<PAGE>
Form 8-K
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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) July 31, 1998
-------------
The Rouse Company
------------------------------------------------------
(Exact name of registrant as specified in its charter)
<TABLE>
<CAPTION>
<S> <C> <C>
Maryland 0-1743 52-0735512
- ------------------ ----------- ------------------
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
</TABLE>
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
- --------------------------------------------------------------------
(Address of principle executive offices) (Zip Code)
Registrant's telephone number, including area code (410) 992-6000
---------------
Not Applicable
--------------
(Former name or former address, if changed since last report)
<PAGE>
Item 2. Acquisition or Disposition of Assets.
On April 6, 1998, The Rouse Company (the "Company") and Westfield America, Inc.
entered into an agreement to purchase a portfolio of interests in retail
centers from TrizecHahn Centers Inc. ("TrizecHahn"). Under the terms of the
agreement, as amended, the Company agreed to purchase ownership interests in
eight retail centers for approximately $1.3 billion in a series of transactions
expected to be completed during the third and fourth quarters of 1998. The
agreement is subject to the satisfaction of certain conditions and includes a
provision for the substitution of, or increase or decrease in the number of,
retail centers to be acquired.
On July 31, 1998, a wholly owned subsidiary of The Rouse Company purchased from
TrizecHahn assets known as Park Meadows Mall. In a related transaction on the
same date, another wholly owned subsidiary of the Company, in a joint venture
with Westfield America, Inc. ("Westfield"), purchased from TrizecHahn assets
known as Valley Fair Mall. As a result, Company subsidiaries now own Park
Meadows Mall and a 50% interest in Valley Fair Mall.
Park Meadows Mall is a regional shopping center in Littleton, Colorado, which is
approximately 15 miles from Denver. The Mall contains approximately 593,000
square feet of leasable mall space and 4 department stores encompassing 875,000
square feet of space with a fifth department store encompassing 146,000 square
feet of space under construction. Valley Fair Mall is a regional shopping
center in San Jose, California containing approximately 469,000 square feet of
leasable mall space and 3 department stores encompassing 669,000 square feet of
space. Park Meadows Mall and Valley Fair Mall will continue to operate as
regional shopping centers.
The aggregate purchase price for the Company's interests in the properties was
approximately $445,435,000, including approximately $252,817,000 paid at
closing and approximately $192,618,000 of debt secured by the properties which
was assumed by subsidiaries of the Company. The purchase prices were
determined on an individual property basis by negotiation between the
applicable parties. The Company used available cash to pay approximately
$42,817,000 of the portion of the purchase price paid at closing. The balance
of the price paid at closing of $210,000,000 was provided by borrowings under
the Company's unsecured revolving credit facility that was underwritten by The
First National Bank of Chicago and Bankers Trust Company.
<PAGE>
Item 2. Acquisition or Disposition of Assets, continued
Prior to the transactions there were no material relationships between
TrizecHahn and the Company or any of its affiliates, any director or officer of
the Company or any affiliate of any such director or officer, except an
affiliate of the Company has a 75% interest and the management of Fashion Show
Mall in Las Vegas, Nevada, in which TrizecHahn has a 25% ownership interest.
<PAGE>
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) & (b) It is impracticable for the Company to provide any of the
financial statements and pro forma financial information required
by Items 7(a) and (b) at this time. The Company will file the
required financial statements and pro forma financial information
as soon as practicable, but in any event no later than October 12,
1998.
(c) The following exhibit is filed as part of this Current Report on
Form 8-K:
Exhibit
Number Exhibit
2 Asset Purchase Agreement between TrizecHahn Centers Inc.
and The Rouse Company and Westfield America, Inc., dated
April 6, 1998.
<PAGE>
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.
THE ROUSE COMPANY
Date: August 14, 1998 By /s/ Jeffrey H. Donahue
-----------------------
Jeffrey H. Donahue
Senior Vice- President and
Chief Financial Officer
Date: August 14, 1998 By /s/ George L. Yungmann
-----------------------
George L. Yungmann
Senior Vice-President and
Controller
<PAGE>
EXHIBITS
Exhibit Index
-------------
Exhibit Number Exhibit
2 Asset Purchase Agreement between TrizecHahn
Centers, Inc. and The Rouse Company and Westfield
America, Inc. dated April 6, 1998.
<PAGE>
EXHIBIT 10
CONFORMED COPY
================================================================================
------------------------------------
ASSET PURCHASE AGREEMENT
------------------------------------
dated as of April 6, 1998
between
TRIZECHAHN CENTERS INC.
and
THE ROUSE COMPANY
and
WESTFIELD AMERICA, INC.
================================================================================
Distributed April 9, 1998
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms...................................... 2
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Assets to Be Sold; Closings................................ 15
SECTION 2.02. Assumption of Liabilities.................................. 18
SECTION 2.03. Closing Deliveries by THCI................................. 19
SECTION 2.04. Closing Deliveries by the Acquirors........................ 20
SECTION 2.05. Delivery of Possession..................................... 21
SECTION 2.06. Management Company Acts and Omissions...................... 21
SECTION 2.07. Apportionments............................................. 21
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THCI
SECTION 3.01. Incorporation and Authority; Ownership of Management
Company Shares and Partnership Interests................... 26
SECTION 3.02. No Conflict................................................ 29
SECTION 3.03. Consents and Approvals..................................... 30
SECTION 3.04. Personal Property.......................................... 30
SECTION 3.05. Litigation................................................. 31
SECTION 3.06. Compliance with Laws....................................... 31
SECTION 3.07. Taxes...................................................... 32
SECTION 3.08. Real Property.............................................. 32
SECTION 3.09. Environmental, Health and Safety Matters................... 33
SECTION 3.10. Insurance.................................................. 33
SECTION 3.11. Financial Information...................................... 34
SECTION 3.12. Employee Benefit Matters................................... 34
SECTION 3.13. Labor Matters.............................................. 35
SECTION 3.14. Material Contracts......................................... 36
SECTION 3.15. The Management Company..................................... 37
<PAGE>
ii Page
SECTION 3.16. Brokers.................................................... 37
SECTION 3.17. Rent Rolls................................................. 37
SECTION 3.18. Other Assets............................................... 38
SECTION 3.19. No Material Defects........................................ 38
SECTION 3.20. Participations............................................. 38
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ACQUIRORS
SECTION 4.01. Incorporation and Authority................................ 38
SECTION 4.02. No Conflict................................................ 39
SECTION 4.03. Consents and Approvals..................................... 39
SECTION 4.04. Litigation................................................. 40
SECTION 4.05. Financing.................................................. 40
SECTION 4.06. Brokers.................................................... 40
SECTION 4.07. Investment Intent.......................................... 40
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. THCI Conduct of Business Prior to the Applicable Closing... 40
SECTION 5.02. Investigation.............................................. 43
SECTION 5.03. Access to Information...................................... 44
SECTION 5.04. Confidentiality............................................ 45
SECTION 5.05. Regulatory and Other Authorizations; Consents.............. 46
SECTION 5.06. Notification to Governmental Authorities................... 47
SECTION 5.07. Bulk Transfer Laws......................................... 47
SECTION 5.08. Use of Name or Other Intellectual Property................. 47
SECTION 5.09. Partnership Interests...................................... 47
SECTION 5.10. Special Provisions Relating to Rights of First Refusal;
Buy/Sells.................................................. 48
SECTION 5.11. Tenancy-in-Common Interests................................ 49
SECTION 5.12. Liquidated Damages......................................... 51
SECTION 5.13. Further Action............................................. 51
SECTION 5.14. Environmental Reports...................................... 51
SECTION 5.15. Record Owner Apportionments................................ 52
<PAGE>
iii Page
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. Employees.................................................. 52
SECTION 6.02. Employee Benefits.......................................... 53
SECTION 6.03. Employee Plans............................................. 53
SECTION 6.04. Other Employee Benefits.................................... 54
SECTION 6.05. WARN Act................................................... 54
SECTION 6.06. Indemnity.................................................. 54
SECTION 6.07. No Third Party Beneficiaries............................... 55
SECTION 6.08. Reimbursement for Certain Payments......................... 55
ARTICLE VII
TAX MATTERS
SECTION 7.01. Conveyance Taxes; Costs.................................... 55
SECTION 7.02. Treatment of Indemnity Payments............................ 55
SECTION 7.03. Allocation of Consideration................................ 56
SECTION 7.04. Employee Withholding....................................... 56
SECTION 7.05. Like-Kind Exchange......................................... 56
SECTION 7.06. Tax Indemnity.............................................. 57
SECTION 7.07. Contests................................................... 57
SECTION 7.08 Section 754 Election....................................... 58
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of THCI.......................... 58
SECTION 8.02. Conditions to Obligations of the Acquirors................. 60
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival................................................... 64
SECTION 9.02. Indemnification by THCI.................................... 65
SECTION 9.03. Indemnification by the Acquirors........................... 67
<PAGE>
iv Page
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. Termination................................................. 70
SECTION 10.02. Effect of Termination....................................... 70
SECTION 10.03. Waiver...................................................... 70
ARTICLE XI
CASUALTY AND CONDEMNATION
SECTION 11.01. Casualty.................................................... 71
SECTION 11.02. Condemnation................................................ 71
ARTICLE XII
GENERAL PROVISIONS
SECTION 12.01. Expenses.................................................... 72
SECTION 12.02. Notices..................................................... 72
SECTION 12.03. Public Announcements........................................ 73
SECTION 12.04. Headings.................................................... 74
SECTION 12.05. Severability................................................ 74
SECTION 12.06. Entire Agreement............................................ 74
SECTION 12.07. Assignment.................................................. 74
SECTION 12.08. No Third-Party Beneficiaries................................ 75
SECTION 12.09. Amendment; Waiver........................................... 75
SECTION 12.10. Governing Law............................................... 75
SECTION 12.11. Counterparts................................................ 75
SECTION 12.12. Specific Performance........................................ 75
SECTION 12.13. No Recordation.............................................. 75
SECTION 12.14. Joint and Several Obligations............................... 75
<PAGE>
EXHIBITS
A THCI Subsidiaries and THCI Partnerships
B Special Property Provisions
1.01(a) Form of Assignment and Assumption Agreement
1.01(b) Form of Assignment of Ground Lease
1.01(c) Form of Bill of Sale
1.01(d) Excluded Computer Software
1.01(e) Form of Lease Assignment
1.01(f) Transferred Computer Software
1.01(g) Form of UTC Right of First Refusal Agreement
2.01(d)(i) Form of Initial Closing Date Notice
2.01(d)(ii) Form of Subsequent Closing Date Notice
5.01(a)(ii) Assets to be Transferred from the Management Company
5.01(a)(iii) Assets to be Transferred to the Management Company
<PAGE>
ASSET PURCHASE AGREEMENT, dated as of April 6, 1998, between
TrizecHahn Centers Inc., a California corporation ("THCI"), and The Rouse
Company, a Maryland corporation ("ROUSE"), and Westfield America, Inc., a
Missouri corporation ("WEA" and, together with Rouse, the "ACQUIRORS").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, THCI, the subsidiaries of THCI listed in Exhibit A
(collectively, the "THCI SUBSIDIARIES") and the partnerships listed on Exhibit A
(the "THCI PARTNERSHIPS") own or lease, or own Partnership Interests (as defined
in Article I) in the partnerships listed in the column entitled "Partnership" in
Section 1.01(A) of the THCI Disclosure Schedule (collectively, the
"PARTNERSHIPS") that own or lease, or own partnership interests in partnerships
(the "SECOND TIER PARTNERSHIPS") listed in the column entitled "Second Tier
Partnership" in Section 1.01(A) of the THCI Disclosure Schedule that own or
lease, the shopping centers listed in the column entitled "Property" in Section
1.01(A) of the THCI Disclosure Schedule (the "PROPERTIES");
WHEREAS, TrizecHahn Centers Management Inc., a California corporation
and a direct, wholly owned subsidiary of THCI (the "MANAGEMENT COMPANY"),
performs management services for certain Properties;
WHEREAS, THCI and the THCI Subsidiaries desire to transfer to the
Acquirors, and the Acquirors desire to acquire from THCI, the Properties and
certain related assets or the Partnership Interests and, in connection
therewith, the Acquirors are willing to assume certain liabilities of THCI and
the THCI Subsidiaries relating thereto, all upon the terms and subject to the
conditions set forth herein;
WHEREAS, THCI desires that the transfers described above be effected
in transactions that will qualify, to the extent permissible, as "like-kind
exchanges" under Section 1031 of the Internal Revenue Code of 1986, as amended
(the "CODE"), and applicable Treasury Regulations, and the Acquirors are willing
to cooperate in structuring such transfers to so qualify; and
WHEREAS, THCI desires to transfer to the Acquirors, and the Acquirors
desire to acquire from THCI, all of the outstanding capital stock of the
Management Company;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements and covenants hereinafter set forth, THCI and the Acquirors hereby
agree as follows:
<PAGE>
2
ARTICLE I
DEFINITIONS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings:
"ACQUIRORS" has the meaning specified in the preamble to this
Agreement.
"ACQUIRORS INDEMNIFIED PARTY" has the meaning specified in Section
9.02(a).
"AD VALOREM TAXES" has the meaning specified in Section 2.07(a).
"ADJUSTED ALLOCATED PURCHASE PRICE" means:
(a) for any Property, the amount by which (i) the sum of (A) the
Allocated Purchase Price for such Property, plus (B) any prepayment
premiums, breakage costs or similar payments required as a result of a
Qualified Prepayment of Existing Debt associated with such Property prior
to the Applicable Closing Date for such Property, plus (C) the Capital
Costs paid on or prior to the Applicable Closing with respect to such
Property under leases and construction contracts that are executed and
delivered after the date of this Agreement and renewals and extensions,
exercised or executed after the date of this Agreement, of leases executed
on or prior to the date of this Agreement (or the applicable Co-Tenant's
Share thereof), in each case in accordance with the terms of this
Agreement, plus (D) in the case of any Expansion Property, the Expansion
Costs incurred after December 31, 1997 and on or prior to the Applicable
Closing Date for such Property, exceeds (ii) the Assumed Debt Amount for
such Property; and
(b) for any Partnership Interest, the sum of (i) the Partnership
Interest Amount for such Partnership Interest plus (ii) any prepayment
premiums, breakage costs or similar payments required to be made by THCI or
the related Partner (or, if made by the applicable Partnership or Second
Tier Partnership, the applicable Partner's share thereof) as a result of a
Qualified Prepayment of Existing Debt associated with the associated
Property, plus (iii) the Capital Costs paid on or prior to the Applicable
Closing by THCI or the applicable Partner (or, if by the Partnership or
Second Tier Partnership, the Partner's share thereof), with respect to such
Property under leases and construction contracts that are executed and
delivered after the date of this Agreement and renewals and extensions,
exercised or executed after the date of this Agreement, of leases executed
on or prior to the date of this Agreement, in each case in accordance
<PAGE>
3
with the terms of this Agreement, plus (iv) in the case of Partnership
Interests for any Expansion Property, the applicable Partner's share of
Expansion Costs incurred after December 31, 1997 and on or prior to the
Applicable Closing Date for such Partnership Interest.
"AFFILIATE" means, with respect to any specified Person, any other
Person that directly, or indirectly through one or more intermediaries,
controls, is controlled by or is under common control with such specified
Person.
"AGREEMENT" means this Asset Purchase Agreement, dated as of April
6, 1998, between THCI and the Acquirors, including, without limitation, the
Schedules and Exhibits hereto, as the same may be amended pursuant to the terms
hereof.
"ALLOCATED PURCHASE PRICE" means (a) for each Property and each
Partnership Interest to be transferred pursuant to this Agreement, the amount
set forth as the Allocated Purchase Price in Section 1.01(A) of the THCI
Disclosure Schedule and (b) for the Management Company Shares, US$20,000.
"ANCILLARY AGREEMENTS" means the Bills of Sale, the Deeds, the
Assignment and Assumption Agreements, the Lease Assignments and the Assignments
of Ground Lease.
"APPLICABLE CLOSING" means, with respect to any purchase
contemplated by this Agreement, the Closing at which such purchase occurs.
"APPLICABLE CLOSING DATE" means, with respect to any purchase
contemplated by this Agreement, the Closing Date on which such purchase occurs.
"ARTICLE VI LIABILITIES" means any and all Liabilities to be
assumed by the Acquirors or retained by THCI or its Affiliates pursuant to
Article VI.
"ASSIGNMENT AND ASSUMPTION AGREEMENT" means the assignment and
assumption agreement to be executed on each Applicable Closing Date,
substantially in the form of Exhibit 1.01(a).
"ASSIGNMENT OF GROUND LEASE" means the assignment and assumption
agreement to be executed on each Applicable Closing Date, substantially in the
form of Exhibit 1.01(b).
"ASSUMED DEBT AMOUNT" means, with respect to any Property, the
amount of indebtedness for borrowed money assumed by the Acquirors in accordance
with this Agreement, whether or not secured by such Property.
<PAGE>
4
"ASSUMED PROPERTY LIABILITIES" means, with respect to any Property
or Partnership Interest, (a) all indebtedness of THCI, the THCI Subsidiaries and
the THCI Partnerships for borrowed money, whether or not secured by a Property,
outstanding on the Applicable Closing and (b) all other Liabilities of THCI and
each THCI Subsidiary or THCI Partnership relating to or arising out of such
Property or Partnership Interest, accruing or arising on or after the Applicable
Closing, except for Capital Costs incurred or to be incurred (i) under leases
and construction contracts relating to such Property that are executed and
delivered on or prior to the date of this Agreement (other than in connection
with renewals or extensions, exercised or executed after the date of this
Agreement, of leases executed on or prior to the date of this Agreement or in
connection with improvements or replacements to such Property made after
completion of the applicable tenant's initial fit-out work unless the same are
required to be performed prior to the Applicable Closing Date) or (ii) in
connection with the improvements and other items described in Section 1.01 of
the THCI Disclosure Schedule, which THCI shall continue to be obligated to pay
(or, to the extent paid by the Acquirors, shall be obligated to reimburse the
Acquirors).
"BILL OF SALE" means the bill of sale and assignment to be executed
on each Closing Date, substantially in the form of Exhibit 1.01(c).
"BRIDGEWATER PARTNERSHIP" means Bridgewater Commons Associates.
"BRIDGEWATER PARTNERSHIP INTERESTS" has the meaning specified in
Section 2.01(b)(ii).
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or other
day on which banks are required or authorized to be closed in the City of New
York.
"CAPITAL COSTS" means all costs and expenses paid by THCI, a THCI
Subsidiary, a THCI Partnership, a Partnership or a Second Tier Partnership with
respect to a Property for improvements or replacements, tenant allowances,
leasing commissions, takeover obligations and other leasing costs, and all other
costs that are capital in nature, but excluding Expansion Costs.
"CLOSING" means the Initial Closing or a Subsequent Closing, as
applicable .
"CLOSING DATE" means the date of the Initial Closing or a Subsequent
Closing, as applicable.
"CO-TENANT" means a THCI Subsidiary, THCI Partnership or Partnership
that holds a TC Interest.
<PAGE>
5
"CODE" has the meaning specified in the recitals to this Agreement.
"CONFIDENTIALITY AGREEMENTS" has the meaning specified in Section
5.04.
"CONTEST" has the meaning specified in Section 7.07(b).
"CONTRACTS" means contracts, agreements, leases, subleases,
purchase or sale orders, notes, bonds, mortgages, indentures, licenses, permits,
franchises, instruments, undertakings, commitments and other binding
arrangements.
"CURRENT REPORTING PERIOD" has the meaning specified in Section
2.07(a)(v).
"DEED" means a quitclaim deed or its equivalent (or, if required to
obtain title insurance, a limited warranty deed) to be executed with respect to
each Owned Real Property on the Applicable Closing Date, in the customary form
for the jurisdiction in which the applicable Property is located.
"DPA" means DPA-H, Inc., the general partner of Plaza.
"EMPLOYEE PLANS" has the meaning specified in Section 3.12(a).
"EMPLOYEE-RELATED LIABILITIES" has the meaning specified in Section
6.01(a).
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien
(including, without limitation, environmental and tax liens), charge or
encumbrance.
"ENVIRONMENTAL LAW" means any Law relating to pollution or
protection of the environment, health, safety or natural resources, including,
without limitation, those relating to the use, handling, transportation,
treatment, storage, disposal, release or discharge of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EWH" means EWH 1979 Development Company, L.P., the general partner
of Midway Associates.
"EXCLUDED PROPERTY ASSETS" means, with respect to any Property:
(a) all cash, marketable securities and bank accounts, except security
deposits of tenants of such Property;
<PAGE>
6
(b) all THCI Names and Marks;
(c) all insurance policies relating to the Properties or the Property
Assets and all rights of THCI or a THCI Subsidiary of every nature and
description under or arising out of such insurance policies, other than the
right to the proceeds thereunder attributable to Assumed Property
Liabilities covered by such policies or to the extent assigned to the
Acquirors pursuant to Article XI;
(d) subject to Section 2.07, all claims for refunds of Taxes paid by
THCI or any Affiliate of THCI attributable to such Property relating to any
period, or any portion of any period, ending on or prior to the Applicable
Closing Date;
(e) all claims for Tenant Delinquent Rents that are delinquent as of
the Applicable Closing Date and are payable under leases that terminated on
or prior to such Applicable Closing Date;
(f) the computer software, including, without limitation, source
code, operating systems and specifications, data, data bases, files,
documentation and other materials related thereto set forth in Exhibit
1.01(d);
(g) all rights of THCI, the THCI Subsidiaries and the THCI
Partnerships under this Agreement and the Ancillary Agreements; and
(h) all other assets of THCI not identified in this Agreement as a
Property Asset with respect to such Property that is not necessary for the
operation of such Property.
"EXCLUSION NOTICE" has the meaning specified in Section 2.01(e).
"EXISTING DEBT" has the meaning specified in Section 3.14(a)(ii).
"EXPANSION COSTS" means, with respect to the Expansion Properties,
all costs and expenses, whether or not capitalized, paid by THCI or any THCI
Subsidiary or THCI Partnership in connection with the proposed renovations and
expansions of such Properties previously described to the Acquirors, including,
without limitation, cost of construction, grading, obtaining permits and
approvals, feasibility and parking studies, marketing and environmental analyses
and development fees (but, as to each Expansion Property, only to the extent of
an amount equal to the product of the applicable development fee times a
fraction, the numerator of which is the budgeted Expansion Costs, exclusive of
development fees, incurred after December 31, 1997 and on or prior to the
Applicable Closing Date and the denominator
<PAGE>
7
of which is all of the budgeted Expansion Costs, exclusive of development fees),
but excluding the purchase price of any land or ground leasehold interest
forming a part of such Properties.
"EXPANSION PROPERTIES" means the Bridgewater Commons, Fashion
Place, Valley Fair and University Towne Centre Properties.
"FASHION OUTLET" means the Property located in Nevada known as
Fashion Outlet of Las Vegas, which is under construction as of the date hereof.
"GOVERNMENTAL AUTHORITY" means any United States federal, state or
local or any foreign government, governmental, regulatory or administrative
authority, agency or commission or any court, tribunal, or judicial or arbitral
body.
"GROUND LEASES" has the meaning specified in Section 3.08(a).
"HAZARDOUS MATERIALS" means (a) petroleum and petroleum products,
by-products or breakdown products, radioactive materials, asbestos-containing
materials and polychlorinated biphenyls and (b) any other chemicals, materials
or substances that are regulated as to disposal, storage, use or quantity or
identified as toxic or hazardous or as a pollutant, contaminant or waste under
any applicable Environmental Law.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations promulgated thereunder.
"INITIAL CLOSING" has the meaning specified in Section 2.01(b).
"INITIAL CLOSING DATE" has the meaning specified in Section
2.01(b).
"INITIAL CLOSING DATE NOTICE" has the meaning specified in Section
2.01(d).
"INITIAL PROPERTIES" means the Properties described in Section
2.01(b)(i) of the THCI Disclosure Statement.
"IRS" means the U.S. Internal Revenue Service.
"KNOWLEDGE OF THCI" or "'THCI'S KNOWLEDGE" means the actual
knowledge, after inquiry of the managers of the Properties, of the President of
the Management Company, the Chief Financial Officer of THCI, the General Counsel
of THCI and the Senior Vice President of THCI in charge of asset management.
<PAGE>
8
"LAW" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order, judgment or decree, and any judicial
or administrative interpretation thereof, and any other requirement or rule of
law.
"LEASE ASSIGNMENT" means the assignment and assumption agreement, to
be executed with respect to such Leased Real Property on the Applicable Closing
Date, substantially in the form of Exhibit 1.01(e).
"LEASED REAL PROPERTY" means each parcel of real property ground
leased, as ground lessee, by THCI, a THCI Subsidiary, a THCI Partnership, a
Partnership or a Second Tier Partnership, included in the Properties; provided
that, upon the conversion of ownership of the ground leasehold interest in the
North County Fair Property into a Tenancy in accordance with Section 5.01(e),
Leased Real Property with respect to the North County Fair Property means the TC
Interest of the Co-Tenant in the ground leasehold interest in the North County
Fair Property.
"LIABILITIES" means any and all debts, liabilities and obligations,
whether accrued or fixed, absolute or contingent, matured or unmatured or
determined or determinable, including, without limitation, those arising under
any Law or any Contract.
"LOSSES" of a Person means any and all losses, liabilities, damages,
claims, awards, judgments, costs and expenses (including, without limitation,
reasonable attorneys' fees) actually suffered or incurred by such Person.
"MANAGEMENT COMPANY" has the meaning specified in the recitals to
this Agreement.
"MANAGEMENT COMPANY SHARES" has the meaning specified in Section
3.01(b).
"MATERIAL ADVERSE EFFECT" means any change in, or effect on, the
Properties, taken as a whole, that is (individually or in the aggregate with any
other changes therein or effects thereon that would be specifically addressed by
a representation or warranty contained in this Agreement but for a "Material
Adverse Effect" exception or qualification thereto), materially adverse to the
Properties, taken as a whole, or to the results of operations of the Properties,
taken as a whole, other than any such changes or effects resulting from (a)
changes in general (national, regional or local) economic, regulatory or
political conditions or changes that affect owners or managers of shopping
centers in general, (b) the termination or expiration of any service contract,
management agreement or space or anchor tenant lease, (c) any defaults by any
tenants (including the bankruptcy of any tenants) under a lease or any other
termination of any lease on or after the date hereof, (d) any notice of
violation from any Governmental Authority having jurisdiction over any Property
received on or after the date
<PAGE>
9
hereof with respect to any condition existing on the date hereof or (e) this
Agreement or the transactions contemplated hereby or the announcement thereof
other than, in the case of clauses (b) and (c), a termination (i) resulting from
a default by THCI, a THCI Subsidiary, a THCI Partnership, a Partnership or a
Second Tier Partnership or (ii) of a space lease resulting from a default by an
anchor tenant under an anchor tenant lease; provided, however, that if either
Acquiror determines that any event or circumstance causes a Material Adverse
Effect, such Acquiror shall notify THCI of such matter and THCI shall have the
right to take such actions as may be necessary to cure and, upon such cure, such
event or circumstance shall no longer to be deemed to have caused a Material
Adverse Effect.
"MATERIAL CONTRACT" has the meaning specified in Section 3.14(a).
"MAXIMUM AMOUNT" has the meaning specified in Section 9.02(b).
"MULTIEMPLOYER PLAN" has the meaning specified in Section 3.12(b).
"MULTIPLE EMPLOYER PLAN" has the meaning specified in Section 3.12(b).
"NEW ENTITY" has the meaning specified in Section 5.01(d).
"NOI" means, for any Property for any period, (a) all gross rental
income of such Property during such period (including, without limitation, fixed
rents, percentage rents and common area maintenance and tax reimbursements) and
all other income of such Property from all other sources during such period,
including, without limitation, parking and concessions, minus (b) all operating
expenses for such Property during such period, including, without limitation,
ground lease rent, taxes, insurance, maintenance costs, electricity and
management fees and cost reimbursements, but excluding debt service on any
indebtedness, costs of obtaining leases (including, without limitation,
brokerage commissions and costs of tenant improvement work), property
depreciation and amortization or any other capital costs, all as determined in
accordance with Canadian generally accepted accounting principles.
"OPTION EXPIRATION DATE" has the meaning specified in Section
2.01(b)(ii).
"OTHER PARTNER" has the meaning specified in Section 5.10.
"OWNED REAL PROPERTY" means each parcel of real property owned in
fee by THCI, a THCI Subsidiary, a THCI Partnership, a Partnership or a Second
Tier Partnership included in the Properties, together with all buildings and
other structures, facilities and improvements located thereon, all fixtures,
systems and equipment attached or appurtenant thereto and all easements,
licenses, rights and appurtenances relating to any of the foregoing; provided
that, upon the conversion of ownership of the Fashion Show Property into a
Tenancy
<PAGE>
10
in accordance with Section 5.01(e), Owned Real Property with respect to the
Fashion Show Property means the TC Interest of the Co-Tenant in the Fashion Show
Property.
"PARTNER" means THCI, a THCI Subsidiary or a THCI Partnership in its
capacity as a partner in a Partnership.
"PARTNERSHIP INTEREST" means a general partner or limited partner
interest held by a Partner in a Partnership and all rights pertaining thereto,
including all rights to receive distributions and allocations and all other
rights pertaining thereto.
"PARTNERSHIP INTEREST AMOUNT" means, for each Partnership Interest,
the amount that would be payable to the Partner holding the Partnership Interest
pursuant to the terms of the applicable partnership agreement if the applicable
Property Assets were sold for a purchase price (assuming no brokerage
commissions, transfer taxes or other transfer costs) equal to the amount set
forth as the "100% Amount" in Section 1.01(A) of the THCI Disclosure Schedule
(or, in the case of a Partnership Interest for which, as a result of the
operation of Section 5.09, there is no "100% Amount", for a purchase price equal
to the Allocated Purchase Price for the related Property) where (a) prorations
of the type specified in Section 2.07 were made, (b) the principal amount of,
and current interest on, all loans to the Partnership and all other partnership
debts of the Partnership (and, if applicable, the Second Tier Partnership) were
paid in full (assuming that payment in full of all outstanding principal of, and
current interest on, indebtedness for money borrowed constitutes payment in full
of such indebtedness), (c) no reserves were established for contingent or
unasserted claims, (d) the Partnership (and, if applicable, the Second Tier
Partnership) were dissolved and liquidated and (e) to the extent of available
proceeds from the sale of such Property Assets, all loans made by the Partner to
another partner in the Partnership or by another partner in the Partnership to
the Partner were repaid.
"PARTNERSHIPS" has the meaning specified in the recitals to this
Agreement.
"PERMITS" means permits, licenses, authorizations, certificates,
exemptions and approvals of Governmental Authorities.
"PERMITTED ENCUMBRANCES" means (a) mortgages, deeds of trust, liens,
security interests, claims and other charges and encumbrances in favor of any
lender and given in connection with indebtedness that is assumed by either
Acquiror hereunder or to which such Acquiror take subject; (b) inchoate
mechanic, construction and materialmen liens for completed construction or
construction in progress; (c) (i) department store leases, reciprocal easement
agreements and other agreements described in Section 1.01 of the THCI Disclosure
Schedule, (ii) other easements that do not have a Material Adverse Effect and
(iii) all other leases and subleases (A) set forth on the Rent Rolls, (B)
entered into in the ordinary course of
<PAGE>
11
business between the respective dates of the Rent Rolls and the date of this
Agreement or (C) entered into pursuant to the terms of this Agreement; (d)
building restrictions and zoning and other regulations, resolutions and
ordinances and any amendments thereto in effect on the date of this Agreement or
hereafter adopted; (e) any state of facts that a survey would show, provided
such facts would not have a Material Adverse Effect; (f) consents previously
granted by THCI or any former owner of the property for the erection of any
structure or structures on, under or above any street or streets on which the
Property may abut; (g) easements or rights of use of record in favor of any
utility company for construction, use, maintenance or repair of utility lines,
wires, terminal boxes, mains, pipes, cables, conduits, poles and other equipment
and facilities on, under and across the Property; (h) liens for any unpaid real
estate tax, water charge, sewer rent and assessment, provided the same are
adjusted at the Applicable Closing; (i) standard printed exclusions from
coverage contained in the form of title insurance policy then issued by the
title company providing title insurance for either Acquiror (other than the
survey exception and the rights of tenants generally); (j) liens or encumbrances
encumbering the property as to which THCI shall deliver to either Acquiror, or
to the title company providing title insurance for either Acquiror, if any, at
or prior to the Applicable Closing, proper instruments, in recordable form,
either canceling such liens or encumbrances, together with any other instruments
necessary thereto and the cost of recording and canceling the same or causing
the title insurance company to insure over such lien or encumbrance; (k) the
revocable nature of the right, if any, to maintain street and sidewalk vaults
and other vault spaces, coal chutes, excavations, canopies, marquees and signs;
(l) any matter that is the responsibility of any tenant (other than THCI, a THCI
Subsidiary, THCI Partnership, a Partnership or a Second Tier Partnership, as the
case may be) under any lease of a Property or of any party to any reciprocal
easement agreement affecting any Property (other than THCI, a THCI Subsidiary, a
THCI Partnership, a Partnership or a Second Tier Partnership, as the case may
be); and (m) any other leases, liens or encumbrances which would not have a
Material Adverse Effect.
"PLAZA" means DPA, L.P., a California limited partnership.
"PERSON" means any individual, partnership, firm, corporation,
limited liability company, association, trust, unincorporated organization or
other entity, as well as any syndicate or group that would be deemed to be a
person under Section 13(d)(3) of the Securities Exchange Act of 1934, as
amended.
"PRO RATA NOI" means the pro rata share of total NOI for a Property
that is allocable to the Partner in the related Partnership or Second Tier
Partnership based on the nominal percentage interest of such Partner in such
Partnership (taking into account the Partnership's nominal percentage interest
in the Second Tier Partnership).
"PROPERTIES" has the meaning specified in the recitals to this
Agreement.
<PAGE>
12
"PROPERTY ASSETS" means, with respect to a Property, all the right,
title and interest of THCI, the THCI Subsidiaries, the THCI Partnerships, the
Partnerships, the Second Tier Partnerships and the Co-Tenants in, to and under
the following assets and properties, in each case other than items that
constitute Excluded Property Assets with respect to such Property:
(a) where the Property is Owned Real Property, all rights in the land,
improvements, fixtures and other real property forming a part of such Owned
Real Property;
(b) where the Property is Leased Real Property, all rights in the
tenant's leasehold estate in such Leased Real Property;
(c) all machinery, equipment, furniture, supplies and other similar
property located in such Property;
(d) all leases, subleases and licenses of such Property and all
amendments thereto, to the extent assignable or otherwise transferable;
(e) all service, maintenance, construction, leasing and other
contracts with respect to such Property, to the extent assignable or
otherwise transferable;
(f) all accounts receivable with respect to such Property, subject to
Section 2.07(a)(iv) as to Tenant Delinquent Rents and Section 2.07(a)(ii)
as to certain tax refunds and credits;
(g) the Real Estate Records with respect to such Property and all
financial records, personnel records and other files and records pertaining
solely to such Property, including all "as-built" building plans,
specifications and drawings for such Property to the extent in the
possession or under the control of THCI, any THCI Subsidiary or any THCI
Partnership;
(h) all municipal, state and federal franchises, permits, licenses,
agreements, waivers and authorizations held or used by THCI, a THCI
Subsidiary, a THCI Partnership, a Partnership or a Second Tier Partnership
solely in connection with, or required for, the operation of such Property,
to the extent assignable or otherwise transferable;
(i) the computer software, including, without limitation, source code,
operating systems and specifications, data, data bases, files,
documentation and other materials related thereto set forth in Exhibit
1.01(f), to the extent transferable;
<PAGE>
13
(j) all security deposits (including letters of credit) posted by
tenants;
(k) all tradenames, service marks, tradedress, logos and trademarks,
whether or not registered, including all common law rights thereto,
relating to such Property other than the THCI Names and Marks; and
(l) any other matter or item necessary for the operation of such
Property and owned by THCI, any THCI Subsidiary or any THCI Partnership.
"QUALIFIED INTERMEDIARY" has the meaning specified in Section 7.05(a).
"QUALIFIED PREPAYMENT" has the meaning specified in Section
5.01(a)(vi).
"REAL ESTATE RECORDS" means, for any Property, all of the documents,
including, without limitation, all instruments, notices, agreements, contracts,
bills, invoices, surveys, engineering reports, environmental reports, leases,
assignments and plans and specifications that relate to such Property and are in
the possession of THCI or an Affiliate of THCI, except for memoranda that are
confidential and are not reasonably required for the operation of the
Properties.
"RECORD OWNER" means, with respect to any Partnership Interest, (a)
THCI, the THCI Subsidiary or the THCI Partnership that is the record owner of
such Partnership Interest or (b) a newly created wholly owned direct or indirect
subsidiary of THCI to which a prior Record Owner transfers such Partnership
Interest.
"RECORD OWNER PARTNERSHIP INTEREST" means, with respect to a Record
Owner that is a partnership, the partnership interests in such partnership.
"RECORD OWNER SHARES" means, with respect to a Record Owner that is
a corporation, the shares of capital stock of such corporation.
"RENT ROLLS" has the meaning specified in Section 3.17.
"RENTS" has the meaning specified in Section 2.07(a).
"ROUSE" has the meaning specified in the preamble to this Agreement.
"SECOND TIER PARTNERSHIPS" has the meaning specified in the recitals
to this Agreement.
"SECTION 1031 TREATMENT" has the meaning specified in Section 7.05(a).
<PAGE>
14
"SUBSEQUENT CLOSING" has the meaning specified in Section 2.01(c).
"SUBSEQUENT CLOSING DATE" has the meaning specified in Section
2.01(c).
"SUBSEQUENT CLOSING DATE NOTICE" has the meaning specified in Section
2.01(d).
"TAX" or "TAXES" means any and all taxes, fees, levies, duties,
tariffs, imposts and other charges of any kind whatsoever (together with any
interest, penalties, additions to tax and additional amounts imposed with
respect thereto) imposed by any governmental or taxing authority, including,
without limitation, taxes or other charges on or with respect to income,
franchises, windfall or other profits, gross receipts, property, sales, use,
capital stock, payroll, employment, social security, workers' compensation,
unemployment compensation, or net worth; taxes or other charges in the nature of
excise, withholding, ad valorem, stamp, transfer, value added, or gains taxes;
license, registration and documentation fees; and customs duties, tariffs and
similar charges.
"TAX RETURN" means any return, form or other report required to be
filed with respect to Taxes, including any declaration of estimated tax and
information return.
"TC INTEREST" means a tenancy-in-common interest in a Tenancy
"TEACHERS" means Teachers Insurance and Annuity Association.
"TENANCY" means the tenancy-in-common form of ownership of an
interest in real property.
"TENANT DELINQUENT RENTS" has the meaning specified in Section
2.07(a)(iv).
"THCI" has the meaning specified in the preamble to this Agreement.
"THCI DISCLOSURE SCHEDULE" means the Disclosure Schedule, dated as
of the date hereof, delivered to the Acquirors by THCI.
"THCI FINANCIAL ADVISORS" has the meaning specified in Section 3.16.
"THCI INDEMNIFIED PARTY" has the meaning specified in Section 9.03(a).
"THCI NAMES AND MARKS" means the names "Trizec", "Hahn", "TrizecHahn"
and variants thereof and all related trademarks, service marks, trade dress,
logos, trade names and corporate names, whether or not registered, including all
common law rights thereto, and registrations and applications for registration
thereof.
<PAGE>
15
"THCI PARTNERSHIPS" has the meaning set forth in the preamble to this
Agreement.
"THCI SUBSIDIARIES" has the meaning specified in the recitals to this
Agreement.
"THRESHOLD AMOUNT" has the meaning specified in Section 9.02(b).
"TRANSFERRED EMPLOYEES" has the meaning specified in Section 6.01(a).
"TREASURY REGULATIONS" means the regulations promulgated under the
Code by the United States Treasury Department.
"UTC RIGHT OF FIRST REFUSAL AGREEMENT" means an agreement in the form
of Exhibit 1.01(g) pursuant to which the Acquirors grant to THCI a right of
first refusal in the event that, at any time prior to the third anniversary of
the Applicable Closing Date for the University Towne Centre Property, the
Acquirors elect to (a) sell or ground lease any portion of such Property to any
third party for the development of one or more office buildings on such property
or (b) engage or retain a developer to develop for the Acquirors one or more
office buildings on such property.
"WARN" means the Workers Adjustment and Retraining Notification Act.
"WEA" has the meaning specified in the preamble to this Agreement.
"WEA FINANCIAL ADVISORS" has the meaning specified in Section 4.06.
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. Assets to Be Sold; Closings. (a) Assets to Be Sold.
Subject to Sections 5.09 and 5.10 and the other terms and conditions of this
Agreement, the parties hereto agree that THCI shall sell, assign, transfer,
convey and deliver, or cause to be sold, assigned, transferred, conveyed and
delivered, to the Acquirors, and the Acquirors shall purchase, all of THCI's and
the THCI Subsidiaries' right, title and interest in and to (i) the Property
Assets associated with the Properties for which a transfer of Property Assets is
specified in Section 1.01(A) of the THCI Disclosure Schedule, (ii) the
Partnership Interests held by Partners with respect to the Properties for which
a transfer of Partnership Interests is specified in Section 1.01(A) of the THCI
Disclosure Schedule and (iii) the Management Company Shares, for an aggregate
purchase price for such Property Assets, Partnership
<PAGE>
16
Interests and Management Company Shares, of US$2,550,000,000, payable in cash,
as adjusted in accordance with the provisions of this Agreement.
(b) Initial Closing. (i) Subject to the terms and conditions of this
Agreement, at the Initial Closing, (A) the Property Assets associated with the
Properties and Partnership Interests specified in Section 2.01(b) of the THCI
Disclosure Schedule and the Property Assets associated with the Properties and
Partnership Interests, if any, specified in the Initial Closing Date Notice
shall be purchased by the Acquirors for an aggregate purchase price, payable in
cash, equal to the aggregate Adjusted Allocated Purchase Price for such
Properties and Partnership Interests and (B) the Management Company Shares shall
be purchased by the Acquirors for an aggregate purchase price, payable in cash,
equal to the Allocated Purchase Price therefor. Subject to the terms and
conditions of this Agreement, the transactions contemplated by this Section
2.01(b) shall take place at a closing (the "INITIAL CLOSING") to be held at
the offices of Shearman & Sterling, 599 Lexington Avenue, New York, New York at
10:00 a.m., New York City time, on a Closing Date specified in the Initial
Closing Date Notice, which shall not be less than 15 Business Days or more than
30 Business Days following delivery of the Initial Closing Date Notice to the
Acquirors but not later than August 31, 1998 or at such other place or at such
other time or on such other date as THCI and the Acquirors may mutually agree
upon in writing (the day on which the Initial Closing takes place being the
"INITIAL CLOSING DATE").
(ii) [CONFIDENTIAL]
<PAGE>
17
(c) Subsequent Closings. Subject to the terms and conditions of this
Agreement, the transactions contemplated by this Agreement that do not occur at
the Initial Closing shall take place at one or more closings (each a
"SUBSEQUENT CLOSING") to be held at the offices of Shearman & Sterling, 599
Lexington Avenue, New York, New York at 10:00 a.m., New York City time, on a
Closing Date specified in a Subsequent Closing Date Notice, which shall not be
less than 15 Business Days or more than 30 Business Days following delivery of
such Subsequent Closing Date Notice to the Acquirors or at such other place or
at such other time or on such other date as THCI and the Acquirors may mutually
agree upon in writing (the day on which a Subsequent Closing takes place being a
"SUBSEQUENT CLOSING DATE"). The Property Assets or Partnership Interests
associated with the Properties set forth in the Subsequent Closing Date Notice
for such Subsequent Closing shall be sold to the Acquirors for an amount of cash
equal to the aggregate Adjusted Allocated Purchase Prices for such Properties
and Partnership Interests.
(d) Closing Notices; Final Closing. THCI shall deliver a notice (the
"INITIAL CLOSING DATE NOTICE"), substantially in the form of Exhibit
2.01(d)(i), to the Acquirors as promptly as practicable after THCI determines,
in good faith, the date on which it expects the conditions to the obligations of
the parties to consummate the Initial Closing to be satisfied, and the Acquirors
shall cooperate with THCI in making such determination. THCI may deliver a
notice (a "SUBSEQUENT CLOSING DATE NOTICE"), substantially in the form of
Exhibit
<PAGE>
18
2.01(d)(ii), to the Acquirors at any time after THCI determines, in good faith,
the date on which it expects the conditions to the obligations of the parties to
consummate a Subsequent Closing with respect to one or more Properties or
Partnership Interests to be satisfied and the Acquirors shall cooperate with
THCI in making such determination. The parties shall cooperate to schedule and
hold a final Closing not later than December 31, 1998 with respect to all
Properties and Partnership Interests for which the conditions to the obligations
of the parties to consummate a Closing have been satisfied or waived by the
applicable parties, it being understood that THCI shall have no further
obligation to sell, and the Acquirors shall have no further obligation to
purchase, any Properties or Partnership Interests for which such conditions have
not been satisfied on or prior to such date. The Initial Closing Date Notice and
each Subsequent Closing Date Notice shall specify the Properties and the
Partnership Interests , if any, to be transferred, shall contain an estimate of
the Adjusted Allocated Purchase Prices for such Properties and Partnership
Interests and the basis for THCI's estimates thereof and may, at the election of
THCI, identify one or more Qualified Intermediaries and the Property or
Properties with respect to which each such Qualified Intermediary is to receive
payment.
(e) Exclusion Notices. At or prior to any Closing held prior to
December 31, 1998, THCI may deliver a notice (an "EXCLUSION NOTICE") with
respect to any Property or Partnership Interest included in the Initial Closing
Date Notice or a Subsequent Closing Date Notice, as the case may be, for such
Closing, stating that there are one or more conditions to the obligations of the
Acquirors to purchase such Property or Partnership Interest that THCI no longer
expects to be satisfied at or prior to such Closing. Unless the Acquirors
deliver, at or prior to such Closing, a waiver of such conditions, the Initial
Closing Date Notice or Subsequent Closing Date Notice for such Closing shall,
for all purposes under this Agreement, be deemed to be amended to remove such
Property or Partnership Interest from the list of Properties and Partnership
Interests to be transferred at such Closing. Such Property or Partnership
Interest may be included in a subsequent Closing Date Notice at any later time
that THCI determines, in good faith, the date on which it expects the conditions
to the obligations of the parties to consummate a Closing with respect to such
Property or Partnership Interest to be satisfied.
(f) Cash Payments. Cash payments to be made by the Acquirors to THCI
shall be made to THCI or a THCI Subsidiary (or to one or more Qualified
Intermediaries if THCI so elects by notice to the Acquirors) by wire transfer in
immediately available funds to a bank account or accounts designated by THCI in
a written notice to the Acquirors, such notice to be delivered not later than
the second Business Day prior to the Applicable Closing Date.
SECTION 2.02. Assumption of Liabilities. (a) On the terms and
subject to the conditions of this Agreement, the Acquirors shall, on each
Closing Date, assume and shall agree to pay, perform, fulfill, and discharge
when due the Assumed Property Liabilities with
<PAGE>
19
respect to each Property and Partnership Interest transferred to the Acquirors
on such Closing Date other than Article VI Liabilities (which shall be assumed
or retained in accordance with Article VI); provided, however, that, with
respect to limited recourse debt, the Acquirors shall be required to assume such
debt only to the extent of recourse thereunder but shall in any event take
Properties transferred hereunder subject to such debt.
(b) The Acquirors agree to use their commercially reasonable efforts
to obtain releases of the obligations of THCI, each THCI Subsidiary, each THCI
Partnership and each of their respective Affiliates (including all guarantees
and indemnities) with respect to the Assumed Debt Amount for each Property;
provided, however, that the Acquirors shall not in any event be required to pay
any transfer fees or prepay any Existing Debt in order to obtain any such
releases.
SECTION 2.03. Closing Deliveries by THCI. (a) Initial Closing. At
the Initial Closing, THCI shall deliver or cause to be delivered to the
applicable Acquirors:
(i) stock certificates evidencing the Management Company Shares, duly
endorsed in blank, or accompanied by stock powers duly executed in blank,
and with all required stock transfer tax stamps affixed;
(ii) with respect to each Property being transferred at such Closing:
(A) the Bill of Sale and the Deed (with respect to Owned Real
Property) and duly executed counterparts of the other Ancillary
Agreements with respect to such Property and such other instruments as
may be reasonably requested by such Acquiror to transfer the Property
Assets with respect to such Property to such Acquiror or to evidence
such transfer on the public records or to provide notice to third
parties of such transfer; provided, however, that in no event shall
THCI be required to provide indemnities, guaranties or other recourse
assurances other than customary affidavits and assurances given to the
such Acquiror's title insurance company to permit it to issue the
title insurance policy referred to in Section 8.02; and
(B) if in the possession of THCI or a THCI Subsidiary, a
complete set of keys and combinations for the Property;
(iii) with respect to each Partnership Interest being transferred at
such Closing:
(A) duly executed counterparts of customary documents required to
cause the transfer of such Partnership Interest, to be registered on
the books of
<PAGE>
20
the applicable Partnership or the public records or to notify third
parties of such transfer; and
(B) original, executed counterparts of the partnership
agreement relating to such Partnership Interest being transferred or,
if unavailable, photocopies thereof;
(iv) one or more receipts for the aggregate Adjusted Allocated
Purchase Price and any other payments made by such Acquiror to THCI or a
Qualified Intermediary at such Closing;
(v) executed counterparts of the appropriate transfer tax returns
to be filed by such Acquiror pursuant to Section 7.01;
(vi) affidavits of THCI, each THCI Subsidiary and each THCI
Partnership transferring a Property or a Partnership Interest pursuant to
(A) Section 1445(b)(2) of the Code and (B) Section 18662 of the California
Revenue and Taxation Code (if applicable), stating that the transferor is
not a foreign person within the meaning of such Sections; and
(vii) the certificates and other documents required to be delivered
at the Initial Closing pursuant to Section 8.02.
(b) Subsequent Closings. At each Subsequent Closing, THCI shall
deliver or cause to be delivered to the Acquirors, (i) with respect to each
Property being transferred, the items specified in Section 2.03(a)(ii), (ii)
with respect to each Partnership Interest being transferred, the items specified
in Section 2.03(a)(iii) and (iii) the items specified in Sections 2.03(a)(iv)
through (vi).
SECTION 2.04. Closing Deliveries by the Acquirors. (a) At each
Closing, the Acquirors shall deliver or cause to be delivered to THCI:
(i) duly executed counterparts of the Ancillary Agreements with
respect to the Property Assets being transferred at such Closing to the
Acquirors other than the Bills of Sale and the Deeds;
(ii) duly executed counterparts of customary documents required to
cause the transfer of any Partnership Interests being transferred at such
Closing to be registered on the books of the applicable Partnerships and
the public records;
<PAGE>
21
(iii) appropriate transfer tax returns of the Acquirors, duly
completed and executed, together with certified checks, payable to the
order of the appropriate Governmental Authorities, in payment of the
transfer taxes payable by the Acquirors pursuant to Section 7.01;
(iv) the certificates and other documents required to be delivered
pursuant to Section 8.01; and
(v) the aggregate Adjusted Allocated Purchase Price and any other
payments to be made by the Acquirors with respect to such Closing (all or a
portion of which shall be paid to a Qualified Intermediary if so directed
by THCI in the Initial Closing Date Notice or a Subsequent Closing Date
Notice, as applicable).
(b) At the Closing for the University Towne Centre Property only,
the Acquirors shall deliver or cause to be delivered to THCI the UTC Right of
First Refusal Agreement.
SECTION 2.05. Delivery of Possession. Coincident with the transfer
at a Closing of Property Assets associated with a Property, THCI shall deliver
possession of such Property to the Acquirors, subject to Permitted Encumbrances.
SECTION 2.06. Management Company Acts and Omissions. From and after
the transfer of the Management Company Shares at the Initial Closing, no
representation or warranty of THCI contained herein shall be deemed to be untrue
and no covenant or agreement of THCI contained herein shall be deemed to be
breached as a result of any act or omission of the Management Company first
occurring after such transfer.
SECTION 2.07. Apportionments. (a) At each Closing, the following
items shall, with respect to the Properties being transferred, be apportioned
between THCI (which, for purposes of this Section 2.07(a), shall include THCI
and, as applicable, the THCI Subsidiaries) and the Acquirors on a per diem
basis, so that THCI shall be responsible for those items of expense and credited
with those items of income that are attributable to the period prior to the
Applicable Closing Date and the Acquirors shall be responsible for those items
of expense and credited with those items of income that are attributable to the
period on or after the Applicable Closing Date: rents (including without
limitation ground lease rent (if applicable), base rent, common area maintenance
reimbursements, marketing fund contributions, operating expense and tax
reimbursements, percentage rent and other additional rent) (collectively
"RENTS"); prepaid and accrued expenses (including, without limitation,
interest, ground rent, utility charges, water and sewer charges (unless such
payment is to be made directly by any tenant), fees for licenses and permits,
fuel, steam, gas and electricity charges, annual license, permit and inspection
fees, payments under reciprocal easement
<PAGE>
22
agreements and payments to merchants associations and/or promotional funds
maintained by THCI, and obligations under the Contracts assumed by the
Acquirors; and real and personal ad valorem and other taxes and assessments ("AD
VALOREM TAXES") against such Property; provided that:
(i) If the Ad Valorem Taxes for the tax year in which the Applicable
Closing occurs are not known or cannot reasonably be estimated, they shall
be adjusted based on an estimate obtained using the then current assessed
value of such Property as of the Applicable Closing Date and the tax rate
and multiplier reflected by the most recent Ad Valorem Taxes due. After
the Ad Valorem Taxes for the year in which the Applicable Closing occurs
are known, adjustments shall be made between the parties.
(ii) THCI shall have the right to control all tax certiorari and tax
reduction proceedings relating to Properties conveyed (or the Properties
associated with the Partnership Interests transferred) for tax years prior
to and including the tax year in which the Applicable Closing Date occurs
and shall keep the Acquirors informed with respect thereto. Any tax refund
or credit obtained by THCI (net of any costs of obtaining such refund)
attributable (A) to the period prior to the tax year in which the
Applicable Closing Date occurs shall be paid, first, to any tenants of the
Properties entitled thereto and, second, to THCI and (B) to the tax year in
which the Applicable Closing Date occurs shall be apportioned between THCI
and the Acquirors, with the portion allocable to THCI to be applied as
provided in clause (A) and the balance paid to the Acquirors, subject,
however, to the rights of tenants of the Properties entitled thereto. With
respect to any proceeding in respect of a tax year in which the Applicable
Closing Date occurs, THCI shall coordinate its efforts with the Acquirors,
shall keep the Acquirors informed with respect thereto and shall not settle
the same without the consent of the Acquirors, which consent shall not be
unreasonably withheld or delayed. From and after the expiration of the tax
year in which the Applicable Closing Date occurs, the Acquirors shall have
the right to control all tax certiorari and tax reduction proceedings
relating to Properties conveyed for tax years commencing with the tax year
following the tax year in which the Applicable Closing Date occurs.
(iii) The Acquirors shall take all steps necessary to effectuate the
transfer of all utilities to an Acquiror's name as of the Applicable
Closing Date and, where necessary, the Acquirors shall post deposits with
the utility companies. THCI shall pay all utility charges accruing prior
to the Applicable Closing Date and all utilities thereafter shall be paid
for by the Acquirors. THCI shall be entitled to recover any and all
deposits held by utility companies as of the Applicable Closing Date. To
the extent that the Acquirors fail to make, where required, deposits to any
such utility companies (or to make any deposits with other service
providers) so as to prevent the timely release of THCI's deposits by the
utility companies (or such other service providers) on
<PAGE>
23
the Applicable Closing Date, the aggregate amount of such deposits shall be
credited to THCI. In such event, THCI's deposits shall be assigned to an
Acquiror, which shall have the right to have the deposits released to it
upon satisfaction of the conditions imposed by the utility companies (or
such other service providers).
(iv) THCI shall, at the Applicable Closing, credit the Acquirors for
any Rents paid to THCI by the tenants of the applicable Property with
respect to the period beginning on the Applicable Closing Date. No
proration shall be made for Rents from tenants that are delinquent as of
the Applicable Closing Date (the "TENANT DELINQUENT RENTS"). All Tenant
Delinquent Rents collected on or after the Applicable Closing Date shall be
allocated, first, to the then current month, next, to any other delinquency
after the Applicable Closing Date, and, finally, to any other delinquency
prior to the Applicable Closing Date. Any Tenant Delinquent Rents
collected by the Acquirors after the Applicable Closing which are allocable
to the period prior to the Applicable Closing Date shall be held in trust
and forthwith paid by the Acquirors to THCI subject to and in accordance
with the foregoing allocation provision. The Acquirors shall use their
commercially reasonable efforts to collect all Tenant Delinquent Rents
(other than the Tenant Delinquent Rents described in clause (e) of the
definition of Excluded Property Assets), but in no event shall the
Acquirors be obligated to commence legal proceedings for collection against
any tenant. All rights to pursue collection of Tenant Delinquent Rents
(other than the Tenant Delinquent Rents described in clause (e) of the
definition of Excluded Property Assets) shall vest solely in the Acquirors.
Any Rents paid to THCI by the tenants of the applicable Property on or
after the Applicable Closing Date, other than Tenant Delinquent Rents
described in clause (e) of the definition of Excluded Property Assets,
shall be held in trust and forthwith paid by THCI to the Acquirors
(subject, however, to the allocation of the same as set forth above). At
the Applicable Closing, THCI shall deliver to the Acquirors a written
certification identifying any Tenant Delinquent Rents.
(v) All percentage rents for tenants' annual sales reporting periods
(as defined in the tenant leases) ending prior to the Applicable Closing
Date, including tenant leases terminated before the Applicable Closing,
shall belong solely to THCI. Any percentage rent paid with respect to any
tenant's annual sales reporting period that is in effect on the Applicable
Closing Date (the "CURRENT REPORTING PERIOD") shall be adjusted by and
between THCI and the Acquirors as hereinafter described. Percentage rent
earned during each tenant's Current Reporting Period shall be prorated on
the basis of the number of days in such annual sales reporting period that
the Applicable Property was owned by THCI or the Acquirors and payments of
THCI's share shall be made by the Acquirors following the end of the
applicable sales reporting period, provided that (i) there shall be
deducted from the amounts payable to THCI hereunder with respect to any
tenant any sums previously collected by THCI from such tenant on
<PAGE>
24
account of percentage rent for the Current Reporting Period and (ii) if it
shall be determined by the parties that THCI has collected more than its
share of the percentage rent from such tenant, THCI shall immediately pay
over the surplus to the Acquirors. After the Applicable Closing Date, the
Acquirors shall deliver to THCI monthly status reports detailing
collections of percentage rents for the Current Reporting Period.
(vi) All security deposits (including any interest thereon to the
extent payable to the applicable tenants) not theretofore properly applied
to obligations under the applicable leases shall be delivered by THCI to
the Acquirors at the Applicable Closing, or, in the alternative, THCI may
elect to give the Acquirors a credit in the amount of such security
deposits. THCI shall either assign its rights under all letters of credit
security deposits to the Acquirors or, if any such letters of credit are
not assignable, shall cooperate with the Acquirors in arranging for the
transfer thereof to the Acquirors, and, pending such transfer, THCI shall
act as the Acquirors' agent in presenting any draws under, and in otherwise
administering such letters of credit.
(vii) [INTENTIONALLY OMITTED]
(viii) THCI shall receive a credit for all reserves, deposits and
escrows for taxes, insurance, interest, capital expenditures, tenant
improvements, claims and any other reserves, deposits and escrows on
deposit with any lender with respect to any indebtedness assumed by the
Acquirors (or to which the Acquirors take subject) or any other Person
other than any of the foregoing that is held (A) by insurers or (B) by
Teachers as security for capital improvement obligations that remain
unsatisfied as of the Applicable Closing Date.
(ix) THCI's insurance policies on the applicable Property shall not
be assumed by the Acquirors, but shall be canceled effective as of the
Applicable Closing Date. The amount of the refunds payable to THCI in
respect of such early cancellation of insurance policies on the applicable
Property shall be the property of THCI. The Acquirors shall purchase and
place their own insurance on the applicable Property as of Applicable
Closing Date.
(x) Common area maintenance reimbursements and charges payable
under leases at the applicable Property with respect to the 1998 calendar
year shall initially be apportioned between the parties at the Applicable
Closing based on the 1998 budgeted amounts of common area maintenance
reimbursement and other charges for such Property and on the number of days
THCI owned the applicable Property during the 1998 calendar year. THCI
shall prepare a statement showing the amounts collected from the tenants in
respect of common area maintenance reimbursements and charges for the
portion of the 1998 calendar year prior to the Applicable Closing Date, and
shall
<PAGE>
25
furnish a copy of such statement to the Acquirors. To the extent the amount
owing to THCI attributable to the portion of the 1998 calendar year prior
to the Applicable Closing Date determined by means of such estimate shall
be more than the amounts collected by THCI in respect of such 1998 calendar
year common area maintenance reimbursements and charges, then the
difference will be paid by the Acquirors to THCI at the Applicable Closing.
To the extent the amount owing to THCI attributable to the portion of the
1998 calendar year through the Applicable Closing Date determined by means
of such estimate shall be less than the amounts collected by THCI in
respect of such 1998 calendar year common area maintenance reimbursements
and charges, then the difference will be paid by THCI to the Acquirors at
the Applicable Closing. A final recalculation of the actual amounts payable
for common area maintenance reimbursements and other charges shall be made
within 120 days after the end of the 1998 calendar year.
(xi) The Acquirors shall receive a credit for unpaid tenant
allowances (which shall include tenant improvement allowances, landlord
contributions, lease takeover obligations and other payments to or for the
benefit of tenants and periods of free rent after the Applicable Closing
Date) and lease commissions applicable to all leases at the Property that
were executed and delivered prior to the date of this Agreement (other than
in connection with renewals or extensions, exercised or executed after the
date of this Agreement, of leases executed on or prior to the date of this
Agreement), the Acquirors shall assume all responsibility for the payment
of such tenant allowances and lease commissions and all of the same shall
constitute Assumed Property Liabilities.
(xii) Amounts subject to redemption under gift certificates issued by
THCI prior to the Applicable Closing Date and still outstanding as of the
Applicable Closing shall be described in a schedule prepared by THCI and
delivered to the Acquirors at the Applicable Closing. At the Applicable
Closing, the aggregate amount of such issued and outstanding scheduled gift
certificates shall be deposited in the bank accounts maintained by THCI and
to be transferred over to the Acquirors at the Applicable Closing, to fund
the redemption of such scheduled gift certificates. The Acquirors shall
assume all liability for the redemption of such scheduled gift
certificates.
(xiii) To the extent that the interest being transferred in a
Property at any Applicable Closing is an interest in a Partnership, the
amounts to be apportioned hereunder shall be adjusted to reflect the
amounts that THCI would receive or pay if such items of income or expense
were paid by the applicable owner of the Property.
(b) At each Applicable Closing, the net credit to THCI or the
Acquirors, as applicable, resulting from the apportionments made pursuant to
subsection (a) of this Section 2.07 for all Properties being transferred on such
Applicable Closing Date shall be paid
<PAGE>
26
to THCI or the Acquirors, as applicable, by wire transfer of immediately
available funds to a bank account or accounts designated by THCI or the
Acquirors, such notice to be delivered not later than the second Business Day
prior to such Applicable Closing Date.
(c) In the event that any amounts to be prorated pursuant to Section
2.07(a) have not been finally determined on the Applicable Closing Date, a
mutually satisfactory estimate of such amounts made on the basis of THCI's
records or public records shall be used as a basis for settlement at the
Applicable Closing, and the amounts finally determined will be prorated as of
the Applicable Closing Date and appropriate settlement made as soon as
practicable after such final determination, but in no event later than 120 days
after the later of (i) the last day in the calendar year in which the Applicable
Closing Date occurs or (ii) the last day of the Current Reporting Period that is
the last Current Reporting Period to expire.
(d) At the Initial Closing, the current assets and current liabilities
of the Management Company shall be estimated in good faith by THCI, and THCI
shall pay to the Acquirors the excess, if any, of such current liabilities over
such current assets, or the Acquirors shall pay to THCI the excess, if any, of
such current assets over such current liabilities. To the extent not known on
the Initial Closing Date, the current assets and current liabilities shall be
estimated on the best available information at the time and appropriate
settlement made from time to time as the same are liquidated.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THCI
THCI represents and warrants to the Acquirors as follows:
SECTION 3.01. Incorporation and Authority; Ownership of Management
Company Shares and Partnership Interests. (a) THCI is a corporation duly
incorporated, validly existing and in good standing under the Laws of California
and has all necessary corporate power and authority to enter into this Agreement
and each Ancillary Agreement to which it is to be a party, to carry out its
obligations hereunder and thereunder and to consummate the transactions
contemplated hereby and thereby. Each THCI Subsidiary is a corporation duly
incorporated, validly existing and in good standing under the Laws of its
jurisdiction of organization and has all necessary corporate power and authority
to enter into each Ancillary Agreement to which it is to be a party, to carry
out its obligations thereunder and to consummate the transactions contemplated
thereby. The execution and delivery by THCI of this Agreement and each
Ancillary Agreement to which it is to be a party, the performance by THCI of its
obligations hereunder and thereunder and the consummation by THCI of the
transactions contemplated hereby and thereby have been approved by all
<PAGE>
27
necessary action of the Board of Directors and stockholders of THCI. The
execution and delivery by each THCI Subsidiary of each Ancillary Agreement to
which it is to be a party, the performance by each THCI Subsidiary of its
obligations thereunder and the consummation by each THCI Subsidiary of the
transactions contemplated thereby will, prior to the Applicable Closing, have
been approved by all necessary action of the Board of Directors and stockholders
of such THCI Subsidiary. This Agreement has been and, at each Closing, each
Ancillary Agreement delivered at such Closing to which THCI is a party will be,
duly executed and delivered by THCI, and (assuming due authorization, execution
and delivery by the Acquirors of this Agreement and of each Ancillary Agreement)
this Agreement and such Ancillary Agreements constitute or will constitute, as
the case may be, legal, valid and binding obligations of THCI enforceable
against THCI in accordance with their respective terms, subject to the effect of
any applicable bankruptcy, reorganization, insolvency (including, without
limitation, all Laws relating to fraudulent transfers), moratorium or similar
Laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
At each Closing, each Ancillary Agreement delivered at such Closing to which a
THCI Subsidiary is a party will be duly executed and delivered by such THCI
Subsidiary and (assuming due authorization, execution and delivery by the
Acquirors of such Ancillary Agreement) will constitute the legal, valid and
binding obligation of such THCI Subsidiary enforceable against such THCI
Subsidiary in accordance with its terms, subject to the effect of any applicable
bankruptcy, reorganization, insolvency (including, without limitation, all Laws
relating to fraudulent transfers), moratorium or similar Laws affecting
creditors' rights and remedies generally and subject, as to enforceability, to
the effect of general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). Each THCI
Partnership (i) is duly organized and validly existing under the laws of its
jurisdiction of organization, (ii) has all necessary power and authority to
enter into each Ancillary Agreement to which it is to be a party, to carry out
its obligations thereunder and to consummate the transactions contemplated
thereby. The execution and delivery by each THCI Partnership of each Ancillary
Agreement to which it is to be a party, the performance by each THCI Partnership
of its obligations thereunder and the consummation by each THCI Partnership of
the transactions contemplated thereby will, prior to the Applicable Closing, be
approved by all necessary action on the part of such THCI Partnership. At each
Closing, each Ancillary Agreement delivered at such Closing to which a THCI
Partnership is a party will be duly executed and delivered by such THCI
Partnership and (assuming due authorization, execution and delivery by the
Acquirors of such Ancillary Agreement) will constitute the legal, valid and
binding obligation of such THCI Partnership enforceable against such THCI
Partnership in accordance with its terms, subject to the effect of any
applicable bankruptcy, reorganization, insolvency (including, without
limitation, all Laws relating to fraudulent transfers), moratorium or similar
Laws affecting creditors' rights and remedies generally and subject, as to
enforceability, to the effect of general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law).
<PAGE>
28
(b) The authorized capital stock of the Management Company consists of
75,000 shares of Common Stock, par value US$1.00 per share, 10,000 shares of
which (the "MANAGEMENT COMPANY SHARES") are issued and outstanding. THCI
owns the Management Company Shares, free and clear of all Encumbrances, other
than any Encumbrances arising out of, under or in connection with this Agreement
and Encumbrances that will be released at or prior to the Initial Closing. The
Management Company Shares are validly issued, fully paid and nonassessable.
None of the Management Company Shares was issued in violation of any preemptive
rights. There are no options, warrants, convertible securities or other rights,
agreements, arrangements or commitments of any character relating to the capital
stock of the Management Company or obligating THCI or the Management Company to
issue or sell any shares of capital stock of, or any other interest in, the
Management Company. Upon consummation of the transactions contemplated by this
Agreement and registration of the Management Company Shares in the name of the
Acquirors in the stock records of the Management Company and assuming that the
Acquirors shall have purchased the Management Company Shares for value, in good
faith and without notice of any adverse claim, the Acquirors will own all the
issued and outstanding capital stock of the Management Company free and clear of
all Encumbrances, other than any Encumbrances resulting from any facts or
circumstances relating solely to either Acquiror.
(c) In the case of a transfer by a Partner of its Partnership Interest
to the Acquirors, THCI represents and warrants to the Acquirors that such
Partner owns such Partnership Interest in the applicable Partnership free and
clear of all Encumbrances, other than any Encumbrances arising out of, under or
in connection with this Agreement and Encumbrances that will be released at or
prior to the Applicable Closing and inchoate Encumbrances under the applicable
partnership agreement.
(d) THCI or another THCI Subsidiary owns or, prior to the Applicable
Closing, will own all of the outstanding capital stock of each THCI Subsidiary.
In the case of a transfer by THCI or a THCI Subsidiary of Record Owner Shares to
the Acquiror, THCI represents and warrants to the Acquirors that (i) THCI or a
THCI Subsidiary owns such Record Owner Shares, free and clear of all
Encumbrances, other than any Encumbrances arising out of, under or in connection
with this Agreement and Encumbrances that will be released at or prior to the
Applicable Closing, (ii) such Record Owner Shares are validly issued, fully paid
and nonassessable, (iii) none of such Record Owner Shares was issued in
violation of any preemptive rights, (iv) there are no options, warrants,
convertible securities or other rights, agreements, arrangements or commitments
of any character relating to the capital stock of the Record Owner or obligating
THCI, the Record Owner or any other THCI Subsidiary to issue or sell any shares
of capital stock of, or any other interest in, the Record Owner, (v) upon
consummation of the transactions contemplated by this Agreement and registration
of the Record Owner Shares in the name of the Acquirors in the stock records of
the Record Owner and assuming that the Acquirors shall have purchased the Record
Owner Shares for value, in
<PAGE>
29
good faith and without notice of any adverse claim, the Acquirors will own all
the issued and outstanding capital stock of the Record Owner free and clear of
all Encumbrances, other than any Encumbrances resulting from any facts or
circumstances relating solely to the Acquirors and (vi) the applicable Record
Owner has not conducted any activities other than in connection with its
ownership of Properties, Partnerships and Second Tier Partnerships, as the case
may be, that shall have been transferred to the Acquirors prior to or at the
same time as the transfer of such Record Owner Shares.
(e) THCI or a THCI Subsidiary owns or, prior to the Applicable
Closing, will own all of the Partnership Interests of each Record Owner that is
a THCI Partnership. In the case of a transfer by THCI or a THCI Subsidiary of
any Record Owner Partnership Interest to the Acquirors, THCI represents and
warrants to the Acquirors that (i) THCI or a THCI Subsidiary owns such Record
Owner Partnership Interest free and clear of all Encumbrances, other than any
Encumbrances arising out of, under or in connection with this Agreement and
Encumbrances that will be released at or prior to the Applicable Closing and
inchoate Encumbrances under the partnership agreement of the applicable THCI
Partnership and (ii) the applicable Record Owner has not conducted any
activities other than in connection with its ownership of Properties,
Partnerships and Second Tier Partnerships, as the case may be, that shall have
been transferred to the Acquirors prior to, or are being transferred to the
Acquirors at the same time as, the transfer of the Record Owner Partnership
Interests in such Record Owner.
SECTION 3.02. No Conflict. Assuming that all consents, approvals,
authorizations and other actions described in Section 3.03 have been obtained
and all filings and notifications listed in Sections 3.03(a) and (b) of the THCI
Disclosure Schedule have been made, and except as may result from any facts or
circumstances relating solely to an Acquiror, the execution, delivery and
performance by THCI of this Agreement and by THCI, each THCI Partnership and
each THCI Subsidiary of each Ancillary Agreement to which they are to be parties
do not and will not (a) violate or conflict with the certificate of
incorporation or by-laws (or similar organizational documents) of THCI, such
THCI Partnership or such THCI Subsidiary, (b) except as would not have a
Material Adverse Effect or a material adverse effect on the ability of THCI to
consummate the transactions contemplated by this Agreement or the Ancillary
Agreements to which it is a party or to perform any of its material obligations
hereunder or thereunder, conflict with or violate any Law applicable to THCI,
any THCI Partnership, any THCI Subsidiary, the Properties, the Management
Company Shares or the Partnership Interests, or (c) except as described in
Section 3.02 of the THCI Disclosure Schedule or as would not have a Material
Adverse Effect or a material adverse effect on the ability of THCI to consummate
the transactions contemplated by this Agreement or the Ancillary Agreements to
which it is a party or to perform any of its material obligations hereunder or
thereunder, result in any breach of, or constitute a default (or event that,
with the giving of notice or lapse of time, or both, would become a default)
under, or give to others any
<PAGE>
30
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of any Encumbrance on, the Management Company Shares, the
Partnership Interests or any of the Properties pursuant to, any Contract
relating to the Management Company Shares, the Partnership Interests or the
Properties to which THCI or any THCI Subsidiary, any THCI Partnership, any
Partnership or any Second Tier Partnership is a party or by which the Management
Company Shares, the Partnership Interests or any of the Properties is bound.
SECTION 3.03. Consents and Approvals. (a) The execution and
delivery by THCI of this Agreement and by THCI, each THCI Partnership and each
THCI Subsidiary of each Ancillary Agreement to which they are to be parties do
not or will not, as the case may be, and the performance by THCI of this
Agreement and by THCI, each THCI Partnership and each THCI Subsidiary of each
Ancillary Agreement to which they are to be parties will not, require any
consent, approval, authorization or other action by, or filing with or
notification to, any Governmental Authority, except (i) as described in Section
3.03(a) of the THCI Disclosure Schedule, (ii) the notification requirements of
the HSR Act, if applicable, (iii) where failure to obtain such consent,
approval, authorization or action, or to make such filing or notification, would
not have a Material Adverse Effect or a material adverse effect on the ability
of THCI to consummate the transactions contemplated by this Agreement or the
Ancillary Agreements to which it is a party or to perform any of its material
obligations hereunder or thereunder and (iv) as may be necessary as a result of
any facts or circumstances relating solely to an Acquiror.
(b) The execution and delivery by THCI of this Agreement and by THCI,
each THCI Partnership and each THCI Subsidiary of each Ancillary Agreement to
which they are to be parties do not or will not, as the case may be, and the
performance by THCI of this Agreement and by THCI, each THCI Partnership and
each THCI Subsidiary of each Ancillary Agreement to which they are to be parties
will not, require any third-party consents, approvals, authorizations or
actions, except (i) as described in Section 3.03(b) of the THCI Disclosure
Schedule or (ii) where failure to obtain such consents, approvals,
authorizations or actions would not have a Material Adverse Effect or a material
adverse effect on the ability of THCI to consummate the transactions
contemplated by this Agreement or the Ancillary Agreements to which it is a
party or to perform any of its material obligations hereunder or thereunder.
SECTION 3.04. Personal Property. THCI, a THCI Subsidiary, a THCI
Partnership, a Partnership or a Second Tier Partnership owns, leases or has the
legal right to use all personal property (whether tangible or intangible)
currently employed in the operation of the applicable Property to be transferred
pursuant to this Agreement, free and clear of all Encumbrances, except (a) as
described in Section 3.04 of the THCI Disclosure Schedule or (b) where the
failure to own, lease or have the legal right to use, or the Encumbrances on,
such property would not have a Material Adverse Effect.
<PAGE>
31
SECTION 3.05. Litigation. As of the date hereof, except as described
in Section 3.05 of the THCI Disclosure Schedule, there are no claims, actions,
proceedings or investigations pending before any Governmental Authority or, to
the knowledge of THCI, threatened against THCI or any THCI Subsidiary, THCI
Partnership, Partnership, Second Tier Partnership or the Management Company and
relating to the Properties, the Management Company Shares or the Partnership
Interests that, if adversely determined, (a) would have a Material Adverse
Effect, (b) would delay or prevent the consummation of the transactions
contemplated by this Agreement or the Ancillary Agreements to which THCI or any
THCI Subsidiary, THCI Partnership, Partnership or Second Tier Partnership is a
party or (c) would have a material adverse effect on the ability of THCI to
consummate the transactions contemplated hereby or thereby or to perform any of
its material obligations hereunder or thereunder. Except as described in
Section 3.05 of the THCI Disclosure Schedule, to the knowledge of THCI, neither
THCI nor the Management Company or any THCI Partnership, THCI Subsidiary,
Property, or Partnership Interest is subject to any order, writ, judgment,
injunction, decree, determination or award relating to the Management Company or
such Property or Partnership Interest that would have a Material Adverse Effect
or a material adverse effect on the ability of THCI to consummate the
transactions contemplated by this Agreement or the Ancillary Agreements to which
it is a party or to perform any of its material obligations hereunder or
thereunder.
SECTION 3.06. Compliance with Laws. All Permits required for the
current use of each Property have been issued and are currently in effect
without violation, except (a) as described in Section 3.06 of the THCI
Disclosure Schedule, (b) for the Expansion Properties (but only to the extent
arising out of the expansion thereof) and for Fashion Outlet or (c) where the
absence or violation of such Permits would not have a Material Adverse Effect.
To the knowledge of THCI, no Property is under investigation for failure to
comply with any Laws of any Governmental Authority pertaining to the use or
occupancy of such Property, except where the matter being investigated, if
adversely determined, would not have a Material Adverse Effect, and each
Property is in compliance with, and not in violation of, any applicable Laws,
except where the absence or failure to comply would not have a Material Adverse
Effect. Except as described in Section 3.06 of the THCI Disclosure Schedule, to
the knowledge of THCI, it has not received any written notice from any
Governmental Authority or any other Person of a violation of the Americans with
Disabilities Act and, notwithstanding anything to the contrary contained in this
Section 3.06, THCI makes no other representation herein with respect to
compliance with the Americans with Disabilities Act or any rule, regulation or
interpretation promulgated thereunder.
SECTION 3.07. Taxes. (a) Except as described in Section 3.07(a) of
the THCI Disclosure Schedule, (i) THCI or an Affiliate of THCI has filed or will
file all material Tax Returns required to be filed with respect to Taxes
pertaining to the ownership of the Property Assets or the operation of the
Properties and the Partnerships and Second Tier
<PAGE>
32
Partnerships in which THCI, a THCI Subsidiary, or a THCI Partnership is the
managing general partner, (ii) all Taxes shown thereon as due have been or will
be paid, (iii) neither THCI nor any Affiliate of THCI has received from any
Governmental Authority any written notice of proposed adjustment, deficiency or
underpayment of any Taxes pertaining to the ownership of the Property Assets or
the operation of the Properties, which notice has not been satisfied by payment
or been withdrawn, and to the knowledge of THCI, there are no claims with
respect thereto that have been asserted or threatened against THCI or any
Affiliate of THCI, and (iv) there are no agreements for the extension of time
for the assessment of any such Taxes.
(b) Except as described in Section 3.07(b) of the THCI Disclosure
Schedule, (i) the Management Company has timely filed or been included in, or
will timely file or be included in, all Tax Returns required to be filed by it
or in which it is to be included with respect to Taxes for any period ending on
or before the Initial Closing Date, taking into account any extension of time to
file granted to or obtained on behalf of THCI, any Affiliate of THCI or the
Management Company, (ii) all Taxes shown thereon as due have been timely paid
and (iii) no deficiency for any material amount of Tax has been asserted or
assessed by any Governmental Authority against the Management Company.
SECTION 3.08. Real Property. (a) Subject only to Permitted
Encumbrances and as described in Section 3.08(a) of the THCI Disclosure
Schedule, THCI, a THCI Subsidiary, a THCI Partnership, a Partnership or a Second
Tier Partnership, as the case may be, has good and valid leasehold interests in
each Leased Real Property pursuant to valid and subsisting ground leases
(collectively, the "GROUND LEASES"). Section 3.08(a) of the THCI Disclosure
Schedule contains a list of the Ground Leases, true and complete copies of which
have been made available to the Acquirors. Except as described in Section
3.08(a) of the THCI Disclosure Schedule, to THCI's knowledge (i) there exists no
default (or event, condition or act that, with the giving of notice or lapse of
time, or both, would become a default) of THCI, a THCI Subsidiary, a THCI
Partnership, a Partnership or a Second Tier Partnership under any Ground Lease
other than a default that would not have a Material Adverse Effect, (ii) each
Ground Lease is in full force and effect and (iii) all rents, additional rents
and sums payable pursuant to each Ground Lease that were or are due and payable
have been paid.
(b) THCI, a THCI Subsidiary, a THCI Partnership, a Partnership or a
Second Tier Partnership, as the case may be, holds fee title to each Owned Real
Property free and clear of all Encumbrances, other than (i) Encumbrances
described in Section 3.08(b) of the THCI Disclosure Schedule and (ii) Permitted
Encumbrances.
<PAGE>
33
(c) Except as described in Section 3.08(c) of the THCI Disclosure
Schedule, no proceeding is pending or, to the knowledge of THCI, threatened for
the taking or condemnation of all or any part of any Property.
SECTION 3.09. Environmental, Health and Safety Matters. Except as
described in Section 3.09 of the THCI Disclosure Schedule, (a) THCI, a THCI
Subsidiary, a THCI Partnership, a Partnership or a Second Tier Partnership, as
applicable, holds all the environmental, health and safety Permits necessary for
the use, occupancy or operation of each Property, except for such Permits the
absence of which would not have a Material Adverse Effect, (b) THCI, the THCI
Subsidiaries, the THCI Partnerships and the Partnerships are in compliance with
Environmental Laws and all of their environmental, health and safety Permits
with respect to the Properties, except as would not have a Material Adverse
Effect, (c) except as would not have a Material Adverse Effect, neither THCI nor
a THCI Subsidiary or a THCI Partnership, a Partnership or a Second Tier
Partnership or, to the knowledge of THCI, any other Person, has released
Hazardous Materials on or affecting on any of the Properties and (d) no Property
is listed or proposed for listing on the "National Priorities List" under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or on the Comprehensive Environmental Response, Compensation and
Liability Information System list maintained by the United States Environmental
Protection Agency or any similar state list of sites requiring investigation or
cleanup, nor is THCI, any THCI Subsidiaries, THCI Partnerships, Partnerships or
Second Tier Partnerships subject to any order to contribute to the remediation
of such sites. Other than as set forth in Section 3.09 of the THCI Disclosure
Schedule, neither THCI nor any THCI Subsidiary, or any THCI Partnership,
Partnership, Second Tier Partnership or Property or, to the knowledge of THCI,
any tenant or other occupant at a Property, is currently subject to an
enforcement action, consent order, voluntary site remediation or similar
proceeding related to Hazardous Materials or health and safety compliance
brought by any federal, state or local agency having jurisdiction over such
claims. Other than as set forth in Section 3.09 of the THCI Disclosure
Schedule, none of THCI, any THCI Subsidiary, any THCI Partnership, any
Partnership or any Second Tier Partnership is currently subject to any order to
undertake, or is currently undertaking, the remediation or clean-up of any
release of Hazardous Materials or violation of Environmental Laws in which the
total costs (including remediation, fines, penalties, and fees of attorneys and
consultants) exceed US$500,000.
SECTION 3.10. Insurance. Insurance policies or binders of insurance
or programs of self-insurance in the types and amounts listed in Section 3.10 of
the THCI Disclosure Schedule are valid and currently in effect. THCI has paid,
or caused to be paid, all premiums due under such policies and is not in default
with respect to its obligations under any such policies in any material respect.
<PAGE>
34
SECTION 3.11. Financial Information. For the year ended December 31,
1997, the NOI for Park Meadow, Horton Plaza, Parkway Plaza and Solano Mall, the
NOI and the Pro Rata NOI for Bridgewater Commons, Towson Town Center, University
Towne Centre, Fashion Place Mall, Oakridge Mall, Los Cerritos Center and Fox
Hills Mall and the Pro Rata NOI for Valley Fair Mall, The Fashion Show Mall, The
Village at Corte Madera, North County Fair, Santa Anita Fashion Park, Downtown
Plaza, Capital Mall and Westdale Mall are, in each case, in all material
respects as set forth in Section 3.11 of the THCI Disclosure Schedule.
SECTION 3.12. Employee Benefit Matters. (a) Section 3.12(a) of the
THCI Disclosure Schedule lists all employee benefit plans (as defined in Section
3(3) of ERISA) and all bonus, stock option, stock purchase, restricted stock,
incentive, deferred compensation, retiree medical or life insurance,
supplemental retirement, severance or other benefit plans, programs or
arrangements, and all employment, termination, severance or other contracts or
agreements for the benefit of any person who will be an employee, officer or
director of the Management Company immediately prior to the Initial Closing or
in which the Management Company participates or to which it makes contributions
immediately prior to the Initial Closing (collectively, the "EMPLOYEE
PLANS").
(b) Except as set forth in Section 3.12(b) of the THCI Disclosure
Schedule, none of the Employee Plans (i) is a multiemployer plan (within the
meaning of Section 3(37) or 4001(a)(3) of ERISA) (a "MULTIEMPLOYER PLAN") or
a single employer pension plan (within the meaning of Section 4001(a)(15) of
ERISA) for which THCI, any THCI Partnership, any THCI Subsidiary or the
Management Company could incur liability under Section 4063 or 4064 of ERISA (a
"MULTIPLE EMPLOYER PLAN"), (ii) provides for the payment by the Management
Company of separation, severance, termination or similar-type benefits to any
Person or obligates the Management Company to pay separation, severance,
termination or similar-type benefits solely as a result of any transaction
contemplated by this Agreement or as a result of a "change in control", within
the meaning of such term under Section 280G of the Code or (iii) provides for or
promises retiree, medical, disability or life insurance benefits from the
Management Company to any current or former employee, officer or director of the
Management Company. Each Employee Plan is subject only to the laws of the
United States or a political subdivision thereof.
(c) Except as described in Section 3.12(c) of the THCI Disclosure
Schedule, each Employee Plan is now and always has been operated in all material
respects in accordance with the requirements of all applicable Laws, including,
without limitation, ERISA and the Code. The Management Company has performed
all material obligations required to be performed by it under and is not in any
material respect in default under or in violation of any Employee Plan. To the
knowledge of THCI, there is no default or violation by any party to any Employee
Plan. No legal action, suit or claim is pending or, to the knowledge of THCI,
<PAGE>
35
threatened with respect to any Employee Plan (other than claims for benefits in
the ordinary course) that could reasonably be expected to give rise to any
material liability to the Management Company and, to the knowledge of THCI, no
fact or event exists that could reasonably be expected to give rise to any such
action, suit or claim.
(d) Except as described in Section 3.12(d) of the THCI Disclosure
Schedule, each Employee Plan that is intended to be qualified under Section
401(a) of the Code or Section 401(k) of the Code has received a favorable
determination letter from the IRS that it is so qualified and each trust
established in connection with any such Employee Plan that is intended to be
exempt from federal income taxation under Section 501(a) of the Code has
received a determination letter from the IRS that it is so exempt, and no fact
or event has occurred since the date of such determination letter from the IRS
that could reasonably be expected to adversely affect the qualified status of
any such Employee Plan or the exempt status of any such trust.
(e) Except as described in Section 3.12(e) of the THCI Disclosure
Schedule, none of THCI, any THCI Subsidiary, THCI Partnership or the Management
Company has incurred any material liability under, arising out of or by
operation of Title IV of ERISA (other than liability for premiums to the Pension
Benefit Guaranty Corporation arising in the ordinary course), including, without
limitation, any liability in connection with (i) the termination or
reorganization of any employee benefit plan subject to Title IV of ERISA or (ii)
the withdrawal from any Multiemployer Plan or Multiple Employer Plan, and no
fact or event exists that could reasonably be expected to give rise to any such
liability. No reportable event (within the meaning of Section 4043 of ERISA)
has occurred or, to the knowledge of THCI, is expected to occur with respect to
any Employee Plan subject to Title IV of ERISA. No Employee Plan is subject to
Title IV of ERISA.
SECTION 3.13. Labor Matters. (a) Set forth in Section 3.13(a) of
the THCI Disclosure Schedule is a list of each collective bargaining agreement
or other labor union contract applicable to Transferred Employees.
(b) Except as described in Section 3.13(b) of the THCI Disclosure
Schedule, (i) there are no material controversies pending or, to the knowledge
of THCI, threatened between the Management Company and any of its employees,
(ii) there are no material grievances outstanding against the Management Company
under any such agreement or contract, (iii) there are no material unfair labor
practice complaints pending against the Management Company before the National
Labor Relations Board and (iv) as of the date of this Agreement, there are no
strikes, slowdowns, work stoppages or lockouts pending or, to the knowledge of
THCI, threatened, by or with respect to any employees of the Management Company.
<PAGE>
36
SECTION 3.14. Material Contracts. (a) Section 3.14(a) of the THCI
Disclosure Schedule lists each of the following contracts and agreements of
THCI, the THCI Partnerships, the THCI Subsidiaries, the Management Company and
the Partnerships (each such contract and agreement, being a "MATERIAL
CONTRACT"):
(i) all management contracts with respect to the Properties and
all amendments, supplements and modifications thereto;
(ii) all documents evidencing or creating indebtedness secured by
the Properties outstanding on the date of this Agreement ("EXISTING DEBT")
and all related security agreements, mortgages and guarantees;
(iii) the partnership agreements and all amendments, modifications
and supplements thereto with respect to the Partnerships;
(iv) all leases and all amendments, modifications and supplements
thereto of major department stores that are tenants on the Properties;
(v) all reciprocal easement agreements and reciprocal operating
agreements and all amendments, modifications and supplements thereto with
anchor tenants at the Properties; and
(vi) all material disposition and development agreements and owner
participation agreements with any Governmental Authority.
(b) True and complete copies of the Material Contracts have been
made available to the Acquirors. Except with respect to Material Contracts
described in Section 3.14(a)(vi), as to which no representation or warranty is
made, and except as disclosed in Section 3.14(b) of the THCI Disclosure Schedule
or as would not have a Material Adverse Effect (i) each Material Contract is
valid and binding on the respective parties thereto and is in full force and
effect, (ii) upon consummation of the transactions contemplated by this
Agreement, except to the extent that any consents set forth in Section 3.03(b)
of the THCI Disclosure Schedule are not obtained, each Material Contract shall
continue in full force and effect without penalty or other adverse consequence,
(iii) neither THCI nor any THCI Subsidiary or any THCI Partnership is in breach
of, or default under, any Material Contract and (iv) to the knowledge of THCI,
no other party to any Material Contract is in breach thereof or default
thereunder.
(c) The aggregate amount of Existing Debt outstanding as of March
31, 1998 with respect to each of the Properties is set forth in Section 3.14(c)
of the THCI Disclosure Schedule.
<PAGE>
37
SECTION 3.15. The Management Company. Except as would not have a
Material Adverse Effect, the Management Company will, on the Initial Closing
Date, own or lease or have the legal right to use all such properties, assets
and rights as are necessary in the conduct of its business as currently
conducted. The Management Company's assets are maintained in accordance with
business practices generally accepted in the industry, and are in all material
respects in good operating condition and repair, ordinary wear and tear
excepted, and are suitable for the purposes for which they are used.
SECTION 3.16. Brokers. Except for Merrill Lynch & Co. and J.P.
Morgan Securities Inc. (collectively, the "THCI FINANCIAL ADVISORS"), no
broker, finder or investment banker is entitled to any brokerage, finder's or
other fee or commission in connection with the transactions contemplated by this
Agreement based upon arrangements made by or on behalf of THCI, any THCI
Partnership or any THCI Subsidiary. THCI is solely responsible for the fees and
expenses of the THCI Financial Advisors.
SECTION 3.17. Rent Rolls. THCI has delivered to Acquirors a rent
roll for each Property, copies of which are attached as Section 3.17 of the THCI
Disclosure Schedule (collectively, the "RENT ROLLS"), which Rent Rolls are
true, accurate and complete in all material respects as to all matters set forth
therein as of the respective dates thereof.
(a) As of the respective dates of the Rent Rolls, all of the
leases reflected in the Rent Rolls are in full force and effect except as
specifically identified in the Rent Rolls;
(b) As of the respective dates of the Rent Rolls, except as
disclosed in the rent roll or in Section 3.17 of the THCI Disclosure Schedule,
no tenant has delivered written notice (not heretofore substantially complied
with in all material respects or withdrawn) asserting any material claim or
basis for any material claim for reduction, deduction, or set-off against the
rent under any lease;
(c) As of the respective dates of the Rent Rolls, except as
disclosed in the Rent Rolls or in Section 3.17 of the THCI Disclosure Schedule,
to the knowledge of THCI, there is no material default by THCI, a THCI
Subsidiary, a THCI Partnership, a Partnership or a Second Tier Partnership in
the performance of any material obligations under any lease or events that, but
for the lapse of time or the giving of notice, or both, would constitute such a
default by THCI, such THCI Subsidiary, THCI Partnership, Partnership or Second
Tier Partnership;
(d) No tenant has an option, right of refusal or other contractual
right to purchase all of any portion of any Property.
<PAGE>
38
SECTION 3.18. Other Assets. Except for the Excluded Assets, neither
THCI nor any THCI Subsidiary or THCI Partnership or any of their respective
Affiliates owns any interest, or has an option to acquire any interest in (i)
any of the Properties, Partnerships or Second Tier Partnerships that is not
subject to the terms of this Agreement, or (ii) any land adjacent to the
Properties that was acquired for purposes of the expansion of any of the
Properties.
SECTION 3.19. No Material Defects. To THCI's knowledge, and except
as set forth on Section 3.19 of the THCI Disclosure Schedule, there are no
defects in the roof, foundation, structural, mechanical or HVAC systems and
masonry walls in any of the Properties that would have a Material Adverse
Effect.
SECTION 3.20. Participations. Except as disclosed in Section 3.20 of
the THCI Disclosure Schedule, no third party is entitled to receive any
interest, rent or other payments from THCI or any THCI Subsidiary, THCI
Partnership, any Partnership or Second Tier Partnership calculated based on the
cash flow, receipts or income of any of the Properties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE ACQUIRORS
Each Acquiror, severally but not jointly, represents and warrants to
THCI as follows:
SECTION 4.01. Incorporation and Authority. Such Acquiror is a
corporation duly incorporated, validly existing and in good standing under the
laws of the its jurisdiction of incorporation and has all necessary corporate
power and authority to enter into this Agreement and each Ancillary Agreement to
which it is to be a party, to carry out its obligations hereunder and thereunder
and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by such Acquiror of this Agreement and each Ancillary
Agreement to which it is to be a party, the performance by such Acquiror of its
obligations hereunder and thereunder and the consummation by such Acquiror of
the transactions contemplated hereby and thereby have been approved by all
necessary action of the Board of Directors and stockholders of such Acquiror.
This Agreement has been, and, at each Closing, each Ancillary Agreement
delivered at such Closing to which such Acquiror is a party will be, duly
executed and delivered by such Acquiror, and (assuming due authorization,
execution and delivery by THCI of this Agreement and by THCI, a THCI Partnership
or a THCI Subsidiary, as the case may be, of such Ancillary Agreement) this
Agreement and such Ancillary Agreements constitute or will constitute, as the
case may be, legal, valid and binding obligations of such Acquiror enforceable
against such Acquiror in accordance with their
<PAGE>
39
respective terms, subject to the effect of any applicable bankruptcy,
reorganization, insolvency (including, without limitation, all Laws relating to
fraudulent transfers), moratorium or similar Laws affecting creditors' rights
and remedies generally and subject, as to enforceability, to the effect of
general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 4.02. No Conflict. Assuming that all consents, approvals,
authorizations and other actions described in Section 4.03 have been obtained,
and except as may result from any facts or circumstances relating solely to
THCI, any THCI Partnership or any THCI Subsidiary, the execution, delivery and
performance by such Acquiror of this Agreement and by such Acquiror of the
respective Ancillary Agreements to which it is a party do not and will not (a)
violate or conflict with the certificate of incorporation or by-laws (or similar
organizational documents) of such Acquiror, (b) except as would not have a
material adverse effect on the ability of such Acquiror to consummate the
transactions contemplated by this Agreement or the Ancillary Agreements to which
it is a party or to perform any of its material obligations hereunder or
thereunder, conflict with or violate any Law applicable to such Acquiror, or (c)
except as would not have a material adverse effect on the ability of such
Acquiror to consummate the transactions contemplated by this Agreement or the
Ancillary Agreements to which it is a party or to perform any of its material
obligations hereunder or thereunder, result in any breach of, or constitute a
default (or event which, with the giving of notice or lapse of time, or both,
would become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
Encumbrance on, any of the assets or properties of such Acquiror pursuant to,
any Contract relating to such assets or properties to which such Acquiror or any
of its subsidiaries is a party or by which any of such assets or properties is
bound.
SECTION 4.03. Consents and Approvals. (a) The execution and
delivery by such Acquiror of this Agreement and each Ancillary Agreement to
which it is a party do not or will not, as the case may be, and the performance
by such Acquiror of this Agreement and each Ancillary Agreement to which it is
to be a party will not, require any consent, approval, authorization or other
action by, or filing with or notification to, any Governmental Authority, except
(i) the notification requirements of the HSR Act, if applicable, (ii) where
failure to obtain such consent, approval, authorization or action, or to make
such filing or notification, would not have a material adverse effect on the
ability of such Acquiror to consummate the transactions contemplated by this
Agreement or the Ancillary Agreements to which it is a party or to perform any
of its material obligations hereunder or thereunder and (iii) as may be
necessary as a result of any facts or circumstances relating solely to THCI, any
THCI Partnership or any THCI Subsidiary.
(b) The execution and delivery by such Acquiror of this Agreement
and the Ancillary Agreements to which it is to be a party do not or will not, as
the case may be, and
<PAGE>
40
the performance by such Acquiror of this Agreement and the Ancillary Agreements
to which it is to be a party will not, require any third-party consents,
approvals, authorizations or actions, except where failure to obtain such
consents, approvals, authorizations or actions would not have a material adverse
effect on the ability of such Acquiror to consummate the transactions
contemplated by this Agreement or the Ancillary Agreements to which it is a
party or to perform any of its material obligations hereunder or thereunder.
SECTION 4.04. Litigation. There are no claims, actions, proceedings
or investigations pending or, to the knowledge of such Acquiror, threatened
against such Acquiror that seek to delay or prevent the consummation of the
transactions contemplated by this Agreement or the Ancillary Agreements to which
it is a party or which would have a material adverse effect on the ability of
such Acquiror to consummate the transactions contemplated hereby or thereby or
to perform any of its material obligations hereunder or thereunder.
SECTION 4.05. Financing. Such Acquiror has or has available to it
all funds necessary to consummate the transactions contemplated by this
Agreement.
SECTION 4.06. Brokers. Except for Goldman Sachs & Co. (the "WEA
FINANCIAL ADVISORS"), which is acting as financial advisor to WEA in connection
with the transactions contemplated by this Agreement, no broker, finder or
investment banker is entitled to any brokerage, finder's or other fee or
commission in connection with the transactions contemplated by this Agreement
based upon arrangements made by or on behalf of either Acquiror. WEA is solely
responsible for the fees and expenses of the WEA Financial Advisors.
SECTION 4.07. Investment Intent. Such Acquiror is acquiring the
Management Company Shares and, if transferred to such Acquiror, the Partnership
Interests solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. THCI Conduct of Business Prior to the Applicable
Closing. (a) THCI covenants and agrees that, between the date hereof and the
Initial Closing Date, THCI shall operate the Management Company and the
Properties managed by the Management Company or any other Affiliate of THCI in
the ordinary course and consistent
<PAGE>
41
with THCI's prior practice, including by keeping the Properties insured
substantially as described in Section 3.10, except:
(i) as described in Section 5.01(a)(i) of the THCI Disclosure
Schedule or as otherwise contemplated by this Agreement;
(ii) the assets described on Exhibit 5.01(a)(ii) may be transferred
from the Management Company prior to the Initial Closing;
(iii) the assets described on Exhibit 5.01(a)(iii) may be
transferred to the Management Company prior to the Initial Closing;
(iv) management contracts may be amended to provide that, in the
event that any Property or Partnership Interest is not transferred to the
Acquirors pursuant to this Agreement, the management contract relating to
the applicable Property may be terminated at any time by the applicable
Partnership or Second Tier Partnership upon 30 days' prior written notice;
(v) THCI and any THCI Partnership, THCI Subsidiary, Partnership
and Second Tier Partnership may each enter into, amend, modify, or
terminate any lease, sublease, reciprocal easement agreement, easement or
other agreement relating to any Property if (A) failure to do so would
result in a breach of a contractual obligation to a third party or breach
of a fiduciary obligation to another partner, (B) the agreement is approved
by the Acquirors, which approval may not be unreasonably withheld or
delayed with respect to leases (other than anchor tenant leases) or (C)
such leases (other than anchor tenant leases) are consistent with leasing
guidelines approved by the Acquirors, which approval, may not be
unreasonably withheld or delayed, provided that with respect to an anchor
tenant, no anchor tenant agreement may be entered into, modified, amended
or terminated without the consent of the Acquirors, which may be withheld
in their sole discretion; and
(vi) THCI and any THCI Partnership, THCI Subsidiary, Partnership
and Second Tier Partnership may repay or refinance all or any portion of
any Existing Debt (other than in respect of Solano Mall, where a prepayment
is prohibited by the terms thereof or Existing Debt in Partnerships where
the interest to be acquired is a Partnership Interest) regardless of any
prepayment restrictions that may apply; provided, however, that (A) the
terms and conditions of any refinancing shall be at least as favorable as
such terms and conditions as are generally available in the market at the
time of refinancing for similar loans, (B) the principal amount of the
Existing Debt on the date hereof shall not be increased as a result of any
such refinancing and (c) the refinancing shall provide that the interest to
be paid shall be a floating rather than a
<PAGE>
42
fixed rate and that there shall be no prepayment fee thereunder (a
prepayment permitted under this clause with respect to the Existing Debt
described in Section 5.01(a)(vi) of the THCI Disclosure Schedule being
referred to as a "QUALIFIED PREPAYMENT").
(b) In furtherance and not in limitation of the foregoing, THCI
covenants and agrees that, except as described in Section 5.01(a), in Section
5.01(d) or in Section 5.01(a) of the THCI Disclosure Schedule, it will not,
prior to the Applicable Closing, without the consent of the Acquirors, (i) make
any material change in operating policies and procedures used by THCI with
respect to the Properties managed by THCI, any THCI Partnership or any THCI
Subsidiary, (ii) in the case of the Expansion Properties, incur Expansion Costs
in excess of the aggregate amount specified in the budget described in Section
5.01(b) of the THCI Disclosure Schedule, (iii) commence any new expansion or
redevelopments; (iv) sell or contract to sell any of the Properties or
Partnership Interests; (v) apply for or consent to the modification of any
zoning of a Property; or (vi) amend, modify or terminate any of the Material
Contracts.
(c) THCI shall continue to be solely responsible for, and THCI
shall use its commercially reasonable efforts in, continuing to completion the
construction of Fashion Outlet, generally in accordance with the development
plan for Fashion Outlet previously delivered by THCI to the Acquirors. The
Closing for Fashion Outlet shall not occur prior to completion of construction
of Fashion Outlet by THCI. THCI shall be obligated to pay for all hard and soft
costs incurred in connection with the construction of Fashion Outlet. As THCI is
not the general contractor of Fashion Outlet, THCI shall not warrant the
workmanship, design or construction of all or any part of Fashion Outlet, it
being expressly understood that the Acquirors are assuming the risk thereof, but
all warranties and guaranties of the general contractor shall be assigned to the
Acquirors at the Applicable Closing and THCI shall advise the Acquirors of the
times when the final punch list is to be prepared so as to permit the Acquirors
to participate in the preparation thereof. In addition, at the Applicable
Closing, THCI shall pay to the Acquirors in respect of any space that is not
leased at that time the budgeted cost for the initial lease up of such portion
of the Property, including, without limitation, tenant allowances and brokerage
commissions.
(d) THCI shall have the right to cause Midway Associates to
transfer its interest in the Corte Madera Partnership to an entity that is
wholly owned, directly or indirectly, by THCI (the "NEW ENTITY"), and, in such
event, from and after the date of transfer, the New Entity shall be deemed for
all purposes of this Agreement to be the Partner in the Corte Madera
Partnership.
(e) As promptly as is reasonably practicable after the date
hereof, provided that there is no material adverse consequence to either
Acquiror as a result thereof and that all requisite lender consents and other
third party consents have been obtained, the Acquirors and
<PAGE>
43
THCI shall cause the dissolution of EWH Escondido Associates, L.P. (North County
Fair) and H-S Las Vegas Associates (Fashion Show) and cause the applicable
Properties to be distributed to the partners in such Partnerships as tenants-in-
common. Each of THCI and the Acquirors shall cause its respective co-tenants to
enter into tenancy-in-common agreements for such Properties that contain the
same substantive terms as the applicable partnership agreements for such
Properties, except for such modifications as are reasonably required to reflect
the difference in ownership structure so as to create, to the extent
practicable, the same types of rights and obligations as the parties had as
partners in the Partnerships (including, without limitation, restrictions on the
mortgaging of such tenancy-in-common interests and waivers of the rights of
partition). THCI shall pay any transfer taxes and legal fees and other fees of
consultants incurred in connection with any transfers of such TC Interest which
occur prior to the 6 month anniversary of the Applicable Closing Date other than
the transfer taxes, legal fees and other fees of consultants that would have
been incurred by the Aquirors had the Partnership Interest been transferred
instead of the TC Interest. At the Applicable Closing, the Acquirors shall cause
an Affiliate of either Acquiror to purchase the TC Interest of the applicable
Co-Tenant (and, at such time, all amounts owed between the co-tenants shall be
settled) and, thereafter, the Acquirors shall cause each associated Property to
continue to be held as a Tenancy under the applicable tenancy-in-common
agreement until the earlier of the sale to an unaffiliated third party by the
applicable Acquiror's associated co-tenants of the entire Property Assets
associated with such Property or January 1, 2001; provided that nothing
contained herein shall prevent Acquiror's associated co-tenants from
transferring partial co-tenancy interests in each associated Property. In the
event that the conversion of either such Property to a Tenancy has not been
consummated on or prior to November 15, 1998, then, in lieu of transferring the
TC Interest in such Tenancy, THCI shall be obligated to transfer to the
Acquirors, and the Acquirors shall be obligated to purchase, the Partnership
Interest associated with such Property, and in determining the Adjusted
Allocated Purchase Price for such Partnership Interest, the amount in clause
(b)(i) of the definition of Adjusted Allocated Purchase Price shall be the "100%
Amount" for such TC Interest.
SECTION 5.02. Investigation. (a) The Acquirors acknowledge and
agree that they (i) have made their own inquiry and investigation into, and,
based thereon, have formed an independent judgment concerning, the Properties,
the Management Company and the Partnership Interests and (ii) will not assert
any claim against THCI or any THCI Subsidiary or THCI Partnership or any of
their respective directors, officers, employees, agents, stockholders,
Affiliates, consultants, investment bankers or representatives, or hold THCI or
any such Persons liable, for any inaccuracies, misstatements or omissions with
respect to such information furnished by THCI or such Persons concerning the
Properties, the Management Company or the Partnership Interests, other than any
inaccuracies or misstatements in the representations and warranties contained in
this Agreement. The Acquirors acknowledge that THCI has not made any
representation or warranty with respect to
<PAGE>
44
any estimates, projections, forecasts, plans or budgets that may have been made
available to or discussed with the Acquirors.
(b) The Acquirors acknowledge and agree that, except as expressly set
forth in this Agreement, the Acquirors are acquiring each Property, the
Management Company Shares and each Partnership Interest in its "as is" condition
"subject to all faults" and specifically and expressly without any warranties,
representations or guarantees, either express or implied, of any kind, nature,
or type whatsoever from or on behalf of THCI. The Acquirors acknowledge that,
except as expressly set forth in this Agreement, the Acquirors have not relied
and are not relying on any information, document, reports, sales brochure or
other literature, maps or sketches, financial information, projections,
estimates, forecasts, plans, budgets, pro formas or statements that may have
been given by or made by or on behalf of THCI. The Acquirors further
acknowledge that, except as otherwise expressly set forth herein, all materials
relating to the Properties, the Management Company Shares and the Partnership
Interests that have been provided by THCI (including, without limitation, the
Real Estate Records and any reports prepared by any consultants) have been
provided without any warranty or representation, expressed or implied, as to
their content, suitability for any purpose, accuracy, truthfulness or
completeness, and the Acquirors shall not have any recourse against THCI, any
THCI Partnership or any THCI Subsidiary or any of their respective directors,
officers, employees, agents, stockholders, Affiliates, consultants, investment
bankers or representatives for any information in the event of any errors
therein or omissions therefrom.
SECTION 5.03. Access to Information. (a) Within 15 days after the
date of this Agreement, THCI shall deliver to the Acquirors a list setting
forth, to the knowledge of THCI, all corporations, partnerships, limited
liability companies and other entities in which a THCI Subsidiary, a THCI
Partnership, a Partnership or a Second Tier Partnership owns a beneficial
interest that may be directly or indirectly acquired by the Acquirors pursuant
to the terms of this Agreement. From the date hereof until the Applicable
Closing, upon reasonable notice, THCI shall, and shall cause each THCI
Partnership and THCI Subsidiary and each of their respective officers,
directors, employees, auditors and agents to, (i) afford the officers,
employees, authorized agents and representatives of the Acquirors reasonable
access, during normal business hours, to the offices, properties, books and
records of THCI, the THCI Partnerships and the THCI Subsidiaries relating to the
Properties, the Management Company and the Partnership Interests and (ii)
furnish to the officers, employees and authorized agents and representatives of
the Acquirors such additional financial and operating data and other information
regarding the Properties, the Management Company and the Partnership Interests
as the Acquirors may from time to time reasonably request; provided, however,
that (A) such investigation shall not unreasonably interfere with any of the
businesses or operations of THCI or any of its Affiliates (including the THCI
Partnerships and the THCI Subsidiaries) or the Properties, the Partnerships or
the Second Tier Partnerships, (B) the Acquirors shall not, prior
<PAGE>
45
to the Applicable Closing, have any contact whatsoever with respect to the
Properties or the Partnership Interests or with respect to the transactions
contemplated by this Agreement with any partner, lender, ground lessor, anchor
department store or other tenant of THCI or any THCI Partnership, THCI
Subsidiary, Partnership or Second Tier Partnership except in consultation with
THCI and then only with the express prior approval of THCI, which approval shall
not be unreasonably withheld, and (C) all requests by the Acquirors for access
or information pursuant to this Section 5.03 shall be submitted or directed
exclusively to an individual to be designated by THCI. The Acquirors shall not
be permitted to conduct any invasive tests on any Property without THCI's prior
written consent. The Acquirors agree to indemnify THCI from and against any and
all losses, damages or claims suffered by THCI as a result of any investigations
or inspections made by the Acquirors.
(b) In order to allow THCI to investigate whether the payments
required pursuant to Section 2.07(c) have been made correctly, to facilitate the
resolution of any third party claims and to prepare documents required to be
filed by THCI with Governmental Authorities, after an Applicable Closing, upon
reasonable notice, the Acquirors shall (i) afford the officers, employees and
authorized agents and representatives of THCI reasonable access, during normal
business hours, to the books and records of the Acquirors relating to the assets
transferred and the liabilities assumed at such Closing, (ii) furnish to the
officers, employees and authorized agents and representatives of THCI such
additional financial and other information regarding such assets and liabilities
as THCI may from time to time reasonably request and (iii) make available to
THCI (at THCI's cost and expense) the employees of the either Acquiror whose
assistance, testimony or presence is deemed necessary by THCI, in its reasonable
judgment, to assist THCI in evaluating or defending any such claims, including
as witnesses in hearings or trials for such purposes.
(c) The Acquirors agree that they shall preserve and keep all
books and records in respect of the Properties, the Management Company and the
Partnership Interests in the Acquirors' possession for a period of at least five
years from the last Closing Date. After such five-year period, before either
Acquiror shall dispose of any of such books and records, at least 90 calendar
days' prior written notice to such effect shall be given by such Acquiror to
THCI, and THCI shall be given an opportunity, at its cost and expense, to remove
and retain all or any part of such books and records as THCI may select. During
such five-year period, duly authorized representatives of THCI shall, upon
reasonable notice, have access thereto during normal business hours to examine,
inspect and copy such books and records.
SECTION 5.04. Confidentiality. The terms of the letter agreements
dated March 4, 1998 and March 3, 1998, respectively (together, the
"CONFIDENTIALITY AGREEMENTS") between each of Rouse and WEA, on the one hand,
and TrizecHahn Corporation, on the other hand, are hereby incorporated by
reference and shall continue in full force and effect until the last Closing, at
which time such Confidentiality Agreements and the obligations of the parties
<PAGE>
46
under this Section 5.04 shall terminate, provided that the provisions relating
to the solicitation of employees shall survive in accordance with the provisions
of the Confidentiality Agreement, except with respect to Transferred Employees.
If this Agreement is, for any reason, terminated prior to the Initial Closing,
the Confidentiality Agreements shall continue in full force and effect
thereafter in accordance with their respective terms.
SECTION 5.05. Regulatory and Other Authorizations; Consents. (a) THCI
shall use its good faith commercially reasonable efforts to obtain the
authorizations, consents, orders and approvals necessary for its execution and
delivery of, and the performance of its obligations pursuant to, this Agreement
and each Ancillary Agreement (including, without limitation, the consent of (i)
Governmental Authorities, (ii) landlords under the Ground Leases, (iii) lenders
(including lenders of Existing Debt or any refinancings thereof), (iv) partners
in any Partnership or Second Tier Partnership, (v) redevelopment authorities and
(vi) tenants at any Property), and the Acquirors shall cooperate fully with THCI
in promptly seeking to obtain all such authorizations, consents, orders and
approvals. If required by the HSR Act, each party hereto agrees to make an
appropriate filing of a Notification and Report Form pursuant to the HSR Act
with respect to the transactions contemplated by this Agreement within five
Business Days after the date hereof and to supply promptly any additional
information and documentary material that may be requested pursuant to the HSR
Act. The parties hereto will not take any action that will have the effect of
delaying, impairing or impeding the receipt of any required approvals.
(b) The Acquirors shall use their good faith commercially reasonable
efforts to assist THCI in obtaining the consents of third parties listed in
Section 3.03(b) of the THCI Disclosure Schedule, including (i) providing to such
third parties such financial statements and other financial information as such
third parties may reasonably request, (ii) agreeing to commercially reasonable
adjustments to the terms of the Contracts with such third parties (provided that
neither party hereto shall be required to agree to any increase in the amount
payable with respect to, or any modification that makes more burdensome, in any
material respect, any Liabilities assumed by such party with respect to such
Contracts) and (iii) executing agreements to effect the assumption of such
Contracts on or before the Applicable Closing.
(c) In the event that THCI is unable to obtain any consent referred to
in Section 5.05(a) or (b) prior to December 31, 1998, THCI may elect not to sell
the affected Property or Partnership Interest, as applicable, and such Property
or Partnership Interest shall no longer be subject to this Agreement, and the
terms of this Agreement shall be modified accordingly.
(d) The Acquirors shall use their good faith, commercially reasonable
efforts to cause THCI and each of its Affiliates to be released as of the
Applicable Closing, or as soon
<PAGE>
47
thereafter as possible, from all guaranties, guaranty obligations, indemnities
and indemnity obligations of THCI and such Affiliates relating principally to
the transferred Properties and applicable to the period subsequent to the
Applicable Closing. The Acquirors shall cause to be issued as of the Applicable
Closing, or as soon thereafter as possible, letters of credit, surety bonds and
similar instruments in substitution of letters of credit, surety bonds and
similar instruments furnished by THCI and any of its Affiliates relating
principally to the Properties. The Acquirors agree to indemnify THCI and each of
its Affiliates for any and all Losses incurred by THCI and any such Affiliate
arising out of any such guaranties, guaranty obligations, indemnities, indemnity
obligations, letters of credit, surety bonds and similar instruments, except to
the extent related to occurrences prior to the Applicable Closing.
SECTION 5.06. Notification to Governmental Authorities. The Acquirors
and THCI shall cooperate to provide notification, promptly after each Closing,
and in any event not later than when due, to each Governmental Authority
responsible for the regulatory supervision and administration of the Properties.
SECTION 5.07. Bulk Transfer Laws. The Acquirors hereby waive
compliance by THCI, each THCI Partnership and each THCI Subsidiary with the
provisions of any so-called bulk transfer Laws of any jurisdiction in connection
with the sale to the Acquirors of the Property Assets. THCI shall indemnify and
hold harmless the Acquirors against any and all liabilities (including Tax
liabilities) that may be asserted by third parties against the Acquirors as a
result of noncompliance by THCI, a THCI Partnership or a THCI Subsidiary with
any such bulk transfer Law (except for those assumed by the Acquirors hereunder
or in any Assumption Agreement).
SECTION 5.08. Use of Name or Other Intellectual Property. The
Acquirors acknowledge that they are not acquiring, pursuant to this Agreement,
any rights with respect to any of the THCI Names and Marks. Within 60 calendar
days after the Applicable Closing, the Acquirors shall remove or obliterate from
all of the Property Assets and all assets of the Management Company (including
signs, stationery, packaging, labels and other materials) all THCI Names and
Marks. The Acquirors shall not use or put into use after the Applicable Closing
any signs, stationery, labels or other materials that bear any THCI Names and
Marks. Any signs, stationery, labels and other materials containing any THCI
Names and Marks shall, at the option of THCI upon due notification, be promptly
returned to THCI, in which case the cost of their removal and return shall be
shared equally between the Acquirors and THCI, or, with THCI's written consent,
destroyed or otherwise permanently disposed of. Immediately after the Initial
Closing, the Acquirors shall change the name of the Management Company to a name
that does not include any of the THCI Names and Marks.
SECTION 5.09. Partnership Interests. THCI will use good faith,
commercially reasonable efforts (but without obligation, except as contemplated
by this
<PAGE>
48
Agreement, to expend funds or to commence legal proceedings) to cause each
Property listed in Section 5.09 of the THCI Disclosure Schedule to be sold to
Acquirors, including the initiation of buy-sell arrangements, requests for
waivers or consents and/or direct negotiations. Notwithstanding the foregoing,
THCI gives no assurance as to the outcome of such actions. In the event that
THCI is unsuccessful in arranging for a sale to the Acquirors of any such
Property, THCI shall, subject to Section 5.10, sell to the Acquirors its
Partnership Interest related to such Property and, if applicable, the provisions
of Exhibit B shall apply thereto.
SECTION 5.10. Special Provisions Relating to Rights of First Refusal;
Buy/Sells. (a) The Acquirors hereby waive and agree to cause their respective
Affiliates to waive, any rights of first refusal such Persons may have under the
partnership agreements or any other agreements relating to the Fashion Show
Partnership and the North County Fair Partnership with respect to the
transactions contemplated by this Agreement. The Acquirors acknowledge that, as
a condition to the applicable Partner's ability to transfer to the Acquirors
certain Properties or the related Partnership Interests, such Partner may be
required to (or in the case of a buy/sell, may elect but is not obligated to)
either (i) offer the Partnership Interest for sale to one or more partners of
such Partner (each, an "OTHER PARTNER") in accordance with certain rights of
first refusal or buy/sell provisions contained in the applicable partnership
agreement or (ii) obtain the consent of one or more Other Partners to the sale
of the Property to the Acquirors and, in either such case, one or more Other
Partners has the right to purchase the Partnership Interest of such Partner in
accordance with the applicable partnership agreement. THCI agrees to offer the
applicable Partnership Interests to the Other Partner or Other Partners in
accordance with the applicable partnership agreement or to request the consent
of the Other Partner or Other Partners, as the case may be, in each case in
accordance with and is required by the applicable partnership agreement. THCI
will use commercially reasonable good faith efforts (but without obligation to
expend funds or to commence legal proceedings) to obtain all required consents.
With respect to each Property identified in Section 5.10 of the THCI Disclosure
Schedule, the terms of this Agreement are hereby modified and amended in the
manner provided in Section 5.10 of the THCI Disclosure Schedule. In addition,
for purposes of clarification, in the event that an Other Partner elects to
purchase the Partnership Interest of such Partner, then, with respect to such
Partnership Interest and the related Property only, (X) the Threshold Amount (as
used with respect to the purchase of the Partnership Interest by such Other
Partner) shall be an amount equal to 1% of the Adjusted Allocated Purchase Price
for such Partnership Interest and the Maximum Amount shall be an amount equal to
10% of such Adjusted Allocated Purchase Price and (Y) the definition of Material
Adverse Effect (as used with respect to the purchase of the Partnership Interest
by such Other Partner) shall mean any change in or effect on the applicable
Property (and not the Properties taken as a whole) that is (individually or in
the aggregate with any other changes therein or effects thereon that would be
specifically addressed by a representation or warranty about such Property
contained in this Agreement but for a "Material Adverse Effect" exception or
qualification thereto), materially adverse to such Property or to the results of
<PAGE>
49
operations of such Property, other than changes resulting from the matters
specified in clauses (a) through (e) of the definition of Material Adverse
Effect. In addition, in the event that an Other Partner elects to purchase the
Partnership Interest of such Partner, the terms of this Agreement shall
automatically be modified and amended as follows with respect to such
Partnership Interest and the related Property only:
(1) THCI (and such Partner) shall not be obligated to sell to the
Acquirors, and the Acquirors shall not be obligated to purchase from THCI,
such Property or Partnership Interest;
(2) the purchase price payable by the Acquirors at the Applicable
Closing shall be reduced accordingly; and
(3) if the Other Partner elects not to purchase such Partnership
Interest, then the Acquirors shall be obligated to purchase such
Partnership Interest or the related Property, as the case may be, subject
to all of the terms and conditions of this Agreement but excluding the
terms of this Section 5.10.
(b) THCI, by notice to the Acquirors to such effect, shall have the
right to elect to have the Acquirors acquire the Partnership Interest of DPA in
"Plaza" in lieu of the stock of DPA if the consent of the Other Partners in said
Partnership to the substitution of the Acquirors as partners in said Partnership
is obtained. In such event, THCI shall have the right to submit such interest to
the right of first refusal in favor of the Other Partners in such Partnership in
accordance with the terms of the applicable partnership agreement.
SECTION 5.11. Tenancy-in-Common Interests. (a) In the case of
Partnership Interests to be transferred hereunder, THCI may elect, in its sole
discretion, to dissolve and liquidate the assets of any Partnership or Second
Tier Partnership as a result of which the applicable Partner will become a Co-
Tenant and receive a TC Interest in the applicable Property in lieu of a
Partnership Interest in such Property. In that event, THCI shall be obligated to
convey to the Acquirors, and the Acquirors shall be obligated to purchase from
THCI, such TC Interest, subject to all the other terms and conditions of this
Agreement relating to the transfer by THCI to the Acquirors of a Partnership
Interest, with the following modifications:
(i) the TC Interest shall be held by the Co-Tenant pursuant to a
tenancy-in-common agreement that contains the same substantive terms as the
applicable partnership agreement for such Property, except for such
modifications as are reasonably required to reflect the difference in
ownership structure so as to create, to the extent practicable, the same
types of rights and obligations as the parties had as partners in the
Partnership or Second Tier Partnership (including, without limitation,
restrictions on the mortgaging of such TC Interest and waivers of the right
of partition);
<PAGE>
50
(ii) the purchase price for the TC Interest shall be calculated in
accordance with the definition of Adjusted Allocated Purchase Price as it
relates to Partnership Interests, except that the amount in clause (b)(i)
thereof shall be calculated by determining the amount that would be payable
to a Co-Tenant holding a TC Interest pursuant to the terms of the
applicable tenancy-in-common agreement, if the applicable Property Assets
had been sold for a purchase price (assuming no brokerage commissions,
transfer taxes or other transfer costs) equal to the applicable amount set
forth in Section 1.01(A) of the THCI Disclosure Schedule in a sale where
(A) apportionments of the type specified in Section 2.07 had been made and
(B) all joint and several indebtedness of the Co-Tenant and its co-tenant
(and all indebtedness secured by a mortgage on the entire Property) had
been paid in full;
(iii) the Assumed Debt Amount for the TC Interest shall include all
indebtedness of the Co-Tenant, other than indebtedness for which the Co-
Tenant and its co-tenant are jointly and severally liable and indebtedness
secured by a mortgage on the entire Property;
(iv) for purposes of THCI's representations and warranties hereunder
and THCI's closing deliveries, the TC Interest shall be treated as Owned
Real Property or Leased Real Property, as applicable, and the rights of the
other co-tenant shall be deemed a Permitted Encumbrance; and
(v) THCI shall pay any transfer taxes, legal fees and other fees of
consultants incurred in connection with transfers of such TC Interest which
occur prior to the six-month anniversary of the Applicable Closing Date
other than transfer taxes, legal fees and other fees of consultants that
would have been incurred by the Acquirors had the Partnership Interest been
transferred instead of the TC Interest.
(b) In the case of a transfer of Property Assets hereunder that are
currently owned by a Partnership or a Second Tier Partnership, prior to the
Closing for such Property Assets, THCI shall have the right to cause the
applicable Partnership or Second Tier Partnership that holds such Property
Assets to dissolve and liquidate the assets of such Partnership or Second Tier
Partnership and distribute to the partners tenancy-in-common interests in the
Property Assets. In such event, (i) THCI shall cause all such tenancy-in-common
interests in such Property Assets to be transferred to the applicable Acquiror
at the Applicable Closing in consideration of the Adjusted Allocated Purchase
Price for such Property, (ii) the Assumed Debt Amount and all of THCI's
representations and warranties hereunder shall apply with respect to all such
tenancy-in-common interests as if such tenancy-in-common interests were a
Property, and (iii) THCI shall pay any transfer taxes, legal fees and other fees
of consultants incurred in connection with transfers of such tenancy-in-common
interests which occur prior to the six-month anniversary of the Applicable
Closing Date other than transfer taxes, legal fees and
<PAGE>
51
other fees of consultants that would have been imposed had the Property been
transferred instead of the tenancy-in-common interests.
SECTION 5.12. Liquidated Damages. If, after receiving the Initial
Closing Date Notice or a Subsequent Closing Date Notice, the Acquirors shall, in
breach of this Agreement, fail to acquire the Properties and Partnership
Interests specified therein on the Closing Date therefor specified pursuant to
Section 2.01, the Acquirors shall pay to THCI an amount equal to 10% of the
aggregate Allocated Purchase Price for such Properties and Partnership
Interests. THCI and the Acquirors agree that actual damages accruing from such a
breach of this Agreement are incapable of precise estimation and would be
difficult to prove, that the payments stipulated in this Section 5.12 bear a
reasonable relationship to the potential injury likely to be sustained in the
event of such a breach and that the payments stipulated in this Section 5.12 are
intended by the parties to provide just compensation in the event of such a
breach and are not intended to compel performance or to constitute a penalty for
nonperformance. If the Acquirors fail promptly to pay to THCI any amounts due
under this Section 5.12, the Acquirors shall be obligated to pay the costs and
expenses (including legal fees and expenses) in connection with any action,
including the filing of any lawsuit or other legal action, taken to collect
payment, together with interest on the amount of any unpaid fee from the date
such amount was required to be paid at an interest rate equal to the prime rate
published by The Wall Street Journal from time to time. THCI's rights pursuant
to this Section 5.12 are in addition to, and may be pursued concurrently with,
THCI's rights pursuant to Section 12.12. The parties hereby acknowledge that the
agreements contained in this Section 5.12 are an integral part of the
transactions contemplated by this Agreement.
SECTION 5.13. Further Action. (a) Each of the parties hereto shall
use its commercially reasonable efforts to take or cause to be taken all
appropriate action, do or cause to be done all things necessary, proper or
advisable, and execute and deliver such documents and other papers, as may be
required to carry out the provisions of this Agreement and consummate and make
effective the transactions contemplated by this Agreement.
(b) After the Initial Closing, the Acquirors shall cause the
Management Company to comply with the terms of the management agreements to
which it is a party with respect to any Properties that have not been
transferred (and for which Partnership Interests have not been transferred).
SECTION 5.14. Environmental Reports. Within 30 days of the date
hereof, THCI shall deliver to the Acquirors Phase I Environmental Reports for
each Property. If such reports recommend Phase II investigations, the Acquirors
may conduct such investigations in accordance with the procedures contemplated
by Section 5.03. In the event that any such Environmental Reports shall disclose
the release of any Hazardous Materials in any of the Properties that shall have
caused a Material Adverse Effect, then unless THCI shall
<PAGE>
52
agree, at its expense, to remediate such condition to the extent required by
Environmental Law or to indemnify the Acquirors against any loss, cost,
liability or expense resulting therefrom, the Acquirors shall not be obligated
to acquire the Property or Properties so affected. The Acquirors shall notify
THCI of their decision as to the acquisition of such Property or Properties
promptly after receipt of the notification of THCI's decision as to remediation
or indemnification, and if, in the absence of remediation or indemnification,
the Acquirors shall elect not to acquire the Property or Properties, THCI shall
have no obligation to convey them pursuant to this Agreement.
SECTION 5.15. Record Owner Apportionments. At any Closing at which
Record Owner Shares or Record Owner Partnership Interests are transferred to the
Acquirors, the then-current assets and then-current liabilities of the Record
Owner thereof shall be estimated in good faith by THCI, and THCI shall pay to
the Acquirors the excess, if any, of such current liabilities over such current
assets, or the Acquirors shall pay to THCI the excess, if any, of such current
assets over such current liabilities. To the extent not known on the Applicable
Closing Date, the current assets and liabilities shall be estimated on the best
available information at the time and appropriate settlement made from time to
time as the same are liquidated.
ARTICLE VI
EMPLOYEE MATTERS
SECTION 6.01. Employees. (a) Except as otherwise expressly provided
in this Article VI or as set forth in Section 6.01(a) of the THCI Disclosure
Schedule, from and after the Initial Closing Date, the Acquirors and the
Management Company shall be responsible for (i) all Employee-related Liabilities
incurred on or after the Initial Closing Date with respect to the individuals
who are employed by the Management Company (including employees on disability,
leave of absence or layoff with recall rights) as of the Initial Closing Date
(collectively referred to herein as the "TRANSFERRED EMPLOYEES") and their
respective dependents and beneficiaries, and (ii) all Employee-related
Liabilities incurred prior to the Initial Closing Date with respect to the
Transferred Employees and their respective dependants and beneficiaries to the
extent such liabilities arise under Employee Plans sponsored by the Management
Company immediately prior to the Initial Closing Date. The Management Company
shall not be responsible, and shall be reimbursed or indemnified by THCI, for
all Employee-related Liabilities accrued but unpaid prior to the Initial Closing
Date that are not referred to in clause (ii) of the immediately preceding
sentence. "EMPLOYEE-RELATED LIABILITIES" shall include, without limitation,
Liabilities for salaries, bonuses, vacations, workers' compensation, medical and
life insurance benefit claims and other welfare benefits and all
<PAGE>
53
Liabilities arising under the continuation coverage requirements of Section
4980(B)(f) of the Code and Section 601 of ERISA.
(b) To the extent that service is relevant for purposes of
eligibility, vesting, calculation of any benefit, or benefit accrual under any
employee benefit plan, program or arrangement established or maintained by the
Acquirors or the Management Company (other than any defined benefit pension
plan) following the Initial Closing Date for the benefit of Transferred
Employees, such plan, program or arrangement shall credit such employees for
service on or prior to the Initial Closing Date that was recognized by THCI or
any THCI Subsidiary for purposes of employee benefit plans, programs or
arrangements maintained by any of them. In addition, with respect to any welfare
benefit plan (as defined in Section 3(1) of ERISA) established or maintained by
the Acquirors or the Management Company following the Initial Closing Date for
the benefit of Transferred Employees, such plan shall waive any pre-existing
condition exclusions and provide that any covered expenses incurred on or before
the Initial Closing Date by a Transferred Employee or by a covered dependent
shall be taken into account for purposes of satisfying applicable deductible
coinsurance and maximum out-of-pocket provisions after the Initial Closing Date.
SECTION 6.02. Employee Benefits. For a period of one year
following the Initial Closing Date, the Acquirors shall cause the Management
Company to provide Transferred Employees with benefits (including, without
limitation, retirement and welfare benefits) that either are (i) substantially
comparable, in the aggregate, to the benefits provided under the Employee Plans
as in effect immediately prior to the Initial Closing Date or (ii) the same as
the benefits generally made available to either of the Acquirors' similarly
situated employees.
SECTION 6.03. Employee Plans. From and after the Initial Closing
Date, the Management Company shall be responsible for the Employee Plans it
sponsored immediately prior to such date (which plans are listed in Section 6.03
of the THCI Disclosure Schedule), and the Acquirors shall cause the Management
Company to comply with the terms and conditions of such plans. With respect to
any Employee Plan which is qualified under Section 401(a) of the Code and was
not sponsored by the Management Company prior to the Initial Closing Date, the
Acquirors shall either cause the Management Company to establish a plan having
substantially similar terms or designate a plan maintained by an Acquiror or one
of its subsidiaries or affiliates to receive a transfer of the accrued benefits
of each Transferred Employee from such Employee Plan, which plan must also
satisfy the requirements of such Section 401(a) of the Code. Any such transfers
shall be effected as soon as practicable after the Initial Closing Date, be
effective as of the later of the Initial Closing Date or the last valuation date
immediately preceding such transfer, and shall be subject to the delivery by an
Acquiror to THCI of a determination letter indicating the qualified status of
such plan or an
<PAGE>
54
opinion of counsel to such Acquiror that the terms of such plan meet the
applicable requirements of such Section 401(a).
SECTION 6.04. Other Employee Benefits. With respect to the severance
plans listed on Section 6.03 of the THCI Disclosure Schedule, THCI agrees that
no severance shall be payable thereunder to any participant who voluntarily
resigns from his or her employment with the Management Company without Good
Reason. For this purpose, "Good Reason" means (a) a reduction in a participant's
base salary as in effect immediately prior to the Initial Closing Date, (b) a
participant ceasing to be eligible for an annual cash bonus opportunity of at
least the same potential amount as immediately prior to the Initial Closing Date
or, with respect to a participant, with a target bonus opportunity expressed as
a percentage of base salary, a reduction in the participant's annual cash bonus
opportunity (expressed as a percentage of base salary) from that in effect
immediately prior to the Initial Closing Date, (c) a failure to provide a
participant benefits at the level required under Section 6.02 hereof, (d) a
failure to provide a participant with a title of comparable status to his or her
title immediately prior to the Initial Closing Date, (e) an adverse change in
the scope or nature of a participant's responsibilities in comparison to those
in effect immediately prior to the Initial Closing Date, or (f) a relocation of
a participant's principal place of business by 25 miles or more from the
location immediately prior to the Initial Closing Date.
SECTION 6.05. WARN Act. In the event that the Acquirors do not
continue all the operations of the Properties and/or do not employ all of the
Transferred Employees on and after the Initial Closing Date, the Acquirors shall
be liable and responsible for any notification required to be provided under the
WARN Act (or under any similar state or local Law), and the Acquirors shall
indemnify THCI and the THCI Subsidiaries and their respective Affiliates for any
claims arising out of a breach of this covenant.
SECTION 6.06. Indemnity. Anything in this Agreement to the contrary
notwithstanding, the Acquirors hereby agree to indemnify THCI, the THCI
Partnerships and the THCI Subsidiaries and their respective Affiliates against
and hold THCI and the THCI Subsidiaries and their respective Affiliates harmless
from any and all Losses arising out of or otherwise in respect of (a) any claim
made by any Transferred Employee against THCI, any THCI Partnership or any THCI
Subsidiary or any of their Affiliates for any severance or termination benefits
pursuant to the provisions of any plan, program or arrangement or any applicable
federal or state Law, (b) any action taken after the Initial Closing by the
Acquirors or the Management Company with respect to any plan (including any
Employee Plan), (c) any claim for payments or benefits by Transferred Employees
or their beneficiaries under any plan (including any Employee Plan) sponsored by
the Management Company or either Acquiror, and (d) any failure of the Acquirors
to discharge their obligations under this Article VI. The provisions of Sections
9.03(c) and 9.03(d) shall apply to the Acquirors' indemnification obligations
under this Section 6.06.
<PAGE>
55
SECTION 6.07. No Third Party Beneficiaries. Notwithstanding anything
else contained herein to the contrary, nothing in this Article VI shall be
construed to create any third party beneficiary rights in any person who is not
a party to this Agreement.
SECTION 6.08. Reimbursement for Certain Payments. THCI shall
reimburse the Acquirors for any payments made pursuant to the Employee Plans
listed in Section 6.03 of the THCI Disclosure Schedule other than Section
6.03(I)(A) and (II)(A) thereof to the extent that the aggregate payments made
under such plans by the Management Company on or following the Initial Closing
Date exceed US$6.6 million and, with respect to the Employee Plans listed in
Section 6.03(I)(A) and (II)(A) thereof, to the extent that any payments are
required to be made under such plans by the Management Company.
ARTICLE VII
TAX MATTERS
SECTION 7.01. Conveyance Taxes; Costs. Except as set forth in
Sections 5.01(e) and 5.11(a) and (b), the Acquirors shall be liable for and
shall hold THCI harmless against any real property transfer or gains, sales,
use, transfer, value added, excise, stock transfer, stamp, recording,
registration and any similar Taxes that become payable in connection with the
acquisitions by Acquirors contemplated hereby, and the applicable parties shall
file such applications and documents as shall permit any such Tax to be assessed
and paid on or prior to the Applicable Closing Date in accordance with any
available pre-sale filing procedure. THCI agrees to cooperate with the Acquirors
and, subject to the other terms of this Agreement and provided the same does not
prohibit or adversely affect in any manner the ability of THCI or any THCI
Subsidiary to qualify for Section 1031 Treatment, to take any action reasonably
requested by the Acquirors in order to minimize the amount of such Taxes. The
parties shall execute and deliver all instruments and certificates necessary to
permit compliance with the foregoing. Each party shall be responsible for its
own attorneys' fees. The Acquirors shall pay the entire cost of any title
insurance (for itself or any lender, including lenders of indebtedness assumed
by the Acquirors hereunder), surveys, title inspections, environmental reports,
engineering reports and appraisals that the Acquirors elect to obtain in
connection with the transactions contemplated hereby. The Acquirors shall pay
any and all attorneys' fees of its lenders and lenders of indebtedness assumed
by the Acquirors hereunder.
SECTION 7.02. Treatment of Indemnity Payments. All payments made by
THCI or the Acquirors, as the case may be, to or for the benefit of the other
party pursuant to any indemnification obligations under this Agreement shall be
treated as adjustments to the consideration for Tax purposes, and such agreed
treatment shall govern for purposes of this Agreement.
<PAGE>
56
SECTION 7.03. Allocation of Consideration. Neither THCI nor any of
its Affiliates or the Acquirors or any of their respective Affiliates shall file
any Tax Return, or take a position with a Tax authority in any refund claim, in
any litigation or otherwise, that is inconsistent with the Adjusted Allocated
Purchase Price determined hereunder for any Property or Partnership Interest or
the Allocated Purchase Price for the Management Company Shares, or that treats
the transactions contemplated by this Agreement in a manner inconsistent with
the terms of this Agreement. THCI and the Acquirors shall inform each other
promptly of any challenge by any Tax authority to such Adjusted Allocated
Purchase Price or Allocated Purchase Price, and neither party shall agree to any
adjustment asserted by such Tax authority without the prior written consent of
the other party, which consent shall not be unreasonably withheld.
SECTION 7.04. Employee Withholding. THCI and the Acquirors agree
that, pursuant to and to the extent permitted by the "Alternative Procedure"
provided in Section 5 of Revenue Procedure 84-77, 1984-2 C.B. 753, with respect
to filing and furnishing IRS Forms W-2, W-3 and 941, (a) THCI and the Acquirors
shall each report on a "predecessor-successor" basis, as set forth therein, (b)
THCI shall be relieved from furnishing Forms W-2 to any of THCI's employees that
become employees of the Acquirors and (c) the Acquirors shall assume the
obligations of THCI to furnish such Forms W-2 to such employees for the full
1998 calendar year.
SECTION 7.05. Like-Kind Exchange. (a) The parties hereto agree that,
no later than two Business Days prior to an Applicable Closing Date, THCI may,
for the purpose of treating all or part of the sale of Properties hereunder as a
like-kind exchange of property ("SECTION 1031 TREATMENT") under Section 1031 of
the Code, assign certain rights that it has under this Agreement, including its
right to receive all or part of the cash consideration it is entitled to receive
at such Closing pursuant to this Agreement, to one or more qualified
intermediaries, as defined in Treasury Regulations Section 1.1031(k)-1(g)(4)
(each a "QUALIFIED INTERMEDIARY"), and provide notice of such assignment to the
Acquirors, provided that no such assignment shall release THCI from its
obligations hereunder. In such case, the Acquirors agree to pay such cash
consideration directly to a Qualified Intermediary. In such case, on or before
the day that is 45 days following the Applicable Closing Date, THCI shall have
the right to identify one or more properties to the Qualified Intermediary as
replacement properties for the Properties with respect to which the Qualified
Intermediary received such cash consideration, and, if a property or properties
is so identified, shall have the right to have such property or properties so
identified purchased by the Qualified Intermediary and transferred to THCI on or
before the day that is 180 days following the Applicable Closing Date. In no
event shall the Acquirors have any right to any cash deposited with the
Qualified Intermediary.
(b) The Acquirors agree to cooperate with THCI in taking such further
actions that THCI shall determine are reasonable and necessary in securing
Section 1031
<PAGE>
57
Treatment for all or part of the Properties. THCI agrees to indemnify the
Acquirors against and hold the Acquirors harmless from any Losses arising from
such cooperation.
SECTION 7.06. Tax Indemnity. (a) From and after the Initial Closing
Date, THCI agrees to indemnify the Acquirors and the Management Company against
all Taxes imposed on the Management Company with respect to any taxable period
or portion thereof that ends on or before the Initial Closing Date and against
all Taxes imposed on any member of any affiliated group with which the
Management Company has filed a Tax Return on a consolidated basis for any
taxable period or portion thereof based on an interim closing of the books
methodology prior to or including the Initial Closing Date; provided, however,
that no indemnity shall be provided under this Agreement for any Tax resulting
from (i) an actual or deemed election under Section 338 of the Code with respect
to the transactions contemplated by this Agreement; (ii) a reduction in any net
operating loss, capital loss or tax credit carryover allocable to the Management
Company; or (iii) any transaction of the Management Company occurring on the
Initial Closing Date but after the Closing that is not in the ordinary course of
business.
(b) Payment by THCI of any amounts due under this Section 7.06 in
respect of Taxes shall be made within thirty days following written notice by
either of the Acquirors that payment of such amounts to the appropriate Tax
authority is due, provided that THCI shall not be required to make any payment
earlier than five days before such payment is due to the appropriate Tax
authority. In the case of a Tax that is contested in accordance with the
provisions of Section 7.07, payment of the Tax to the appropriate Tax authority
shall not be considered to be due earlier than the date a final determination to
such effect is made by the appropriate Tax authority or a court of competent
jurisdiction.
SECTION 7.07. Contests. (a) After the Closing Date, the Acquirors
shall promptly notify THCI in writing of the commencement of any Tax audit or
administrative or judicial proceeding or of any demand or claim on the Acquirors
or any of their respective Affiliates which, if determined adversely to the
taxpayer or after the lapse of time, would be grounds for indemnification under
Section 7.06. Such notice shall contain factual information (to the extent known
to the Acquirors or the relevant Affiliate) describing the asserted Tax
liability in reasonable detail and shall include copies of any notice or other
document received from any Tax authority in respect of any such asserted Tax
liability. If the Acquirors fail to give THCI prompt notice of an asserted Tax
liability as required by this Section 7.07 and if THCI is precluded by the
failure to give prompt notice from contesting the asserted Tax liability in both
the administrative and judicial forums, then THCI shall not have any obligation
to indemnify for any loss arising out of such asserted Tax liability to the
extent that THCI was prejudiced as a result of such failure.
<PAGE>
58
(b) THCI may elect to direct, through counsel of its own choosing and
at its own expense, any audit, claim for refund and administrative or judicial
proceeding involving any asserted liability with respect to which indemnity may
be sought under Section 7.06 relating to any taxable period ending on or before
the Closing Date (any such audit, claim for refund or proceeding relating to an
asserted Tax liability is referred to herein as a "CONTEST"). If THCI elects to
direct a Contest, it shall within 30 calendar days of receipt of the notice of
asserted Tax liability notify the Acquirors in writing of its intent to do so,
and the Acquirors shall cooperate and shall cause their respective Affiliates or
their respective successors to cooperate, at THCI's expense, in each phase of
such Contest. In each such case, neither the Acquirors nor any of their
respective Affiliates may settle or compromise any asserted Tax liability over
the objection of THCI. If THCI elects not to direct the Contest or fails to
notify the Acquiror of its election as herein provided, the Acquirors or any of
their respective Affiliates may contest, at their own expense, such asserted Tax
liability or pay or compromise such asserted Tax liability at THCI's expense.
SECTION 7.08 Section 754 Election. With respect to each transfer by
a Partner of its Partnership Interest to the Acquirors, THCI agrees, if THCI, a
THCI Subsidiary or a THCI Partnership is a managing general partner of a
Partnership at the time that a year-end tax return is filed and if permitted by
the applicable partnership agreement, unless otherwise notified by the
Acquirors, to cause the Partnership and, if applicable, the Second Tier
Partnership, to make an election under section 754 of the Code with respect to
the transferred interest and to make any available election under substantially
similar state or local laws.
ARTICLE VIII
CONDITIONS TO CLOSING
SECTION 8.01. Conditions to Obligations of THCI. (a) The obligations
of THCI to consummate the transactions contemplated by this Agreement for the
Initial Closing shall be subject to the satisfaction or waiver, at or prior to
the Initial Closing, of each of the following conditions:
(i) Representations and Warranties. The representations and warranties
of the Acquirors contained in this Agreement that are qualified as to
materiality shall be true and correct as of the Initial Closing Date (other
than such representations and warranties as are made as of a certain date,
which shall be true and correct as of such certain date) and the
representations and warranties of the Acquirors contained in this Agreement
that are not so qualified shall be true and correct in all material
respects as of the Initial Closing Date (other than such representations
and warranties as are made as
<PAGE>
59
of a certain date, which shall be true and correct in all material respects
as of such certain date), and THCI shall have received a certificate of the
Acquirors to such effect signed by a duly authorized officer of each
Acquiror;
(ii) Covenants. All covenants contained in this Agreement to be
complied with by the Acquirors on or before the Initial Closing shall have
been complied with in all material respects, and THCI shall have received a
certificate of the Acquirors to such effect signed by a duly authorized
officer of each Acquiror;
(iii) HSR Act. Any waiting period (and any extension thereof) under
the HSR Act applicable to the transactions to be consummated at the Initial
Closing shall have expired or been terminated;
(iv) No Order. No Governmental Authority or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, injunction or other order (whether
temporary, preliminary or permanent) that is in effect and has the effect
of making the transactions contemplated by this Agreement for the Initial
Closing illegal or otherwise restraining or prohibiting consummation of
such transactions; provided, however, that the provisions of this Section
8.01(a)(iv) shall not apply unless THCI has used its commercially
reasonable efforts to have any such order or injunction vacated;
(v) Consents. The Acquirors, THCI, the THCI Partnerships, the THCI
Subsidiaries, the Partners, the Partnerships or the Second Tier
Partnerships, as applicable, shall have received the authorizations,
orders, approvals and consents of Governmental Authorities and third
parties described in Sections 3.03(a) and 3.03(b) of the THCI Disclosure
Schedule, in form and substance reasonably satisfactory to THCI, with
respect to the Properties and Partnership Interests to be transferred; and
(vi) Ancillary Agreements. The Acquirors shall have duly executed and
delivered to THCI counterparts of each Ancillary Agreement to which it they
are parties with respect to the Properties to be transferred.
(b) The obligations of THCI to consummate the transactions
contemplated by this Agreement for each Subsequent Closing shall be subject to
the satisfaction or waiver, at or prior to such Subsequent Closing, of each of
the following conditions:
(i) Representations and Warranties. The representations and warranties
of the Acquirors contained in this Agreement that are qualified as to
materiality shall be true and correct as of such Subsequent Closing Date
(other than such representations and warranties as are made as of a certain
date, which shall be true and correct as of
<PAGE>
60
such certain date) and the representations and warranties of the Acquirors
contained in this Agreement that are not so qualified shall be true and
correct in all material respects as of such Subsequent Closing Date (other
than such representations and warranties as are made as of a certain date,
which shall be true and correct in all material respects as of such certain
date), and THCI shall have received a certificate of the Acquirors to such
effect signed by a duly authorized officer of each Acquiror;
(ii) Covenants. All covenants contained in this Agreement to be
complied with by the Acquiror on or before such Subsequent Closing shall
have been complied with in all material respects, and THCI shall have
received a certificate of the Acquirors to such effect signed by a duly
authorized officer of each Acquiror;
(iii) No Order. No Governmental Authority or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, injunction or other order (whether
temporary, preliminary or permanent) that is in effect and has the effect
of making the transactions contemplated by this Agreement for such
Subsequent Closing illegal or otherwise restraining or prohibiting
consummation of such transactions; provided, however, that the provisions
of this Section 8.01(b)(iii) shall not apply unless THCI has used its
commercially reasonable efforts to have any such order or injunction
vacated;
(iv) Consents. The Acquirors, THCI, the THCI Partnerships, the THCI
Subsidiaries, the Partners, the Partnerships or the Second Tier
Partnerships, as applicable, shall have received the authorizations,
orders, approvals and consents of Governmental Authorities and third
parties described in Sections 3.03(a) and 3.03(b) of the THCI Disclosure
Schedule, in form and substance reasonably satisfactory to THCI, with
respect to the Properties and Partnership Interests to be transferred; and
(v) Ancillary Agreements. The Acquirors shall have duly executed and
delivered to THCI counterparts of each Ancillary Agreement to which it is a
party with respect to the Properties to be transferred at such Subsequent
Closing.
SECTION 8.02. Conditions to Obligations of the Acquirors. (a) The
obligations of the Acquirors to consummate the transactions contemplated by this
Agreement for the Initial Closing shall be subject to the satisfaction or
waiver, at or prior to the Initial Closing, of each of the following conditions:
(i) Representations and Warranties. The representations and
warranties of THCI contained in this Agreement that are qualified as to
materiality shall be true and correct as of the Initial Closing Date (other
than such representations and warranties as are made as of a certain date,
which shall be true and correct as of such certain date),
<PAGE>
61
and the representations and warranties of THCI contained in this Agreement
that are not so qualified shall be true and correct in all material
respects as of the Initial Closing Date (other than such representations
and warranties as are made as of a certain date, which shall be true and
correct in all material respects as of such certain date), and the
Acquirors shall have received a certificate of THCI to such effect signed
by a duly authorized officer thereof;
(ii) Covenants. All covenants contained in this Agreement to be
complied with by THCI on or before the Initial Closing shall have been
complied with in all material respects, and the Acquirors shall have
received a certificate of THCI to such effect signed by a duly authorized
officer thereof;
(iii) HSR Act. Any waiting period (and any extension thereof) under
the HSR Act applicable to the transactions to be consummated at the Initial
Closing shall have expired or been terminated;
(iv) No Order. No Governmental Authority or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, injunction or other order (whether
temporary, preliminary or permanent) which is in effect and has the effect
of making the transactions contemplated by this Agreement for the Initial
Closing illegal or otherwise restraining or prohibiting consummation of
such transactions; provided, however, that the provisions of this Section
8.02(a)(iv) shall not apply unless the Acquirors have used its commercially
reasonable efforts to have any such order or injunction vacated;
(v) Consents. The Acquirors, THCI, the THCI Partnerships, the THCI
Subsidiaries, the Partners, the Partnerships or the Second Tier
Partnerships, as applicable, shall have received the authorizations,
orders, approvals and consents of Governmental Authorities and third
parties described in Sections 3.03(a) and 3.03(b) of the THCI Disclosure
Schedule, in form and substance reasonably satisfactory to the Acquirors,
with respect to the Properties and Partnership Interests to be transferred;
(vi) Ancillary Agreements. THCI, a THCI Partnership or a THCI
Subsidiary, as appropriate, shall have duly executed and delivered to the
Acquirors counterparts of each Ancillary Agreement with respect to the
Properties to be transferred at the Initial Closing;
(vii) Subject to the other terms and provisions of this Agreement,
all of the Initial Properties shall be included in the Initial Closing; and
<PAGE>
62
(viii) The Acquirors, at their expense and provided they have ordered
the same promptly following the date hereof, shall have received an ALTA
owner or leasehold owner (or equivalent), or commitment to issue the same,
as applicable, title insurance policy with extended coverage (to the extent
available) with respect to each Property included in the Initial Closing,
at standard market rates, subject only to Permitted Exceptions.
(b) At the Initial Closing, if there is a failure of condition with
respect to one or more of the Properties or Partnership Interests to be conveyed
at the Initial Closing and, with respect to Properties other than the Initial
Properties, the same are not withdrawn by THCI as Properties to be conveyed at
the Initial Closing, then, subject to THCI's right to a reasonable postponement
of the Initial Closing in order to cure the same, the Acquirors may at their
option (i) terminate this Agreement, in which event no party hereto shall have
any further obligations hereunder; (ii) waive the condition and purchase such
Property or Partnership Interest; or (iii) elect not to purchase such Property
or Partnership Interest and purchase the remainder of the Properties or
Partnership Interests to be delivered at the Initial Closing, in which case the
Acquirors shall remain obligated to purchase such Property or Partnership
Interest and the remainder of the Properties and Partnership Interests to be
delivered at Subsequent Closings in accordance with the terms of this Agreement.
(c) The obligations of the Acquirors to consummate the transactions
contemplated by this Agreement for each Subsequent Closing shall be subject to
the satisfaction or waiver, at or prior to such Subsequent Closing, of each of
the following conditions:
(i) Representations and Warranties. The representations and
warranties of THCI contained in Sections 3.01(a) and 3.16 of this Agreement
that are qualified as to materiality shall be true and correct as of such
Subsequent Closing Date and the representations and warranties of THCI
contained in Sections 3.01(a) and 3.16 of this Agreement that are not so
qualified shall be true and correct in all material respects as of such
Subsequent Closing Date, and the representations and warranties of THCI
contained in Sections 3.01(c), 3.01(d), 3.01(e), 3.02, 3.03, 3.04, 3.05,
3.06, 3.07(a), 3.08, 3.09, 3.10, 3.11, 3.14, 3.17, 3.18, 3.19 and 3.20 of
this Agreement that are qualified as to materiality shall be true and
correct with respect to the Properties and the Partnership Interests, if
any, to be transferred at such Subsequent Closing as of such Subsequent
Closing Date (other than such representations and warranties as are made as
of a certain date, which shall be true and correct as of such certain date)
and the representations and warranties of THCI contained in Sections
3.01(c), 3.01(d), 3.01(e), 3.02, 3.03, 3.04, 3.05, 3.06, 3.07(a), 3.08,
3.09, 3.10, 3.11, 3.14, 3.17, 3.18, 3.19 and 3.20 of this Agreement that
are not so qualified shall be true and correct with respect to the
Properties and Partnership Interests, if any, to be transferred at such
Subsequent Closing in all material respects as of such Subsequent Closing
Date (other
<PAGE>
63
than such representations and warranties as are made as of a certain date,
which shall be true and correct in all material respects as of such certain
date); and the Acquirors shall have received a certificate of THCI to such
effect signed by a duly authorized officer thereof;
(ii) Covenants. All covenants contained in this Agreement to be
complied with by THCI on or before such Subsequent Closing with respect to
the Properties and the Partnership Interests, if any, to be transferred at
such Subsequent Closing shall have been complied with in all material
respects; and the Acquirors shall have received a certificate of THCI to
such effect signed by a duly authorized officer thereof;
(iii) No Order. No Governmental Authority or court of competent
jurisdiction shall have enacted, issued, promulgated, enforced or entered
any statute, rule, regulation, injunction or other order (whether
temporary, preliminary or permanent) that is in effect and has the effect
of making the transactions contemplated by this Agreement for such
Subsequent Closing illegal or otherwise restraining or prohibiting
consummation of such transactions; provided, however, that the provisions
of this Section 8.02(b)(iii) shall not apply unless the Acquirors have used
their commercially reasonable efforts to have any such order or injunction
vacated;
(iv) Consents. The Acquirors, THCI, the THCI Partnerships, the THCI
Subsidiaries, the Partners, the Partnerships or the Second Tier
Partnerships, as applicable, shall have received the authorizations,
orders, approvals and consents of Governmental Authorities and third
parties described in Sections 3.03(a) and 3.03(b) of the THCI Disclosure
Schedule, in form and substance reasonably satisfactory to the Acquirors,
with respect to the Properties and Partnership Interests to be transferred;
(v) Ancillary Agreements. THCI or a THCI Subsidiary, as
appropriate, shall have duly executed and delivered to the Acquirors
counterparts of each Ancillary Agreement with respect to the Properties to
be transferred at such Subsequent Closing; and
(vi) The Acquirors, at their expense and provided they have ordered
the same promptly following the date hereof, shall have received an ALTA
owner or leasehold owner (or equivalent), or commitment to issue the same,
as applicable, title insurance policy with extended coverage (to the extent
available) with respect to each Property included in the Subsequent
Closing, at standard market rates, subject only to Permitted Exceptions.
(d) The obligations of the Acquirors to consummate the transactions
contemplated by this Agreement for the Applicable Closing for the Partnership
Interest in the
<PAGE>
64
Corte Madera Partnership or Second Tier Partnership shall be subject to the
satisfaction or waiver, at or prior to such Applicable Closing, of the following
additional conditions:(i) the Existing Debt with respect to such Property shall
have been paid in full and (ii) the Acquirors shall not, as a result of the
acquisition of such Partnership Interest, acquire a direct or indirect interest
in the capital stock of Hahn JMB Institutional Funding Corp.
(e) At a Subsequent Closing, if there is a failure of condition with
respect to the applicable Property or Partnership Interests to be conveyed at
the Subsequent Closing, subject to THCI's right to a reasonable postponement of
the Applicable Closing in order to cure the same, the Acquirors may at their
option (i) waive the condition and purchase each Property or Partnership
Interest or (ii) elect not to purchase such Property or Partnership Interest, in
which case the Acquirors shall remain obligated to purchase such Property or
Partnership Interest and the remainder of the Properties or Partnership
Interests to be delivered at Subsequent Closings in accordance with the terms of
this Agreement.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01. Survival. (a) Subject to the limitations and other
provisions of this Agreement, the representations and warranties of the parties
hereto contained herein, to the extent covered in a certificate delivered at the
Applicable Closing pursuant to Section 8.01(a)(i), 8.01(b)(i), 8.02(a)(i) or
8.02(b)(i), as the case may be, shall survive the Applicable Closing and shall
remain in full force and effect, regardless of any investigation made by or on
behalf of THCI or the Acquirors, for a period of one year after the Applicable
Closing Date; provided, however, that (i) the representations and warranties set
forth in Section 3.07 shall survive the Applicable Closing and remain in full
force and effect until the termination of all liabilities arising from the
subject matter thereof pursuant to all applicable statutes of limitations and
(ii) the representations and warranties set forth in Sections 3.04, 3.08 and
3.10 shall not survive the Applicable Closing with respect to the Properties,
Management Company Shares and Partnership Interests that are transferred at such
Closing.
(b) Subject to the limitations and other provisions of this Agreement,
each covenant and agreement, including, without limitation, the indemnity
obligations set forth in Section 7.06, of the parties hereto contained herein
shall survive the Applicable Closing and shall remain in full force and effect
for the shortest of the following: (i) an indefinite period after the
Applicable Closing Date; (ii) until the termination of all liabilities arising
from the subject matter thereof pursuant to all applicable statutes of
limitations and (iii) until the end of the applicable period specified elsewhere
in this Agreement with respect to such covenant or agreement.
<PAGE>
65
SECTION 9.02. Indemnification by THCI. (a) THCI agrees, subject to
the other terms and conditions of this Agreement, to indemnify the Acquirors and
their Affiliates, officers, directors, employees, agents, successors and assigns
(each an "ACQUIRORS INDEMNIFIED PARTY") against and hold them harmless from
all Losses arising out of (i) the breach of any representation or warranty of
THCI contained herein, (ii) any breach of any covenant or agreement of THCI
contained herein (other than any covenant or agreement contained in Article VI,
it being understood that all rights to indemnification under Article VI are
pursuant to its terms), (iii) all Liabilities of the Management Company arising
prior to the Initial Closing other than Liabilities for which the Acquirors
receive a credit pursuant to Section 2.07 (other than Liabilities of the
Management Company referred to in Article VI, it being understood that all
rights with respect to indemnification for such Liabilities are pursuant to
Article VI), (iv) with respect to any Property or Partnership Interest for which
a Closing has occurred, any Liability of THCI, the THCI Partnerships and the
THCI Subsidiaries relating to or arising out of such Property or Partnership
Interest, arising or accruing prior to the Applicable Closing for such Property
or Partnership Interest which is not an Assumed Property Liability and (v) with
respect to any Record Owner whose Record Owner Shares or Record Owner
Partnership Interests are transferred to the Acquirors pursuant to this
Agreement, all Liabilities of such Record Owner arising prior to the Applicable
Closing other than Liabilities for which the Acquirors receive a credit pursuant
to Section 5.15. Anything in Section 9.01 to the contrary notwithstanding, no
claim may be asserted nor any action commenced against THCI for breach of any
representation or warranty contained herein, unless written notice of such claim
or action is received by THCI describing in detail the facts and circumstances
with respect to the subject matter of such claim or action on or prior to the
30th day after the date on which the representation or warranty on which such
claim or action is based ceases to survive as set forth in Section 9.01, and
such claim or action on or prior to the date such representation or warranty
ceased to survive, in which case such representation or warranty will survive as
to such claim until such claim has been finally resolved
(b) The indemnification obligations of THCI pursuant to Section
9.02(a)(i) and (a)(ii) shall not be effective until the aggregate dollar amount
of all Losses that would otherwise be indemnifiable pursuant to this Section
9.02 exceeds 1% of the aggregate Allocated Purchase Price for the Properties,
Partnership Interests and Management Company Shares (the "THRESHOLD AMOUNT"),
and then only to the extent such aggregate amount exceeds the Threshold Amount.
The indemnification obligations of THCI pursuant to Section 9.02(a)(i) shall be
effective only until the dollar amount paid in respect of the Losses indemnified
against under Section 9.02(a)(i) aggregates an amount equal to 10% of the
aggregate Allocated Purchase Price for the Properties, Partnership Interests and
Management Company Shares transferred pursuant to this Agreement (the
"MAXIMUM AMOUNT"). For purposes of this Section 9.02(b), in computing such
individual or aggregate amounts of claims, the amount of each claim shall be
deemed to be an amount net of any insurance proceeds and
<PAGE>
66
any indemnity, contribution or other similar payment actually reserved by the
Acquirors Indemnified Parties from any third party with respect thereto.
(c) Payments by THCI pursuant to Section 9.02(a) shall be limited to
the amount of any liability or damage that remains after deducting therefrom any
insurance proceeds and any indemnity, contribution or other similar payment
actually reserved by the Acquirors Indemnified Parties from any third party with
respect thereto.
(d) An Acquirors Indemnified Party shall give THCI written notice of
any claim, assertion, event or proceeding by or in respect of a third party as
to which such Acquirors Indemnified Party may request indemnification hereunder
or as to which the Threshold Amount may be applied as soon as is practicable and
in any event within 30 days of the time that such Acquirors Indemnified Party
learns of such claim, assertion, event or proceeding; provided, however, that
the failure to so notify THCI shall not affect rights to indemnification
hereunder except to the extent that THCI is actually prejudiced by such failure.
THCI shall have the right to direct, through counsel of its own choosing, the
defense or settlement of any such claim or proceeding at its own expense,
provided that THCI shall not settle any such claim or proceeding without getting
the release of the managing general partner of any Partnership that is an
Acquirors Indemnified Party. If THCI elects to assume the defense of any such
claim or proceeding, THCI shall consult with the Acquirors Indemnified Party and
the Acquirors Indemnified Party may participate in such defense, but in such
case the expenses of the Acquirors Indemnified Party shall be paid by the
Acquirors Indemnified Party. The Acquirors Indemnified Party shall provide THCI
with access to its records and personnel relating to any such claim, assertion,
event or proceeding during normal business hours and shall otherwise cooperate
with THCI in the defense or settlement thereof, and THCI shall reimburse the
Acquirors Indemnified Party for all its reasonable out-of-pocket expenses in
connection therewith. If THCI elects to direct the defense of any such claim or
proceeding, the Acquirors Indemnified Party shall not pay, or permit to be paid,
any part of any claim or demand arising from such asserted liability unless THCI
consents in writing to such payment or unless THCI, subject to the last sentence
of this Section 9.02(d), withdraws from the defense of such asserted liability
or unless a final judgment from which no appeal may be taken by or on behalf of
THCI is entered against the Acquirors Indemnified Party for such liability. If
THCI fails to defend or if, after commencing or undertaking any such defense,
THCI fails to prosecute or withdraws from such defense, the Acquirors
Indemnified Party shall have the right to undertake the defense or settlement
thereof, at THCI's expense. If the Acquirors Indemnified Party assumes the
defense of any such claim or proceeding pursuant to this Section 9.02(d) and
proposes to settle such claim or proceeding prior to a final judgment thereon or
to forego any appeal with respect thereto, then the Acquirors Indemnified Party
shall give THCI prompt written notice thereof, and THCI shall have the right to
participate in the settlement or assume or reassume the defense of such claim or
proceeding.
<PAGE>
67
(e) The Acquirors hereby acknowledge and agree that, except as
provided in Section 12.12, from and after each Closing, its sole and exclusive
remedy with respect to any and all claims relating to the Properties,
Partnership Interests and other assets transferred at such Closing shall be
pursuant to the indemnification provisions set forth in this Article IX and in
Article VII; it being understood that the Acquirors shall retain all of their
other rights and remedies under this Agreement with respect to any and all
Properties, Partnership Interests and other assets not transferred under this
Agreement on or prior to such Closing. In furtherance of the foregoing and
except as specified therein, the Acquirors hereby waive, to the fullest extent
permitted under applicable Law, any and all rights, claims and causes of action
relating to the subject matter of this Agreement that they may have against THCI
arising under or based upon any Law (including, without limitation, any such
rights, claims or causes of action arising under or based upon common law or
otherwise).
(f) Except as set forth in this Agreement, THCI is not making any
representation, warranty, covenant or agreement with respect to the matters
contained herein. Anything herein to the contrary notwithstanding, no breach of
any representation, warranty, covenant or agreement contained herein shall give
rise to any right on the part of the Acquirors, after the consummation of the
transactions contemplated hereby, to rescind this Agreement or any of the
transactions contemplated hereby.
(g) THCI shall have no liability under any provision of this Agreement
for and in no event shall the Threshold Amount be applied to any consequential
damages. The Acquirors shall take all reasonable steps to mitigate Losses for
which indemnification may be claimed pursuant to this Agreement upon and after
becoming aware of any event that could reasonably be expected to give rise to
any such Losses.
(h) THCI agrees that until December 31, 1999 it, together with any
guarantor of the obligations of THCI under this Article IX pursuant to a
guaranty in form and substance reasonably acceptable to the Acquiror, shall
maintain a net worth, determined in accordance with Canadian generally accepted
accounting principles, at least equal to the Maximum Amount. THCI shall have
the right to designate one or more such guarantors from time to time, which
guarantors shall become jointly and severally liable with THCI and each other
guarantor at such time as such guarantor delivers the guaranty referred to
above. The Acquirors shall respond promptly to any proposed form of guaranty
submitted by THCI.
SECTION 9.03. Indemnification by the Acquirors. (a) The Acquirors
agree, subject to the other terms and conditions of this Agreement, jointly and
severally to indemnify THCI and its Affiliates, officers, directors, employees,
agents, successors and assigns (each a "THCI INDEMNIFIED PARTY") against and
hold them harmless from all Losses arising out of (i) the breach of any
representation or warranty of the Acquirors contained herein, (ii) any breach of
any covenant or agreement of the Acquirors contained herein (other
<PAGE>
68
than any covenant or agreement contained in Article VI, it being understood that
all rights to indemnification under Article VI are pursuant to its terms) and
(iii) the Assumed Property Liabilities with respect to the Properties and
Partnership Interests as to which a Closing has occurred. Anything in Section
9.01 to the contrary notwithstanding, no claim may be asserted nor may any
action be commenced against the Acquirors for breach of any representation or
warranty contained herein, unless written notice of such claim or action is
received by the Acquirors describing in detail the facts and circumstances with
respect to the subject matter of such claim or action on or prior to the 30th
day after the date on which the representation or warranty on which such claim
or action is based ceases to survive as set forth in Section 9.01, and such
claim or action arose on or prior to the date such representation or warranty
ceased to survive, in which case such representation or warranty will survive as
to such claim until such claim has been finally resolved.
(b) The indemnification obligations of the Acquirors pursuant to
Section 9.03(a)(i) and (a)(ii) shall not be effective until the aggregate dollar
amount of all Losses that would otherwise be indemnifiable pursuant to this
Section 9.03 exceeds the Threshold Amount, and then only to the extent such
aggregate amount exceeds the Threshold Amount. The indemnification obligations
of the Acquirors pursuant to Section 9.03(a)(i) shall be effective only until
the dollar amount paid in respect of the Losses indemnified against under
Section 9.03(a)(i) aggregates the Maximum Amount. For purposes of this Section
9.03(b), in computing such individual or aggregate amounts of claims, the amount
of each claim shall be deemed to be an amount net of any insurance proceeds and
any indemnity, contribution or other similar payment actually recovered by THCI
Indemnified Parties from any third party with respect thereto.
(c) Payments by the Acquirors pursuant to Section 9.03(a) shall be
limited to the amount of any liability or damage that remains after deducting
therefrom any insurance proceeds and any indemnity, contribution or other
similar payment actually recovered by THCI Indemnified Parties from any third
party with respect thereto.
(d) A THCI Indemnified Party shall give the Acquirors written notice
of any claim, assertion, event or proceeding by or in respect of a third party
as to which such THCI Indemnified Party may request indemnification hereunder or
as to which the Threshold Amount may be applied as soon as is practicable and in
any event within 30 days of the time that such THCI Indemnified Party learns of
such claim, assertion, event or proceeding; provided, however, that the failure
to so notify the Acquirors shall not affect rights to indemnification hereunder
except to the extent that the Acquirors are actually prejudiced by such failure.
The Acquirors shall have the right to direct, through counsel of its own
choosing, the defense or settlement of any such claim or proceeding at its own
expense. If the Acquirors elects to assume the defense of any such claim or
proceeding, the Acquirors shall consult with the THCI Indemnified Party, the
THCI Indemnified Party may participate in such
<PAGE>
69
defense, but in such case the expenses of the THCI Indemnified Party shall be
paid by the THCI Indemnified Party. The THCI Indemnified Party shall provide the
Acquirors with access to its records and personnel relating to any such claim,
assertion, event or proceeding during normal business hours and shall otherwise
cooperate with the Acquirors in the defense or settlement thereof, and the
Acquirors shall reimburse the THCI Indemnified Party for all the reasonable out-
of-pocket expenses of such THCI Indemnified Party in connection therewith. If
the Acquirors elect to direct the defense of any such claim or proceeding, the
THCI Indemnified Party shall not pay, or permit to be paid, any part of any
claim or demand arising from such asserted liability, unless the Acquirors
consent in writing to such payment or unless the Acquirors, subject to the last
sentence of this Section 9.03(d), withdraws from the defense of such asserted
liability, or unless a final judgment from which no appeal may be taken by or on
behalf of the Acquirors is entered against the THCI Indemnified Party for such
liability. If the Acquirors fail to defend or if, after commencing or
undertaking any such defense, the Acquirors fail to prosecute or withdraws from
such defense, the THCI Indemnified Party shall have the right to undertake the
defense or settlement thereof, at the Acquirors' expense. If the THCI
Indemnified Party assumes the defense of any such claim or proceeding pursuant
to this Section 9.03(d) and proposes to settle such claim or proceeding prior to
a final judgment thereon or to forego appeal with respect thereto, then such
THCI Indemnified Party shall give the Acquirors prompt written notice thereof
and the Acquirors shall have the right to participate in the settlement or
assume or reassume the defense of such claim or proceeding.
(e) THCI hereby acknowledges and agrees that, except as provided in
Section 12.12, from and after each Closing, its sole and exclusive remedy with
respect to any and all claims relating to the Properties, Partnership Interests
and other assets transferred at such Closing shall be pursuant to the
indemnification provisions set forth in this Article IX and in Articles VI and
VII; it being understood that THCI shall retain all of its other rights and
remedies under this Agreement with respect to any and all Properties,
Partnership Interests and other assets not transferred under this Agreement on
or prior to such Closing. In furtherance of the foregoing and except as
specified therein, THCI hereby waives, to the fullest extent permitted under
applicable Law, any and all rights, claims and causes of action relating to the
subject matter of this Agreement that they may have against the Acquirors
arising under or based upon any Law (including, without limitation, any such
rights, claims or causes of action arising under or based upon common law or
otherwise).
(f) Except as set forth in this Agreement, the Acquirors are not
making any representation, warranty, covenant or agreement with respect to the
matters contained herein. Anything herein to the contrary notwithstanding, no
breach of any representation, warranty, covenant or agreement contained herein
shall give rise to any right on the part of THCI, after the consummation of the
transactions contemplated by this Agreement, to rescind this Agreement or any of
the transactions contemplated hereby.
<PAGE>
70
(g) The Acquirors shall have no liability under any provision of this
Agreement for and in no event shall the Threshold Amount be applied to any
consequential damages. THCI shall take all reasonable steps to mitigate Losses
for which indemnification may be claimed pursuant to this Agreement upon and
after becoming aware of any event that could reasonably be expected to give rise
to any such Losses.
ARTICLE X
TERMINATION, AMENDMENT AND WAIVER
SECTION 10.01. Termination. This Agreement may be terminated:
(a) at any time, by the mutual written consent of THCI and the
Acquirors; or
(b) by either THCI or the Acquirors, if the Initial Closing shall not
have occurred prior to September 30, 1998; provided, however, that the
right to terminate this Agreement under this Section 10.01(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the
failure of the Initial Closing to occur prior to such date.
Time shall be of the essence for the purposes of this Section 10.01.
SECTION 10.02. Effect of Termination. In the event of
termination of this Agreement as provided in Section 10.01, this Agreement shall
forthwith become void and there shall be no liability on the part of any party
hereto except (a) as set forth in Sections 3.16, 4.06, 5.04 and 12.01 and (b)
nothing herein shall relieve either party from liability for any willful breach
hereof.
SECTION 10.03. Waiver. At any time prior to the Closing, the
Acquirors and THCI hereto may (a) extend the time for the performance of any of
the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties of the other party contained
herein or in any document delivered by the other party pursuant hereto or (c)
waive compliance with any of the agreements of the other party or conditions to
its own obligations contained herein. Any such extension or waiver shall be
valid only if set forth in an instrument in writing signed by the party to be
bound thereby. Waiver of any term or condition of this Agreement by a party
shall not be construed as a waiver of any subsequent breach or waiver of the
same term or condition by such party, or a waiver of any other term or condition
of this Agreement by such party.
<PAGE>
71
ARTICLE XI
CASUALTY AND CONDEMNATION
SECTION 11.01. Casualty. In the event of any damage or destruction
with respect to any Property, (a) the Acquirors may not exclude such Property
(or Partnership Interest, if applicable) from the assets being purchased by the
Acquirors hereunder; (b) the Adjusted Allocable Purchase Price for such Property
or Partnership Interest shall not be adjusted; and (c) THCI shall assign to the
Acquirors at the Applicable Closing all insurance proceeds or awards received by
THCI in respect of such damage or destruction (and any rights to receive same)
net of any costs incurred by THCI in obtaining such proceeds or awards or used
by THCI to rebuild or protect the Property and shall pay to the Acquirors the
amount of any deductible under such insurance policy; provided that in the case
--------
of a casualty where the cost to repair or rebuild, as reasonably estimated by
THCI, exceeds 25% of the Allocated Purchase Price applicable to such Property,
the Acquirors may, at their sole option at any time within 30 days following
notice from THCI of such estimated cost, elect not to purchase the Property.
SECTION 11.02. Condemnation. In the event of any condemnation with
respect to any Property, (a) the Acquirors may not exclude such Property (or
Partnership Interest, if applicable) from the assets being purchased by the
Acquirors hereunder; (b) the Adjusted Allocable Purchase Price for such Property
or Partnership Interest shall not be adjusted; and (c) THCI shall assign to the
Acquirors at the Applicable Closing all condemnation proceeds or awards received
by THCI in respect of such condemnation (and any rights to receive same) net of
any costs incurred by THCI in obtaining such proceeds or awards or used by THCI
to protect the Property or to integrate the balance of the Property into a
functional unit; provided that in the case of a condemnation where the value of
--------
the portion of the Property so taken is greater than 25% of the Allocated
Purchase Price applicable to such Property, the Acquiror may, at its sole option
at any time written 30 days following notice from THCI of such taking, elect not
to purchase the Property.
ARTICLE XII
GENERAL PROVISIONS
SECTION 12.01. Expenses. Except as provided in Section 7.01, all
costs and expenses, including, without limitation, fees and disbursements of
counsel, financial advisors and accountants, incurred in connection with this
Agreement and the transactions
<PAGE>
72
contemplated hereby shall be paid by the party incurring such costs and
expenses, whether or not the Initial Closing shall have occurred.
SECTION 12.02. Notices. (a) All notices and other communications
given or made pursuant hereto or pursuant to any Ancillary Agreement shall,
subject to Section 12.02(b), be deemed to have been duly given or made upon
receipt or refusal of notice and shall be in writing and shall be sent by an
overnight courier service that provides proof of receipt or telecopied to the
parties at the following addresses (or at such other address for a party as
shall be specified by like notice):
(i) if to THCI:
TrizecHahn Centers Inc.
c/o TrizecHahn Corporation
BCE Place, 181 Bay Street
Suite 3900, Box 800
Toronto, Ontario M5J 2T3
Canada
Telecopy No.: (416) 364-5491
Attention: General Counsel
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Telecopy No.: (212) 848-7179
Attention: Bonnie Greaves, Esq.
(ii) if to the Acquirors:
The Rouse Company
10275 Little Patuxent Parkway
Columbia, Maryland 21044-3456
Telecopy No.: (410) 992-6392
Attention: Bruce Rothschild, Esq.
General Counsel
and
<PAGE>
73
Westfield America, Inc.
c/o Westfield Corporation, Inc.
11601 Wilshire Blvd., 12/th/ Floor
Los Angeles, California 90025-1748
Telecopy No.: (310) 478-8776
Attention: Irv Hepner, Esq.
General Counsel
with copies to:
Debevoise & Plimpton
875 Third Avenue
New York, New York 10022
Telecopy No.: (212) 909-6836
Attention: Barry Mills, Esq.
(b) If this Agreement requires the exercise of a right by notice on
or before a certain date or within a designated period, such right shall be
deemed exercised on the date of delivery to the courier service or telecopying
of the notice pursuant to which such right is exercised.
(c) Notices of changes of address shall be effective only upon
receipt.
(d) Any notices or other communications given by either Acquiror
shall be deemed given by both Acquirors and THCI shall be entitled to rely
thereon.
SECTION 12.03. Public Announcements. Except as required by Law or
the rules of any securities exchange on which the securities of either party
hereto may be traded (in which case the disclosing party shall use all
reasonable efforts to provide prior notification to the other party), no party
to this Agreement shall make any public announcement in respect of this
Agreement or the transactions contemplated hereby or otherwise communicate with
any news media without giving prior notification thereof to the other party, and
the parties shall each consult with the other as to the timing and contents of
any such announcement.
SECTION 12.04. Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 12.05. Severability. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule of
Law or public policy, all other conditions and provisions of this Agreement
shall nevertheless remain in full
<PAGE>
74
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the greatest extent possible.
SECTION 12.06. Entire Agreement. This Agreement and the Ancillary
Agreements constitute the entire agreement of the parties hereto with respect to
the subject matter hereof and supersede all prior agreements and undertakings,
both written and oral, other than the Confidentiality Agreements with respect to
the subject matter thereof and except as otherwise expressly provided herein.
SECTION 12.07. Assignment. This Agreement shall not be assigned by
operation of Law or otherwise without the express written consent of THCI and
the Acquirors (which consent may be granted or withheld in the sole discretion
of THCI on the one hand and the Acquirors, on the other hand); provided,
however, that (a) THCI may, without the consent of the Acquirors, assign this
Agreement in accordance with Section 7.05, (b) each Acquiror may assign any or
all of its rights hereunder to the other Acquiror, but no such assignment shall
relieve either Acquiror of any of its obligations hereunder and (c) any party
may assign any or all of its rights and interests hereunder to one or more of
its Affiliates, but no such assignment shall relieve such party of any of its
obligations hereunder. Each of WEA and Rouse may elect to have title to any
Property or any Partnership Interest conveyed directly to any entity which is
wholly owned or controlled by WEA or Rouse if the same would not cause THCI to
be in violation of the representation set forth in Section 3.14(b). Any action
required to be taken by THCI pursuant to this Agreement shall be deemed to be
taken if THCI causes one of its Affiliates or another Person to take such
action.
SECTION 12.08. No Third-Party Beneficiaries. This Agreement shall
be binding upon the Acquiror and THCI and shall inure to the sole benefit of the
Acquirors, THCI, and, in the case of Article IX, THCI Indemnified Parties and
the Acquirors Indemnified Parties, and their respective successors, heirs, legal
representatives and permitted assigns. Nothing herein, express or implied, is
intended to or shall confer upon any other person or entity any legal or
equitable right, benefit or remedy of any nature whatsoever under or by reason
of this Agreement.
SECTION 12.09. Amendment; Waiver. This Agreement may not be
amended or modified except by an instrument in writing signed by THCI and the
Acquiror.
<PAGE>
75
SECTION 12.10. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the Laws of the State of New York; provided,
however, that all matters related to conveying any Property shall be governed
by, and construed in accordance with, the Laws of the State in which such
Property is located. All actions and proceedings arising out of or relating to
this Agreement shall be heard and determined in any state or federal court
sitting in the City of New York, and the parties hereto hereby irrevocably
submit to the exclusive jurisdiction of such courts in any such action or
proceeding and irrevocably waive the defense of an inconvenient forum to the
maintenance of any such action or proceeding.
SECTION 12.11. Counterparts. This Agreement may be executed in one
or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original but
all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 12.12. Specific Performance. The parties hereto agree that
the remedy at law for any breach of this Agreement will be inadequate and that
any party by whom this Agreement is enforceable shall be entitled to specific
performance in addition to any other appropriate relief or remedy.
SECTION 12.13. No Recordation. The Acquirors shall not be
permitted to record this Agreement or any memorandum hereof. To the extent any
such recording is made, the Acquirors shall indemnify THCI, each THCI
Partnership and each THCI Subsidiary against any damages incurred by any of them
in connection therewith.
SECTION 12.14. Joint and Several Obligations. The obligation of
the Acquirors pursuant to this Agreement shall be joint and several.
<PAGE>
76
IN WITNESS WHEREOF, THCI and the Acquiror have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
TRIZECHAHN CENTERS INC.
By /s/ Richard Steets
------------------------------------------
Name: Richard Steets
Title: Executive Vice President
THE ROUSE COMPANY
By /s/ Robert Minutoli
------------------------------------------
Name: Robert Minutoli
Title: Senior Vice President
WESTFIELD AMERICA, INC.
By /s/ Peter S. Lowy
------------------------------------------
Name: Peter S. Lowy
Title: Co-President
<PAGE>
77
EXHIBITS
A THCI Subsidiaries and THCI Partnerships
B Special Property Provisions
1.01(a) Form of Assignment and Assumption Agreement
1.01(b) Form of Assignment of Ground Lease
1.01(c) Form of Bill of Sale
1.01(d) Excluded Computer Software
1.01(e) Form of Lease Assignment
1.01(f) Transferred Computer Software
1.01(g) Form of UTC Right of First Refusal Agreement
2.01(d)(i) Form of Initial Closing Date Notice
2.01(d)(ii) Form of Subsequent Closing Date Notice
5.01(a)(ii) Assets to be Transferred from the Management Company
5.01(a)(iii) Assets to be Transferred to the Management Company
<PAGE>
CONFIDENTIAL
THCI DISCLOSURE SCHEDULE
------------------------
This THCI Disclosure Schedule has been prepared and delivered in
accordance with the Asset Purchase Agreement, dated as of April 6, 1998 (the
"Agreement"), between TrizecHahn Centers Inc., a California corporation
("THCI"), and The Rouse Company, a Maryland corporation ("Rouse"), and Westfield
America, Inc., a Missouri corporation ("WEA" and, together with Rouse, the
"Acquirors").
Certain agreements and other matters are listed in this THCI Disclosure
Schedule for informational purposes only, notwithstanding the fact that, because
they do not rise above applicable materiality thresholds or otherwise, they are
not required to be listed herein by the terms of the Agreement. In no event
shall the listing of such agreements or other matters in this THCI Disclosure
Schedule be deemed or interpreted to broaden THCI's representations and
warranties, covenants or agreements contained in the Agreement or be taken as an
admission by THCI that such disclosure is required to be made under the terms of
any of such representations and warranties. In addition, nothing in this THCI
Disclosure Schedule shall influence the construction or interpretation of any of
the representations and warranties contained in the Agreement. The headings
contained in this THCI Disclosure Schedule are for convenience of reference only
and shall not be deemed to modify or influence the interpretation of the
information contained in this THCI Disclosure Schedule or the Agreement.
Where any information set forth in this THCI Disclosure Schedule
comprises expressions of opinion, no warranty is given as to their accuracy, but
unless otherwise stated herein, such opinions are bona fide held by THCI or, to
the best of THCI's knowledge, by such other person to whom they are attributed.
Terms defined in the Agreement and not otherwise defined in this THCI
Disclosure Schedule are used herein as defined in the Agreement.
<PAGE>
INDEX TO DISCLOSURE SCHEDULES
Section 1.01(a) Assumed Property Liabilities
Section 1.01(b) Permitted Encumbrances
Section 2.01(b)(i) Assets to be Transferred; Closings
Section 3.02 No Conflict
Section 3.03(a) Consents and Approvals
Section 3.04(b) Consents and Approvals
Section 3.04 Personal Property
Section 3.05 Litigation
Section 3.06 Compliance with laws
Section 3.07(a) Taxes
Section 3.07(b) Taxes
Section 3.08(a) Real Property
Section 3.08(b) Real Property
Section 3.08(c) Real Property
Section 3.09 Environmental, Health and Safety
Matters
Section 3.10 Insurance
Section 3.11 Financial Information
Section 3.12(a) Employee Benefit Matters
Section 3.12(b) Employee Benefit Matters
Section 3.12(c) Employee Benefit Matters
Section 3.12(d) Employee Benefit Matters
Section 3.12(e) Employee Benefit Matters
<PAGE>
Section 3.13(a) Labor Matters
Section 3.13(b) Labor Matters
Section 3.14(a) Material Contracts
Section 3.14(b) Material Contracts
Section 3.14(c) Material Contracts
Section 3.17 Rent Roll
Section 3.19 No Material Defects
Section 3.20 Participations
Section 5.01(a)(i) THCI Conduct of Business Prior to
the Initial Closing
Section 5.01(a)(vi) THCI Conduct of Business Prior to
the Applicable Closing
Section 5.01(b) THCI Conduct of Business Prior to
the Applicable Closing
Section 5.09 Partnership Interests
Section 5.10
Section 6.01(a) Employees
Section 6.03 Employee Plans
