<PAGE> 1
As filed with the Securities and Exchange Commission on April 2, 1998.
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): MARCH 31, 1998
EXCEL REALTY TRUST, INC.
(Exact Name of Registrant as Specified in its Charter)
<TABLE>
<CAPTION>
<S> <C> <C>
MARYLAND 1-12244 33-0160389
(State or Other Jurisdiction of (Commission File Number) (I.R.S. Employer Identification
Incorporation) No.)
</TABLE>
16955 VIA DEL CAMPO, SUITE 110
SAN DIEGO, CALIFORNIA
(Address of Principal Executive Offices)
92127
(Zip Code)
(619) 485-9400
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former Name or Former Address, if Changed Since Last Report)
Page 1 of 76
Exhibit Index on Page 5
<PAGE> 2
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On March 31, 1998, Excel Realty Trust, Inc., a Maryland corporation
("Excel"), consummated its previously-announced spin-off of Excel Legacy
Corporation, a Delaware corporation ("Legacy"), through the distribution to the
holders of record of Excel common stock on March 2, 1998 (the "Record Date") of
all of the common stock of Legacy (the "Distribution"), pursuant to a
Distribution Agreement dated as of March 31, 1998 (the "Distribution Agreement")
among Excel, Legacy and ERT Development Corporation. Each holder of Excel common
stock received one share of Legacy common stock for each share of Excel common
stock owned on the Record Date. No consideration was paid by the holders of
Excel common stock in exchange for the Legacy common stock. Based on the
23,160,757 shares of Excel common stock outstanding on the Record Date,
23,160,757 shares of Legacy common stock were distributed to such holders. The
Legacy common stock is currently quoted and traded on the OTC Bulletin Board
under the symbol "XLCY." The Legacy common stock was registered under the
Securities Exchange Act of 1934, as amended, under a Registration Statement on
Form 10 which included an information statement about the Distribution (the
"Information Statement"), copies of which were mailed to Excel's stockholders.
The final version of the Information Statement was filed by Legacy with the
Securities and Exchange Commission on a Form 8-K dated March 26, 1998. A copy of
the Distribution Agreement is attached hereto as Exhibit 2.1 and is incorporated
herein by reference.
Additional information concerning the assets and liabilities
transferred to Legacy and the continuing relationship between Excel and Legacy
is contained in the Information Statement. In connection with the Distribution,
and in addition to the Distribution Agreement, Excel and Legacy entered into an
Administrative Services Agreement, Intercompany Agreement, Tax Sharing Agreement
and Transitional Services Agreement, copies of which are attached hereto as
exhibits and are incorporated herein by reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits.
2.1 Distribution Agreement, dated as of March 31, 1998, by and among
Excel Realty Trust, Inc., Excel Legacy Corporation and ERT
Development Corporation.
10.1 Administrative Services Agreement, dated as of March 31, 1998, by
and between Excel Realty Trust, Inc. and Excel Legacy
Corporation.
10.2 Intercompany Agreement, dated as of March 31, 1998, by and
between Excel Realty Trust, Inc. and Excel Legacy Corporation.
10.3 Tax Sharing Agreement, dated as of March 31, 1998, by and between
Excel Realty Trust, Inc. and Excel Legacy Corporation.
2
<PAGE> 3
10.4 Transitional Services Agreement, dated as of March 31, 1998, by
and between Excel Realty Trust, Inc. and Excel Legacy
Corporation.
3
<PAGE> 4
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 hereunto duly authorized.
Date: April 2, 1998 EXCEL REALTY TRUST, INC.
By: /s/ Richard B. Muir
--------------------------------
Richard B. Muir
Executive Vice President and
Secretary
4
<PAGE> 5
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
2.1 Distribution Agreement, dated as of March 31, 1998, by and among
Excel Realty Trust, Inc., Excel Legacy Corporation and ERT
Development Corporation.
10.1 Administrative Services Agreement, dated as of March 31, 1998,
by and between Excel Realty Trust, Inc. and Excel Legacy
Corporation.
10.2 Intercompany Agreement, dated as of March 31, 1998, by and
between Excel Realty Trust, Inc.and Excel Legacy Corporation.
10.3 Tax Sharing Agreement, dated as of March 31, 1998, by and
between Excel Realty Trust, Inc. and Excel Legacy Corporation.
10.4 Transitional Services Agreement, dated as of March 31, 1998, by
and between Excel Realty Trust, Inc. and Excel Legacy
Corporation.
</TABLE>
5
<PAGE> 1
EXHIBIT 2.1
DISTRIBUTION AGREEMENT
among
EXCEL REALTY TRUST, INC.
ERT DEVELOPMENT CORPORATION
and
EXCEL LEGACY CORPORATION
dated as of
March 31, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
ARTICLE I. DEFINITIONS..................................................................... 2
Section 1.01 General.......................................................... 2
Section 1.02. Terms Defined Elsewhere in Agreement............................. 11
ARTICLE II. TRANSFER OF ASSETS............................................................. 11
Section 2.01 Transfer of Assets to Legacy..................................... 11
Section 2.02 Consideration.................................................... 12
Section 2.03 Transfers Not Effected Prior to the Distribution................. 12
Section 2.04 Cooperation Re: Assets.......................................... 13
Section 2.05 No Representations or Warranties; Consents....................... 14
Section 2.06 Conveyancing and Assumption Instruments.......................... 15
Section 2.07. Cash Management.................................................. 15
ARTICLE III. ASSUMPTION AND SATISFACTION OF LIABILITIES.................................... 16
Section 3.01. Assumption and Satisfaction of Liabilities...................... 17
ARTICLE IV. THE DISTRIBUTION............................................................... 17
Section 4.01. Cooperation Prior to the Distribution........................... 17
Section 4.02. Excel and EDV Board Action; Conditions Precedent
to the Distribution............................................. 18
Section 4.03. The Distribution................................................ 19
Section 4.04. Cash in Lieu of Fractional Shares............................... 19
ARTICLE V. INDEMNIFICATION................................................................. 19
Section 5.01. Indemnification by Excel........................................ 19
Section 5.02. Indemnification by EDV.......................................... 20
Section 5.03. Indemnification by Legacy....................................... 20
Section 5.04. Insurance Proceeds.............................................. 21
Section 5.05. Procedure for Indemnification................................... 21
Section 5.06. Remedies Cumulative............................................. 25
Section 5.07. Survival of Indemnities......................................... 26
ARTICLE VI. CERTAIN ADDITIONAL MATTERS..................................................... 26
Section 6.01. Legacy Board.................................................... 26
Section 6.02. Certificate and Bylaws.......................................... 26
Section 6.03. Certain Post-Distribution Transactions.......................... 26
Section 6.04. Notices by Excel................................................ 28
ARTICLE VII. ACCESS TO INFORMATION AND SERVICES............................................ 28
Section 7.01. Provision of Corporate Records.................................. 28
Section 7.02. Access to Information........................................... 29
</TABLE>
i
<PAGE> 3
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Section 7.03. Production of Witnesses......................................... 30
Section 7.04. Reimbursement................................................... 30
Section 7.05. Retention of Records............................................ 30
Section 7.06. Confidentiality................................................. 31
Section 7.07. Privileged Matters.............................................. 31
ARTICLE VIII. INSURANCE.................................................................... 34
Section 8.01. Policies and Rights Included Within the Legacy Assets........... 34
Section 8.02. Post-Distribution Date Claims................................... 35
Section 8.03. Administration and Reserves..................................... 35
Section 8.04. Agreement for Waiver of Conflict and Shared Defense............. 37
ARTICLE IX. MISCELLANEOUS.................................................................. 37
Section 9.01. Complete Agreement; Construction................................ 37
Section 9.02. Expenses........................................................ 37
Section 9.03. Governing Law................................................... 37
Section 9.04. Notices......................................................... 38
Section 9.05. Amendments...................................................... 38
Section 9.06. Successors and Assigns.......................................... 38
Section 9.07. Termination..................................................... 38
Section 9.08. Subsidiaries.................................................... 39
Section 9.09. No Third-Party Beneficiaries.................................... 39
Section 9.10. Titles and Headings............................................. 39
Section 9.11. Exhibits and Schedules.......................................... 39
Section 9.12. Legal Enforceability............................................ 39
Section 9.13. Arbitration of Disputes......................................... 40
</TABLE>
EXHIBITS
Exhibit A: Administrative Services Agreement
Exhibit B: Legacy Bylaws
Exhibit C: Legacy Certificate
Exhibit D: Legacy Employees
Exhibit E: Tax Sharing Agreement
Exhibit F: Transitional Services Agreement
ii
<PAGE> 4
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT (this "Agreement") is made as of this
31st day of March, 1998 among Excel Realty Trust, Inc., a Maryland corporation
("Excel"), ERT Development Corporation, a Delaware corporation ("EDV"), and
Excel Legacy Corporation, a Delaware corporation and a wholly-owned subsidiary
of Excel ("Legacy").
RECITALS
WHEREAS, Excel and EDV, of which Excel owns 100% of the
outstanding preferred shares, (i) acquire, develop, own and manage certain real
estate assets, including neighborhood and community shopping centers and other
retail and commercial properties, and (ii) hold certain notes receivable;
WHEREAS, the Boards of Directors of Excel and EDV have each
determined that it is in the best interests of their respective stockholders to
transfer to Legacy certain real properties, notes receivable and related assets
and liabilities currently held by Excel and EDV (the "Asset Transfers"), and
thereafter to distribute all of the outstanding shares of common stock, par
value $.01 per share, of Legacy to the holders of Excel common stock (the
"Distribution");
WHEREAS, in connection with the Distribution, Excel, EDV and
Legacy have determined that it is necessary and desirable to set forth the
principal corporate transactions required to effect the Asset Transfers and the
Distribution, and to set forth the agreements that will govern certain matters
following the Distribution.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby agree
as follows:
<PAGE> 5
ARTICLE I.
DEFINITIONS
Section 1.01 General. As used in this Agreement, the following
terms shall have the following meanings:
Action: Any action, claim, suit, arbitration, inquiry, proceeding
or investigation by or before any court, any governmental or other regulatory or
administrative agency or commission or any arbitration tribunal.
Administrative Services Agreement: The Administrative Services
Agreement between Excel and Legacy, which agreement shall be entered into on or
prior to the Distribution Date in substantially the form of Exhibit A attached
hereto.
Affiliate: With respect to any specified Person, any other Person
directly or indirectly controlling or controlled by, or under direct or indirect
common control with, such specified Person. For purposes of this definition,
"control," when used with respect to any Person, means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" shall have meanings correlative to the foregoing.
Notwithstanding the foregoing, (i) the Affiliates of Excel shall not include
Legacy or any other Person which would be an Affiliate of Excel by reason of
Excel's ownership of the capital stock of Legacy prior to the Distribution or
the fact that any officer or director of Legacy shall also serve as an officer
or director of Excel, (ii) the Affiliates of EDV shall not include Legacy or any
other Person which would be an Affiliate of EDV by reason of the fact that any
officer or director or Legacy shall also serve as an officer or director of EDV,
and (iii) the Affiliates of Legacy shall not include Excel, EDV or any other
Person which would be an Affiliate of Legacy by reason of Excel's ownership of
the capital stock of Legacy prior to the
2
<PAGE> 6
Distribution or the fact that any officer or director of Legacy shall also serve
as an officer or director of Excel or EDV.
Agent: The distribution agent appointed by Excel to distribute
the Legacy Common Stock pursuant to the Distribution.
Commission: The Securities and Exchange Commission.
Conveyancing and Assumption Instruments: Collectively, the
various agreements, instruments and other documents to be entered into to effect
the Asset Transfers and the assumption of Liabilities in the manner contemplated
by this Agreement and the Related Agreements.
Distribution Date: The date determined by the Excel Board as the
date on which the Distribution shall be effected, which Distribution Date is
contemplated by the Excel Board to occur on or about March 31, 1998.
Distribution Record Date: The date established by the Excel Board
as the date for taking a record of the Holders of Excel Common Stock entitled to
participate in the Distribution, which Distribution Record Date has been
established as March 2, 1998, subject to the fulfillment on or before March 31,
1998 of certain conditions to the Distribution as provided in Section 4.02.
EDV Board: The Board of Directors of EDV.
EDV Books and Records: The books and records (including
computerized records) of EDV and all books and records owned by Legacy which
relate to the EDV Retained Business or are necessary to operate the EDV Retained
Business, or are required by law to be retained by EDV, all files relating to
any Action pertaining to the EDV Retained Liabilities, original corporate minute
books, stock ledgers and certificates and corporate seals, and all licenses,
leases, agreements and filings, relating to EDV or the EDV Retained Business
(but not including the Legacy Books and Records, provided that EDV shall have
access to, and shall have the right to obtain duplicate copies of, the Legacy
Books and Records in accordance with the provisions of Article VII).
3
<PAGE> 7
EDV Common Stock: The common stock, par value $.0001 per share,
of EDV.
EDV Notes: The notes receivable listed on Schedule 1.01(a).
EDV Real Estate Assets: The real estate assets listed on Schedule
1.01(b).
EDV Retained Assets: The assets of EDV other than the Legacy
Assets transferred to Legacy by EDV, including without limitation (i) assets
relating to the EDV Retained Business, (iii) all of the assets expressly
allocated to EDV under this Agreement or the Related Agreements, and (iv) any
other assets of EDV and its Affiliates relating to the EDV Retained Business.
EDV Retained Business: The businesses conducted by EDV pursuant
to or utilizing the EDV Retained Assets, including without limitation, the
acquisition, development, ownership and management of real estate assets.
EDV Retained Liabilities: (i) All of the Liabilities arising out
of or in connection with the EDV Retained Assets or the EDV Retained Business,
(ii) all of the Liabilities of EDV under, or to be retained or assumed by EDV
pursuant to, this Agreement or any of the Related Agreements, (iii) any
Financing Obligations not constituting Legacy Liabilities or Excel Retained
Liabilities, (iv) all Liabilities for the payment of outstanding drafts of EDV
attributable to the EDV Retained Business existing as of the Distribution Date,
and (v) all other Liabilities of EDV not constituting Legacy Liabilities.
EDV Retained Policies: All Policies, current or past, which are
owned or maintained by or on behalf of EDV (or any of its predecessors) which
relate to the EDV Retained Business but do not relate to the Legacy Business.
Excel Board: The Board of Directors of Excel.
Excel Books and Records: The books and records (including
computerized records) of Excel and all books and records owned by Legacy which
relate to the Excel Retained Business or are necessary to operate the Excel
Retained Business, or are required by law to be retained by Excel,
4
<PAGE> 8
including without limitation, all files relating to any Action pertaining to the
Excel Retained Liabilities, original corporate minute books, stock ledgers and
certificates and corporate seals, and all licenses, leases, agreements and
filings, relating to Excel or the Excel Retained Business (but not including the
Legacy Books and Records, provided that Excel shall have access to, and shall
have the right to obtain duplicate copies of, the Legacy Books and Records in
accordance with the provisions of Article VII).
Excel Common Stock: The common stock, par value $.01 per share,
of Excel.
Excel Notes: The notes listed on Schedule 1.01(c).
Excel Real Estate Assets: The real estate assets listed on
Schedule 1.01(d).
Excel Retained Assets: The assets of Excel other than the Legacy
Assets transferred to Legacy by Excel, including without limitation (i) assets
relating to the Excel Retained Business, (iii) all of the assets expressly
allocated to Excel under this Agreement or the Related Agreements, and (iv) any
other assets of Excel and its Affiliates relating to the Excel Retained
Business.
Excel Retained Business: The businesses conducted by Excel
pursuant to or utilizing the Excel Retained Assets, including without
limitation, the acquisition, development, ownership and management of real
estate assets, including neighborhood and community shopping centers and other
retail and commercial properties.
Excel Retained Liabilities: (i) All of the Liabilities arising
out of or in connection with the Excel Retained Assets or the Excel Retained
Business, (ii) all Liabilities arising out of or in connection with any lawsuits
relating to the Distribution (other than those Liabilities relating to employee
claims which shall be allocated pursuant to the Administrative Services
Agreement), (iii) all of the Liabilities of Excel under, or to be retained or
assumed by Excel pursuant to, this Agreement or any of the Related Agreements,
(iv) any Financing Obligations not constituting Legacy Liabilities or EDV
Retained Liabilities, (v) all Liabilities for the payment of outstanding drafts
of Excel
5
<PAGE> 9
attributable to the Excel Retained Business existing as of the Distribution
Date, and (vi) all other Liabilities of Excel not constituting Legacy
Liabilities.
Excel Retained Policies: All Policies, current or past, which are
owned or maintained by or on behalf of Excel (or any of its predecessors) which
relate to the Excel Retained Business but do not relate to the Legacy Business.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Financing Obligations: All (i) indebtedness for borrowed money,
(ii) obligations evidenced by bonds, notes, debentures or similar instruments,
(iii) obligations under capitalized leases and deferred purchase arrangements,
(iv) reimbursement or other obligations relating to letters of credit or similar
arrangements, and (v) obligations to guarantee, directly or indirectly, any of
the foregoing types of obligations on behalf of others.
Holders: The holders of record of Excel Common Stock as of the
Distribution Record Date.
Insurance Proceeds: Those moneys (i) received by an insured from
an insurance carrier or (ii) paid by an insurance carrier on behalf of the
insured, in either case net of any applicable premium adjustment,
retrospectively-rated premium, deductible, retention, cost or reserve paid or
held by or for the benefit of such insured.
Insured Claims: Those Liabilities that, individually or in the
aggregate, are covered within the terms and conditions of any of the Policies,
whether or not subject to deductibles, co-insurance, uncollectability or
retrospectively-rated premium adjustments, but only to the extent that such
Liabilities are within applicable Policy limits, including aggregates.
Legacy Board: The Board of Directors of Legacy.
Legacy Books and Records: The books and records (including
computerized records) of Legacy and all books and records owned by Excel and EDV
which relate to the Legacy Business
6
<PAGE> 10
or are necessary to operate the Legacy Business, including, without limitation,
all such books and records relating to Legacy Employees, all files relating to
any Action being assumed by Legacy as part of the Legacy Liabilities, original
corporate minute books, stock ledgers and certificates and corporate seals, and
all licenses, leases, agreements and filings, relating to Legacy or the Legacy
Business (but not including the Excel Books and Records or the EDV Books and
Records, provided that Legacy shall have access to, and have the right to obtain
duplicate copies of, the Excel Books and Records and the EDV Books and Records
in accordance with the provisions of Article VII).
Legacy Bylaws: The Amended and Restated Bylaws of Legacy,
substantially in the form of Exhibit B, to be in effect at the Distribution
Date.
Legacy Certificate: The Amended and Restated Certificate of
Incorporation of Legacy, substantially in the form of Exhibit C, to be in effect
at the Distribution Date.
Legacy Common Stock: The common stock, par value $.01 per share,
of Legacy.
Legacy Employees: All of the Legacy employees at the time of the
Distribution, as identified on Exhibit D.
Legacy Liabilities: (i) All of the Liabilities of Legacy under,
or to be retained or assumed by Legacy pursuant to, this Agreement or any of the
Related Agreements, including those set forth on Schedule 1.01(e), (ii) all
Liabilities for payment of outstanding drafts of Excel or EDV attributable to
the Legacy Business existing as of the Distribution Date, and (iii) all
Liabilities arising out of or in connection with any of the Legacy Assets or the
Legacy Business.
Legacy Policies: All Policies, current or past, which are owned
or maintained by or on behalf of Excel or EDV or any of their Affiliates or
predecessors, which relate to the Legacy Business but do not relate to the
Retained Businesses, and which Policies are either maintained by Legacy or
assignable to Legacy.
7
<PAGE> 11
Liabilities: Any and all debts, liabilities and obligations,
absolute or contingent, matured or unmatured, liquidated or unliquidated,
accrued or unaccrued, known or unknown, whenever arising, including all costs
and expenses relating thereto, and including, without limitation, those debts,
liabilities and obligations arising under any law, rule, regulation, Action,
threatened Action, order or consent decree of any governmental entity or any
award of any arbitrator of any kind, and those arising under any contract,
commitment or undertaking.
Notes: The Excel Notes and the EDV Notes, collectively.
Person: Any individual, corporation, partnership, association,
trust, estate or other entity or organization, including any governmental entity
or authority.
Policies: Insurance policies and insurance contracts of any kind
relating to the Legacy Business or the Retained Businesses as conducted prior to
the Distribution Date, including without limitation primary and excess policies,
comprehensive general liability policies, automobile and workers' compensation
insurance policies, and self-insurance and captive insurance company
arrangements, together with the rights, benefits and privileges thereunder.
Privileges: All privileges that may be asserted under applicable
law, including, without limitation, privileges arising under or relating to the
attorney-client relationship (including but not limited to the attorney-client
and work product privileges), the accountant-client privilege, and privileges
relating to internal evaluative processes.
Privileged Information: All Information as to which Excel, EDV,
Legacy or any of their Subsidiaries are entitled to assert the protection of a
Privilege.
Related Agreements: All of the agreements, instruments,
understandings, assignments or other arrangements which are entered into in
connection with the transactions contemplated hereby and which are set forth in
a writing, including, without limitation (i) the Conveyancing and
8
<PAGE> 12
Assumption Instruments, (ii) the Administrative Services Agreement, (iii) the
Tax Sharing Agreement, and (iv) the Transitional Services Agreement.
Retained Assets: The Excel Retained Assets and the EDV Retained
Assets, collectively.
Retained Businesses: The Excel Retained Business and the EDV
Retained Business, collectively.
Retained Liabilities: The Excel Retained Liabilities and the EDV
Retained Liabilities, collectively.
Retained Policies: The Excel Retained Policies and the EDV
Retained Policies, collectively.
Shared Policies: All Policies, current or past, which are owned
or maintained by or on behalf of Excel, EDV or their predecessors which relate
to both the Retained Businesses and the Legacy Business, and all other Policies
not constituting Legacy Policies or Retained Policies.
Subsidiary: With respect to any Person, (a) any corporation of
which at least a majority in interest of the outstanding voting stock (having by
the terms thereof voting power under ordinary circumstances to elect a majority
of the directors of such corporation, irrespective of whether or not at the time
stock of any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the time,
directly or indirectly, owned or controlled by such Person, by one or more
Subsidiaries of such Person, or by such Person and one or more of its
Subsidiaries, or (b) any non-corporate entity in which such Person, one or more
Subsidiaries of such Person, or such Person and one or more Subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has at
least majority ownership interest.
9
<PAGE> 13
Tax Sharing Agreement: The Tax Sharing Agreement between Legacy
and Excel, which agreement shall be entered into on or prior to the Distribution
Date in substantially the form of Exhibit E attached hereto.
Transitional Services Agreement: The agreement to be entered into
between Excel and Legacy on or prior to the Distribution Date, providing for the
furnishing of certain services on a transitional basis after the Distribution
Date, in substantially the form attached hereto as Exhibit F.
10
<PAGE> 14
Section 1.02. Terms Defined Elsewhere in Agreement.
Each of the following terms is defined in the Section set forth
opposite such term:
<TABLE>
<CAPTION>
Term Section
- ---- -------
<S> <C>
Asset Transfers Recitals
Consents 4.01(c)
Distribution Recitals
EDV/Legacy Indemnifiable Losses 5.02
Excel Recitals
Excel/EDV Indemnitees 5.03
Excel/EDV Indemnifiable Losses 5.03
Excel/Legacy Indemnifiable Losses 5.01
Indemnifiable Losses 5.03
Indemnifying Party 5.04
Indemnitee 5.04
Information 7.02
Legacy Recitals
Legacy Assets 2.01(c)
Legacy Business Recitals
Legacy Indemnitees 5.01
Pending Action 5.05(h)
Third-Party Claim 5.05(a)
</TABLE>
ARTICLE II.
TRANSFER OF ASSETS
Section 2.01 Transfer of Assets to Legacy.
(a) Prior to the Distribution Date, Excel shall take or cause to
be taken all actions necessary to cause the transfer, assignment, delivery and
conveyance to Legacy of all of Excel's right, title and interest in the
following assets:
(i) the Excel Real Estate Assets;
(ii) the Excel Notes;
(iii) the Legacy Books and Records;
(iv) all of the other assets to be assigned to Legacy by
Excel under this Agreement or the Related Agreements; and
11
<PAGE> 15
(v) all other assets relating to the Legacy Business held
by Excel.
(b) Prior to the Distribution Date, EDV shall take or cause to be
taken all actions necessary to cause the transfer, assignment, delivery and
conveyance to Legacy of all of EDV's right, title and interest in the following
assets:
(i) the EDV Real Estate Assets;
(ii) the EDV Notes;
(iii) the Legacy Books and Records;
(iv) all of the other assets to be assigned to Legacy by
EDV under this Agreement or the Related Agreements; and
(v) all other assets relating to the Legacy Business held
by EDV.
(c) The "Legacy Assets" shall consist of the assets transferred
to Legacy by Excel and EDV pursuant to this Section 2.1.
Section 2.02 Consideration for Asset Transfers. As consideration
for the foregoing asset transfers:
(a) On or prior to the Distribution Date, Excel shall receive
from Legacy (i) a sufficient number of shares of Legacy Common Stock to effect
the Distribution to the Holders of Excel Common Stock, and (ii) a promissory
note payable to Excel in the amount of $21.4 million.
(b) On or prior to the Distribution Date, EDV shall receive
evidence of the cancellation of certain indebtedness of EDV currently held by
Excel in the amount of $33.3 million.
Section 2.03 Transfers Not Effected Prior to the Distribution. To
the extent that any transfers contemplated by this Article II shall not have
been fully effected on the Distribution Date, the parties shall cooperate to
effect such transfers as promptly as shall be practicable following the
Distribution Date. Nothing herein shall be deemed to require the transfer of any
assets or the assumption of any Liabilities which by their terms or operation of
law cannot be transferred or
12
<PAGE> 16
assumed; provided, however, that Excel, EDV and Legacy and their respective
Subsidiaries and Affiliates shall cooperate in seeking to obtain any necessary
consents or approvals for the transfer of all assets and Liabilities
contemplated to be transferred pursuant to this Article II. In the event that
any such transfer of assets or Liabilities has not been consummated effective as
of the Distribution Date, the party retaining such asset or Liability shall
thereafter hold such asset in trust for the use and benefit of the party
entitled thereto (at the expense of the party entitled thereto) and retain such
Liability for the account of the party by whom such Liability is to be assumed
pursuant hereto, and take such other actions as may be reasonably required in
order to place the parties, insofar as reasonably possible, in the same position
as would have existed had such asset been transferred or such Liability been
assumed as contemplated hereby. As and when any such asset or Liability becomes
transferable, such transfer and assumption shall be effected forthwith. The
parties agree that, except as set forth in this Section 2.03, as of the
Distribution Date, each party hereto shall be deemed to have acquired complete
and sole beneficial ownership over all of the assets, together with all rights,
powers and privileges incidental thereto, and shall be deemed to have assumed in
accordance with the terms of this Agreement all of the Liabilities, and all
duties, obligations and responsibilities incidental thereto, which such party is
entitled to acquire or required to assume pursuant to the terms of this
Agreement.
Section 2.04 Cooperation Re: Assets. In the case that at any time
after the Distribution Date, Legacy reasonably determines that any of the Excel
Retained Assets or the EDV Retained Assets are essential for the conduct of the
Legacy Business, or Excel reasonably determines that any of the Legacy Assets
are essential for the conduct of the Excel Retained Business, or EDV reasonably
determines that any of the Legacy Assets are essential for the conduct of the
EDV Retained Business, and the nature of such assets makes it impracticable for
Legacy, Excel or EDV, as the case may be, to obtain substitute assets or to make
alternative arrangements on commercially
13
<PAGE> 17
reasonable terms to conduct their respective businesses, and reasonable
provisions for the use thereof are not already included in the Related
Agreements, then Legacy (with respect to the Legacy Assets), Excel (with respect
to the Excel Retained Assets) and EDV (with respect to the EDV Retained Assets)
shall cooperate to make such assets available to the appropriate party on
commercially reasonable terms, as may be reasonably required for such party to
maintain normal business operations (provided that such assets shall be required
to be made available only until such time as the other party may reasonably
obtain substitute assets or make alternative arrangements on commercially
reasonable terms to permit it to maintain normal business operations).
Section 2.05 No Representations or Warranties; Consents. Each of
the parties hereto understands and agrees that no party hereto is, in this
Agreement or in any other agreement or document contemplated by this Agreement
or otherwise, representing or warranting in any way (i) as to the value or
freedom from encumbrance of, or any other matter concerning, any assets of such
party or (ii) as to the legal sufficiency to convey title to any asset
transferred pursuant to this Agreement or any Related Agreement, including,
without limitation, any Conveyancing and Assumption Instruments. It is also
agreed and understood that there are no warranties, express or implied, as to
the merchantability or fitness of any of the assets either transferred to or
retained by the parties, as the case may be, and all such assets shall be "as
is, where is" and "with all faults" (provided, however, that the absence of
warranties shall have no effect upon the allocation of liabilities under this
Agreement). Similarly, each party hereto understands and agrees that no party
hereto is, in this Agreement or in any other agreement or document contemplated
by this Agreement or otherwise, representing or warranting in any way that the
obtaining of any consents or approvals, the execution and delivery of any
amendatory agreements and the making of any filings or applications contemplated
by this Agreement will satisfy the provisions of any or all applicable laws or
judgments or other instruments or agreements relating to such assets.
Notwithstanding the
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foregoing, the parties shall use their good faith efforts to obtain all consents
and approvals, to enter into all reasonable amendatory agreements and to make
all filings and applications which may be reasonably required for the
consummation of the transactions contemplated by this Agreement, and shall take
all such further reasonable actions as shall be reasonably necessary to preserve
for each of Excel, EDV and Legacy, to the greatest extent feasible, the economic
and operational benefits of the allocation of assets and liabilities provided
for in this Agreement. In case at any time after the Distribution Date any
further action is necessary or desirable to carry out the purposes of this
Agreement, the proper officers and directors of each party to this Agreement
shall take all such necessary or desirable action.
Section 2.06 Conveyancing and Assumption Instruments. In
connection with the Asset Transfers and the assumptions of Liabilities
contemplated by this Agreement, the parties shall execute or cause to be
executed by the appropriate entities the Conveyancing and Assumption Instruments
in such forms as the parties shall reasonably agree, including the transfer of
real property with deeds as may be appropriate, and the assignment of trademarks
and other intellectual property rights. The transfer of capital stock shall be
effected by means of delivery of stock certificates and executed stock powers
and notation on the stock record books of the corporation or other legal
entities involved and, to the extent required by applicable law, by notation on
public registries.
Section 2.07. Cash Management.
(a) Cash Management After the Distribution Date. Legacy shall
establish and maintain a separate cash management system and accounting records
with respect to the Legacy Business effective as of 12:01 a.m. on the day
following the Distribution Date; thereafter, (i) any payments by Excel or EDV on
behalf of Legacy in connection with the Legacy Business (including, without
limitation, any such payments in respect of Liabilities or other obligations of
Legacy under the Administrative Services Agreement) shall be recorded in the
accounts of Legacy as a payable to
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Excel or EDV, as applicable; (ii) any payments by Legacy on behalf of Excel or
EDV in connection with the Excel Retained Business or the EDV Retained Business,
respectively (including, without limitation, any such payments in respect of
Liabilities or other obligations of Excel or EDV under the Administrative
Services Agreement), shall be recorded in the accounts of Excel or EDV, as
applicable, as a payable to Legacy; (iii) any cash payments received by Excel or
EDV relating to the Legacy Business or the Legacy Assets shall be recorded in
the accounts of Excel or EDV, as applicable, as a payable to Legacy; (iv) any
cash payments received by Legacy relating to the Excel Retained Business, the
EDV Retained Business, the Excel Retained Assets or the EDV Retained Assets
shall be recorded in the accounts of Legacy as a payable to Excel or EDV, as
applicable; (v) Excel, EDV and Legacy shall make adjustments for late deposits,
checks returned for not sufficient funds and other post-Distribution Date
transactions as shall be reasonable under the circumstances consistent with the
purpose and intent of this Agreement; and (vi) the net balance due to Excel, EDV
or Legacy, as the case may be, in respect of the aggregate amounts of clauses
(i), (ii), (iii), (iv) and (v) shall be paid by Excel, EDV or Legacy, as
appropriate, as promptly as practicable. For purposes of this Section 2.07(a),
the parties contemplate that the Excel Retained Business, the EDV Retained
Business and the Legacy Business, including but not limited to the
administration of accounts payable and accounts receivable, will be conducted in
the normal course.
(b) All transactions contemplated in this Section 2.07 shall be
subject to audit by the parties, and any dispute thereunder shall be resolved by
Coopers & Lybrand L.L.P. (or, if Coopers & Lybrand L.L.P. is not available, by
such other independent firm of certified public accountants mutually acceptable
to Excel, EDV and Legacy), whose decision shall be final and unappealable.
ARTICLE III.
ASSUMPTION AND SATISFACTION OF LIABILITIES
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Section 3.01. Assumption and Satisfaction of Liabilities. Except
as set forth in the Administrative Services Agreement, the Tax Sharing Agreement
or the other Related Agreements, effective as of and after the Distribution
Date, (a) Legacy shall assume, pay, perform and discharge in due course all of
the Legacy Liabilities, (b) Excel shall pay, perform and discharge in due course
all of the Excel Retained Liabilities, and (c) EDV shall pay, perform and
discharge in due course all of the EDV Retained Liabilities.
ARTICLE IV.
THE DISTRIBUTION
Section 4.01. Cooperation Prior to the Distribution.
(a) Excel, EDV and Legacy shall cooperate in preparing, filing
with the Commission and causing to become effective any registration statements
or amendments thereof which are appropriate to reflect the establishment of, or
amendments to, any employee benefit plans and other plans contemplated by the
Administrative Services Agreement.
(b) Excel, EDV and Legacy shall take all such action as may be
necessary or appropriate under the securities or blue sky laws of states or
other political subdivisions of the United States in connection with the
transactions contemplated by this Agreement and the Related Agreements.
(c) Excel, EDV and Legacy shall use all reasonable efforts to
obtain any third-party consents or approvals necessary or desirable in
connection with the transactions contemplated hereby ("Consents").
(d) Excel, EDV and Legacy will use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, all
things necessary or desirable under applicable law, to consummate the
transactions contemplated under this Agreement and the Related Agreements.
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Section 4.02. Excel and EDV Board Action; Conditions Precedent to
the Distribution. The Excel Board and the EDV Board shall, in their discretion,
establish any appropriate procedures in connection with the Distribution. In no
event shall the Distribution occur unless the following conditions shall have
been satisfied:
(a) the transactions contemplated by Sections 2.01 and 2.02 shall
have been consummated in all material respects;
(b) the Legacy Board, comprised as contemplated by Section 6.01,
shall have been elected, and the Legacy Certificate and Legacy Bylaws shall have
been adopted and shall be in effect;
(c) Excel, EDV and Legacy shall have obtained all Consents, the
failure of which to obtain would, in the determination of each of the Excel
Board and the EDV Board, have a material adverse effect on Excel, EDV or Legacy;
(d) the Registration Statement on Form 10 under the Exchange Act
filed by Legacy shall have been declared effective by the Commission;
(e) the Legacy Common Stock shall have been approved for
quotation and trading on the OTC Bulletin Board subject to official notice of
issuance; and
(f) Excel, EDV and Legacy shall have entered into the Related
Agreements to which they are a party; provided, however, that (i) any such
condition may be waived by the concurrence of the Excel Board and the EDV Board
in their sole discretion, and (ii) the satisfaction of such conditions shall not
create any obligation on the part of Excel, EDV or any other party hereto to
effect the Distribution or in any way limit Excel's and EDV's power of
termination set forth in Section 9.07 or alter the consequences of any such
termination from those specified in such Section.
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Section 4.03. The Distribution. On the Distribution Date, subject
to the conditions and rights of termination set forth in this Agreement, Excel
shall deliver to the Agent a share certificate representing all of the then
outstanding shares of Legacy Common Stock owned by Excel and shall instruct the
Agent to distribute, on or as soon as practicable following the Distribution
Date, such Legacy Common Stock to the Holders. Legacy agrees to provide all
share certificates that the Agent shall require in order to effect the
Distribution.
Section 4.04. Cash in Lieu of Fractional Shares. No certificate
or scrip representing fractional shares of Legacy Common Stock shall be issued
as part of the Distribution and in lieu thereof, each holder of Excel Common
Stock who would otherwise be entitled to receive a fractional share of Legacy
Common Stock will receive cash for such fractional share. Excel shall instruct
the Agent to determine the number of whole shares and fractional shares of
Legacy Common Stock allocable to each holder of record of Excel Common Stock as
of the Distribution Record Date. Excel shall instruct the Agent to aggregate all
such fractional shares into whole shares and sell the whole shares obtained
thereby in the open market as soon as practicable following the Distribution
Date at then prevailing prices on behalf of Holders who otherwise would be
entitled to receive fractional share interests and to distribute to each such
Holder such Holder's ratable share of the proceeds of such sale as soon as
practicable after the Distribution Date. Excel shall bear the costs of
commissions incurred in connection with such sales.
ARTICLE V.
INDEMNIFICATION
Section 5.01. Indemnification by Excel. Except as otherwise
expressly set forth in a Related Agreement, Excel shall indemnify, defend and
hold harmless Legacy and its directors, officers, employees, agents and
Affiliates and each of the heirs, executors, successors and assigns of any of
the foregoing (the "Legacy Indemnitees") from and against the Excel Retained
Liabilities and
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any and all losses, Liabilities, damages, including, without limitation, the
costs and expenses of any and all Actions, threatened Actions, demands,
assessments, judgments, settlements and compromises relating to the Excel
Retained Liabilities and attorneys' fees and any and all expenses whatsoever
reasonably incurred in investigating, preparing or defending against any such
Actions or threatened Actions (collectively, "Excel/Legacy Indemnifiable Losses"
and, individually, an "Excel/Legacy Indemnifiable Loss") of the Legacy
Indemnitees arising out of or due to the failure or alleged failure of Excel or
any of its Affiliates (i) prior to or after the Distribution Date to pay,
perform or otherwise discharge in due course any of the Excel Retained
Liabilities, or (ii) comply with the provisions of Section 6.04.
Section 5.02. Indemnification by EDV. Except as otherwise
expressly set forth in a Related Agreement, EDV shall indemnify, defend and hold
harmless the Legacy Indemnitees from and against the EDV Retained Liabilities
and any and all losses, Liabilities, damages, including, without limitation, the
costs and expenses of any and all Actions, threatened Actions, demands,
assessments, judgments, settlements and compromises relating to the EDV Retained
Liabilities and attorneys' fees and any and all expenses whatsoever reasonably
incurred in investigating, preparing or defending against any such Actions or
threatened Actions (collectively, "EDV/Legacy Indemnifiable Losses" and,
individually, an "EDV/Legacy Indemnifiable Loss") of the Legacy Indemnitees
arising out of or due to the failure or alleged failure of EDV or any of its
Affiliates (i) prior to or after the Distribution Date to pay, perform or
otherwise discharge in due course any of the EDV Retained Liabilities, or (ii)
comply with the provisions of Section 6.04.
Section 5.03. Indemnification by Legacy. Except as otherwise
expressly set forth in a Related Agreement, Legacy shall indemnify, defend and
hold harmless Excel and EDV and each of their respective directors, officers,
employees, agents and Affiliates and each of the heirs, executors, successors
and assigns of any of the foregoing (the "Excel and EDV Indemnitees") from and
against
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the Legacy Liabilities and any and all losses, Liabilities, damages, including,
without limitation, the costs and expenses of any and all Actions, threatened
Actions, demands, assessments, judgments, settlements and compromises relating
to the Legacy Liabilities and attorneys' fees and any and all expenses
whatsoever reasonably incurred in investigating, preparing or defending against
any such Actions or threatened Actions (collectively, "Excel/EDV Indemnifiable
Losses" and, individually, an "Excel/EDV Indemnifiable Loss") of the Excel and
EDV Indemnitees arising out of or due to the failure or alleged failure of
Legacy or any of its Affiliates (i) prior to or after the Distribution Date to
pay, perform or otherwise discharge in due course any of the Legacy Liabilities
or (ii) comply with the provisions of Section 6.04. The "Excel/Legacy
Indemnifiable Losses," the "EDV/Legacy Indemnifiable Losses," and the "Excel/EDV
Indemnifiable Losses" are collectively referred to as the "Indemnifiable
Losses."
Section 5.04. Insurance Proceeds. The amount which any party (an
"Indemnifying Party") is or may be required to pay to any other Person (an
"Indemnitee") pursuant to Section 5.01, Section 5.02 or Section 5.03 shall be
reduced (including, without limitation, retroactively) by any Insurance Proceeds
or other amounts actually recovered by or on behalf of such Indemnitee in
reduction of the related Indemnifiable Loss. If an Indemnitee shall have
received the payment required by this Agreement from an Indemnifying Party in
respect of an Indemnifiable Loss and shall subsequently actually receive
Insurance Proceeds, or other amounts in respect of such Indemnifiable Loss as
specified above, then such Indemnitee shall pay to such Indemnifying Party a sum
equal to the amount of such Insurance Proceeds or other amounts actually
received.
Section 5.05. Procedure for Indemnification.
(a) Except as may be set forth in a Related Agreement, if an
Indemnitee shall receive notice or otherwise learn of the assertion by a Person
(including, without limitation, any governmental entity) who is not a party to
this Agreement or to any of the Related Agreements of any
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claim or of the commencement by any such Person of any Action (a "Third-Party
Claim") with respect to which an Indemnifying Party may be obligated to provide
indemnification pursuant to this Agreement, such Indemnitee shall give such
Indemnifying Party written notice thereof promptly after becoming aware of such
Third-Party Claim; provided that the failure of any Indemnitee to give notice as
required by this Section 5.05 shall not relieve the Indemnifying Party of its
obligations under this Article V, except to the extent that such Indemnifying
Party is prejudiced by such failure to give notice. Such notice shall describe
the Third-Party Claim in reasonable detail, and shall indicate the amount
(estimated if necessary) of the Indemnifiable Loss that has been or may be
sustained by such Indemnitee.
(b) An Indemnifying Party may elect to defend or to seek to
settle or compromise, at such Indemnifying Party's own expense and by such
Indemnifying Party's own counsel, any Third-Party Claim, provided that the
Indemnifying Party must confirm in writing that it agrees that the Indemnitee is
entitled to indemnification hereunder in respect of such Third-Party Claim.
Within 30 days of the receipt of notice from an Indemnitee in accordance with
Section 5.05(a) (or sooner, if the nature of such Third-Party Claim so
requires), the Indemnifying Party shall notify the Indemnitee of its election
whether to assume responsibility for such Third-Party Claim (provided that if
the Indemnifying Party does not so notify the Indemnitee of its election within
30 days after receipt of such notice from the Indemnitee, the Indemnifying Party
shall be deemed to have elected not to assume responsibility for such
Third-Party Claim), and such Indemnitee shall cooperate in the defense or
settlement or compromise of such Third-Party Claim. After notice from an
Indemnifying Party to an Indemnitee of its election to assume responsibility for
a Third-Party Claim, such Indemnifying Party shall not be liable to such
Indemnitee under this Article V for any legal or other expenses (except expenses
approved in advance by the Indemnifying Party) subsequently incurred by such
Indemnitee in connection with the defense thereof; provided that if the
defendants in
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any such claim include both the Indemnifying Party and one or more Indemnitees
and in such Indemnitees' reasonable judgment a conflict of interest between such
Indemnitees and such Indemnifying Party exists in respect of such claim, such
Indemnitees shall have the right to employ separate counsel and in that event
the reasonable fees and expenses of such separate counsel (but not more than one
separate counsel reasonably satisfactory to the Indemnifying Party) shall be
paid by such Indemnifying Party. If an Indemnifying Party elects not to assume
responsibility for a Third-Party Claim (which election may be made only in the
event of a good faith dispute that a claim was inappropriately tendered under
Section 5.01, 5.02 or 5.03, as the case may be) such Indemnitee may defend or
(subject to the following sentence) seek to compromise or settle such
Third-Party Claim. Notwithstanding the foregoing, an Indemnitee may not settle
or compromise any claim without prior written notice to the Indemnifying Party,
which shall have the option within ten days following the receipt of such notice
(i) to disapprove the settlement and assume all past and future responsibility
for the claim, including reimbursing the Indemnitee for prior expenditures in
connection with the claim, or (ii) to disapprove the settlement and continue to
refrain from participation in the defense of the claim, in which event the
Indemnifying Party shall have no further right to contest the amount or
reasonableness of the settlement if the Indemnitee elects to proceed therewith,
or (iii) to approve the amount of the settlement, reserving the Indemnifying
Party's right to contest the Indemnitee's right to indemnity, or (iv) to approve
and agree to pay the settlement. In the event the Indemnifying Party makes no
response to such written notice from the Indemnitee, the Indemnifying Party
shall be deemed to have elected option (ii).
(c) If an Indemnifying Party chooses to defend or to seek to
compromise any Third-Party Claim, the Indemnitee shall make available to such
Indemnifying Party any personnel and any books, records or other documents
within its control or which it otherwise has the ability to make available that
are necessary or appropriate for such defense.
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(d) Notwithstanding anything else in this Section 5.05 to the
contrary, an Indemnifying Party shall not settle or compromise any Third-Party
Claim unless such settlement or compromise contemplates as an unconditional term
thereof the giving by such claimant or plaintiff to the Indemnitee of a written
release from all liability in respect of such Third-Party Claim (and provided
further that such settlement may not provide for any non-monetary relief by
Indemnitee without the written consent of Indemnitee). In the event the
Indemnitee shall notify the Indemnifying Party in writing that such Indemnitee
declines to accept any such settlement or compromise, such Indemnitee may
continue to contest such Third-Party Claim, free of any participation by such
Indemnifying Party, at such Indemnitee's sole expense. In such event, the
obligation of such Indemnifying Party to such Indemnitee with respect to such
Third-Party Claim shall be equal to (i) the costs and expenses of such
Indemnitee prior to the date such Indemnifying Party notifies such Indemnitee of
the offer to settle or compromise (to the extent such costs and expenses are
otherwise indemnifiable hereunder) plus (ii) the lesser of (A) the amount of any
offer of settlement or compromise which such Indemnitee declined to accept and
(B) the actual out-of-pocket amount such Indemnitee is obligated to pay
subsequent to such date as a result of such Indemnitee's continuing to pursue
such Third-Party Claim.
(e) Any claim on account of an Indemnifiable Loss which does not
result from a Third-Party Claim shall be asserted by written notice given by the
Indemnitee to the applicable Indemnifying Party. Such Indemnifying Party shall
have a period of 15 days after the receipt of such notice within which to
respond thereto. If such Indemnifying Party does not respond within such 15- day
period, such Indemnifying Party shall be deemed to have refused to accept
responsibility to make payment. If such Indemnifying Party does not respond
within such 15-day period or rejects such claim in whole or in part, such
Indemnitee shall be free to pursue such remedies as may be available to such
party under applicable law or under this Agreement.
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(f) In addition to any adjustments required pursuant to Section
5.04, if the amount of any Indemnifiable Loss shall, at any time subsequent to
the payment required by this Agreement, be reduced by recovery, settlement or
otherwise, the amount of such reduction, less any expenses incurred in
connection therewith, shall promptly be repaid by the Indemnitee to the
Indemnifying Party.
(g) In the event of payment by an Indemnifying Party to any
Indemnitee in connection with any Third-Party Claim, such Indemnifying Party
shall be subrogated to and shall stand in the place of such Indemnitee as to any
events or circumstances in respect of which such Indemnitee may have any right
or claim relating to such Third-Party Claim against any claimant or plaintiff
asserting such Third-Party Claim. Such Indemnitee shall cooperate with such
Indemnifying Party in a reasonable manner, and at the cost and expense of such
Indemnifying Party, in prosecuting any subrogated right or claim.
(h) Notwithstanding anything else in this Section 5.05 to the
contrary, with respect to any Action pending at the time of the Distribution (a
"Pending Action") with respect to which an Indemnifying Party may be obligated
to provide indemnification pursuant to this Agreement, Excel, EDV or Legacy
shall, at the request of any other party, cause the employee(s) who were
handling the defense, compromise or settlement of such Pending Action prior to
the Distribution to continue to handle such defense, compromise or settlement
following the Distribution (subject to the last two sentences of subsection (b)
above). If such employees are employed by the Indemnitee, the Indemnitee shall
keep the Indemnifying Party reasonably informed of the progress of, and the
Indemnifying Party shall cooperate in, such defense, compromise or settlement.
Section 5.06. Remedies Cumulative. The remedies provided in this
Article V shall be cumulative and shall not preclude assertion by any Indemnitee
of any other rights or the seeking of any and all other remedies against any
Indemnifying Party.
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Section 5.07. Survival of Indemnities. The obligations of each of
Excel, EDV and Legacy under this Article V shall survive the sale or other
transfer by it of any assets or businesses or the assignment by it of any
Liabilities with respect to any Indemnifiable Loss of the others related to such
assets, businesses or Liabilities.
ARTICLE VI.
CERTAIN ADDITIONAL MATTERS
Section 6.01. Legacy Board. Excel, EDV and Legacy shall take all
actions which may be required to constitute, effective as of the Distribution
Date, the board of directors of Legacy with the persons listed on Schedule
1.01(f).
Section 6.02. Certificate and Bylaws. On or prior to the
Distribution Date, Legacy shall adopt the Legacy Certificate and the Legacy
Bylaws, and shall file the Legacy Certificate with the Secretary of State of the
State of Delaware.
Section 6.03. Certain Post-Distribution Transactions.
(a) Legacy. (i) Legacy shall comply with each
representation and statement made, or to be made, to any taxing authority in
connection with any ruling obtained, or to be obtained, by Excel, EDV and Legacy
acting together, from any such taxing authority with respect to any transaction
contemplated by this Agreement, and (ii) until the second anniversary of the
Distribution Date, Legacy shall not (A) make a material disposition, by means of
a sale or exchange of assets or capital stock, a distribution to stockholders or
otherwise, of any substantial portion of its assets, (B) repurchase or issue any
Legacy capital stock (other than stock issued pursuant to employee plans), or
(C) cease the active conduct of a material portion of its business
independently, with its own employees and without material change, unless, in
each of cases (A), (B) and (C), in the opinion of counsel to Legacy, which
opinion shall be reasonably satisfactory to Excel and EDV, or pursuant to a
favorable supplemental ruling letter reasonably satisfactory to Excel and EDV,
such act or
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omission would not adversely affect the tax consequences of the Distribution to
Excel or EDV or the stockholders of Excel or EDV, as set forth in any ruling
issued by any taxing authority.
(b) Excel. (i) Excel shall comply with each representation and
statement made, or to be made, to any taxing authority in connection with any
ruling obtained, or to be obtained, by Excel, EDV and Legacy acting together,
from any such taxing authority with respect to any transaction contemplated by
this Agreement, and (ii) until the second anniversary of the Distribution Date,
Excel shall not (A) make a material disposition, by means of a sale or exchange
of assets or capital stock, a distribution to stockholders or otherwise, of any
substantial portion of its assets (other than the Legacy Assets), (B) repurchase
or issue any capital stock of Excel (other than stock issued pursuant to
employee plans), or (C) cease the active conduct of a material portion of its
business independently, with its own employees and without material change,
unless, in each of cases (A), (B) and (C), in the opinion of counsel to Excel,
which opinion shall be reasonably satisfactory to Legacy, or pursuant to a
favorable supplemental ruling letter reasonably satisfactory to Legacy, such act
or omission would not adversely affect the tax consequences of the Distribution
to Legacy or the stockholders of Legacy, as set forth in any ruling issued by
any taxing authority.
(c) EDV. (i) EDV shall comply with each representation and
statement made, or to be made, to any taxing authority in connection with any
ruling obtained, or to be obtained, by Excel, EDV and Legacy acting together,
from any such taxing authority with respect to any transaction contemplated by
this Agreement, and (ii) until the second anniversary of the Distribution Date,
EDV shall not (A) make a material disposition, by means of a sale or exchange of
assets or capital stock, a distribution to stockholders or otherwise, of any
substantial portion of its assets (other than the Legacy Assets), (B) repurchase
or issue any capital stock of EDV (other than stock issued pursuant to employee
plans), or (C) cease the active conduct of a material portion of its business
independently, with its own employees and without material change, unless, in
each of cases (A), (B)
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and (C), in the opinion of counsel to EDV, which opinion shall be reasonably
satisfactory to Legacy, or pursuant to a favorable supplemental ruling letter
reasonably satisfactory to Legacy, such act or omission would not adversely
affect the tax consequences of the Distribution to Legacy or the stockholders of
Legacy, as set forth in any ruling issued by any taxing authority.
Section 6.04. Notices by Excel. Excel shall provide notice of the
Distribution to all holders of its securities, or options, rights or warrants
convertible into its securities, as may be required by Excel's Certificate of
Incorporation or Bylaws or any agreement to which Excel is a party.
ARTICLE VII.
ACCESS TO INFORMATION AND SERVICES
Section 7.01. Provision of Corporate Records.
(a) Except as may otherwise be provided in a Related Agreement,
each of Excel and EDV shall arrange as soon as practicable following the
Distribution Date, to the extent not previously delivered in connection with the
transactions contemplated in Article II, for the transportation (at Legacy's
cost) to Legacy of the Legacy Books and Records in its possession, except to the
extent such items are already in the possession of Legacy. The Legacy Books and
Records shall be the property of Legacy, but shall be available to Excel and EDV
for review and duplication until Excel or EDV shall notify Legacy in writing
that such records are no longer of use to Excel or EDV, respectively.
(b) Except as otherwise provided in a Related Agreement, Legacy
shall arrange as soon as practicable following the Distribution Date, to the
extent not previously delivered in connection with the transactions contemplated
in Article II, for the transportation (at Excel's cost) to Excel of the Excel
Books and Records in its possession, except to the extent such items are already
in the possession of Excel. The Excel Books and Records shall be the property of
Excel, but shall be
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available to Legacy for review and duplication until Legacy shall notify Excel
in writing that such records are no longer of use to Legacy.
(c) Except as otherwise provided in a Related Agreement, Legacy
shall arrange as soon as practicable following the Distribution Date, to the
extent not previously delivered in connection with the transactions contemplated
in Article II, for the transportation (at EDV's cost) to EDV of the EDV Books
and Records in its possession, except to the extent such items are already in
the possession of EDV. The EDV Books and Records shall be the property of EDV,
but shall be available to Legacy for review and duplication until Legacy shall
notify EDV in writing that such records are no longer of use to Legacy.
Section 7.02. Access to Information. Except as otherwise provided
in a Related Agreement, from and after the Distribution Date, Excel and EDV
shall afford to Legacy and its authorized accountants, counsel and other
designated representatives reasonable access (including using reasonable efforts
to give access to persons or firms possessing information) and duplicating
rights during normal business hours to all records, books, contracts,
instruments, computer data and other data and information relating to
pre-Distribution operations (collectively, "Information") within Excel's or
EDV's possession insofar as such access is reasonably required by Legacy for the
conduct of its business, subject to appropriate restrictions for classified or
Privileged Information. Similarly, except as otherwise provided in a Related
Agreement, Legacy shall afford to Excel and EDV and their authorized
accountants, counsel and other designated representatives reasonable access
(including using reasonable efforts to give access to persons or firms
possessing information) and duplicating rights during normal business hours to
Information within Legacy's possession, insofar as such access is reasonably
required by Excel or EDV for the conduct of its business, subject to appropriate
restrictions for classified or Privileged Information. Information may be
requested under this Article VII for the legitimate business purposes of either
party, including, without limitation, audit,
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accounting, claims (including claims for indemnification hereunder), litigation
and tax purposes, as well as for purposes of fulfilling disclosure and reporting
obligations and for performing this Agreement and the transactions contemplated
hereby.
Section 7.03. Production of Witnesses. At all times from and
after the Distribution Date, each of Excel, EDV and Legacy shall use reasonable
efforts to make available to the others, upon written request, its and its
Subsidiaries' officers, directors, employees and agents as witnesses to the
extent that such persons may reasonably be required in connection with any
Action.
Section 7.04. Reimbursement. Except to the extent otherwise
contemplated in any Related Agreement, a party providing Information or witness
services to another party under this Article VII shall be entitled to receive
from the recipient, upon the presentation of invoices therefor, payments of such
amounts, relating to supplies, disbursements and other out-of-pocket expenses
(at cost) and direct and indirect expenses of employees who are witnesses or
otherwise furnish assistance (at cost), as may be reasonably incurred in
providing such Information or witness services.
Section 7.05. Retention of Records. Except as otherwise required
by law or agreed to in a Related Agreement or otherwise in writing, each of
Excel, EDV and Legacy may destroy or otherwise dispose of any of the
Information, which is material Information and is not contained in other
Information retained by Excel, EDV or Legacy, as the case may be, at any time
after the tenth anniversary of this Agreement, provided that, prior to such
destruction or disposal, (a) it shall provide no less than 90 or more than 120
days prior written notice to the other, specifying in reasonable detail the
Information proposed to be destroyed or disposed of and (b) if a recipient of
such notice shall request in writing prior to the scheduled date for such
destruction or disposal that any of the Information proposed to be destroyed or
disposed of be delivered to such requesting party, the party proposing the
destruction or disposal shall promptly arrange for the delivery of such of the
Information as was requested at the expense of the party requesting such
Information.
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Section 7.06. Confidentiality. Each of Excel, EDV, Legacy and
their respective Subsidiaries shall hold, and shall cause its consultants and
advisors to hold, in strict confidence, all Information concerning the other
parties hereto in its possession or furnished by the other parties or the other
parties' representatives pursuant to this Agreement (except to the extent that
such Information has been (i) in the public domain through no fault of such
party or (ii) later lawfully acquired from other sources by such party), and
each party shall not release or disclose such Information to any other person,
except its auditors, attorneys, financial advisors, rating agencies, bankers and
other consultants and advisors, unless compelled to disclose by judicial or
administrative process or, as reasonably advised by its counsel or by other
requirements of law, or unless such Information is reasonably required to be
disclosed in connection with (x) any litigation with any third-parties or
litigation between Excel, EDV and Legacy or any of them, (y) any contractual
agreement to which Excel, EDV or Legacy or any of them are currently parties, or
(z) in exercise of any party's rights hereunder.
Section 7.07. Privileged Matters. Excel, EDV and Legacy recognize
that legal and other professional services that have been and will be provided
prior to the Distribution Date have been and will be rendered for the benefit of
each of Excel, EDV and Legacy and that each of Excel, EDV and Legacy should be
deemed to be the client for the purposes of asserting all Privileges. To
allocate the interests of each party in the Privileged Information, the parties
agree as follows:
(a) Excel shall be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged Information
which relates solely to the Excel Retained Business, whether or not the
Privileged Information is in the possession of or under the control of Excel,
EDV or Legacy. Excel shall also be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged Information
that relates solely to the subject matter of any claims constituting Excel
Retained Liabilities, now pending or which may be asserted in the
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future, in any lawsuits or other proceedings initiated against or by Excel,
whether or not the Privileged Information is in the possession of or under the
control of Excel, EDV or Legacy.
(b) EDV shall be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged Information
which relates solely to the EDV Retained Business, whether or not the Privileged
Information is in the possession of or under the control of Excel, EDV or
Legacy. EDV shall also be entitled, in perpetuity, to control the assertion or
waiver of all Privileges in connection with Privileged Information that relates
solely to the subject matter of any claims constituting EDV Retained
Liabilities, now pending or which may be asserted in the future, in any lawsuits
or other proceedings initiated against or by EDV, whether or not the Privileged
Information is in the possession of or under the control of Excel, EDV or
Legacy.
(c) Legacy shall be entitled, in perpetuity, to control the
assertion or waiver of all Privileges in connection with Privileged Information
which relates solely to the Legacy Business, whether or not the Privileged
Information is in the possession of or under the control of Excel, EDV or
Legacy. Legacy shall also be entitled, in perpetuity, to control the assertion
or waiver of all Privileges in connection with Privileged Information which
relates solely to the subject matter of any claims constituting Legacy
Liabilities, now pending or which may be asserted in the future, in any lawsuits
or other proceedings initiated against or by Legacy, whether or not the
Privileged Information is in the possession of Legacy or under the control of
Excel, EDV or Legacy.
(d) Excel, EDV and Legacy agree that they shall have a shared
Privilege, with equal right to assert or waive, subject to the restrictions in
this Section 7.07, with respect to all Privileges not allocated pursuant to the
terms of Sections 7.07(a), (b) and (c). All Privileges relating to any claims,
proceedings, litigation, disputes or other matters which involve each of Excel,
EDV and Legacy in respect of which Excel, EDV and Legacy retain any
responsibility or liability under this Agreement shall be subject to a shared
Privilege.
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(e) No party may waive any Privilege which could be asserted
under any applicable law, and in which any other party has a shared Privilege,
without the consent of the other party, except to the extent reasonably required
in connection with any litigation with third-parties or as provided in
subsection (f) below. Consent shall be in writing, or shall be deemed to be
granted unless written objection is made within 20 days after notice upon the
other party requesting such consent.
(f) In the event of any litigation or dispute between Excel, EDV
and Legacy, or any of them, any party may waive a Privilege in which any other
party has a shared Privilege, without obtaining the consent of the other party,
provided that such waiver of a shared Privilege shall be effective only as to
the use of Information with respect to the litigation or dispute between such
parties, and shall not operate as a waiver of the shared Privilege with respect
to third-parties.
(g) If a dispute arises between the parties regarding whether a
Privilege should be waived to protect or advance the interest of any party, each
party agrees that it shall negotiate in good faith, shall endeavor to minimize
any prejudice to the rights of the other parties, and shall not unreasonably
withhold consent to any request for waiver by the other parties. Each party
specifically agrees that it will not withhold consent to waiver for any purpose
except to protect its own legitimate interests.
(h) Upon receipt by any party of any subpoena, discovery or other
request which arguably calls for the production or disclosure of Information
subject to a shared Privilege or as to which any other party has the sole right
hereunder to assert a Privilege, or if any party obtains knowledge that any of
its current or former directors, officers, agents or employees have received any
subpoena, discovery or other requests which arguably calls for the production or
disclosure of such Privileged Information, such party shall promptly notify the
other party of the existence of the request and shall provide the other party a
reasonable opportunity to review the Information and to assert any
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rights it may have under this Section 7.07 or otherwise to prevent the
production or disclosure of such Privileged Information.
(i) The transfer of the Legacy Books and Records, the Excel Books
and Records and the EDV Books and Records and other Information between Excel,
EDV, Legacy and their respective Subsidiaries is made in reliance on the
agreement of Excel, EDV and Legacy, as set forth in Sections 7.06 and 7.07, to
maintain the confidentiality of Privileged Information and to assert and
maintain all applicable Privileges. The access to information being granted
pursuant to Sections 7.01 and 7.02, the agreement to provide witnesses and
individuals pursuant to Section 7.03 and the transfer of Privileged Information
between Excel, EDV, Legacy and their respective Subsidiaries pursuant to this
Agreement shall not be deemed a waiver of any Privilege that has been or may be
asserted under this Agreement or otherwise.
ARTICLE VIII.
INSURANCE
Section 8.01. Policies and Rights Included Within the Legacy
Assets. Without limiting the generality of the definition of the Legacy Assets
set forth in Section 2.01 or the effect of Section 2.01, the Legacy Assets shall
include (a) any and all rights of an insured party under each of the Shared
Policies, specifically including rights of indemnity and the right to be
defended by or at the expense of the insurer, with respect to all injuries,
losses, liabilities, damages and expenses incurred or claimed to have been
incurred on or prior to the Distribution Date by any party in or in connection
with the conduct of the Legacy Business or, to the extent any claim is made
against Legacy or any of its Subsidiaries, the Retained Businesses, and which
injuries, losses, liabilities, damages and expenses may arise out of insured or
insurable occurrences or events under one or more of the Shared Policies;
provided, however, that nothing in this Section 8.01 shall be deemed to
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constitute (or to reflect) the assignment of the Shared Policies, or any of
them, to Legacy, and (b) the Legacy Policies.
Section 8.02. Post-Distribution Date Claims. If, subsequent to
the Distribution Date, any person, corporation, firm or entity shall assert a
claim against Legacy with respect to any injury, loss, liability, damage or
expense incurred or claimed to have been incurred on or prior to the
Distribution Date in or in connection with the Distribution or the conduct of
the Legacy Business or, to the extent any claim is made against Legacy or any of
its Subsidiaries, the Retained Businesses, and which injury, loss, liability,
damage or expense may arise out of insured or insurable occurrences or events
under one or more of the Shared Policies, Excel and/or EDV, as appropriate,
shall at the time such claim is asserted be deemed to assign, without need of
further documentation, to Legacy any and all rights of an insured party under
the applicable Shared Policy with respect to such asserted claim, specifically
including rights of indemnity and the right to be defended by or at the expense
of the insurer; provided, however, that nothing in this Section 8.02 shall be
deemed to constitute (or to reflect) the assignment of the Shared Policies, or
any of them, to Legacy.
Section 8.03. Administration and Reserves.
(a) Notwithstanding the provisions of Article III, but subject to
any contrary provisions of any Related Agreement, from and after the
Distribution Date:
(i) Legacy shall be entitled to any reserves established
by Excel, EDV or any of their Subsidiaries, or the benefit of reserves
held by any insurance carrier, with respect to the Legacy Liabilities;
(ii) Excel shall be entitled to any reserves established
by Excel or any of its Subsidiaries, or the benefit of reserves held by
any insurance carrier, with respect to the Excel Retained Liabilities;
and
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(iii) EDV shall be entitled to any reserves established by
EDV or any of its Subsidiaries, or the benefit of reserves held by any
insurance carrier, with respect to the EDV Retained Liabilities.
(b) Insurance Premiums. Legacy shall have the right but not the
obligation to pay the premiums, to the extent that Excel and EDV do not pay
premiums with respect to Retained Liabilities (retrospectively-rated or
otherwise), with respect to Shared Policies and the Legacy Policies, as required
under the terms and conditions of the respective Policies, whereupon Excel and
EDV shall forthwith reimburse Legacy for that portion of such premiums paid by
Legacy as are attributable to the Retained Liabilities. Each of Excel and EDV
shall provide continued coverage under its director and officer liability
insurance policy, if any, for a period of not less than three years for acts
which took place or were alleged to have taken place prior to the Distribution
Date covering persons who were directors and officers of Excel or EDV,
respectively, prior to the Distribution Date. Fifty percent of the additional
premiums, if any, for such coverage shall be reimbursed by Legacy within 15 days
of the Distribution Date.
(c) Allocation of Insurance Proceeds. Insurance Proceeds received
with respect to claims, costs and expenses under the Policies shall be paid to
Legacy with respect to the Legacy Liabilities, to Excel with respect to the
Excel Retained Liabilities and to EDV with respect to the EDV Retained
Liabilities. Payment of the allocable portions of indemnity costs of Insurance
Proceeds resulting from the liability policies will be made to the appropriate
party upon receipt from the insurance carrier. In the event that the aggregate
limits on any Shared Policies are exceeded, the parties agree to provide an
equitable allocation of Insurance Proceeds received after the Distribution Date
based upon their respective bona fide claims. The parties agree to use their
best efforts to cooperate with respect to insurance matters.
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Section 8.04. Agreement for Waiver of Conflict and Shared
Defense. In the event that Insured Claims of Excel, EDV and Legacy, or any two
of them, exist relating to the same occurrence, such parties agree to jointly
defend and to waive any conflict of interest necessary to the conduct of that
joint defense. Nothing in this Section 8.04 shall be construed to limit or
otherwise alter in any way the indemnity obligations of the parties to this
Agreement, including those created by this Agreement, by operation of law or
otherwise.
ARTICLE IX.
MISCELLANEOUS
Section 9.01. Complete Agreement; Construction. This Agreement,
including the Schedules and Exhibits and the Related Agreements and other
agreements and documents referred to herein, shall constitute the entire
agreement between the parties with respect to the subject matter hereof and
thereof and shall supersede all previous negotiations, commitments and writings
with respect to such subject matter. Notwithstanding any other provisions in
this Agreement to the contrary, in the event and to the extent that there shall
be a conflict between the provisions of this Agreement and the provisions of the
Related Agreements, the Related Agreements shall control.
Section 9.02. Expenses. Except as otherwise set forth in this
Agreement or any Related Agreement, all costs and expenses in connection with
the preparation, execution, delivery and implementation of this Agreement, the
Distribution and with the consummation of the transactions contemplated by this
Agreement shall be charged to the party for whose benefit the expenses are
incurred, with any expenses which cannot be allocated on such basis to be split
equally between the parties.
Section 9.03. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of California, without
regard to the principles of conflicts of laws thereof.
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Section 9.04. Notices. All notices and other communications
hereunder shall be in writing and shall be delivered by hand or mailed by
registered or certified mail (return receipt requested) to the parties at the
following addresses (or at such other addresses for a party as shall be
specified by like notice) and shall be deemed given on the date on which such
notice is received:
To Legacy:
Excel Legacy Corporation
16955 Via Del Campo, Suite 100
San Diego, California 92127
Attention: Gary B. Sabin
To Excel:
Excel Realty Trust, Inc.
16955 Via Del Campo, Suite 100
San Diego, California 92127
Attention: Gary B. Sabin
To EDV:
ERT Development Corporation
16955 Via Del Campo, Suite 100
San Diego, California 92127
Attention: Gary B. Sabin
Section 9.05. Amendments. This Agreement may not be modified or
amended except by an agreement in writing signed by the parties.
Section 9.06. Successors and Assigns. This Agreement and all of
the provisions hereof shall be binding upon and inure to the benefit of the
parties and their respective successors and permitted assigns. The parties
acknowledge and agree that any party into which Excel, EDV or Legacy merges or
which acquires all or substantially all of Excel's, EDV's or Legacy's assets in
a sale transaction would constitute a permitted assign for purposes of this
Section 9.06.
Section 9.07. Termination. This Agreement may be terminated and
the Distribution abandoned at any time prior to the Distribution Date by and in
the sole discretion of the Excel Board
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and the EDV Board without the approval of Legacy or of the stockholders of Excel
or EDV. In the event of such termination, no party shall have any liability to
any other party pursuant to this Agreement.
Section 9.08. Subsidiaries. Each of the parties hereto shall
cause to be performed, and hereby guarantees the performance of, all actions,
agreements and obligations set forth herein to be performed by any Subsidiary of
such party which is contemplated to be a Subsidiary of such party on and after
the Distribution Date.
Section 9.09. No Third-Party Beneficiaries. Except for the
provisions of Article V relating to Indemnities, this Agreement is solely for
the benefit of the parties hereto and their respective Subsidiaries and
Affiliates and should not be deemed to confer upon third-parties any remedy,
claim, Liability, reimbursement, claim of action or other right in excess of
those existing without reference to this Agreement.
Section 9.10. Titles and Headings. Titles and headings to
sections herein are inserted for the convenience of reference only and are not
intended to be a part of or to affect the meaning or interpretation of this
Agreement.
Section 9.11. Exhibits and Schedules. The Exhibits and Schedules
shall be construed with and as an integral part of this Agreement to the same
extent as if the same had been set forth verbatim herein.
Section 9.12. Legal Enforceability. Any provision of this
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof. Any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction. Without prejudice
to any rights or remedies otherwise available to any party hereto, each party
hereto acknowledges that damages would be an
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inadequate remedy for any breach of the provisions of this Agreement and agrees
that the obligations of the parties hereunder shall be specifically enforceable.
Section 9.13. Arbitration of Disputes.
(a) Any controversy or claim arising out of this Agreement, or
any breach of this Agreement, including any controversy relating to a
determination of whether specific assets constitute Legacy Assets or Retained
Assets or whether specific Liabilities constitute Legacy Liabilities or Retained
Liabilities, shall be settled by arbitration in accordance with the Rules of the
American Arbitration Association then in effect, as modified by this Section
9.13 or by the further agreement of the parties.
(b) Such arbitration shall be conducted in San Diego, California.
(c) Any judgment upon the award rendered by the arbitrators may
be entered in any court having jurisdiction thereof. The arbitrators shall have
the authority to award to the prevailing party its attorneys' fees and costs
incurred in such arbitration. The arbitrators shall not, under any
circumstances, have any authority to award punitive, exemplary or similar
damages, and may not, in any event, make any ruling, finding or award that does
not conform to the terms and conditions of this Agreement.
(d) Nothing contained in this Section 9.13 shall limit or
restrict in any way the right or power of a party at any time to seek injunctive
relief in any court and to litigate the issues relevant to such request for
injunctive relief before such court (i) to restrain any other party from
breaching this Agreement or (ii) for specific enforcement of this Section 9.13.
The parties agree that any legal remedy available to a party with respect to a
breach of this Section 9.13 will not be adequate and that, in addition to all
other legal remedies, each party is entitled to an order specifically enforcing
this Section 9.13.
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(e) The parties hereby consent to the jurisdiction of the federal
courts located in San Diego, California for all purposes under this Agreement.
(f) Neither the parties nor the arbitrators may disclose the
existence or results of any arbitration under this Agreement or any evidence
presented during the course of the arbitration without the prior written consent
of the parties, except as required to fulfill applicable disclosure and
reporting obligations, or as otherwise required by law.
(g) Except as provided in Section 9.13(c), each party shall bear
its own costs incurred in the arbitration. If any party refuses to submit to
arbitration any dispute required to be submitted to arbitration pursuant to this
Section 9.13, and instead commences any other proceeding, including, without
limitation, litigation, then the party who seeks enforcement of the obligation
to arbitrate shall be entitled to its attorneys' fees and costs incurred in any
such proceeding.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
duly executed as of the day and year first above written.
EXCEL REALTY TRUST, INC.
By: /s/ GARY B. SABIN
--------------------------------------
Name: GARY B. SABIN
--------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
--------------------------------------
ERT DEVELOPMENT CORPORATION
By: /s/ GARY B. SABIN
--------------------------------------
Name: GARY B. SABIN
--------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
--------------------------------------
EXCEL LEGACY CORPORATION
By: /s/ GARY B. SABIN
--------------------------------------
Name: GARY B. SABIN
--------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
--------------------------------------
S-1
<PAGE> 46
EXHIBITS
Exhibit A: Administrative Services Agreement
Exhibit B: Legacy Bylaws
Exhibit D: Legacy Certificate
Exhibit D: Legacy Employees
Exhibit E: Tax Sharing Agreement
Exhibit F: Transitional Services Agreement
<PAGE> 47
SCHEDULES
Schedule 1.01(a): EDV Notes
Schedule 1.01(b): EDV Real Estate Assets
Schedule 1.01(c): Excel Notes
Schedule 1.01(d): Excel Real Estate Assets
Schedule 1.01(e): Legacy Liabilities
Schedule 1.01(f): Legacy Board
<PAGE> 1
EXHIBIT 10.1
ADMINISTRATIVE SERVICES AGREEMENT
ADMINISTRATIVE SERVICES AGREEMENT (this "Agreement") is made and
entered into as of March 31, 1998, by and between EXCEL REALTY TRUST, INC., a
Maryland corporation ("Excel"), and EXCEL LEGACY CORPORATION, a Delaware
corporation ("Legacy," and collectively with Excel, the "Parties"), effective as
of the Distribution Date (as hereinafter defined).
R E C I T A L S
WHEREAS, subject to certain conditions, Excel intends to spin-off
certain businesses and assets by distributing to Excel stockholders a special
dividend of one share of Legacy Common Stock for each share of Excel Common
Stock held as of the close of business on the Record Date (the "Distribution");
WHEREAS, in connection with the Distribution, Excel and Legacy have
entered into a Distribution Agreement of even date herewith (the "Distribution
Agreement");
WHEREAS, after the Distribution, Legacy will need certain management and
administrative services to be provided by Excel to Legacy for a period of time
from and after the Distribution Date; and
WHEREAS, in connection with the Distribution, Legacy has requested Excel
to provide, and Excel has agreed to provide, certain management and
administrative services to Legacy from and after the Distribution Date pursuant
to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein, and other valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, Excel and Legacy agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms shall
have the meanings indicated below:
Distribution: the spin-off of Legacy pursuant to the Distribution
Agreement.
Distribution Agreement: the agreement described in the second recital of
this Agreement.
Distribution Date: the date on which the Distribution occurs.
<PAGE> 2
Employee Benefit Plan: any plan, policy, arrangement, contract or
agreement providing compensation benefits for any group of Excel Employees or
former Excel Employees or individual Excel Employee or former Excel Employee, or
the dependents or beneficiaries of any such Excel Employee or former Excel
Employee, whether formal or informal or written or unwritten, and including,
without limitation, any means, whether or not legally required, pursuant to
which any benefit is provided by Excel to any Excel Employee or former Excel
Employee or the beneficiaries of any such Excel Employee or former Excel
Employee, adopted or entered into by Excel prior to, upon or after the
Distribution. The term "Employee Benefit Plan" as used in this Agreement does
not include any contract, agreement or understanding entered into by Excel
relating to settlement of actual or potential Excel Employee related litigation
claims.
Excel Employee: any individual who is an employee or director of Excel
and is not a Legacy Employee and has not been designated as a Legacy Individual
under Section 6.2 hereof.
First Month: In the event that the Distribution Date does not fall on
the first day of a month, the month that includes the Distribution Date.
Full Month: A full calendar month during the Term (as defined in Section
3).
Last Month: In the event that the Termination Date does not fall on the
last day of a month, the month that includes the Termination Date (as defined in
Section 3).
Legacy Business: any business or operation of Legacy which is, pursuant
to the Distribution Agreement, to be conducted by Legacy after the Distribution.
Legacy Employee: any individual who (i) is independently hired by Legacy
after the Distribution Date as an employee of Legacy, and (ii) is not an
employee or director of Excel.
Legacy Individual: any individual who (i) is designated in writing by
Excel and Legacy as a "Legacy Individual" for purposes of this Agreement in
accordance with Section 6.2 hereof and was an Excel Employee prior to such
designation, and (ii) is not a Legacy Employee or an Excel Employee.
Month: a Full Month, First Month or Last Month, as the case may be.
Monthly Fee: The amount payable by Legacy to Excel under Section 4.1
herein with respect to a particular Full Month or any First Month or Last Month.
Record Date: March 2, 1998.
2. ENGAGEMENT OF EXCEL. During the term of this Agreement, Excel shall
provide to Legacy certain management and administrative services ("Services"),
as more
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fully described and defined below, as may be necessary or desirable, or as
Legacy may reasonably request or require, in connection with the business,
operations and affairs of Legacy. "Services" means and includes, without
limitation, the furnishing of advice, assistance, guidance, equipment and the
services of Excel Employees and Legacy Individuals in connection with, among
other things, (i) the Legacy Business and (ii) the use of Excel's management
information and accounting system, the administration of insurance and worker's
compensation programs, legal and employee benefit services and the preparation
of payrolls.
3. TERM; TERMINATION. This Agreement shall commence as of the date hereof
and continue thereafter unless and until terminated by either party at any time
for any reason upon not less than thirty (30) days' prior written notice to the
other (the "Termination Date", with the term of this Agreement as set forth in
this Section 3 being referred to as the "Term").
4. PAYMENTS TO EXCEL.
4.1 Generally.
(a) Full Month. With respect to each Full Month, in
consideration of the Services provided by Excel hereunder, Legacy shall pay to
Excel fees equal to the product of:
(i) 1.15; and
(ii) the sum of (x) one-third of the aggregate
amount of all wages and salaries paid to Excel Employees during the Full Month,
and (y) two-thirds of the aggregate amount of all wages and salaries paid to
Legacy Individuals during the Full Month.
(b) First Month and Last Month. With respect to any
First Month or Last Month, in consideration of the Services provided by Excel
hereunder, Legacy shall pay to Excel fees equal to the product of:
(i) 1.15;
(ii) the sum of (x) one-third of the aggregate
amount of all wages and salaries paid to Excel Employees during the First Month
or Last Month, as the case may be, and (y) two-thirds of the aggregate amount of
all wages and salaries paid to Legacy Individuals during the First Month or Last
Month, as the case may be; and
(iii) the number of days in the First Month or the
Last Month, as the case may be, which are included in the Term, divided by the
total number of days in the First Month or the Last Month, as the case may be.
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4.2 Statement from Excel. Promptly and in any event not later
than ten (10) days following the end of each Month, Excel shall provide to
Legacy a statement setting forth (i) a list of the Excel Employees, (ii) a list
of the Legacy Individuals, (iii) the aggregate amount of all wages and salaries
paid to Excel Employees during the Month, and (iv) the aggregate amount of all
wages and salaries paid to Legacy Individuals during the Month.
4.3 Payment by Legacy. Promptly and in any event not later than
five (5) days after delivery by Excel of each statement referred to in Section
4.2, Legacy shall pay to Excel the Monthly Fee applicable to the Month to which
such statement relates.
5. EMPLOYEE BENEFIT PLANS. From and after the Distribution Date, Excel
shall (i) permit the Excel Employees to continue to participate in the Employee
Benefit Plans on the same basis as such persons participated immediately prior
to the Distribution Date, and (ii) permit each Legacy Individual to participate
in the Employee Benefit Plans after the Distribution Date on the same basis as
Excel Employees participated immediately prior to the date such Legacy
Individual was designated as such; provided, however, nothing contained in this
Agreement shall prohibit Excel from modifying or terminating any one or more of
the Employee Benefit Plans so long as such modification or termination shall
apply to all participants in such Employee Benefit Plans. Excel shall provide
Legacy with sixty (60) days' prior written notice of its intent to terminate any
Employee Benefit Plan or effect the modification thereof in a manner adverse to
either Legacy or a Legacy Individual; provided that no such notice shall be
required for any Employee Benefit Plan which terminates by its terms without any
action by Excel.
6. EMPLOYEES.
6.1 Legacy's Hiring of Employees. Nothing in this Agreement shall
prohibit Legacy from independently hiring one or more Legacy Employees;
provided, however, that (i) all wages, salaries, payroll taxes, and employee
benefits with respect to Legacy Employees shall be Legacy's sole responsibility,
and (ii) Legacy Employees shall not be subject to this Agreement.
6.2 Excel Employee Becoming Legacy Individual. From time to time
after the Distribution Date, at such time as an Excel Employee regularly spends
more than 50% of his or her working time performing services for Legacy, he or
she may be designated in writing by Excel and Legacy as a "Legacy Individual"
for purposes of the Agreement (a "Designation"). For purposes of Section 4.1,
the Designation shall be effective on the first day of the month following the
date such writing is fully executed by Excel and Legacy. In addition, unless
otherwise agreed to in writing by Excel and Legacy, all Legacy Individuals will
remain employees of Excel and will not be Legacy Employees.
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7. GENERAL.
7.1 Relationship of Parties. Nothing in this Agreement shall be
deemed or construed by the Parties or any third party as creating the
relationship of principal and agent, partnership or joint venture between the
Parties, it being understood and agreed that no provision contained herein, and
no act of the Parties, shall be deemed to create any relationship between the
Parties other than the relationship set forth herein.
7.2 Access to Information; Cooperation. Excel and Legacy and
their authorized agents shall be given reasonable access to and may take copies
of all information relating to the subjects of this Agreement (to the extent
permitted by federal and state confidentiality laws) in the custody of the other
Party, including any agent, contractor, subcontractor, agent or any other person
or entity under the contract of such Party.
7.3 Assignment. Neither Party shall, without the prior written
consent of the other, have the right to assign any rights or delegate any
obligations under this Agreement.
7.4 Headings. The headings used in this Agreement are inserted
only for the purpose of convenience and reference, and in no way define or limit
the scope or intent of any provision or part hereof.
7.5 Severability of Provisions. Neither Excel nor Legacy intend
to violate statutory or common law by executing this Agreement. If any section,
sentence, paragraph, clause or combination of provisions in this Agreement is in
violation of any law, such sections, sentences, paragraphs, clauses or
combinations shall be inoperative and the remainder of this Agreement shall
remain in full force and effect and shall be binding upon the Parties.
7.6 Parties Bound. This Agreement shall inure to the benefit of
and be binding upon the Parties hereto and their respective successors and
permitted assigns. Nothing herein, expressed or implied, shall be construed to
give any other person any legal or equitable rights hereunder.
7.7 Notices. All notices, consents, approvals and other
communications given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given when delivered personally or by overnight courier
or three days after being mailed by registered or certified mail (postage
prepaid, return receipt requested) to the named representatives of the Parties
at the following addresses or at such other address for a Party as shall be
specified by like notice, except that notices of changes of address shall be
effective upon receipt):
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(a) if to Excel:
Excel Realty Trust, Inc.
16955 Via Del Campo, Suite 100
San Diego, California 92127
Attention: Gary B. Sabin
(b) if to Legacy:
Excel Legacy Corporation
16955 Via Del Campo, Suite 100
San Diego, California 92127
Attention: Richard B. Muir
Legacy and Excel agree that, upon the request of either Party, the requested
Party will give copies of all of its notices, consents, approvals and other
communications hereunder to any lender to the requesting Party or other person
specified by such requesting Party.
7.8 Further Action. Legacy and Excel each shall cooperate in good
faith and take such steps and execute such papers as may be reasonably requested
by the other Party to implement the terms and provisions of this Agreement.
7.9 Waiver. Legacy and Excel each agree that the waiver of any
default under any term or condition of this Agreement shall not constitute a
waiver of any subsequent default or nullify the effectiveness of that term or
condition.
7.10 Governing Law. All controversies and disputes arising out of
or under this Agreement shall be determined pursuant to the laws of the State of
California, regardless of the laws that might be applied under applicable
principles of conflicts of laws.
7.11 Entire Agreement. This Agreement and the Distribution
Agreement constitute the entire understanding between the Parties hereto, and
supersede all prior written or oral communications, relating to the subject
matter covered by said agreements. To the extent that the terms of this
Agreement and similar terms of the Distribution Agreement are in conflict, this
Agreement shall govern. No amendment, modification, extension or failure to
enforce any condition of this Agreement by either Party shall be deemed a waiver
of any of its rights herein. This Agreement shall not be amended except by a
writing executed by the Parties.
7.12 Dispute Resolution. Any dispute arising under this Agreement
shall be resolved by binding arbitration in the manner contemplated by Section
9.13 of the Distribution Agreement, including the attorneys fees provisions
referred to therein.
{SIGNATURE PAGE FOLLOWS}
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IN WITNESS WHEREOF, the Parties have executed this Agreement as of the
date first above written.
EXCEL REALTY TRUST, INC., a Maryland
corporation
By: /s/ GARY B. SABIN
-----------------------------------------
Name: GARY B. SABIN
--------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
-------------------------------------
EXCEL LEGACY CORPORATION, a Delaware
corporation
By: /s/ GARY B. SABIN
-----------------------------------------
Name: GARY B. SABIN
--------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
-------------------------------------
S-1
<PAGE> 1
EXHIBIT 10.2
INTERCOMPANY AGREEMENT
This INTERCOMPANY AGREEMENT (the "Agreement") is made and entered
into as of the 31st day of March, 1998, by and between Excel Realty Trust, Inc.,
a Maryland corporation ("Excel"), and Excel Legacy Corporation, a Delaware
corporation ("Legacy").
W I T N E S E T H:
WHEREAS, Excel may in certain circumstances determine that it is
precluded from pursuing, or is limited in the manner in which it pursues,
various business opportunities due to its status as a real estate investment
trust ("REIT") under Sections 856 through 860 of the Internal Revenue Code of
1986, as amended (the "Code");
WHEREAS, Legacy is a newly-formed corporation which was organized
by Excel for the purpose of identifying and making opportunistic real estate
investments that are not generally available to REITs; and
WHEREAS, in light of the purpose for which Legacy was formed,
Excel and Legacy desire to enter into this Agreement in order to provide to each
other a right of first opportunity and notification right with respect to
certain investment opportunities.
NOW, THEREFORE, in consideration of the mutual agreements,
provisions and covenants contained in this Agreement, the parties hereby agree
as follows:
1. Definitions. Except as otherwise may be expressly provided herein,
the following terms shall have the meanings set forth below:
(a) "Change in Control" shall mean a change in ownership or
control of a party effected through either of the following transactions:
(i) any person or related group of persons (other than
such party or a Controlled Affiliate of such party) directly or
indirectly acquires beneficial ownership (within the meaning of Rule
13d-3 under the Securities Exchange Act of 1934, as amended) of
securities possessing more than fifty percent (50%) of the total
combined voting power of such party's outstanding securities; or
(ii) there is a change in the composition of such party's
Board of Directors over a period of thirty-six (36) consecutive months
(or less) such that a majority of the Board members (rounded up to the
nearest whole number) ceases, by reason of one or more proxy contests
for the election of Board members, to be comprised of individuals who
either (A) have been Board members continuously since the beginning of
such period or (B) have been elected or nominated for election as Board
members during such period by at least a majority of the Board members
described in clause (A) who were still in office at the time such
election or nomination was approved by the Board; or
<PAGE> 2
(iii) there is a change in the composition of such party's
senior executive management such that both Gary B. Sabin and Richard B.
Muir cease to be employed by such party.
(b) "Controlled Affiliate" shall mean, with respect to a party,
any entity controlled by, controlling or under common control with such party.
(c) "Notice" shall have the meaning set forth in Section 2(a)(i)
hereof.
(d) "REIT Opportunity" shall mean a direct or indirect
opportunity to invest in neighborhood and community shopping centers, power
centers, malls or other conventional retail properties (including without
limitation the opportunity to provide services related to such real estate and
to invest in entities that invest primarily in or have a substantial portion of
their assets in such real estate), but not including office and industrial
properties, single tenant retail properties, entertainment/ retail/mixed-use
development projects, real estate mortgages, real estate derivatives, or
entities that invest primarily in or have a substantial portion of their assets
in such real estate assets. Excel shall have the right from time to time to
provide written notice to Legacy specifying certain criteria for a REIT
Opportunity in addition to the criteria specified above in this definition of
REIT Opportunity. Any such written notice from Excel may be modified or canceled
by written notice given by Excel at any time. This definition of REIT
Opportunity shall be modified as appropriate from time to time in accordance
with any such written notices sent by Excel.
(e) "Ten-Day Period" shall have the meaning set forth in Section
2(a)(i) hereof.
(f) "Withdrawal Date" shall have the meaning set forth in Section
2(a)(ii) hereof.
2. Right of First Opportunity; Notification Right.
(a) Right of First Opportunity.
(i) During the term of this Agreement, if Legacy develops
a REIT Opportunity, or if any REIT Opportunity otherwise becomes
available to Legacy, Legacy shall first offer such REIT Opportunity to
Excel. The offer shall be made by written notice (the "Notice") from
Legacy to Excel, which Notice shall contain a detailed description of
the material terms and conditions of the REIT Opportunity. Excel shall
have ten days (the "Ten-Day Period") from the date of receipt of the
Notice to notify Legacy in writing that it has accepted or rejected the
REIT Opportunity. If Excel does not respond by the end of the Ten-Day
Period, Excel shall be deemed to have rejected the REIT Opportunity. If
Excel accepts a REIT Opportunity, but subsequently decides not to pursue
such opportunity or for any other reason fails to consummate such
opportunity, Excel shall immediately provide written notice that it is
no longer pursuing such REIT Opportunity to Legacy.
(ii) If Excel rejects a REIT Opportunity, or accepts such
REIT Opportunity but thereafter provides, or is required by the
provisions hereof to provide, written notice to Legacy that it is no
longer pursuing such REIT Opportunity, Legacy shall, for a period of one
year after the Withdrawal Date (as hereinafter defined), be entitled to
acquire the REIT Opportunity (A) at a price, and on terms and
conditions, that are not more favorable to Legacy
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<PAGE> 3
in any material respect than the price and terms and conditions set
forth in the Notice relating to such REIT Opportunity or (B) if Excel,
at any time after the Notice, negotiated a different price, terms or
conditions with the seller, then at a price, and on terms and
conditions, that are not more favorable to Legacy in any material
respect than the price and terms and conditions negotiated by Excel with
the seller. If Legacy does not enter into a binding agreement to acquire
the REIT Opportunity within such one-year period, or if the price and
terms and conditions are more favorable to Legacy in any material
respect than the price and terms and conditions set forth in the Notice
(or, if applicable, than the price and terms and conditions negotiated
by Excel with the seller subsequent to the Notice), Legacy shall again
be required to comply with the procedures set forth above in Section
2(a)(i) if it desires to acquire such REIT Opportunity. The "Withdrawal
Date" means any one of the following dates, as applicable: (A) the date
that Excel notifies Legacy that it has rejected the REIT Opportunity,
(B) if Excel does not respond to Legacy regarding the REIT Opportunity,
the expiration date of the Ten-Day Period, or (C) if Excel accepts the
REIT Opportunity but subsequently ceases to pursue the opportunity, the
earlier of (1) thirty (30) days after the date on which Excel ceases to
pursue the REIT Opportunity or (2) the date of receipt by Legacy of
written notice from Excel that it is no longer pursuing the REIT
Opportunity.
(b) Notification Right. In the event that either party hereto
develops or becomes aware of any investment opportunity during the term of this
Agreement (other than a REIT Opportunity), and such party is not interested in
pursuing such opportunity, or the opportunity is otherwise unavailable to such
party, such party shall immediately notify the other party of such opportunity
and provide to the other party a copy of all written information, and a
description of all material terms not set forth in writing, available to such
party concerning such opportunity.
3. General Terms and Conditions for First Opportunity/Notification
Rights.
(a) Unless waived or unless agreed to as part of an investment,
each party hereto shall bear its own expenses with respect to any opportunity to
which this Agreement is applicable, and each party agrees that it shall not be
entitled to any compensation from the other party with respect to any such
opportunity.
(b) A party shall not be required to comply with the right of
first opportunity and notification requirements set forth in this Agreement
during any period in which the other party or any Controlled Affiliate of such
other party is in default of this Agreement or any other agreement entered into
by the parties hereto or any of their Controlled Affiliates, if such default is
material and remains uncured for fifteen (15) days after receipt of notice
thereof.
(c) Any opportunity which is offered to and accepted by Excel
under this Agreement may be entered into by or on behalf of Excel or by any
designee which is a Controlled Affiliate of Excel. Any opportunity which is
offered to and accepted by Legacy under this Agreement may be entered into by or
on behalf of Legacy or by any designee which is a Controlled Affiliate of
Legacy.
(d) All first opportunity and notification rights set forth in
this Agreement shall be subordinated to any seller consent and confidentiality
requirements; no party shall be required to comply with the first opportunity
and notification rights set forth in this Agreement to the extent such
compliance would violate any seller consent or confidentiality requirements.
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<PAGE> 4
(e) While it is the intention of the parties to align their
businesses in accordance with the terms of this Agreement, each party shall act
independently in its own best interests, and neither party shall be considered a
partner or agent of the other party or owe any fiduciary or other common law
duties to the other party.
4. Specific Performance. Each party hereto hereby acknowledges that the
obligations undertaken by it pursuant to this Agreement are unique and that the
other party would likely have no adequate remedy at law if such party shall fail
to perform its obligations hereunder, and such party therefor confirms that the
other party's right to specific performance of the terms of this Agreement is
essential to protect the rights and interests of the other party. Accordingly,
in addition to any other remedies that a party hereto may have at law or in
equity, such party shall have the right to have all obligations, covenants,
agreements and other provisions of this Agreement specifically performed by the
other party hereto and the right to obtain a temporary restraining order or a
temporary or permanent injunction to secure specific performance and to prevent
a breach or threatened breach of this Agreement by the other party.
5. Term. The term of this Agreement shall commence as of the date of
this Agreement and shall terminate upon the earlier of (a) the tenth (10th)
anniversary of the date of this Agreement, or (b) a Change in Control of either
party hereto. Notwithstanding the foregoing, a party hereto may terminate this
Agreement if the other party or any Controlled Affiliate of such other party is
in default of this Agreement or any other agreement entered into by the parties
hereto or any of their Controlled Affiliates, if such default is material and
remains uncured for fifteen (15) days after receipt of notice thereof.
6. Miscellaneous.
(a) Notices. Notices shall be sent to the parties at the
following addresses:
Excel Realty Trust, Inc.
16955 Via Del Campo, Suite 100
San Diego, California 92127
Attn: Gary B. Sabin
Facsimile: (619) 485-8530
Excel Legacy Corporation
16955 Via Del Campo, Suite 100
San Diego, California 92127
Attn: Richard B. Muir
Facsimile: (619) 485-8530
Notices may be hand-delivered or sent by certified mail, return
receipt requested, Federal Express or comparable overnight delivery service, or
facsimile. Notice shall be deemed received at the time delivered by hand, on the
fourth business day following deposit in the U.S. mail, and on the first
business day following deposit with Federal Express or other delivery service,
or transmission by facsimile. Any party to this Agreement may change its address
for notice by giving written notice to the other party at the address and in
accordance with the procedures provided above.
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<PAGE> 5
(b) Reasonable and Necessary Restrictions. Each of the parties
hereto hereby acknowledges and agrees that the restrictions, prohibitions and
other provisions of this Agreement are reasonable, fair and equitable in scope,
term and duration, and are necessary to protect the legitimate business
interests of the parties hereto. Each party covenants that it will not sue to
challenge the enforceability of this Agreement or raise any equitable defense to
its enforcement.
(c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and assigns. This Agreement shall not be assigned without the express
written consent of each of the parties hereto.
(d) Amendments; Waivers. No termination, cancellation,
modification, amendment, deletion, addition or other change in this Agreement,
or any provision hereof, or waiver of any right or remedy herein provided, shall
be effective for any purpose unless such change or waiver is specifically set
forth in a writing signed by the party or parties to be bound thereby. The
waiver of any right or remedy with respect to any occurrence on one occasion
shall not be deemed a waiver of such right or remedy with respect to such
occurrence on any other occasion.
(e) Choice of Law. This Agreement and the rights and obligations
of the parties hereunder shall be governed by the laws of the State of
California, without regard to the principles of choice of law thereof.
(f) Severability. In the event that one or more of the terms or
provisions of this Agreement or the application thereof to any person(s) or in
any circumstance(s) shall, for any reason and to any extent be found by a court
of competent jurisdiction to be invalid, illegal or unenforceable, such court
shall have the power, and hereby is directed, to substitute for or limit such
invalid term(s), provision(s) or application(s) and to enforce such substituted
or limited terms or provisions, or the application thereof. Subject to the
foregoing, the invalidity, illegality or enforceability of any one or more of
the terms or provisions of this Agreement, as the same may be amended from time
to time, shall not affect the validity, legality or enforceability of any other
term or provision hereof.
(g) Entire Agreement; No Third-Party Beneficiaries. This
Agreement (i) constitutes the entire agreement and supersedes all prior
agreements, understandings, negotiations and discussions, whether written or
oral, between the parties hereto with respect to the subject matter hereof, so
that no such external or separate agreement relating to the subject matter of
this Agreement shall have any effect or be binding, unless the same is referred
to specifically in this Agreement or is executed by the parties after the date
hereof; and (ii) is not intended to confer upon any other person any rights or
remedies hereunder, and shall not be enforceable by any party not a signatory to
this Agreement.
(h) Headings. The headings of the sections hereof are inserted
for convenience of reference only and are not intended to be a part of or affect
the meaning or interpretation of this Agreement or of any term or provision
hereof.
(i) Counterparts. This Agreement may be executed in two or more
counterparts, each of which together shall be deemed to be an original and all
of which together shall be deemed to constitute one and the same agreement.
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<PAGE> 6
IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be executed by one of its duly authorized officers, as of the date
first written above.
EXCEL REALTY TRUST, INC.
By: /s/ GARY B. SABIN
-------------------------------------
Name: GARY B. SABIN
-------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
-------------------------------------
EXCEL LEGACY CORPORATION
By: /s/ GARY B. SABIN
-------------------------------------
Name: GARY B. SABIN
-------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
-------------------------------------
S-1
<PAGE> 1
EXHIBIT 10.3
TAX SHARING AGREEMENT
TAX SHARING AGREEMENT, dated as of March 31, 1998, between Excel
Realty Trust, Inc., a Maryland corporation ("Excel"), and Excel Legacy
Corporation, a Delaware corporation and wholly-owned subsidiary of Excel
("Legacy").
WHEREAS, Excel is the parent corporation of an affiliated group
of corporations that join in filing consolidated federal Income Tax Returns and
certain consolidated, combined or unitary state Income Tax Returns;
WHEREAS, Legacy is a wholly-owned subsidiary of Excel and a
member of the Excel Group;
WHEREAS, pursuant to the Distribution Agreement (as hereinafter
defined), Excel presently intends to distribute all the common stock of Legacy
to its stockholders (the "Distribution"); and
WHEREAS, Excel and Legacy desire on behalf of themselves, their
subsidiaries and their successors to set forth their respective rights and
obligations with respect to Taxes (as hereinafter defined).
NOW THEREFORE, in consideration of their mutual promises, the
parties hereby agree as follows:
1. DEFINITIONS.
When used herein the following terms shall have the following
meanings:
"Closing Date" -- the date the Distribution is consummated
pursuant to the terms of the Distribution Agreement.
"Code" -- the Internal Revenue Code of 1986, as amended, or any
successor thereto, as in effect for the taxable year in question.
"Distribution Agreement" -- the Distribution Agreement dated
March 31, 1998 between Excel and Legacy.
"Excel Assets" -- the retail properties and other assets
(together with any related liabilities) retained by Excel pursuant to the
Distribution Agreement.
"Excel Group" -- for any taxable year or period, Excel and each
corporation filing a consolidated federal Income Tax Return with Excel as the
parent corporation.
<PAGE> 2
"Income Tax(es)" -- with respect to any corporation or group of
corporations, any and all Taxes to the extent based upon or measured by net
income (regardless of whether denominated as an "income tax," a "franchise tax"
or otherwise), imposed by any Taxing Authority, together with any related
interest, penalties or other additions thereto.
"IRS" -- the U.S. Internal Revenue Service.
"Legacy Assets" -- the retail properties and other assets
(together with any related liabilities) distributed to Legacy pursuant to the
Distribution Agreement.
"Legacy Group" -- Legacy and each corporation filing a
consolidated federal Income Tax Return with Legacy as the parent corporation.
"Other Taxes" -- Taxes other than Income Taxes.
"Overdue Rate" -- a rate of interest per annum that fluctuates
with the federal short-term rate established from time to time pursuant to Code
Section 6621(b).
"Tax(es)" -- any net income, gross income, gross receipts, sales,
use, excise, franchise, transfer, payroll, premium, property or windfall profits
tax, alternative or add-on minimum tax, or other tax, fee or assessment,
together with any interest and any penalty, addition to tax or other additional
amount imposed by any Taxing Authority, whether any such tax is imposed directly
or through withholding.
"Taxing Authority" -- the IRS and any other domestic or foreign
governmental authority responsible for the administration of any Tax.
"Tax Return(s)" -- all returns, reports, estimates, information
statements, declarations and other filings relating to, or required to be filed
by any taxpayer in connection with, its liability for, or its payment or receipt
of any refund of, any Tax.
2. PREPARATION AND FILING OF TAX RETURNS; PAYMENT OF TAXES
a. Excel shall prepare and timely file, or cause to be
prepared and timely filed, with the appropriate Taxing Authorities (i) all
federal and state Income and Other Tax Returns of the Excel Group and any member
or members thereof for all taxable years and periods ending on or before the
Closing Date; and (ii) all federal and state Income and Other Tax Returns of
Excel for all taxable years and periods beginning after the Closing Date. Excel
shall pay, or cause to be paid, all Taxes due with respect to Tax Returns
described in this subsection (a). Excel shall be entitled to all Tax refunds
received or receivable with respect to any and all Income and Other Taxes
attributable to the Excel Assets for all taxable years and periods.
b. Legacy shall prepare and timely file, or cause to be
prepared and timely filed, with the appropriate Taxing Authorities, all federal
and state Income and Other Tax Returns of the Legacy Group and any member or
members thereof for taxable years and periods
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<PAGE> 3
beginning after the Closing Date. Legacy shall pay, or cause to be paid, all
Taxes due with respect to Tax Returns described in this subsection (b). Legacy
shall be entitled to all Tax refunds received or receivable with respect to any
and all Income and Other Taxes attributable to the Legacy Assets for all taxable
years and periods.
3. PAYMENTS.
a. Method. Unless the parties otherwise agree, all
payments made by a party pursuant to this Agreement shall be made by wire
transfer to a bank account designated from time to time by the other party. The
paying party shall also provide a notice of payment to the recipient.
b. Interest. If any payment is not timely paid, interest
shall accrue on the unpaid amount at the Overdue Rate. A payment will be deemed
to be timely paid only if actually received by the payee within five (5) days of
the receipt of notice from the other party that such payment is due.
c. Characterization. Any payment (other than interest
thereon) made hereunder shall be treated by all parties for all purposes as a
nontaxable intercompany settlement of liabilities existing immediately before
the Distribution or, to the extent appropriate, as a non-taxable dividend
distribution or capital contribution.
4. CONTESTS AND AUDITS; INDEMNIFICATION.
a. Notice. Upon the receipt by Excel or Legacy, as the
case may be, of notice of any pending or threatened Tax audit or assessment
which may affect the liability for Taxes that are subject to indemnification
hereunder, Excel or Legacy, as the case may be, shall promptly notify the other
in writing of the receipt of such notice.
b. Control and Settlement. From and after the Closing
Date, Excel shall have full control over, and the right to represent the
interests of, Excel and all other corporations involved in or affected by any
Tax audit or administrative, judicial or other proceeding relating, in whole or
in part, to Taxes that are subject to indemnification by Excel hereunder. Excel
shall have the right to employ counsel of its choice at its expense, and shall
have the ultimate control of the contest and any settlement or other resolution
thereof. Any liability for Taxes established pursuant to such proceeding shall
be allocated and paid in accordance with Section 2 of this Agreement.
c. Amendment of Tax Returns. Excel shall have sole control
over the preparation and filing of any and all amendments to Tax Returns
described in Section 2(a).
d. Indemnification. Excel shall indemnify and hold
harmless Legacy and the Legacy Group against any and all Income and Other Taxes
specifically attributable to the Excel Assets for all taxable years and periods.
Legacy shall indemnify and hold harmless Excel
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against any and all Income and Other Taxes specifically attributable to the
Legacy Assets for all taxable years and periods.
5. COOPERATION; DOCUMENT RETENTION; CONFIDENTIALITY.
a. Cooperation. Upon reasonable request, Excel and Legacy
shall promptly provide (and shall cause their respective affiliates to provide)
the requesting party with such cooperation and assistance, documents, and other
information, without charge, as may be necessary or reasonably helpful in
connection with (i) the preparation and filing of any original or amended Tax
Return, (ii) the conduct of any audit, appeal, protest or other examination or
any judicial or administrative proceeding involving to any extent Taxes or Tax
Returns within the scope of this Agreement, or (iii) the verification by a party
of an amount payable hereunder to, or receivable hereunder from, another party.
Such cooperation and assistance shall include, without limitation: (a) the
provision on demand of books, records, Tax Returns, documentation or other
information relating to any relevant Tax Return; (b) the execution of any
document that may be necessary or reasonably helpful in connection with the
filing of any Tax Return, or in connection with any audit, appeal, protest,
proceeding, suit or action of the type generally referred to in the preceding
sentence, including, without limitation, the execution of powers of attorney and
extensions of applicable statutes of limitations; (c) the prompt and timely
filing of appropriate claims for refund; and (d) the use of reasonable best
efforts to obtain any documentation from a governmental authority or a third
party that may be necessary or helpful in connection with the foregoing. Each
party shall make its employees and facilities available on a mutually convenient
basis to facilitate such cooperation.
b. Retention. Excel and Legacy shall retain or cause to be
retained all Tax Returns, and all books, records, schedules, workpapers, and
other documents relating thereto, which Tax Returns and other materials are
within the scope of this Agreement, until the expiration of the later of (i) all
applicable statutes of limitations (including any waivers or extensions
thereof), and (ii) any retention period required by law or pursuant to any
record retention agreement. The parties hereto shall notify each other in
writing of any waivers, extensions or expirations of applicable statutes of
limitations, and shall provide at least thirty (30) days prior written notice of
any intended destruction of the documents referred to in the preceding sentence.
A party giving such a notification shall not dispose of any of the foregoing
materials without first allowing the other party a reasonable opportunity to
copy them at such other party's expense.
c. Confidentiality. Except as required by law or with the
prior written consent of the other party, all Tax Returns, documents, schedules,
work papers and similar items and all information contained therein, which Tax
Returns and other materials are within the scope of this Agreement, shall be
kept confidential by the parties hereto and their representatives, shall not be
disclosed to any other person or entity and shall be used only for the purposes
provided herein.
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<PAGE> 5
6. MISCELLANEOUS.
a. Effectiveness. This Agreement shall be effective from
and after the Closing Date and shall survive until the expiration of all
applicable statutes of limitations with respect to taxable years and periods
ending on or before or including the Closing Date.
b. Entire Agreement. This Agreement contains the entire
agreement between the parties hereto with respect to the subject matter hereof.
This Agreement cancels and supersedes, as of the Closing Date, any and all other
agreements with respect to Taxes between Excel and Legacy.
c. Severability. In case any one or more of the provisions
contained in this Agreement should be invalid, illegal or unenforceable, the
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby. In the event that any such provision is hereafter
held to be invalid, void or unenforceable, the parties hereto agree to use their
reasonable best efforts to find and employ an alternate means to achieve the
same or substantially the same result as that contemplated by such provision.
d. Indulgences, etc. Neither the failure nor any delay on
the part of any party hereto to exercise any right under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right preclude any other or further exercise of the same or any other right, nor
shall any waiver of any right with respect to any occurrence be construed as a
waiver of such right with respect to any other occurrence.
e. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of California
without regard to the conflict of law principles thereof, except with respect to
matters of law concerning the internal corporate affairs of any corporate entity
which is a party to or subject of this Agreement, and as to those matters the
law of the jurisdiction under which the respective entity derives its powers
shall govern.
f. Notices. All notices, requests, demands, statements,
bills and other communications under this Agreement shall be delivered in
accordance with Section 9.04 of the Distribution Agreement.
g. Modification or Amendment. This Agreement may be
amended at any time by written agreement executed and delivered by duly
authorized officers of Legacy and Excel.
h. Successors and Assigns. Except by operation of law or
in connection with the sale of all or substantially all the assets of a party
hereto, a party's rights and obligations under this Agreement may not be
assigned without the prior written consent of the other party. All of the
provisions of this Agreement shall be binding upon and inure to the benefit of
the parties and their respective successors and permitted assigns.
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<PAGE> 6
i. Third-Party Beneficiaries. This Agreement is solely for
the benefit of the parties hereto and shall not be deemed to confer upon third
parties any remedy, claim, liability, reimbursement, claim of action or other
right in excess of those existing without this Agreement.
j. Other. This Agreement may be executed in any number of
counterparts, each such counterpart being deemed to be an original instrument,
and all of such counterparts shall together constitute one and the same
instrument. The section numbers and captions herein are for convenience of
reference only, do not constitute part of this Agreement and shall not be deemed
to limit or otherwise affect any of the provisions hereof.
k. Predecessors and Successors. To the extent necessary to
give effect to the purposes of this Agreement, any reference to any corporation
shall also include any predecessor or successor thereto, by operation of law or
otherwise.
l. Tax Elections. Nothing in this Agreement is intended to
change or otherwise affect any previous tax election made by or on behalf of the
Excel Group, and Excel shall have sole discretion to make or change any and all
elections affecting the Excel Group or any member or members thereof for all
taxable years and periods ending on or before the Closing Date.
m. Costs and Expenses. Unless otherwise specifically
provided herein, each party agrees to pay its own costs and expenses resulting
from the fulfillment of its respective obligations hereunder.
n. Disputes. Any dispute between the parties hereunder
shall be resolved in accordance with Section 9.13 of the Distribution Agreement.
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<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
EXCEL REALTY TRUST, INC., A MARYLAND
CORPORATION.
By: /s/ GARY B. SABIN
-----------------------------------------
Name: GARY B. SABIN
---------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
---------------------------------------
EXCEL LEGACY CORPORATION, A DELAWARE CORPORATION
By: /s/ GARY B. SABIN
-----------------------------------------
Name: GARY B. SABIN
---------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
---------------------------------------
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EXHIBIT 10.4
TRANSITIONAL SERVICES AGREEMENT
This Transitional Services Agreement (this "Agreement") is made as of
this 31st day of March, 1998, between Excel Realty Trust, Inc., a Maryland
corporation ("Excel"), and Excel Legacy Corporation, a Delaware corporation
("Legacy").
RECITALS
WHEREAS, pursuant to a Distribution Agreement dated as of March 31,
1998, (the "Distribution Agreement") between Excel, Legacy and ERT Development
Corporation, a Delaware corporation ("EDV"), Excel and EDV will (i) transfer
certain real properties (the "Properties"), notes receivable (the "Notes"), and
all other assets and liabilities of Excel and EDV related thereto (collectively,
the "Legacy Business") to Legacy; (ii) a distribution by Legacy of all of the
outstanding shares of common stock, par value $.0001 per share, of Legacy (the
"Legacy Common Stock") to Excel; and (iii) a special dividend by Excel to the
stockholders of record of Excel's common stock, consisting of the distribution
on a one-for-one basis, of all of the outstanding shares of Legacy Common Stock
(the "Distribution"); and
WHEREAS, a condition of the closing of the transactions
contemplated by the Distribution Agreement is that Excel and Legacy enter into,
among other things, a transitional services agreement pursuant to which Excel
shall provide certain services to Legacy and Legacy shall provide certain
services to Excel.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter set forth, and intending to be legally bound
hereby, the parties agree as follows:
1. SERVICES. Excel and Legacy hereby agree, subject to Section 6 below,
to cause their respective employees and to use their respective assets to
provide certain services to the other, including without limitation, cash
management services, certain accounting services, litigation management, real
estate services and any other similar services that Excel or Legacy may request.
Nothing contained herein shall be deemed to restrict either party to this
Agreement from procuring any of the services to be provided hereunder from
outside vendors or from developing an in-house capability to provide such
services internally.
2. CHARGES FOR SERVICES. The charge for each service to be provided
hereunder shall be equal to the cost (which shall include indirect costs as well
as direct out of pocket expenses) of providing such service. The cost of
providing a service shall be determined in good faith by the party to provide
such service (the "providing party"). Prior to providing a service, the
providing party shall give an estimate of the cost thereof to the other party,
so that the other party shall have the opportunity to decide whether to accept
such service before it is performed.
3. INVOICE AND PAYMENT. Each party shall invoice the other once each
month for the services performed during the prior month and each party shall pay
the other for such services not later than ten (10) days from the receipt of
invoice.
4. OUTSIDE SERVICES. In the event that the providing party is required
to retain outside consultant/contractor assistance to perform any of the
services hereunder, the providing party shall
<PAGE> 2
first obtain the consent of the other party to such retention and the other
party shall pay directly the fees of such consultant/contractor. The providing
party shall not be held responsible for the performance of such
consultant/contractor services and the other party assumes the risk thereof.
5. CONTRACTUAL RELATIONSHIP. The relationship between Excel and Legacy
under this Agreement shall be that of principal and agent in respect of the
services to be performed hereunder. In no event is the relationship of the
parties intended to be that of employer and employee and in no event is either
party to be deemed or purported to be the partner or joint venturer of the other
for any purpose whatsoever.
6. TERM. The term of this Agreement shall expire on December 15, 1998;
provided, however, that each party shall have the right, upon fourteen (14) days
advance notice to the other, to terminate all or part of the services it
performs hereunder. Upon the termination of all services, payment therefor and
payment of all consultants/contractors, this Agreement shall terminate.
7. LIMITATION OF LIABILITY. Neither party shall have any liability
whatsoever to the other party or to any third party for any loss, liability,
damage, cost or deficiency (collectively, "Losses"), or for any claim for
Losses, including, without limitation, Losses or claims for personal injury,
death or property damage, warranty, tort or products liability, resulting from,
caused by or arising out of a party's performance under this Agreement except
for claims arising out of the negligence or willful default or breach of such
party hereunder. In no event shall any party have liability to the other party
or to any third party for indirect, special or consequential damages or loss of
profits (except with respect to its willful default or breach), or for punitive
damages for any reason whatsoever.
8. NOTICES. All notices and other communications hereunder shall be in
writing and shall be delivered by hand or mailed by registered or certified mail
(return receipt requested) to the parties at the following addresses (or at such
other addresses for a party as shall be specified by like notice) and shall be
deemed given on the date on which such notice is received:
To Legacy:
Excel Legacy Corporation
16955 Via Del Campo, Suite 100
San Diego, California 92127
Attention: Richard B. Muir
To Excel:
Excel Realty Trust, Inc.
16955 Via Del Campo, Suite 100
San Diego, California 92127
Attention: Gary B. Sabin
9. ASSIGNMENT. This Agreement and all of the provisions hereof shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns but neither this Agreement nor any of the
rights, interests or obligations hereunder shall be assigned by any party hereto
without the prior written consent of the other party (other than to an
affiliate). Any purported assignment in violation of the provisions hereof shall
be void.
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<PAGE> 3
10. GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California (regardless of the laws that might otherwise govern under
applicable California conflict of laws principles) as to all matters, including
but not limited to matters of validity, construction, effect, performance and
remedies.
11. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12. INTERPRETATION. The article and section headings contained in this
Agreement are solely for the purpose of reference, are not part of the agreement
of the parties and shall not in any way affect the meaning or interpretation of
this Agreement.
13. SEVERANCE. In the event that any provision of this Agreement is
declared illegal, invalid or unenforceable or contrary to law, it shall not
affect any other provision in the Agreement.
14. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding of the parties hereto in respect of the subject matter hereof.
This Agreement supersedes all prior agreements and understandings between the
parties with respect to the transactions contemplated hereby.
15. DISPUTES. Any disputes arising under this Agreement shall be
resolved by binding arbitration in the manner contemplated by Section 9.13 of
the Distribution Agreement, including the attorneys' fees provision referenced
therein.
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<PAGE> 4
IN WITNESS WHEREOF, each of Excel and Legacy has caused this Agreement
to be executed by its duly authorized officer as of the date first above
written.
EXCEL REALTY TRUST, INC.
By: /s/ GARY B. SABIN
-------------------------------------
Name: GARY B. SABIN
-------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
-------------------------------------
EXCEL LEGACY CORPORATION
By: /s/ GARY B. SABIN
-------------------------------------
Name: GARY B. SABIN
-------------------------------------
Title: PRESIDENT AND CHIEF EXECUTIVE OFFICER
-------------------------------------
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