Estate, L.L.C.,
its Managing Member
By: Whitehall Street Real Estate
Limited Partnership XI,
its Managing Member
By: WH Advisors, L.L.C. XI,
its General Partner
By: /s/ Jonathan Langer
----------------------------------------
Name: Jonathan Langer
Title: Vice President
McNEIL INVESTORS, INC.
By: /s/ Robert A. McNeil
----------------------------------------
Name: Robert A. McNeil
Title: Chairman of the Board
McNEIL REAL ESTATE MANAGEMENT, INC.
By: /s/ Robert A. McNeil
----------------------------------------
Name: Robert A. McNeil
Title: Co-Chairman of the Board
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McNEIL PARTNERS, L.P.
By: McNeil Investors, Inc.,
its General Partner
By: /s/ Robert A. McNeil
----------------------------------------
Name: Robert A. McNeil
Title: Chairman of the Board
on behalf of itself and each of the McNeil
Partnerships (other than Regency North,
Fairfax and Summerhill)
REGENCY NORTH ASSOCIATES, L.P.
By: /s/ Robert A. McNeil
----------------------------------------
Name: Robert A. McNeil
Title: General Partner
FAIRFAX ASSOCIATES II, LTD.
By: /s/ Robert A. McNeil
----------------------------------------
Name: Robert A. McNeil
Title: General Partner
McNEIL SUMMERHILL I, L.P.
By: McNeil Summerhill, Inc.
its General Partner
By: /s/ Robert A. McNeil
------------------------------------
Name: Robert A. McNeil
Title: Co-Chairman of the Board
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McNEIL SUMMERHILL, INC.
By: /s/ Robert A. McNeil
----------------------------------------
Name: Robert A. McNeil
Title: Co-Chairman of the Board
/s/ Robert A. McNeil
----------------------------------------
Robert A. McNeil
F-1
McNeil Partnerships to Merge With an Affiliate of Whitehall
DALLAS, Texas, June 25, 1999 -- McNeil Partners, L.P., a privately held sponsor
of real estate partnerships, and WXI/McN Realty L.L.C., an affiliate of
Whitehall Street Real Estate Limited Partnership XI, a real estate investment
fund managed by Goldman, Sachs & Co., today announced that they have entered
into a definitive acquisition agreement whereby the Whitehall affiliate will
acquire by merger nineteen real estate limited partnerships operated by McNeil
Partners, L.P. and Robert A. McNeil. The limited partnerships involved are
McNeil Real Estate Funds IX, X, XI, XII, XIV, XV, XX, XXI, XXII, XXIII, XXIV,
XXV, XXVI and XXVII, Hearth Hollow Associates, McNeil Midwest Properties,
Regency North Associates, Fairfax Associates and McNeil Summerhill
(collectively, the "Partnerships"). The Partnerships (other than Fairfax
Associates and McNeil Summerhill which are wholly-owned by Robert A. McNeil and
related parties) will be merged with subsidiaries of WXI/McN Realty L.L.C. The
acquisition agreement also provides for the acquisition by WXI/McN Realty of the
assets of McNeil Real Estate Management, Inc. ("McREMI"), the real estate
investment and management company controlled by Robert A. McNeil. The aggregate
consideration in the transaction, including all outstanding mortgage debt of the
Partnerships, is approximately $644,440,000.
Pursuant to the terms of the acquisition agreement, the limited partners in each
of the Partnerships (other than those wholly-owned by Robert A. McNeil) will
receive cash on the closing date of the transaction in exchange for their
limited partnership interests. In addition, each Partnership will make a special
distribution to its limited partners on the closing date of the transaction
equal to its then net positive working capital balance. McNeil Partners, L.P.
will receive an equity interest in WXI/McN Realty in exchange for its
contribution of its general partnership interests in the Partnerships, the
limited partnership interests in its wholly owned Partnerships and the assets of
McREMI.
The proposed transaction follows an extensive marketing effort by PaineWebber
Incorporated, exclusive financial advisor to the Partnerships.
The transaction has been unanimously approved by the Board of Directors of
McNeil Investors, Inc., the general partner of McNeil Partners, L.P., the
general partner of each of the Partnerships other than Regency North, Fairfax
Associates and McNeil Summerhill. The respective general partners of Regency
North, Fairfax Associates and McNeil Summerhill also have approved the
transaction. The Board of Directors of McNeil Investors based its approval upon,
among other things, the recommendation of a Special Committee of the Board,
appointed at the beginning of the discussions with Whitehall to represent the
interests of holders of limited partnership interests in each of the
Partnerships. In addition, the Special Committee and the Board relied upon
fairness opinions given by Robert A. Stanger & Co., Inc. ("Stanger & Co."), an
independent financial advisor to the Partnerships, to the effect that the
aggregate consideration is fair to the holders of each class of limited
partnership interests in each Partnership. The Special Committee's
recommendation was also based upon the separate opinions of Eastdil Realty
Company, the independent financial advisor to the Special Committee. Stanger &
Co. and Eastdil have each also rendered an opinion that the aggregate
consideration to be paid for the general partnership interests and limited
partnership interests in all of the Partnerships and the assets of McREMI is
fair from a financial point of view to the holders of each class of limited
partnership interests in each of the Partnerships.
<PAGE>
Each Partnership's participation in the transaction is subject to, among other
conditions, the approval by a majority of the limited partners of that
Partnership. The approval of the limited partners of the Partnerships will be
sought at meetings to be held in the coming months after the filing of proxy
statements with the Securities and Exchange Commission with respect to the
publicly traded Partnerships, and the subsequent mailing of proxy statements to
the limited partners.
The aggregate consideration in the transaction has been allocated preliminarily
among the general partnership interests and the limited partnership interests in
each of the Partnerships and McREMI, based upon an allocation analysis prepared
by Stanger & Co. and confirmed by Eastdil. Based upon this allocation analysis
and the fairness opinions rendered by Stanger & Co. and Eastdil, the Special
Committee, the Board of Directors of McNeil Investors, the respective general
partners of Regency North, Fairfax Associates and McNeil Summerhill have each
unanimously approved the allocation of the aggregate consideration. The
estimated aggregate consideration and working capital distribution to be
received per unit of limited partnership interest, is currently estimated as
follows:
Estimated
Consideration and
Working Capital Distribution
Partnership Per Unit
- ----------- ----------------------------
McNeil Real Estate Fund IX $ 424
McNeil Real Estate Fund X 234
McNeil Real Estate Fund XI 221
McNeil Real Estate Fund XII 77
McNeil Real Estate Fund XIV 214
McNeil Real Estate Fund XV 160
McNeil Real Estate Fund XX 92
McNeil Real Estate Fund XXI* 99
McNeil Real Estate Fund XXII* 0.25
McNeil Real Estate Fund XXIII* 0.28
McNeil Real Estate Fund XXIV 347
McNeil Real Estate Fund XXV 0.50
McNeil Real Estate Fund XXVI 0.27
McNeil Real Estate Fund XXVII 10.54
Hearth Hollow Associates 40,115
McNeil Midwest Properties 25,840
Regency North Associates 75,916
Fairfax Associates 450,065
McNeil Summerhill 9,309
* Current Income Units ONLY
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McNeil Partners, L.P. will contribute its real estate investment and management
company business to a subsidiary of WXI/McN Realty, L.L.C., along with its
general partnership interests in the Partnerships and its limited partnership
interests in the wholly-owned Partnerships, having an aggregate allocated value,
as determined by Stanger & Co., of approximately $58,640,000, of which
approximately $29,400,000 reflects balances due to McNeil and affiliates as
reflected on the Partnership financial statements as of March 31, 1999.
The above estimates of the per unit estimated merger consideration and working
capital distribution and the interest of McNeil Partners, L.P. are based upon,
among other things, the balance sheet of each Partnership as of March 31, 1999,
adjusted for intangible assets, non-cash liabilities, transaction expenses and
the McNeil Partners, L.P. interest in each Partnership. The McNeil Partners,
L.P. interest in each Partnership includes all amounts payable to McNeil
Partners, L.P. as reflected on the balance sheet as of March 31, 1999, the
McNeil Partners, L.P. general partnership interest in respect of its capital
contribution less the deficit restoration obligation of McNeil Partners, L.P.
pursuant to the partnership agreements. Actual amounts, including the estimate
allocable to McNeil Partners, L.P., will vary with the performance of the
Partnership and McNeil Partners, L.P. through the closing date. The above
estimated merger consideration and special working capital distribution will be
adjusted at closing to reflect the then working capital position of each
Partnership.
Robert and Carole McNeil stated that: "We are very pleased to have entered into
this transaction that will result in the McNeil Partnerships being sold to
Whitehall on a basis which we believe is very favorable to our limited partners.
The price reflects the quality and dedication of our management team who, over
the past 8 years, have worked to optimize the value of these properties. We also
believe that this transaction will provide shorter term liquidity to our limited
partners than would have been obtainable had the partnerships been liquidated on
an individual basis."
Whitehall Street Real Estate Limited Partnership XI is a $2.26 billion equity
fund and is the seventh in a series of funds sponsored and capitalized by
Goldman, Sachs & Co. and its affiliates, along with public and private
investors, to acquire real estate worldwide.
This release contains statements based on current expectations. All of these
statements are forward-looking statements made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. These
statements are not historical and involve risks and uncertainties. Each
Partnership's financial results for future periods may differ materially due to
several factors. These factors include, but are not limited to, the
Partnership's ability to control costs, make necessary capital improvements and
respond to changing economic and competitive factors. With respect to each
publicly held Partnership, further information on the factors that could affect
such Partnership's financial results is included in such Partnership's SEC
filings.
SOURCE McNeil Partners, L.P.
