<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
Current Report Pursuant to Section 13 or 15(d) of the Securities Act
of 1934
Date of Report (Date of Earliest Event Reported)
November 10, 1999
General Growth Properties, Inc.
(Exact name of registrant as specified in its charter)
Delaware 1-11656 42-1283895
-------- ------- ----------
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification Number)
incorporation)
110 N. Wacker Drive, Chicago, Illinois 60606
(Address of principal executive offices) (Zip Code)
(312) 960-5000
--------------
(Registrant's telephone number, including area code)
N/A
(Former name or former address, if changed since last report.)
<PAGE> 2
ONLY THOSE ITEMS AMENDED ARE REPORTED HEREIN.
The registrant hereby amends its Current Report on Form 8-K dated November 23,
1999 as follows:
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Listed below are the financial statements, proforma financial information and
exhibits filed as a part of this report:
(a) Financial Statements of Businesses acquired.
The financial statements of Oak View Mall, Baybrook Mall, East Ridge Mall, and
the combined financial statements of Alderwood Mall, Carolina Place and
Montclair Plaza as listed in the accompanying Index to Financial Statements and
Proforma Financial Information are filed as part of this Current Report on Form
8-K/A.
(b) Proforma Financial Information.
The proforma financial information of General Growth Properties, Inc. (the
"Company") listed in the accompanying Index to Financial Statements and Proforma
Financial Information is filed as part of this Current Report on Form 8-K/A.
(c) Exhibits.
See Exhibit Index attached hereto and incorporated herein by reference.
<PAGE> 3
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GENERAL GROWTH PROPERTIES, INC.
By: /s/ Bernard Freibaum
------------------------------
Bernard Freibaum
Executive Vice President and
Chief Financial Officer
Date: January 11, 2000
<PAGE> 4
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER NAME NUMBER
<S> <C> <C>
2.1 Agreement of Purchase and Sale, dated as of July 27, 1999, among Oak
View Mall Corporation, a Delaware corporation, and Oak View Mall,
L.L.C., a Delaware limited liability company**
2.2 Agreement of Purchase and Sale, dated as of July 22, 1999 between
General Growth Properties, Inc., a Delaware corporation (the "Company"),
and RREEF USA Fund-III, a California group trust.**
2.3 Operating Agreement, dated November 10, 1999, between GGP Limited
Partnership, a Delaware limited partnership, The Comptroller of the
State of New York as Trustee of the Common Retirement Fund ("NYSCRF"),
and GGP/Homart II L.L.C. a Delaware limited liability company ("GGP/
Homart II").**
2.5 Contribution Agreement dated November 10, 1999, by and between GGP
Limited Partnership, a Delaware limited partnership (the "Operating
Partnership"), and GGP/Homart II (Altamonte Mall)*
2.6 Contribution Agreement dated November 10, 1999, by and between the
Operating Partnership and GGP/Homart II (Northbrook Court)*
2.7 Contribution Agreement dated November 10, 1999, by and between the
Operating Partnership and GGP/Homart II (Natick Trust)*
2.8 Contribution Agreement dated November 10, 1999, by and between the
Operating Partnership and GGP/Homart II (Stonebriar Centre)*
2.9 Contribution Agreement dated November 10, 1999, by and between NYSCRF
and GGP/Homart II (Carolina Place)*
2.10 Contribution Agreement dated November 10, 1999, by and between NYSCRF
and GGP/Homart II (Alderwood Mall)*
2.11 Contribution Agreement dated November 10, 1999, by and between NYSCRF
and GGP/Homart II (Montclair Plaza)*
4.1 First Amendment to Rights Agreement, dated as of November 10,1999,
between the Company and Norwest Bank, Minnesota, N.A.**
4.2 Letter Agreement concerning Rights Agreement, dated November 10, 1999,
between the Operating Partnership and NYSCRF.**
</TABLE>
<PAGE> 5
EXHIBIT INDEX-CONTINUED
<TABLE>
<CAPTION>
EXHIBIT PAGE
NUMBER NAME NUMBER
<S> <C> <C>
23.1 Consent of Deloitte & Touche LLP.
23.2 Consent of Ernst & Young LLP.
</TABLE>
* In accordance with Rule 601(b)(2) of Regulation S-K, the exhibits to this
agreement and the related disclosure schedules have not been filed. The
Company agrees to furnish supplementary a copy of any such omitted exhibit
or disclosure schedule to the Securities and Exchange Commission upon
request.
** Previously filed by the Company in its Current Report on Form 8-K dated
November 23, 1999.
<PAGE> 6
INDEX TO FINANCIAL STATEMENTS AND
PROFORMA FINANCIAL INFORMATION
The following financial information is presented in accordance with Rule 3-14 of
Regulation S-X of the Securities and Exchange Commission. Accordingly, such
historical information has been audited only for the most recent fiscal year of
the applicable properties as the transactions relating to their acquisition (as
described in the registrant's Current Report on Form 8-K dated November 23,
1999) are not with related parties and the registrant, after reasonable inquiry,
is not aware of any material factors related to the properties not otherwise
disclosed that would cause the reported financial information to not be
necessarily indicative of future operating results. In addition, as the
properties will be directly or indirectly owned by entities that elect or have
elected to be treated as REITs for Federal income tax purposes, a presentation
of estimated taxable operating results is not applicable.
EASTRIDGE MALL
Statements of Revenues and Certain Expenses for the
Year Ended December 31, 1998 (Unaudited) and for the
Nine Months Ended September 30,1999 (Unaudited)......................... F-3
BAYBROOK MALL
Independent Auditors' Report............................................ F-4
Statements of Revenues and Certain Expenses for the
Year Ended December 31, 1998 and for the
Nine Months Ended September 30,1999 (Unaudited)......................... F-5
Notes to Statements of Revenues and Certain Expenses.................... F-6
OAK VIEW MALL
Independent Auditors' Report............................................ F-8
Statements of Revenues and Certain Expenses for the
Year Ended December 31, 1998 and for the
Nine Months Ended September 30,1999 (Unaudited)......................... F-9
Notes to Statements of Revenues and Certain Expenses.................... F-10
F-1
<PAGE> 7
ALDERWOOD, CAROLINA PLACE AND MONTCLAIR PLAZA
Report of Independent Auditors.......................................... F-12
Combined Statements of Revenues and Certain Expenses for the
Year Ended December 31, 1998 and for the
Nine Months Ended September 30,1999 (Unaudited)......................... F-13
Notes to Combined Statements of Revenues and Certain Expenses........... F-14
GENERAL GROWTH PROPERTIES, INC.
Proforma Condensed Consolidated Statement of Operations
for the Year Ended December 31,1998 (Unaudited)......................... F-16
Notes to Proforma Condensed Consolidated Statement of
Operations for the Year Ended December 31, 1998 (Unaudited)............. F-17
Proforma Condensed Consolidated Statement of Operations for
the Nine Months Ended September 30, 1999 (Unaudited).................... F-21
Notes to Proforma Condensed Consolidated Statement of
Operations for the Nine Months Ended September 30, 1999 (Unaudited)..... F-22
Proforma Condensed Consolidated Balance Sheet as of
September 30, 1999 (Unaudited).......................................... F-25
Notes to Proforma Condensed Consolidated Balance Sheet as of
September 30, 1999 (Unaudited).......................................... F-26
F-2
<PAGE> 8
EAST RIDGE MALL
STATEMENTS OF REVENUE AND CERTAIN EXPENSES
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, 1999 DECEMBER 31, 1998
------------------ -----------------
<S> <C> <C>
Revenue:
Rental $ 5,846,312 $ 7,273,197
Tenant reimbursement and other 4,197,089 5,469,154
----------- -----------
Total revenue 10,043,401 12,742,351
----------- -----------
Expenses:
Utilities 819,864 1,095,517
Maintenance, taxes and other property operating 2,717,753 4,053,479
Promotional and other expenses 445,209 539,232
----------- -----------
Total expenses 3,982,826 5,688,228
----------- -----------
Revenue in excess of Certain Expenses $ 6,060,575 $ 7,054,123
=========== ===========
</TABLE>
F-3
<PAGE> 9
INDEPENDENT AUDITORS' REPORT
To the Stockholders of RREEF USA Fund - III:
We have audited the statement of revenues and certain expenses of Baybrook Mall
(owned by RREEF USA Fund - III) for the year ended December 31, 1998. This
financial statement is the responsibility of RREEF USA Fund - III's management.
Our responsibility is to express an opinion on the financial statement based on
our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission (for inclusion in the filing of Form 8-K/A of General Growth
Properties, Inc. as a result of the acquisition of this property). Material
amounts, described in Note 1 to the statement of revenues and certain expenses,
that would not be comparable to those resulting from future operations of the
acquired property are excluded, and the statement is not intended to be a
complete presentation of the acquired property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenues and certain expenses of Baybrook Mall for
the year ended December 31, 1998 in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Chicago, Illinois
October 28, 1999
F-4
<PAGE> 10
BAYBROOK MALL
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1998 AND THE
NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
- -------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1999 1998
(UNAUDITED)
REVENUES:
Minimum rent $ 7,211,672 $ 9,384,649
Operating expense recoveries 4,324,332 5,908,181
Percentage rent 410,850 582,687
Other income 442,982 868,750
----------- -----------
Total revenues 12,389,836 16,744,267
CERTAIN EXPENSES:
Property operating 2,829,328 3,912,431
Real estate taxes 1,501,355 1,928,170
General and administrative 375,799 514,707
----------- -----------
Total certain expenses 4,706,482 6,355,308
----------- -----------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 7,683,354 $10,388,959
=========== ===========
See notes to statements of revenues and certain expenses.
F-5
<PAGE> 11
BAYBROOK MALL
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1998 AND THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Baybrook Mall, a shopping center located in Friendswood, Texas, was
acquired by Baybrook Mall, L.P. a Delaware limited partnership and
wholly-owned subsidiary of General Growth Properties, Inc., on October 28,
1999. The statements of revenues and certain expenses include information
related to the operations of Baybrook Mall for the period from January 1,
1998 through December 31, 1998 and January 1, 1999 through September 30,
1999 (unaudited) as recorded by the previous owner, RREEF USA Fund - III.
The accompanying historical financial statement information is presented
to comply with Rule 3-14 of Regulation S-X of the Securities and Exchange
Commission. Accordingly, the financial statements are not representative
of the actual operations for the year ended December 31, 1998 and the nine
months ended September 30, 1999 (unaudited) as certain expenses, which may
not be comparable to the expenses expected to be incurred in the future
operations of the acquired property, have been excluded. Expenses excluded
consist of interest, depreciation, amortization, and other costs not
directly related to the future operations of the acquired property.
MANAGEMENT'S USE OF ESTIMATES - The preparation of the statements requires
management to make estimates and assumptions that affect the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
RENTAL INCOME - Minimum rents are recognized on the accrual basis as
earned, which approximates the straight-line basis. Other lease rental
revenue, such as adjustments based on the Consumer Price Index, charges to
tenants for their share of operating expenses, and percentage rents based
on sales, is recognized when earned.
PROPERTY OPERATING EXPENSES - Property operating expenses consist
primarily of utilities, insurance, repairs and maintenance, security and
safety, cleaning, and other operating expenses.
UNAUDITED INFORMATION - In the opinion of management, the Statement
contains all the adjustments necessary, which are of a normal recurring
nature, to present fairly the revenues and certain expenses for the nine
months ended September 30, 1999. Results of interim periods are not
necessarily indicative of results to be expected for the year.
F-6
<PAGE> 12
2. OPERATING LEASES
Operating revenue is principally obtained from retail tenant rentals under
noncancelable operating leases.
Future minimum rentals under noncancelable operating leases as of December
31, 1998 are approximately as follows:
1999 $ 9,477,604
2000 9,201,882
2001 8,636,563
2002 8,244,129
2003 7,326,781
Thereafter 17,385,457
------------
Total $ 60,272,416
============
3. TRANSACTIONS WITH AFFILIATES
The property was managed by RREEF Management Company for a property
management fee paid monthly in arrears based on an annual rate of 4.0% of
tenant cash receipts. Management fees incurred in 1999 and 1998 were
$325,656 and $432,783, respectively.
F-7
<PAGE> 13
INDEPENDENT AUDITORS' REPORT
To the Stockholders of Oak View Mall Corporation:
We have audited the statement of revenues and certain expenses of Oak View Mall
(owned by Oak View Mall Corporation) for the year ended December 31, 1998. This
financial statement is the responsibility of Oak View Mall's management. Our
responsibility is to express an opinion on the financial statement based on our
audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statement is free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statement. An audit also includes
assessing the accounting principles used and the significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
The accompanying statement of revenues and certain expenses was prepared for the
purpose of complying with the rules and regulations of the Securities and
Exchange Commission (for inclusion in the filing of Form 8-K/A of General Growth
Properties, Inc. as a result of the acquisition of this property.) Material
amounts, described in Note 1 to the statement of revenues and certain expenses,
that would not be comparable to those resulting from future operations of the
acquired property are excluded, and the statement is not intended to be a
complete presentation of the acquired property's revenues and expenses.
In our opinion, the financial statement referred to above presents fairly, in
all material respects, the revenues and certain expenses of Oak View Mall for
the year ended December 31, 1998 in conformity with generally accepted
accounting principles.
Deloitte & Touche LLP
Chicago, Illinois
October 25, 1999
F-8
<PAGE> 14
OAK VIEW MALL
STATEMENTS OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1998 AND THE
NINE MONTHS ENDED SEPTEMBER 30, 1999
(UNAUDITED)
- --------------------------------------------------------------------------
SEPTEMBER 30, DECEMBER 31,
1999 1998
(UNAUDITED)
REVENUES:
Minimum rent $ 5,103,485 $ 6,714,373
Operating expense recoveries 3,397,991 4,603,473
Percentage rent 501,694 697,832
Other income 705,453 1,363,140
----------- -----------
Total revenues 9,708,623 13,378,818
CERTAIN EXPENSES:
Property operating 2,630,551 3,414,812
Real estate taxes 949,522 1,325,200
General and administrative 158,750 221,778
----------- -----------
Total certain expenses 3,738,823 4,961,790
----------- -----------
REVENUES IN EXCESS OF CERTAIN EXPENSES $ 5,969,800 $ 8,417,028
=========== ===========
See notes to statements of revenues and certain expenses.
F-9
<PAGE> 15
OAK VIEW MALL
NOTES TO STATEMENTS OF REVENUES AND CERTAIN EXPENSES
YEAR ENDED DECEMBER 31, 1998 AND THE
NINE MONTHS ENDED SEPTEMBER 30, 1999 (UNAUDITED)
1. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Oak View Mall, a regional shopping center located in Omaha, Nebraska, was
acquired on September 28, 1999 by Oak View Mall L.L.C., a Delaware limited
liability company and subsidiary of GGP Ivanhoe III, a joint venture of
General Growth Properties, Inc. The statements of revenues and certain
expenses include information related to the operations of Oak View Mall
for the period from January 1, 1998 through December 31, 1998 and January
1, 1999 through September 30, 1999 (unaudited) as recorded by the previous
owner, Oak View Mall Corporation.
The officers and directors of Oak View Mall Corporation are generally
officers of Heitman Capital Management L.L.C. ("HCM").
The accompanying historical financial statement information is presented
in conformity with Rule 3-14 of Regulation S-X of the Securities and
Exchange Commission. Accordingly, the statements are not representative of
the actual operations for the year ended December 31, 1998 and the nine
months ended September 30, 1999 (unaudited) as certain expenses, which may
not be comparable to the expenses expected to be incurred in the future
operations of the acquired property, have been excluded. Expenses excluded
consist of interest, income taxes, and depreciation, and other costs not
directly related to the future operations of the acquired property.
MANAGEMENT'S USE OF ESTIMATES - The preparation of the statements requires
management to make estimates and assumptions that affect the reported
amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
RENTAL INCOME - Minimum rents are recognized in accordance with the terms
of the related leases. This method approximates the straight-line basis.
Other lease rental revenue, such as adjustments based on the Consumer
Price Index, charges to tenants for their share of operating expenses, and
percentage rents based on sales, is recognized when earned.
LEASE CANCELLATION FEES - Lease cancellation fees are recognized as income
when the lease is terminated. Oak View Mall received lease cancellation
fees of $3,418 during the nine months ended September 30, 1999 and $85,720
during the year ended December 31, 1998.
F-10
<PAGE> 16
PROPERTY OPERATING EXPENSES - Property operating expenses consist
primarily of utilities, insurance, repairs and maintenance, security and
safety, cleaning, and other operating expenses.
UNAUDITED INFORMATION - In the opinion of management, the Statement
contains all the adjustments necessary, which are of a normal recurring
nature, to present fairly the revenues and certain expenses for the nine
months ended September 30, 1999. Results of interim periods are not
necessarily indicative of results to be expected for the year.
2. OPERATING LEASES
Operating revenue is principally obtained from tenant rentals under
noncancelable operating leases. Leasing arrangements generally provide for
contingent rentals based upon a percentage of the tenants' gross revenue
and for additional rent based on operating expenses and real estate taxes,
in addition to minimum rent.
Future minimum rentals under noncancelable operating leases as of December
31, 1998 are approximately as follows:
1999 $ 6,689,780
2000 6,866,198
2001 6,756,803
2002 4,566,591
2003 4,207,705
Thereafter 12,444,285
------------
Total $ 41,531,362
============
3. TRANSACTIONS WITH AFFILIATES
Under the terms of the property management agreement, Heitman Properties
Ltd. ("HPL"), an affiliate of HCM, performs property management services
for Oak View Mall. Management fees are payable monthly based upon 5% of
gross receipts. On April 1, 1999, management of the property was
transferred to an independent third party. Management fees paid to HPL in
1999 and 1998 were $179,309 and $655,292, respectively.
Additionally, Oak View Mall reimbursed HPL for certain direct payroll
costs related to bookkeeping, office operations, engineering, maintenance
and janitorial services.
F-11
<PAGE> 17
REPORT OF INDEPENDENT AUDITORS
The Board of Directors
General Growth Properties, Inc.
We have audited the accompanying Combined Statement of Revenue and Certain
Expenses of Alderwood Mall, Carolina Place Mall and Montclair Plaza (the
Properties) for the year ended December 31, 1998. The Combined Statement of
Revenue and Certain Expenses is the responsibility of the Properties'
management. Our responsibility is to express an opinion on the Combined
Statement of Revenue and Certain Expenses based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the Combined Statement of Revenue and Certain Expenses
is free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the Combined Statement of
Revenue and Certain Expenses. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall presentation of the Combined Statement of Revenue and
Certain Expenses. We believe that our audit provides a reasonable basis for our
opinion.
The accompanying Combined Statement of Revenue and Certain Expenses was prepared
for the purpose of complying with the rules and regulations of the Securities
and Exchange Commission, for inclusion in the Current Report on Form 8-K/A of
General Growth Properties, Inc. as described in Note 2, and is not intended to
be a complete presentation of the Properties' revenue and expenses.
In our opinion, the Combined Statement of Revenue and Certain Expenses referred
to above presents fairly, in all material respects, the revenue and certain
expenses described in Note 2 of the Properties for the year ended December 31,
1998, in conformity with generally accepted accounting principles.
Ernst & Young LLP
Chicago, Illinois
December 20, 1999
F-12
<PAGE> 18
ALDERWOOD MALL, CAROLINA PLACE MALL AND MONTCLAIR PLAZA
COMBINED STATEMENTS OF REVENUE AND CERTAIN EXPENSES
<TABLE>
<CAPTION>
JANUARY 1, 1999 THROUGH
YEAR ENDED SEPTEMBER 30, 1999
DECEMBER 31, 1998 (UNAUDITED)
----------------- -----------
<S> <C> <C>
REVENUES:
Rental income $33,618,187 $26,650,640
Other charges to tenants 17,630,006 13,703,780
Percentage rent 1,101,496 852,823
Other income 1,523,865 734,928
----------- -----------
Total revenue 53,873,554 41,942,171
----------- -----------
EXPENSES:
Real estate taxes 3,500,472 2,931,372
General operating 3,325,614 1,739,140
Utilities 2,575,428 1,988,018
Advertising 2,881,522 1,871,987
Repairs and maintenance 4,829,729 3,392,134
Management fees 1,483,076 1,166,837
----------- -----------
Total expenses 18,595,841 13,089,488
----------- -----------
REVENUE IN EXCESS OF CERTAIN EXPENSES $35,277,713 $28,852,683
=========== ===========
</TABLE>
See accompanying notes.
F-13
<PAGE> 19
ALDERWOOD MALL, CAROLINA PLACE MALL AND MONTCLAIR PLAZA
NOTES TO STATEMENTS OF REVENUE AND CERTAIN EXPENSES
1. BUSINESS
The accompanying combined statements of revenue and certain expenses relate to
the operations of Alderwood Mall, Carolina Place Mall and Montclair Plaza (the
"Properties"), three regional malls located in Lynnwood, Washington, Pineville,
North Carolina and Montclair, California, respectively. The Properties were
acquired on November 30, 1999 by GGP/Homart II L.L.C., an entity controlled
jointly by General Growth Properties, Inc. and New York State Common Retirement
Fund.
At September 30, 1999 and December 31, 1998, the Properties were leased as
follows:
September 30, 1999 December 31, 1998
Alderwood Mall 98.5% 95.5%
Carolina Place 91.5% 90.1%
Montclair Plaza 96.8% 95.6%
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying combined statements of revenue and certain expenses were
prepared for the purpose of complying with the rules and regulations of the
Securities and Exchange Commission, for inclusion in the current report on Form
8-K/A of General Growth Properties, Inc. The statements are not representative
of the actual operations of the Properties for the periods presented nor
indicative of future operations, as certain expenses, primarily depreciation and
amortization which may not be comparable to the expenses expected to be incurred
by GGP/Homart II L.L.C. in future operations of the Properties, have been
excluded.
REVENUE AND EXPENSE RECOGNITION
Minimum rents are recognized on a straight-line basis, over the term of the
respective leases. Rental revenue based on tenant sales is recognized in the
period in which the sales occur. Revenue related to reimbursable operating
expenses is recorded in the same period as the related expenses and included in
revenues as other charges to tenants.
Expenses are recognized in the period in which they are incurred.
F-14
<PAGE> 20
USE OF ESTIMATES
The preparation of the Combined Statements of Revenue and Certain Expenses in
conformity with generally accepted accounting principles require management to
make estimates and assumptions that affect the amount reported in the statements
of revenue and certain expenses. Actual results could differ from those
estimates.
UNAUDITED INTERIM STATEMENT
The Combined Statements of Revenue and Certain Expenses for the period January
1, 1999 through September 30, 1999 ("Interim Statement") is unaudited. In the
opinion of management, the Interim Statement reflects all adjustments necessary
for fair presentation of the results of the interim period. All adjustments are
of a normal, recurring nature.
3. RENTALS
The Properties have entered into tenant leases that provide for tenants to share
in the operating expenses and real estate taxes in relation to their pro rata
basis, as defined.
4. MANAGEMENT AGREEMENTS
During the periods from January 1, 1999 to September 30, 1999 and from January
1, 1998 to December 31, 1998, Carolina Place and Montclair Plaza were managed by
third-party management companies. The management agreements provided for
management fees based on a flat rate of 3% of cash receipts, as defined, for
Carolina Place and a flat rate of 3.5% of net rental receipts, as defined, for
Montclair Plaza. Alderwood Mall was managed by General Growth Management, Inc.,
a related party. Management fees incurred with respect to General Growth
Management, Inc. are 4.5% of minimum and percentage rents collected and 10% of
temporary rental income ($419,273 and $559,378 for January 1, 1999 through
September 30, 1999 and the year ended December 31, 1998, respectively).
F-15
<PAGE> 21
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA--UNAUDITED)
<TABLE>
<CAPTION>
1999 Proforma
Historical Fiscal 1998 Adjustments and Fiscal
General Growth Proforma Proforma Acquisitions 1998
Properties, Adjustments Fiscal Previously Proforma Eastridge Baybrook
Inc.(1) and Acquisitions 1998(1) Reported(2) As Reported(2) Acquisition Acquisition
------- ---------------- ------- ----------- -------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Total revenues $426,576 $ 87,525 $514,101 $ 99,248 $ 613,349 $ -- $ 16,744
Expenses:
Property operating 147,496 31,704 179,200 28,782 207,982 -- 6,355
Management fees 4,288 739 5,027 200 5,227 -- --
Depreciation and amortization 75,227 17,180 92,407 19,755 112,162 -- --
-------- -------- -------- -------- --------- ------- --------
Total Expenses 227,011 49,623 276,634 48,737 325,371 -- 6,355
-------- -------- -------- -------- --------- ------- --------
Operating Income 199,565 37,902 237,467 50,511 287,978 -- 10,389
Interest expense, net (109,840) (38,766) (148,606) (34,918) (183,524) -- --
Equity in net income/(loss)
unconsolidated affiliates:
GGP/Homart, Inc. 17,865 -- 17,865 5,512 23,377 -- --
GGP/Homart II, Inc. -- -- -- -- -- -- --
Property Joint Ventures 9,837 (69) 9,768 -- 9,768 3,598 --
General Growth Management, Inc. (16,635) 1,697 (14,938) -- (14,938) -- --
-------- -------- -------- -------- --------- ------- --------
Income before minority interest 100,792 764 101,556 21,105 122,661 3,598 10,389
Minority interest in
Operating Partnership (29,794) 164 (29,630) (1,913) (31,543) -- --
-------- -------- -------- -------- --------- ------- --------
Net income 70,998 928 71,926 19,192 91,118 3,598 10,389
Convertible preferred
stock dividends(3) (13,433) (11,036) (24,469) -- (24,469) -- --
-------- -------- -------- -------- --------- ------- --------
Net income available
to common stockholders $ 57,565 $(10,108) $ 47,457 $ 19,192 $ 66,649 $ 3,598 $ 10,389
======== ======== ======== ======== ========= ======= ========
Weighted average shares outstanding - basic
Weighted average shares outstanding - diluted
Earnings per share - basic
Earnings per share - diluted
<CAPTION>
GGP/Homart II Fiscal 1998
Oak View Acquisition of Proforma for Current
Acquisition Properties Adjustments 8-K/A
----------- ---------- ----------- -----------
<S> <C> <C> <C> <C>
Total revenues $ -- $ -- $ (68,987) (A) $ 561,106
Expenses:
Property operating -- -- (22,808) (A) 191,529
Management fees -- -- 2,919 (B) 8,146
Depreciation and amortization -- -- (9,256) (C) 102,906
------- -------- --------- ---------
Total Expenses -- -- (29,145) 302,581
------- -------- --------- ---------
Operating Income -- -- (39,842) 258,525
Interest expense, net -- -- (4,014) (D) (179,510)
Equity in net income/(loss)
unconsolidated affiliates:
GGP/Homart, Inc. -- -- -- 23,377
GGP/Homart II, Inc. -- 17,639 1,826 (E) 19,465
Property Joint Ventures 4,293 -- (6,608) (F) 11,051
General Growth Management, Inc. -- -- 4,306 (G) (10,632)
------- -------- --------- ---------
Income before minority interest 4,293 17,639 (36,304) 122,276
Minority interest in
Operating Partnership -- -- (7,158) (H) (38,701)
------- -------- --------- ---------
Net income 4,293 17,639 (43,462) 83,575
Convertible preferred
stock dividends(3) -- -- -- (24,469)
------- -------- --------- ---------
Net income available
to common stockholders $ 4,293 $ 17,639 $ (43,462) $ 59,106
======= ======== ========= =========
Weighted average shares outstanding - basic 48,793,658
Weighted average shares outstanding - diluted 48,985,205
Earnings per share - basic $ 1.21
Earnings per share - diluted $ 1.21
</TABLE>
(1) Amounts are from the statements included in the Company's Form 10-K for the
year ended December 31, 1998.
(2) Amounts are from the statements included in the Company's Form 8-K dated
July 12, 1999.
(3) Proforma earnings have been reduced by proforma dividends on the 7.25%
Convertible Preferred Stock.
F-16
<PAGE> 22
NOTES TO PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1998
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
NOTE 1 PROFORMA BASIS OF PRESENTATION
This unaudited pro forma condensed consolidated statement of operations is
presented as if (i) the acquisitions made in 1998 (Southwest Plaza, Northbrook
Court, Coastland Mall, the MEPC Portfolio, the USPPI Portfolio, Altamonte Mall,
Spring Hill Mall, Pierre Bossier Mall and Mall St. Vincent), (ii) the
acquisitions made in 1999 (The Crossroads Mall, the Ala Moana Properties, the
Baybrook Mall, and the acquisition of the Oak View Mall and the Eastridge Mall
by GGP/Ivanhoe III, Inc. ("GGP/Ivanhoe III"), the formation of GGP/Homart II
L.L.C. ("GGP/Homart II"), and the additional interest in GGP/Homart, Inc.
("GGP/Homart"), due to the exchange of interests for common stock) and (iii) the
use of the net proceeds of the offering of Depositary Shares in 1998 and a
majority of the approximately $332,225 of net proceeds from a public offering of
10,000,000 shares of common stock in 1999 to fund the acquisitions and for other
working capital purposes, had all occurred on January 1, 1998. In management's
opinion, all adjustments necessary to reflect these transactions have been
included. Such pro forma statement of operations is based upon the historical
information of General Growth Properties, Inc. and its owned or controlled
affiliates ("the Company"), excluding the non-recurring gains on sale and
extraordinary items and the historical information of each of the
above-mentioned assets for the year ended December 31, 1998. This unaudited pro
forma statement of operations is not necessarily indicative of what actual
results of the Company would have been assuming such transactions had been
completed as of January 1, 1998 nor does it purport to represent the results of
operations for future periods.
NOTE 2 ACQUISITIONS AND OTHER PRO FORMA TRANSACTIONS
On April 2, 1998, the Company acquired Southwest Plaza located in Denver,
Colorado. On May 8, 1998, the Company completed the acquisition of Northbrook
Court Shopping Center located in Northbrook (Chicago), Illinois. The aggregate
purchase price for Southwest Plaza and Northbrook Court was approximately
$261,000, including approximately $149,000 of assumed debt.
On June 2, 1998, the Company acquired the U.S. retail property portfolio (the
"MEPC Portfolio") of MEPC plc, a United Kingdom based real estate company
("MEPC"), through the purchase of the stock of the three U.S. subsidiaries of
MEPC ("MEPC U.S. Subsidiaries") that directly or indirectly owned the MEPC
Portfolio. The Company acquired the MEPC Portfolio for approximately $871,000
(less certain adjustments for tenant allowances, construction costs, MEPC U.S.
Subsidiary liabilities and other items). The Company borrowed approximately
$830,000 to finance the purchase price for the stock, which was paid in cash at
closing. The MEPC Portfolio consists of eight enclosed mall shopping centers:
Apache Mall in Rochester, Minnesota; The Boulevard Mall in Las Vegas, Nevada;
Cumberland Mall in Atlanta, Georgia; McCreless Mall in San Antonio, Texas;
Northridge Fashion Center in Northridge (Los Angeles),
F-17
<PAGE> 23
California; Regency Square Mall in Jacksonville, Florida; Riverlands Shopping
Center in LaPlace, Louisiana and Valley Plaza Mall in Bakersfield, California.
On July 21, 1998, the Company acquired Altamonte Mall in Altamonte Springs
(Orlando), Florida. The aggregate consideration paid for the Altamonte Mall was
$169,000 (subject to prorations and certain adjustments), part of which was paid
by the payoff of approximately $24,000 of indebtedness assumed at acquisition
from cash funded from the Company's line of credit facility and the balance of
which was paid by the issuance of 3,683,143 redeemable units of limited
partnership interest ("Units") in General Growth Properties Limited Partnership
("the Operating Partnership").
On July 23, 1998, effective as of June 30, 1998, GGP Ivanhoe III acquired the
U.S. Prime Property, Inc. ("USPPI") portfolio through a merger of a wholly-owned
subsidiary of GGP Ivanhoe III into USPPI. The common stock of GGP Ivanhoe III,
which has elected to be taxed as a REIT, is owned 51% by the Company and 49% by
an affiliate of Ivanhoe, Inc. of Montreal, Quebec, Canada ("Ivanhoe"). The
aggregate consideration paid pursuant to the merger agreement was approximately
$625,000 (less certain adjustments, including a credit of approximately $64,000
for outstanding mortgage indebtedness and accrued interest thereon as well as
credits for tenant allowances, construction costs, commissions, due diligence
items and certain miscellaneous items). The acquisition was financed with a
$392,000 interim loan, which became due July 1, 1999 (subsequently extended and
repaid in October 1999), and capital contributions from the Company and the
joint venture partner in proportion to their respective stock ownership.
Pursuant to the GGP Ivanhoe III stockholders' agreement, the Company has
contributed approximately $91,290 to GGP Ivanhoe III (less certain interest and
other credits). The Company's capital contributions were funded primarily from
proceeds from the Company's line of credit facility. The properties acquired
include: Landmark Mall in Alexandria, Virginia; Mayfair Mall and adjacent office
buildings in Wauwatosa (Milwaukee), Wisconsin; Meadows Mall in Las Vegas,
Nevada; Northgate Mall in Chattanooga, Tennessee; Oglethorpe Mall in Savannah,
Georgia; and Park City Center in Lancaster, Pennsylvania.
On September 3, 1998, the Company acquired Pierre Bossier Mall in Bossier City
(Shreveport), Louisiana. The aggregate consideration paid for the Pierre Bossier
Mall was approximately $52,700 (subject to prorations and certain adjustments)
which was paid in the form of approximately $10,000 in cash (funded from the
Company's line of credit facility), a new mortgage loan (obtained from an
independent third party) of approximately $42,000 and the assumption of
approximately $700 of existing debt.
On September 15, 1998, the Company acquired Spring Hill Mall in West Dundee
(Chicago), Illinois. The aggregate consideration paid by the Company was
approximately $124,000 (subject to prorations and certain adjustments) which was
paid in the form of approximately $32,000 in cash (through the Company's line of
credit facility) and a new ten-year fixed rate $92,000 mortgage.
On September 18, 1998, the Company acquired Coastland Center in Naples, Florida,
for approximately $114,500 in cash (subject to prorations and certain
adjustments). The aggregate consideration paid was borrowed under the Company's
line of credit facility.
On October 21, 1998, the Company acquired Mall St. Vincent in Shreveport,
Louisiana. The aggregate consideration paid for Mall St. Vincent was $26,400
(subject to prorations and certain
F-18
<PAGE> 24
adjustments) which was paid by issuing 200,052 redeemable Units in the Operating
Partnership (of which 88,871 were immediately redeemed for cash, funded by the
Company's line of credit facility, upon demand of the holders of such Units) and
by assuming approximately $19,200 of debt.
On January 11, 1999, the Company acquired a 100% ownership interest in the
Crossroads Mall in Kalamazoo, Michigan. The aggregate purchase price was
approximately $68,000 (subject to prorations and certain adjustments), which was
funded primarily from a new $45,000 mortgage loan.
On July 30, 1999, the Company acquired a 100% interest in the Ala Moana
Properties in Honolulu, Hawaii. The price paid to the seller was $810,000 (less
certain closing adjustments, including a credit for the cost to complete an
ongoing expansion project), and was funded with the proceeds of the issuance of
$500,000 of commercial mortgage-backed securities and a majority of the proceeds
from the Company's July 1999 public offering of 10,000,000 shares of Common
Stock.
Effective as of September 28, 1999, GGP Ivanhoe III acquired, through its
wholly-owned subsidiary, Oak View Mall in Omaha, Nebraska from an unrelated
third party. On December 22, 1999, GGP Ivanhoe III acquired, through its
wholly-owned subsidiary, Eastridge Mall in San Jose, California from an
unrelated third party. The aggregate purchase price of the two properties was
approximately $160,000 which was financed with a $83,000 ten-year mortgage loan,
approximately $30,000 of short-term financing and capital contributions from the
Company and Ivanhoe in proportion to their respective stock ownership in GGP
Ivanhoe III. The Company's capital contributions were funded primarily from
proceeds from the Company's Credit Facility.
On October 28, 1999, the Company acquired Baybrook Mall in Houston, Texas. The
aggregate consideration paid by the Company was approximately $133,000 (subject
to pro-rations and certain adjustments), which was paid in cash (raised
primarily through new long-term financing on other previously unsecured
properties), and a new 10-year $95,000 non-recourse loan.
During 1999, the Company received notices from three of the institutional
investors in GGP/Homart (holding an approximate 11.08% total interest in
GGP/Homart) that they desired to exercise the exchange rights available to them
under the GGP/Homart stockholders' agreement. The Company satisfied the exercise
of such exchange rights by issuing 2,603,291 shares of Common Stock, thereby
increasing its ownership interest in GGP/Homart from approximately 38.2% in 1998
to 50% in 1999.
On November 10, 1999, the Company, together with the joint venture partner in
GGP/Homart formed GGP/Homart II L.L.C.("GGP/Homart II"). GGP/Homart II is 50%
owned by the Company. In connection with the formation of GGP/Homart II, the
Company contributed to GGP/Homart II its 100% interests in Stonebriar Centre in
Frisco (Dallas), Texas (currently under construction), Altamonte Mall in
Altamonte Springs (Orlando), Florida, Natick Mall in Natick (Boston),
Massachusetts and Northbrook Court in Northbrook (Chicago), Illinois. The
Company's joint venture partner contributed its 100% interests in Alderwood Mall
in Lynnwood (Seattle), Washington; Carolina Place in Charlotte, North Carolina;
and Montclair Plaza in Los Angeles, California to GGP/Homart II.
F-19
<PAGE> 25
NOTE 3 PRO FORMA ADJUSTMENTS
The following adjustments pertain to the Eastridge Mall, Oak View Mall, Baybrook
Mall and GGP/Homart II transactions.
(A) REVENUES AND PROPERTY OPERATING EXPENSES
The revenue and property operating expenses adjustments reflect that the
operations for the properties contributed to GGP/Homart II by the Company at
formation are presented on the equity method as described in adjustment (E)
below.
(B) MANAGEMENT FEES
The management fee adjustment represents the management costs charged by General
Growth Management, Inc. (including an adjustment to fees not reflected in the
July 12, 1999 information previously reported) and reflects a reduction for the
properties contributed to GGP/Homart II.
(C) DEPRECIATION AND AMORTIZATION
Depreciation and amortization is adjusted to include amounts for the entire year
of 1998 for the acquisitions made in 1999 not described in the Company's July
12, 1999 8-K. In addition, depreciation and amortization is adjusted for the
properties contributed to GGP/Homart II.
(D) INTEREST EXPENSE
Interest expense increased due to a combination of debt assumption and increased
borrowings. In connection with the 1998 acquisitions described above, the
Company assumed $69,000 of mortgage debt bearing interest at the weighted
average rate of 8.64%. The Company also issued approximately $1,137,400 of
secured and unsecured borrowings to fund the cash portion of the acquisitions.
The pro forma interest expense on new borrowings was calculated using a weighted
average interest rate of 6.64%. In connection with the 1999 acquisitions and
common stock issuance, the Company issued approximately $655,000 of net secured
and unsecured borrowings to fund the cash portion of the acquisitions. The pro
forma interest expense on new borrowing was calculated using a weighted average
interest rate of 6.39%. In addition, interest expense is reduced for the
properties contributed by the Company to GGP/Homart II.
(E) EQUITY IN GGP/HOMART II
The Company's equity in the proforma net income of GGP/Homart II is adjusted to
reflect the Company's share of the proforma operations of the properties
contributed by the Company and the Company's joint venture partner.
F-20
<PAGE> 26
(F) EQUITY IN PROPERTY JOINT VENTURES
Reflects the depreciation and management fee expense of the properties acquired
by GGP/Ivanhoe III.
(G) EQUITY IN GENERAL GROWTH MANAGEMENT, INC.
Reflects the increase in General Growth Management, Inc. net income for
management fees for fees not previously reported and as the acquisitions of the
Eastridge Mall, Oak View Mall and the properties acquired through GGP/Homart II
were acquired with joint venture partners.
(H) MINORITY INTEREST
The pro forma income statement has been adjusted to reflect the allocation of
earnings to the minority interest.
(I) WEIGHTED AVERAGE SHARES
The pro forma weighted average shares outstanding has been adjusted to reflect
the additional shares of stock outstanding due to the exchange of the interest
of three investors in GGP/Homart for 2,603,291 shares of Common Stock and the
10,000,000 shares of Common Stock issued in the July 1999 public offering.
F-21
<PAGE> 27
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA--UNAUDITED)
<TABLE>
<CAPTION>
Historical Previously Reported
General Growth 1999 Eastridge Baybrook Oak View
Properties, Inc.(1) Acquisitions Acquisition Acquisition Acquisition
------------------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Total revenues $426,203 $ 54,152 $ -- $ 12,389 $ --
Expenses:
Property operating 139,854 14,982 -- 4,706 --
Management fees 4,389 1,886 -- -- --
Depreciation & amortization 80,050 10,532 -- -- --
-------- -------- -------- -------- --------
Total Expenses 224,293 27,400 -- 4,706 --
Operating Income 201,910 26,752 -- 7,683 --
Interest expense, net (120,121) (16,782) -- -- --
Equity in unconsolidated
affiliates:
GGP/Homart, Inc. 12,236 694 -- -- --
GGP/Homart II 0 -- -- -- --
Property Joint Ventures 7,102 -- 3,091 -- 3,045
General Growth Management, Inc. (7,581) 227 -- -- --
-------- -------- -------- -------- --------
Income before minority interest 93,546 10,891 3,091 7,683 3,045
Minority interest in Operating Partnership (19,996) -- -- -- --
-------- -------- -------- -------- --------
Net income 73,550 10,891 3,091 7,683 3,045
Convertible preferred stock dividends (18,351) -- -- -- --
-------- -------- -------- -------- --------
Net income available
to common stockholders $ 55,199 $ 10,891 $ 3,091 $ 7,683 $ 3,045
======== ======== ======== ======== ========
Weighted average shares outstanding - basic
Weighted average shares outstanding - diluted
Earnings per share-basic
Earnings per share-diluted
<CAPTION>
GGP/Homart II Total
Acquisition Proforma Proforma
of Properties Adjustments Combined
------------- ----------- --------
<S> <C> <C> <C>
Total revenues $ -- $(50,938) (A) $441,806
Expenses:
Property operating -- (15,667) (A) 143,875
Management fees -- (150) (B) 6,125
Depreciation & amortization -- (7,300) (C) 83,282
-------- -------- --------
Total Expenses -- (23,117) 233,282
Operating Income -- (27,821) 208,524
Interest expense, net -- 4,025 (D) (132,878)
Equity in unconsolidated
affiliates:
GGP/Homart, Inc. -- -- 12,930
GGP/Homart II 14,427 3,456 (E) 17,883
Property Joint Ventures -- (4,907) (F) 8,331
General Growth Management, Inc. -- 2,409 (G) (4,945)
-------- -------- --------
Income before minority interest 14,427 (22,838) 109,845
Minority interest in Operating Partnership -- (5,373) (H) (25,369)
-------- -------- --------
Net income 14,427 (28,211) 84,476
Convertible preferred stock dividends -- -- (18,351)
-------- -------- --------
Net income available
to common stockholders $ 14,427 $(28,211) $ 66,125
======== ======== ========
Weighted average shares outstanding - basic 51,651,583
Weighted average shares outstanding - diluted 51,774,656
Earnings per share-basic $ 1.28
Earnings per share-diluted $ 1.28
</TABLE>
(1) Amounts are from the statements included in the Company's Form 10-Q for the
nine months ended September 30, 1999 except that extraordinary items and
gain on sale are excluded.
F-22
<PAGE> 28
GENERAL GROWTH PROPERTIES, INC.
NOTES TO PROFORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
NOTE 1 PROFORMA BASIS OF PRESENTATION
This unaudited pro forma condensed consolidated statement of operations is
presented as if (i) the acquisitions made in 1999 (The Crossroads Mall, the Ala
Moana Properties, and the Baybrook Mall, the acquisition of the Oak View Mall
and the Eastridge Mall by GGP/Ivanhoe III, the formation of GGP/Homart II, and
the additional interest in GGP/Homart due to the exchange of interests for
common stock) and (ii) the Company's use of a majority of the approximately
$322,225 of net proceeds from a public offering of 10,000,000 shares of common
stock to fund the acquisitions and for other working capital purposes, had all
occurred on January 1, 1999. In management's opinion, all adjustments necessary
to reflect these transactions have been included. Such pro forma statement of
operations is based upon the historical information of General Growth
Properties, Inc. excluding extraordinary items and the historical information of
each of the above-mentioned entities for the nine months ended September 30,
1999. This unaudited pro forma statement of operations is not necessarily
indicative of what actual results of General Growth Properties, Inc. would have
been assuming such transactions had been completed as of January 1, 1999 nor
does it purport to represent the results of operations for future periods.
NOTE 2 ACQUISITIONS AND OTHER PRO FORMA TRANSACTIONS
On January 11, 1999, the Company acquired a 100% ownership interest in the
Crossroads Mall in Kalamazoo, Michigan. The aggregate purchase price was
approximately $68,000 (subject to prorations and certain adjustments), which was
funded primarily from a new $45,000 mortgage loan.
On July 30, 1999, the Company acquired a 100% interest in the Ala Moana
Properties in Honolulu, Hawaii. The price paid to the seller was $810,000 (less
certain closing adjustments, including a credit for the cost to complete an
ongoing expansion project), and was funded with the proceeds of the issuance of
$500,000 of commercial mortgage-backed securities and a majority of the proceeds
from the Company's July 1999 public offering of 10,000,000 shares of Common
Stock.
Effective as of September 28, 1999, GGP Ivanhoe III acquired, through its
wholly-owned subsidiary, Oak View Mall in Omaha, Nebraska from an unrelated
third party. On December 22, 1999, GGP Ivanhoe III acquired, through its
wholly-owned subsidiary, Eastridge Mall in San Jose, California from an
unrelated third party. The aggregate purchase price of the two properties was
approximately $160,000 which was financed with a $83,000 ten-year mortgage loan,
approximately $30,000 of short-term financing and capital contributions from the
Company and Ivanhoe in proportion to their respective stock ownership in GGP
Ivanhoe III. The Company's capital contributions were funded primarily from
proceeds from the Company's Credit Facility.
F-23
<PAGE> 29
On October 28, 1999, the Company acquired Baybrook Mall in Houston, Texas. The
aggregate consideration paid by the Company was approximately $133,000 (subject
to pro-rations and certain adjustments), which was paid in cash (raised
primarily through new long-term financing on other previously unsecured
properties), and a new 10-year $95,000 non-recourse loan.
During 1999, the Company received notices from three of the institutional
investors in GGP/Homart (holding an approximate 11.08% total interest in
GGP/Homart) that they desired to exercise the exchange rights available to them
under the GGP/Homart stockholders' agreement. The Company satisfied the exercise
of such exchange rights by issuing 2,603,291 shares of Common Stock, thereby
increasing its ownership interest in GGP/Homart from approximately 38.2% in 1998
to 50% in 1999.
On November 10, 1999, the Company, together with the joint venture partner in
GGP/Homart, Inc. formed GGP/Homart II L.L.C.("GGP/Homart II"). GGP/Homart II is
50% owned by the Company. In connection with the formation of GGP/Homart II, the
Company contributed to GGP/Homart II its 100% interests in Stonebriar Centre in
Frisco (Dallas), Texas (currently under construction), Altamonte Mall in
Altamonte Springs (Orlando), Florida, Natick Mall in Natick (Boston),
Massachusetts and Northbrook Court in Northbrook (Chicago), Illinois. The
Company's joint venture partner contributed its 100% interests in Alderwood Mall
in Lynnwood (Seattle), Washington; Carolina Place in Charlotte, North Carolina;
and Montclair Plaza in Los Angeles, California to GGP/Homart II.
NOTE 3 PRO FORMA ADJUSTMENTS
The following adjustments pertain to the Eastridge Mall, Oak View Mall, Baybrook
Mall and GGP/Homart II transactions.
(A) REVENUES AND PROPERTY OPERATING EXPENSES
The revenue and property operating expenses adjustments reflect that the
operations for the properties contributed to GGP/Homart II by the Company at
formation are presented on the equity method as described in adjustment (E)
below.
(B) MANAGEMENT FEES
The management fee adjustment represents the management costs charged by General
Growth Management, Inc. and reflects a reduction for the properties contributed
to GGP/Homart II.
(C) DEPRECIATION AND AMORTIZATION
Depreciation and amortization is adjusted to include amounts for the entire year
of 1999 for the acquisitions made in 1999 not described in the Company's July
12, 1999 8-K. In addition, depreciation and amortization is adjusted for the
properties contributed to GGP/Homart II.
F-24
<PAGE> 30
(D) INTEREST EXPENSE
Interest expense increased due to a combination of debt assumption and increased
borrowings. In connection with the 1999 acquisitions and common stock issuance,
the Company issued approximately $665,000 of net secured and unsecured
borrowings to fund the cash portion of the acquisitions. The pro forma interest
expense on new borrowing was calculated using a weighted average interest rate
of 6.39%. In addition, interest expense is reduced for the properties
contributed by the Company to GGP/Homart II.
(E) EQUITY IN GGP/HOMART II
The Company's equity in the proforma net income of the GGP/Homart II is adjusted
to reflect the Company's share of the proforma operations of the properties
contributed by the Company and the Company's joint venture partner.
(F) EQUITY IN PROPERTY JOINT VENTURES
Reflects the depreciation and management fee expense of the properties acquired
by GGP/Ivanhoe III.
(G) EQUITY IN GENERAL GROWTH MANAGEMENT, INC.
Reflects the increase in General Growth Management, Inc. net income for
management fees as the acquisitions of the Eastridge Mall, Oak View Mall and the
properties acquired through GGP/Homart II were acquired with joint venture
partners.
(H) MINORITY INTEREST
The pro forma income statement has been adjusted to reflect the allocation of
earnings to the minority interest.
(I) WEIGHTED AVERAGE SHARES
The pro forma weighted average shares outstanding has been adjusted to reflect
the additional shares of stock outstanding due to the exchange of the interest
of three investors in GGP/Homart for 2,603,291 shares of Common Stock and the
10,000,000 shares of Common Stock issued in the July 1999 public offering.
F-25
<PAGE> 31
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS--UNAUDITED)
<TABLE>
<CAPTION>
HISTORICAL
GENERAL GROWTH
PROPERTIES, PROFORMA SEPTEMBER 30, 1999
INC.(1) ADJUSTMENTS PROFORMA
------- ----------- --------
<S> <C> <C> <C>
ASSETS
- ------
Investment in real estate
Land $ 674,353 $ (84,122) (A) $ 590,231
Buildings and equipment 3,917,782 (375,372) (B) 3,542,410
Less accumulated depreciation (376,699) 28,135 (B) (348,564)
Developments in progress 182,856 (47,446) (C) 135,410
---------- --------- ----------
Net property and equipment 4,398,292 (478,805) 3,919,487
Investment in GGP/Homart 279,644 -- 279,644
Investment in GGP/Homart II -- 196,663 (C) 196,663
Investment in Property Joint Ventures 216,938 24,480 (D) 241,418
---------- --------- ----------
Net investment in real estate 4,894,874 (257,662) 4,637,212
Cash and cash equivalents 5,992 (789) 5,203
Tenant accounts receivable, net 84,187 (13,830) 70,357
Deferred expenses, net 89,977 (1,858) 88,119
Investment in and note receivable from GGMI 92,591 -- 92,591
Mortgage note receivable 31,086 -- 31,086
Prepaid expenses and other assets 59,579 95 59,674
---------- --------- ----------
Total Assets $5,258,288 $(274,044) $4,984,242
========== ========= ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Mortgage notes and other debt payable $3,378,270 $(248,973) (F) $3,129,297
Distributions payable 41,140 -- 41,140
Accounts payable and accrued expenses 222,954 (25,071) 197,883
---------- --------- ----------
Total Liabilities 3,642,364 (274,044) 3,368,320
Minority interest in Operating Partnership 354,417 -- 354,417
---------- --------- ----------
Commitments and Contingencies
Preferred Income Equity Redeemable Stock;
$100 par value 5,000,000 shares authorized;
no shares issued and outstanding; 400,000 PIERS
issued and outstanding on a pro forma basis 337,500 -- 337,500
Stockholder's equity
Common stock; $10 par value; 210,000,000 shares authorized
51,677,425 shares issued and outstanding 5,168 -- 5,168
Additional paid-in capital 1,199,986 -- 1,199,986
Retained earnings (deficit) (277,985) -- (277,985)
Note receivable - common stock (3,164) -- (3,164)
---------- --------- ----------
Total stockholders' equity 924,005 -- 924,005
---------- --------- ----------
Total Liabilities and Equity $5,258,288 $(274,044) $4,984,242
========== ========= ==========
</TABLE>
(1) Amounts are from the statements included in the Company's Form 10-Q for the
quarter ended September 30, 1999 except that the cumulative other comprehensive
loss of $1,758 has been excluded.
The accompanying notes are an integral part of the Proforma Condensed
Consolidated Balance Sheet.
F-26
<PAGE> 32
GENERAL GROWTH PROPERTIES, INC.
PROFORMA CONDENSED CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1999
(DOLLARS IN THOUSANDS EXCEPT FOR PER SHARE AMOUNTS)
NOTE 1 PRO FORMA BASIS OF PRESENTATION
This unaudited pro forma condensed consolidated balance sheet is presented as if
the acquisitions made subsequent to September 30, 1999 (the acquisition of the
Eastridge Mall by GGP/Ivanhoe III, the acquisition of a 100% interest in the
Baybrook Mall and the formation of GGP/Homart II), had all occurred at September
30, 1999. In management's opinion, all adjustments necessary to reflect these
transactions have been included.
NOTE 2 ACQUISITIONS AND OTHER PRO FORMA TRANSACTIONS
Effective as of September 28, 1999, GGP Ivanhoe III acquired, through its
wholly-owned subsidiary, Oak View Mall in Omaha, Nebraska from an unrelated
third party. On December 22, 1999, GGP Ivanhoe III acquired, through its
wholly-owned subsidiary, Eastridge Mall in San Jose, California from an
unrelated third party. The aggregate purchase price of the two properties was
approximately $160,000 which was financed with a $83,000 ten-year mortgage loan,
approximately $30,000 of short-term financing and capital contributions from the
Company and Ivanhoe in proportion to their respective stock ownership in GGP
Ivanhoe III. The Company's capital contributions were funded primarily from
proceeds from the Company's Credit Facility.
On October 28, 1999, the Company acquired Baybrook Mall in Houston, Texas. The
aggregate consideration paid by the Company was approximately $133,000 (subject
to pro-rations and certain adjustments), which was paid in cash (raised
primarily through new long-term financing on other previously unsecured
properties), and a new 10-year $95,000 non-recourse loan bearing interest at
7.71% per annum and requiring monthly payments of principal and interest.
On November 10, 1999, the Company, together with the joint venture partner in
GGP/Homart, Inc. formed GGP/Homart II L.L.C.("GGP/Homart II"). GGP/Homart II is
50% owned by the Company. In connection with the formation of GGP/Homart II, the
Company contributed to GGP/Homart II its 100% interests in Stonebriar Centre in
Frisco (Dallas), Texas (currently under construction), Altamonte Mall in
Altamonte Springs (Orlando), Florida, Natick Mall in Natick (Boston),
Massachusetts and Northbrook Court in Northbrook (Chicago), Illinois. The
Company's joint venture partner contributed its 100% interests in Alderwood Mall
in Lynnwood (Seattle), Washington; Carolina Place in Charlotte, North Carolina;
and Montclair Plaza in Los Angeles, California to GGP/Homart II.
F-27
<PAGE> 33
NOTE 3 PRO FORMA ADJUSTMENTS
(A) LAND
Acquisition of Baybrook $ 13,300
Contribution of properties to GGP/Homart II (97,422)
----------
$ (84,122)
==========
(B) BUILDING AND EQUIPMENT
<TABLE>
<CAPTION>
Cost Depreciation Net
---------- ------------ ----------
<S> <C> <C> <C>
Acquisition of Baybrook $ 117,281 $ -- $ 117,281
Contribution of properties to GGP/Homart II (492,653) 28,135 (464,515)
---------- ---------- ----------
$ (375,372) $ 28,135 $ (347,237)
========== ========== ==========
</TABLE>
(C) INVESTMENT in GGP/Homart II - Contribution to GGP/Homart II of properties
formerly 100% owned by the Company
Net property and equipment (includes $47,446 of
construction in progress) $ (609,386)
Mortgage notes 406,616
Other, net 6,107
----------
Investment in GGP/Homart II $ 196,663
==========
(D) INVESTMENT IN PROPERTY JOINT VENTURES
Adjustment to investment in joint ventures for
acquisition of Eastridge by GGP/Ivanhoe III $ 24,480
(E) ACQUISITION OF BAYBROOK
Land $ 13,300
Building 117,281
Mortgage notes and other debt (133,163)
Other, net 2,582
----------
$ --
==========
(F) MORTGAGE NOTES AND OTHER DEBT PAYABLE
Acquisition of Baybrook $ 133,163
Acquisition of Eastridge 24,480
Contribution of properties to GGP/Homart II (406,616)
----------
$ (248,973)
==========
F-28
<PAGE> 1
EXHIBIT 2.5
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is dated as of November 10, 1999, by and
between GGP LIMITED PARTNERSHIP, a Delaware limited partnership ("SELLER"), and
GGP/HOMART II L.L.C., a Delaware limited liability company (the "COMPANY").
R E C I T A L S
WHEREAS, Seller owns a 99.999% interest as a limited partner in
Altamonte Springs Mall, L.P., a Delaware limited partnership ("ASM"), the owner
of 50% of the partnership interests in Altamonte Mall Venture, a Florida joint
venture (the "EXISTING VENTURE");
WHEREAS, Seller owns a 99.999% interest as a limited partner in
Altamonte Springs Mall II, L.P., a Delaware limited partnership ("ASMII"), the
owner of 50% of the partnership interests in the Existing Venture;
WHEREAS, Seller owns 100% of the membership interests in Altamonte
Springs Mall L.L.C., a Delaware limited liability company ("ASMLLC"), the owner
of the remaining .001% interest as a general partner in ASM and the owner of the
remaining .001% interest as a general partner in ASMII;
WHEREAS, the Existing Venture is the owner of the real property
commonly known as Altamonte Mall, Altamonte Springs, Florida which is more
particularly described on EXHIBIT A attached hereto, other than the property
owned by the Anchors (as hereinafter defined) at such mall; and
WHEREAS, Seller desires to contribute to the capital of the Company all
of its partnership interests in ASM and ASMII and all of its membership
interests in ASMLLC, and the Company desires to acquire such interests.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
Definitions
1.1 Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
"ADA" shall mean the Americans With Disabilities Act, as amended.
"AFFILIATE" shall mean a Person that directly or indirectly through one
or more intermediaries controls, is controlled by, or is under common control
with the Person specified. The term "control" as used in the immediately
preceding sentence, means (a) the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the
controlled entity or (b) the ownership (directly or indirectly) of not less than
50% of the voting stock of a corporation or not less than 50% of the aggregate
legal and equitable interest in a limited liability company, a partnership or
other business entity.
<PAGE> 2
"AGREEMENT" shall mean this Contribution Agreement, as amended or
modified from time to time hereafter in accordance with the terms hereof.
"ANCHOR" shall mean each Person identified in SCHEDULE 1.1-1.
"ASM" shall mean Altamonte Springs Mall, L.P., a Delaware limited
partnership.
"ASMII" shall mean Altamonte Springs Mall II, L.P., a Delaware limited
partnership.
"ASMLLC" shall mean Altamonte Springs Mall L.L.C., a Delaware limited
liability company.
"ASSUMED LIABILITIES" shall have the meaning set forth in Section
2.3(a).
"AUDITOR" shall have the meaning set forth in Section 5.2(b).
"BALANCE SHEET SETTLEMENT DATE" shall have the meaning set forth in
Section 5.1(c).
"BOOKS AND RECORDS" shall mean all records, books of account and papers
of the Existing Venture relating to the construction, ownership and operations
of the Property, including architect's drawings, blue prints and as-built plans,
maintenance logs, copies of warranties and guaranties, licenses and permits,
instruction books, employee manuals, records and correspondence relating to
insurance claims, financial statements, operating budgets, paper and electronic
media copies of data and other information relating to the Property available
from personal computers, structural, mechanical, geotechnical or other
engineering studies, soil test reports, environmental reports, underground
storage tank reports, feasibility studies, appraisals, ADA surveys or reports,
OSHA asbestos surveys, marketing studies, mall documents and compilations, lease
summaries and originals and/or copies of Leases, the REA and the Contracts and
correspondence related thereto.
"CLOSING" shall have the meaning set forth in Section 4.1.
"CLOSING BALANCE SHEETS" shall have the meaning set forth in Section
5.1(a).
"CLOSING DATE" shall have the meaning set forth in Section 4.1.
"CLOSING DOCUMENTS" shall mean the Seller Closing Documents and the
Company Closing Documents, collectively.
"CLOSING NET EQUITY" shall mean, in the case of the Preliminary
Proration Date Balance Sheet or Proration Date Balance Sheet, the excess of the
book value of the assets reflected on such balance sheet over the liabilities
reflected thereon.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY CLOSING DOCUMENTS" shall have the meaning set forth in Section
4.3.
"CONTRACTS" shall mean all equipment leases and all service,
maintenance and other contracts and concessions that are currently in effect and
to which the Existing Venture is a party respecting the use, maintenance,
development, sale or operation of the Property or any portion thereof (but
excluding this Agreement, the Leases, the Permitted Exceptions and the REA)
including those which are listed on SCHEDULE 6.1(I), together with any additions
thereto,
-2-
<PAGE> 3
modifications thereof or substitutions therefor hereafter entered into in
accordance with the provisions of this Agreement.
"CONTRIBUTION AMOUNT" shall have the meaning set forth in Section 2.2.
"DEFECT" shall mean any Lien, encumbrance, easement, agreement,
restriction, proceeding, lis pendens, notice, encroachment or exception to title
other than a Permitted Exception that materially and adversely affects the title
to or use of the Property.
"ENVIRONMENTAL LAWS" shall mean all federal, state and local statutes,
ordinances, codes, rules, regulations, orders and decrees regulating, relating
to or imposing liability or standards concerning or in connection with Hazardous
Materials, underground storage tanks or the protection of human health, natural
resources or the environment, as any of the same may be amended from time to
time, including the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. ss.9601 et. seq., as amended by the
Superfund Amendments and Reauthorization Act or any equivalent state or local
laws or ordinances; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. ss. 6901 et seq., as amended by the Hazardous and Solid Waste Amendments
of 1984, or any equivalent state or local laws or ordinances; the Federal
Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. ss.136 et. seq.
or any equivalent state or local laws or ordinances; the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq.); the Emergency Planning and
Community Right-to-Know Act ("EPCRA"), 42 U.S.C. ss.11001 et. seq. or any
equivalent state or local laws or ordinances; the Toxic Substance Control Act
("TSCA"), 15 U.S.C. ss.2601 et. seq. or any equivalent state or local laws or
ordinances; the Atomic Energy Act, 42 U.S.C. ss.2011 et. seq., or any equivalent
state or local laws or ordinances; the Clean Water Act (the "Clean Water Act"),
33 U.S.C. ss.1251 et. seq. or any equivalent state or local laws or ordinances;
the Clean Air Act (the "Clean Air Act"), 42 U.S.C. ss.7401 et seq. or any
equivalent state or local laws or ordinances; the Occupational Safety and Health
Act, 29 U.S.C. ss.651 et seq. or any equivalent state or local laws or
ordinances.
"EXISTING INDEBTEDNESS" shall mean the loans listed on Schedule 6.1(x).
"EXISTING INDEBTEDNESS DOCUMENTS" shall have the meaning set forth in
Section 6.1(x).
"EXISTING LENDER" shall mean the holder or holders of the Existing
Indebtedness as specified on Schedule 6.1(x).
"EXISTING MANAGER" shall mean General Growth Management, Inc.
"EXISTING VENTURE" shall mean Altamonte Mall Venture, a Florida joint
venture.
"EXECUTION DATE" shall mean the date of this Agreement.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
6.1(v).
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"GAAS" shall mean Generally Accepted Auditing Standards as promulgated
by the Auditing Standards Division of the American Institute of Certified Public
Accountants from time to time.
-3-
<PAGE> 4
"GOVERNMENTAL AUTHORITY" shall mean any federal, state or local
government, court, department, commission, board and office having jurisdiction
over the Property, Seller, Existing Venture or the Company, or any other body
exercising functions similar to those of any of the foregoing.
"HAZARDOUS MATERIALS" shall mean any substance, material, waste, gas or
particulate matter which (i) is now, or at any future time may be, regulated by
the United States Government, the state in which the Real Property is located,
any other state with jurisdiction, or any local governmental authority, or (ii)
the exposure to, or manufacture, possession, presence, use generation, storage,
transportation, treatment, release, disposal, abatement, cleanup, removal,
remediation or handling of is prohibited, controlled or regulated by any
Environmental Law, or (iii) requires investigation or remediation under any
Environmental Law or common law, or (iv) is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous. Such term includes any material or substance which is (1) defined as
a "hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste" or any like or similar term under
any applicable Environmental Law; (2) oil and petroleum products; (3) asbestos
or asbestos-containing material as defined in the regulations of the
Occupational Safety and Health Administration at 29 C.F.R. ss.1910.1001; (4)
polychlorinated biphenyls; (5) radioactive material; (6) designated as a "toxic
pollutant" or a "hazardous substance" pursuant to Sections 307 or 311 of the
Clean Water Act; (7) defined as a "hazardous waste" pursuant to Section 1004 of
RCRA; (8) defined as a "hazardous substance" pursuant to Section 101 of CERCLA;
(9) designated as a "hazardous chemical" substance or mixture pursuant to TSCA;
(10) designated as an "extremely hazardous" substance under Section 302 of
EPCRA; (11) designated as a "priority pollutant" or "hazardous air pollutant"
pursuant to the Clean Air Act; (12) designated as a hazardous chemical under the
Occupational Safety and Health Act; (13) radon gas or other radioactive source
material, including special nuclear material, and byproduct materials regulated
under the Atomic Energy Act, 42 U.S.C. ss.2011 et. seq.; (14) subject to
regulation under FIFRA; (15) natural gas, natural gas liquids, liquefied natural
gas, and synthetic gas usable for fuel; or (16) infectious wastes or materials
and pathogenic bacteria or other pathogenic microbial agents.
"IMPROVEMENTS" shall mean improvements, buildings, structures,
fixtures, facilities, installations, machinery and equipment, in, on, over or
under the Land, including the foundations and footings therefor, elevators,
plumbing, air conditioning, heating, ventilating, mechanical, electrical and
utility systems (except to the extent owned by a utility company) and any other
similar systems, signs and light fixtures (except to the extent of trade
fixtures and equipment owned by tenants under the Leases), doors, windows,
fences, parking lots, walks and walkways and each and every other type of
physical improvement to the extent owned, in whole or in part, by the Existing
Venture, located at, on or affixed to the Land, to the full extent such items
constitute or are or can or may be construed as realty under the laws of the
state in which the Real Property is located.
"INDEMNIFIED COMPANY PERSONS" shall have the meaning set forth in
Section 8.1.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 8.3.
"INDEMNIFIED SELLER PERSONS" shall have the meaning set forth in
Section 8.2.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 8.3.
"LAND" shall mean those certain parcels of real estate described on
EXHIBIT A.
-4-
<PAGE> 5
"LANDLORD WORK" shall mean all work, improvements, fixtures, fittings
and equipment (other than normal repairs, maintenance or replacements) that are
required (or may in the future be required) to be furnished or provided to
Tenants or REA Parties or paid for by landlord or developer under the terms of
the Leases or the REA, as in effect on the date hereof.
"LEASES" shall mean all leases, tenancies, concessions, licenses and
occupancy agreements currently in effect and to which the Existing Venture or
any of its predecessors in title is a party affecting or relating to the
Property including those which are listed on SCHEDULE 6.1(G), together with any
additions thereto, modifications thereof or substitutions therefor hereafter
entered into in accordance with the provisions of this Agreement.
"LEGAL REQUIREMENTS" shall mean any laws, ordinances, orders, rules,
regulations and requirements of any Governmental Authority which may be
applicable to the Property, the Existing Venture or Seller.
"LIENS" shall mean any mortgages, deeds of trust, security interests,
judgments or charges, pledges, options, rights of first offer or first refusal,
liens of any type, restrictions, claims and other encumbrances of any nature
whatsoever other than the Existing Indebtedness Documents.
"LIEN SEARCHES" shall mean a search report by an independent search
firm reasonably acceptable to the Company of the Secretary of State records,
county recorder records, local court records (federal, state, county and
municipal) and such other official public records with respect to the Property
that would disclose the presence of any Liens, bankruptcy proceedings, lis
pendens or other matters affecting the Property, the Existing Venture or Seller.
"LOSSES" shall mean any and all claims, actions, suits, proceedings,
demands, losses, damages, liabilities, obligations, judgments, settlements,
awards, penalties, costs or expenses, including reasonable attorneys', experts'
or consultants' fees and expenses.
"OPERATING AGREEMENT" shall mean that certain Operating Agreement among
the Company, Seller and the New York State Common Retirement Fund dated as of
the date hereof.
"PARTY" shall mean a party to the REA, a Contract or Permitted
Exception Document (or the successor or assignee thereof) or a Tenant under a
Lease, in each case other than the Existing Venture or its predecessors in title
with respect to the Property.
"PERMITTED EXCEPTION DOCUMENT" shall have the meaning set forth in
Section 2.3(b).
"PERMITTED EXCEPTIONS" shall mean the exceptions to title to the
Property listed on EXHIBIT B attached hereto and made a part hereof.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, governmental unit or agency, trust, estate or other entity of
any type.
"PERSONALTY" shall mean all of the personal property, both tangible and
intangible, owned by the Existing Venture (and the Existing Venture's interest
in any of the following) and located in or upon or used in connection with the
operation or maintenance of the Property, including machinery; equipment;
building supplies and materials; consumables; inventories; names, logos,
trademarks, trade names and copyrights; all assignable licenses, permits,
-5-
<PAGE> 6
approvals, authorizations, variances, consents and certificates of occupancy;
all assignable guarantees or warranties (including performance bonds obtained
by, or for the benefit of, the Existing Venture, pertaining to the ownership,
construction or development of the Real Property or any part thereof); the Books
and Records; computer and peripheral equipment; computer software and data
contained in hard drives and on diskette; advertising materials; and telephone
exchange numbers. Without limiting the foregoing, "Personalty" shall include the
property listed on SCHEDULE 1.1-2. Personalty shall not include personal items
belonging to Tenants or to employees of the Existing Venture and the rights of
the Existing Venture in and to the Leases, the REA and the Contracts.
"PRELIMINARY PRORATION DATE BALANCE SHEET" shall have the meaning set
forth in Section 5.1(a).
"PROMOTIONAL ASSOCIATION" shall have the meaning set forth in Section
6.1(l).
"PROPERTY" shall mean (a) the Real Property, (b) the Personalty, (c)
the rights and interests of the Existing Venture in, to and under all Leases,
(d) the rights and interests of the Existing Venture in, to and under the REA,
(e) the rights and interests of the Existing Venture in, to and under the
Contracts to the extent assignable, (f) the rights and interests of the Existing
Venture in, to and under the Existing Indebtedness Documents.
"PRORATION DATE" shall mean November 30, 1999.
"PRORATION DATE BALANCE SHEET" shall have the meaning set forth in
Section 5.1(a).
"REAL PROPERTY" shall mean the Land and the Improvements, together with
all of the estate, right, title and interest of the Existing Venture therein,
and in and to (a) any land lying in the beds of any streets, roads or avenues,
open or proposed, public or private, in front of or adjoining the Land to the
center lines thereof, and in and to any awards to be made in lieu thereof and in
and to any unpaid awards for damage to the foregoing by reason of the change of
grade of any such streets, roads or avenues; and (b) all easements, rights,
licenses, privileges, rights-of-way, strips and gores, hereditaments and such
other real property rights and interests appurtenant to the foregoing (including
all rights of the Existing Venture under the REA).
"REA" shall mean that certain Memorandum Of Operating Agreement dated
as of July 18, 1973 by and among Federated Department Stores, Inc., Sears,
Roebuck and Co., Associated Dry Goods Corporation and Altamonte Mall, together
with any additions thereto, modifications thereof or substitutions therefor
hereafter entered into in accordance with the provisions of this Agreement.
"REGULATIONS" shall mean the final, temporary or proposed Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"RENT ROLL" shall have the meaning set forth in Section 6.1(e).
"RENTS" shall mean fixed, minimum, additional, percentage and overage
rents, common area maintenance charges, advertising and promotional fees,
insurance charges, rubbish removal charges, sprinkler charges, shoppers aid
charges, water charges, utility charges, HVAC charges, amounts payable with
respect to real estate and any other taxes, and other amounts payable by any
Party under the Leases and the REA.
-6-
<PAGE> 7
"RETAINED DEBT" shall have the meaning set forth in the Operating
Agreement.
"SELLER CLOSING DOCUMENTS" shall have the meaning set forth in Section
4.2.
"SELLER'S INTEREST" shall mean the entire interest of Seller as a
limited partner in ASM, together with all rights, obligations and powers of
Seller as a limited partner of ASM, together with the entire interest of Seller
as a limited partner in ASMII, together with all rights, obligations and powers
of Seller as a limited partner of ASMII, together with the entire membership
interest of Seller in ASMLLC, together with all rights, obligations and powers
of Seller as a member of ASMLLC.
"SELLER'S LIABILITIES" shall have the meaning set forth in Section
2.3(b).
"SURVEY" shall mean the Urban ALTA/ACSM Land Title Survey of the
Property by Doudney Surveyors Inc., Project #127-97, last revised August 25,
1999.
"TENANTS" shall mean tenants, concessionaires, licensees and/or
occupants under the Leases.
"TENANT SERVICES" shall mean all services supplied by or on behalf of
the Existing Venture to Tenants for which Tenants are separately charged, other
than services in the nature of common area maintenance.
"THIRD PARTY CLAIM" shall have the meaning set forth in Section 8.3(a).
"TITLE COMMITMENT" shall mean the Commitment for Title Insurance No.
FA-C 2595 issued by the Title Company to the Company effective August 11, 1999,
together with copies of all documents underlying all exceptions to title and all
encumbrances on and other matters of record affecting the Real Property.
"TITLE COMPANY" shall mean First American Title Insurance Company.
"TITLE POLICY" shall mean Owner's Policy of Title Insurance No. FA-35
272754 issued by Title Company and effective September 1, 1998, insuring the
Existing Venture as owner of good, marketable and indefeasible fee title to the
Property, subject only to the Permitted Exceptions.
"TRANSACTIONS" shall mean the transactions contemplated by this
Agreement.
"UTILITY DEPOSITS" shall have the meaning set forth in Section 5.8.
1.2 References. All references in this Agreement to particular
sections or articles shall, unless expressly otherwise provided, or unless the
context otherwise requires, be deemed to refer to the specific sections or
articles in this Agreement, and any references to "Exhibit" shall, unless
otherwise specified, refer to one of the exhibits annexed hereto and, by such
reference, be made a part hereof. The words "herein", "hereof", "hereunder",
"hereinafter", "hereinabove" and other words of similar import refer to this
Agreement as a whole and not to any particular section, subsection, paragraph or
article hereof. The words "include", "includes" and "including" shall be deemed
in each case to be followed by the phrase "without limitation".
-7-
<PAGE> 8
1.3 Terms Generally. Definitions in this Agreement apply equally to
both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.
ARTICLE II
Contribution
2.1 Contribution of Seller's Interest. Upon the terms and subject to
the conditions contained herein, at the Closing, Seller shall contribute to the
Company, and the Company shall acquire, Seller's Interest, free and clear of all
Liens. The Seller's Interest shall be deemed to have a fair market value equal
to $170,000,000.00, which represents the fair market value of the Property, plus
or minus Closing Net Equity as set forth on the Preliminary Proration Date
Balance Sheet (such amount, as the same is adjusted as hereinafter provided, the
"CONTRIBUTION AMOUNT").
2.2 Consideration. In consideration for the contribution of Seller's
Interest and certain other property being contributed to the capital of the
Company by Seller, and in addition to the assumption of liabilities and
adjustments as hereinafter provided, on the Closing Date, Seller shall receive
units of membership interest in the Company pursuant to the Operating Agreement.
2.3 Liabilities.
(a) The Existing Venture shall continue to be liable and
responsible for all liabilities and obligations of the Existing Venture other
than the Seller's Liabilities (the "Assumed Liabilities"). Without limiting the
foregoing, Assumed Liabilities shall include all liabilities and obligations
relating to the Existing Indebtedness (other than Seller's Retained Debt)
notwithstanding any joint and several or other liability of Seller under the
Existing Indebtedness Documents. Further, without limiting the foregoing,
Assumed Liabilities shall include all leasing costs, allowances, concessions,
rent abatements, build-out costs, other leasing inducements and leasing
commissions with respect to (i) all leases executed on or after September 1,
1999, and (ii) all leases identified on Schedule 2.3(b) attached hereto without
regard to the date of execution thereof, including commissions due to Existing
Manager.
(b) Seller shall be responsible for all of the following
liabilities or obligations of the Existing Venture, Seller or any predecessor of
any of them (collectively, the "SELLER PARTIES") or other Person specified below
(collectively, the "SELLER'S LIABILITIES"): (i) any liability or obligation that
is not related to the Property, (ii) any liability or obligation that arises
from contracts or agreements other than the Leases, the Contracts, the REA, the
Existing Indebtedness Documents or the instruments or agreements constituting
the Permitted Exceptions (a "PERMITTED EXCEPTION DOCUMENT") (except to the
extent the Existing Venture accepts the benefits thereof), (iii) any tort
liability arising from any accident, injury, event, circumstance, action or
omission occurring prior to the Closing Date (except to the extent of the
insurance proceeds received by the Existing Venture in connection therewith),
whether or not asserted before or after the Closing, (iv) any liability or
obligation to a Party for breach of, or other payment obligation under, a Lease,
REA, Contract or Permitted Exception Document (including any claimed overcharge
of common area maintenance or other similar charges but excluding the items
covered in clause (v)) to the extent that the liability or obligation relates to
the period or accrued prior to the Closing Date, whether or not asserted before
or after the Closing, (v) all leasing costs, costs of Landlord Work (net of the
value of any additional revenues that are to be received by the Existing Venture
and are directly attributable to the
-8-
<PAGE> 9
Landlord Work), allowances, concessions, rent abatements, build-out costs, other
leasing inducements and leasing commissions, with respect to all leases executed
prior to September 1, 1999 (except with respect to the leases identified on
Schedule 2.3(b) attached hereto which are included in Assumed Liabilities as set
forth in Section 2.3(a) above), (vi) any fine, penalty or other amount that is
imposed or assessed by or which was payable to (including any installment
thereof) a Governmental Authority for the period prior to the Closing Date,
whether or not imposed or assessed before or after the Closing, (vii) all
federal, state and local taxes of any Seller Party of whatever kind and nature
relating to the period prior to Closing, (viii) liabilities and obligations
relating to any employees (current or former), employee benefit plans or
collective bargaining agreements of the Existing Manager or any Seller Party
that accrued, relate to or arise from any incident, event, circumstance, action
or omission occurring during the period through the Closing Date, including
severance pay and accrued vacation pay obligations and other liabilities of the
Existing Manager, any Seller Party, the Company or others relating to the
termination of any of such employees prior to the Closing or as the result of
the consummation of the Transactions, (ix) any liability or obligation to pay
for work performed at, or materials supplied or delivered to, the Property prior
to the Closing, (x) any liability or obligation relating to litigation that is
commenced by Persons other than Parties or Governmental Authorities and that
relates to incidents, events, circumstances, actions or omissions occurring
during the period prior to Closing, whether or not asserted before or after the
Closing and (xi) any other costs or liabilities imposed on Seller hereunder or
under the Operating Agreement, including the obligations of Seller thereunder as
to the Retained Debt. Notwithstanding anything to the contrary contained herein,
Seller's Liabilities shall not include (i) any liabilities or obligations to the
extent that the Company has received a credit therefor under the provisions of
Article V, (ii) subject to the provisions of Section 2.3(c), the cost of repair,
remediation or correction of any physical defect in the Property (but do include
damages, fines or other amounts owing to Parties, Governmental Authorities or
others on account of any such physical defect to the extent that such damages,
fines or other amounts are not for the cost of repair, remediation or correction
thereof) and (iii) any and all payments or penalties required to be paid to
O'Connor Realty Investors II, L.P., a Tennessee limited partnership, or Nashland
Associates, a Tennessee general partnership, or their respective successors and
assigns, under the terms of that certain Contribution and Exchange Agreement
dated as of July 10, 1998, among Nashland Associates, HRE Altamonte, Inc.,
Altamonte Springs Mall, L.P. and Seller.
(c) Nothing contained in this Section 2.3 shall impair the rights
of the Company for a breach of any representation or warranty contained herein
or in the Seller Closing Documents.
ARTICLE III
Costs and Expenses
3.1 Title and Survey Costs. Title and Survey costs shall be paid as
follows:
(a) The Company shall pay the cost of obtaining the Title
Commitment and the cost of recording any documents required to release, cure or
remove Defects;
(b) The Company shall pay the cost of obtaining the Survey;
(c) The Company shall pay the cost of recording any other
documents;
(d) Subject to any separate agreement between Seller and the
Company, the Company shall be solely responsible for the payment of any real
property transfer taxes levied
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or imposed upon Seller or the Property as a result of the transfers to the
Company, gains taxes levied or imposed upon Seller or the Property as a result
of the transfers to the Company, sales taxes levied or imposed upon Seller or
the Property as a result of the transfers to the Company, and documentary stamps
and other taxes, fees or charges imposed in connection with the conveyance of
Seller's Interest or any portion thereof;
(e) The Company shall pay all filing fees and charges and any
personal property sales taxes in connection with the indirect transfer of the
Personalty to the Company; and
(f) The Company shall pay the costs of the Lien Search.
3.2 Other Costs. Except for expenses and costs related to the
termination of any existing management agreement and the termination of any
employees, the Company shall pay any and all costs or expenses in connection
with the termination of any Contracts to be terminated in accordance with the
terms of this Agreement. The Company shall pay the legal fees of its counsel and
Seller shall pay the legal fees of Neal, Gerber & Eisenberg incurred in
connection with the drafting and negotiation of this Agreement and the Closing
of the Transactions.
ARTICLE IV
Closing
4.1 Closing. The closing of the Transactions (the "CLOSING") shall
take place at the offices of Neal, Gerber & Eisenberg, Two North LaSalle Street,
Chicago, Illinois 60602, commencing at 10:00 a.m., local time, on the date
hereof (the "CLOSING DATE").
4.2 Seller Closing Documents. On or prior to the Closing Date, Seller
shall deliver, or cause to be delivered, to the Company the following documents
(collectively, the "SELLER CLOSING DOCUMENTS"), duly executed by Seller and the
other parties thereto (other than the Company) and in form and substance
reasonably acceptable to the Company and to Seller unless the form thereof is
attached hereto:
(a) Assignment or assignments of partnership interest with respect
to ASM and ASMII, and assignment of membership interests with respect to ASMLLC,
assigning Seller's Interest from Seller to the Company.
(b) An affidavit of Seller stating its U.S. taxpayer
identification number and that it is a "United States person", as defined by
Sections 1445(f)(3) and 7701(b) of the Code.
(c) Such certificates as the Company may reasonably request as to
the authorization on the part of Seller of the execution, delivery and
performance of this Agreement and the authority of the Persons executing and
delivering this Agreement and the Seller Closing Documents on behalf of Seller.
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(d) Certificates issued by the Delaware Secretary of State, dated
not more than ten (10) days prior to the Closing Date, certifying the good
standing of Seller and the general partner(s) of Seller, respectively.
(e) Originals or certified copies of the organizational documents
for the Existing Venture, ASM, ASMII and ASMLLC, including partnership
agreements, operating agreements, articles of organization, by-laws, minute
books and records of meetings, including all amendments thereof.
(f) Original, or copies certified by Seller as true, complete and
correct, of each of the Leases and the REA, together with all Books and Records
including current real estate tax bills, water, sewer and utility bills and all
Tenant correspondence.
(g) Keys and combinations to locked compartments within the
Property.
(h) The Existing Indebtedness Documents.
(i) Any instruments, documents or certificates required to be
executed by Seller with respect to any state, county or local transfer taxes
applicable to the conveyance of Seller's Interest pursuant to this Agreement.
(j) Such other documents, instruments or agreements which Seller
is required to deliver to the Company pursuant to the other provisions of this
Agreement or which the Company reasonably may deem necessary or desirable in
order to consummate the Transactions in accordance with the terms hereof.
4.3 Company Closing Documents. On or prior to the Closing Date, the
Company shall deliver to Seller the following documents (herein referred to
collectively as the "COMPANY CLOSING DOCUMENTS"), duly executed by an authorized
officer on behalf of the Company and the other parties thereto (other than
Seller) and in form and substance reasonably acceptable to Seller and to the
Company unless the form thereof is attached hereto:
(a) An agreement or agreements pursuant to which the Company
accepts assignment of Seller's Interest.
(b) A duly executed and acknowledged Secretary's Certificate,
certifying that the members of the Company have duly adopted resolutions
authorizing the consummation of the Transactions and certifying the authority of
the respective authorized signatories of the Company executing and delivering
this Agreement and the Company Closing Documents in their capacities as officers
of the Company.
(c) A certificate issued by the Secretary of State of Delaware
dated not earlier than ten (10) days prior to the Closing Date certifying the
existence and good standing of the Company as of the date of such certificate.
(d) Copies of the Certificate of Formation of the Company and any
amendments thereto, as of the Closing Date certified by the Secretary of State
of the State of Delaware as of a date not more than twenty (20) days prior to
the Closing Date, together with a certificate of an officer of the Company to
the effect that the Certificate of Formation of the Company, as certified by the
Secretary of State of Delaware, has not been further amended, revised, restated,
cancelled or rescinded up to and including the Closing Date.
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<PAGE> 12
(e) Any instruments, documents or certificates required to be
executed by the Company with respect to any state, county or local transfer
taxes applicable to the conveyance of Seller's Interest pursuant to this
Agreement.
(f) Such other documents, instruments or agreements which the
Company may be required to deliver to Seller pursuant to the other provisions of
this Agreement or which Seller reasonably may deem necessary or desirable to
consummate the Transactions; provided, however, that any such other document,
instrument or agreement which Seller reasonably deems necessary or desirable
shall not impose upon the Company any obligation or liability other than an
obligation or liability expressly imposed upon the Company pursuant to the terms
of this Agreement or pursuant to the terms of the other the Company Closing
Documents specified in this Section 4.3.
4.4 Joint Deliveries. Seller and the Company shall jointly execute
and deliver the Preliminary Proration Date Balance Sheet.
ARTICLE V
Net Equity Adjustment
5.1 Net Equity Adjustment.
(a) At or prior to Closing, Seller shall prepare and deliver to
the Company a balance sheet with respect to the Property and the Existing
Venture (the "PRELIMINARY PRORATION DATE BALANCE SHEET") prepared as of the last
day of the month prior to the Closing Date, or, if the data as of such date are
unavailable, the last day of the second month prior to the Closing Date. No
later than one hundred twenty (120) days after the Closing Date, the Company
shall cause to be prepared and delivered to Seller an unaudited balance sheet
with respect to the Property and the Existing Venture as of the Proration Date
(the "PRORATION DATE BALANCE SHEET" and, together with the Preliminary Proration
Date Balance Sheet, the "CLOSING BALANCE SHEETS"), showing Closing Net Equity.
The Closing Balance Sheets shall be prepared on an accrual basis in accordance
with GAAP applied in a manner consistent with that utilized in the preparation
of the financial statements for General Growth Properties, Inc. without regard
to any special provisions relating to its REIT status, provided however, that
the following rules shall be employed:
(i) the following assets shall be excluded or eliminated:
deferred rent receivables; deferred financing, leasing and other costs;
tenant lease incentives; prepaid expenses to the extent the full amount
thereof could not reasonably be expected to inure to the benefit of the
Existing Venture (including but not limited to prepaid insurance
premiums);
(ii) no amount shall be recorded under the classification
"Building & Improvements", "Fixtures & Equipment", "Tenant
Improvements" and "Land;"
(iii) net carrying amounts for or in respect of the following
shall be eliminated, with such elimination to be done, in each case net
of accumulated amortization and depreciation, allowances for bad debts
and other contra accounts:
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building and improvements, fixtures and equipment, land, capitalized
taxes, tangible personal property and goodwill;
(iv) the following assets shall be included (and shall be
deemed to be part of the assets of the Existing Venture and transferred
to the Company): all cash in the Existing Venture;
(v) the following liabilities shall be excluded or eliminated:
Retained Debt, deferred revenues and income tax accounts;
(vi) at Seller's election, a liability may be excluded to the
extent that it is a Seller's Liability and any reserves or other assets
relating to such excluded liability shall be excluded or distributed to
Seller;
(vii) there shall be excluded from assets an amount equal to
proceeds from condemnation awards (or payments in lieu thereof),
casualty insurance or the termination of any Lease, in each case
received after the date hereof;
(viii) reserves for billed accounts receivable, including Rent
and all other tenant charges, shall be calculated so that (A) accounts
receivable from Tenants in bankruptcy shall utilize a reserve of 100%,
(B) accounts receivable that are 90 days (but less than 120 days) past
due shall utilize a reserve of 25%, and (C) accounts receivable that
are more than 120 days past due shall utilize a reserve of 50%, and in
each case accounts receivable shall also include a reserve of five
percent (5%) for unbilled tenant charges, and an accrual shall be
recorded for insurance deductibles based upon insurance company
estimates; and
(ix) any distributions made by Existing Venture during
November shall be treated as though not made.
(b) If, based on the Preliminary Proration Date Balance Sheet,
Closing Net Equity exceeds zero, the Contribution Amount will be increased by
the amount of such excess. If, based on the Preliminary Proration Date Balance
Sheet, Closing Net Equity is less than zero, the Company will receive a credit
against the Contribution Amount equal to the amount of such shortfall.
(c) If, based on the Proration Date Balance Sheet, Closing Net
Equity, adjusted for the amount of any adjustment made pursuant to Section
5.1(b), exceeds zero, the Company will, no later than the later of (i) sixty-one
(61) days following the delivery of the Proration Date Balance Sheet or (ii)
five (5) business days following the resolution of a dispute with respect to an
item on the Proration Date Balance Sheet as set forth in subsection 5.2 hereof
(the "BALANCE SHEET SETTLEMENT DATE"), pay to Seller the amount of such excess
by wire transfer of immediately available funds to an account designated by
Seller. If Closing Net Equity, adjusted for the amount of any adjustment made
pursuant to Section 5.1(b), is less than zero, Seller will pay to the Company no
later than the Balance Sheet Settlement Date the amount of such shortfall by
wire transfer of immediately available funds to an account designated by the
Company.
5.2 Resolution of Disputes on Proration Date Balance Sheet.
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<PAGE> 14
(a) If Seller disagrees with any item on the Proration Date
Balance Sheet, Seller shall notify the Company in writing of such disagreement
within sixty (60) days after Seller's receipt of the Proration Date Balance
Sheet. Such notice shall set forth the basis for such disagreement in reasonable
detail. During such sixty (60) day period, the Company shall afford Seller and
its duly designated representatives access to all of the Existing Venture's
books and records, in each case solely for the purposes of resolving such
disagreement. The Company and Seller shall thereafter negotiate in good faith to
resolve any such disagreements, provided that Seller shall promptly pay to the
Company, or the Company shall promptly pay to Seller, as the case may be, the
amount determined pursuant to Section 5.1(c) that is not subject to dispute.
(b) If the Company and Seller are unable to resolve any such
disagreements within thirty (30) days after the expiration of the sixty (60) day
period referred to in Section 5.2(a), or, if the Company and Seller are unable
to resolve a dispute concerning the final adjustments to the Contribution
Amount, the Company and Seller shall cause Ernst & Young LLP (the "AUDITOR") to
resolve all disagreements on the disputed items as soon as practicable, provided
that the Auditor shall be bound by the provisions of Section 5.1 and may not
assign a value to any item greater than the greatest value for such item claimed
by either party or less than the smallest value for such item claimed by either
party. Each of the Company and Seller shall permit the Auditor to have full
access to its books, records, key employees and independent accountants in order
to resolve any such disagreements. The resolution of such disagreements by the
Auditor shall be final and binding on the Company and Seller. The fees and
expenses of the Auditor shall be paid by the party whose position is most at
variance with the decision of the Auditor.
ARTICLE VI
Representations and Warranties
6.1 Seller's Representations and Warranties. Seller represents and
warrants to the Company as follows:
(a) Seller is a limited partnership duly formed, validly existing
and in good standing under the laws of the State of Delaware with full power and
authority to execute, deliver and perform this Agreement. Seller has delivered
to the Company true, correct and complete copies of its limited partnership
agreement and all amendments and modifications thereto.
(b) The execution, delivery and performance of this Agreement by
Seller have been duly and validly authorized by all necessary action on the part
of Seller. This Agreement has been, and the Seller Closing Documents will be,
duly executed and delivered by Seller. This Agreement constitutes, and when so
executed and delivered the Seller Closing Documents will constitute, the legal,
valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms.
(c) None of the execution, delivery or performance of this
Agreement by Seller does or will, with or without the giving of notice, lapse of
time or both, violate, conflict with, constitute a default, result in a loss of
rights, acceleration of payments due or creation of any Lien upon the Property
or require the approval or waiver of or filing with any Person (including any
governmental body, agency or instrumentality) under (i) the organizational
documents of Seller or its general partner or, any agreement, instrument or
other document to which Seller or its general partner is a party or by which it
is bound, (ii) any judgment, decree, order, statute,
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<PAGE> 15
injunction, rule, regulation or the like of a governmental unit applicable to
the Property, the Existing Venture, Seller or its general partner (other than
notification of ownership change or transfer or reissuance of permits as may be
required under Environmental Laws), or (iii) any contract or agreement by which
Seller or the Existing Venture may be bound.
(d) Seller has good and marketable title to Seller's Interest free
and clear of Liens and, upon execution and delivery of the Seller Closing
Documents, the Company will have good and marketable title to Seller's Interest
free and clear of Liens other than Liens created by, under or through the
Company. No other property (other than the Real Property and property owned by
any Anchor) comprises "Altamonte Mall".
(e) Schedule 6.1(e) is a true, correct and complete copy of the
rent roll of the Property (the "RENT ROLL") as of November 1, 1999, prepared in
the format prescribed by the MRI software reporting system currently in place at
the Property. All information therein is accurate as of its date. Except as set
forth to the contrary on Schedule 6.1(e), no Tenant has paid any rent in advance
except for the current month.
(f) Schedule 6.1(f) is a true, correct and complete schedule of
delinquencies in Rent, common area maintenance and other similar charges,
showing amounts payable as of November 1, 1999 by each Party, which schedule
sets forth separately and certifies the items of Rents with respect to which
each such Party is in arrears, the amount of each item and the period of such
arrearage.
(g) Schedule 6.1(g) contains a complete and correct list of all
existing Leases and modifications thereof and supplements thereto regardless of
whether the terms thereof have commenced, setting forth with respect to each (i)
the date thereof and of each modification thereof and supplement thereto and
(ii) the names of the Parties thereto (including the name of the current
assignee, if any, but only if and to the extent Seller has actual notice of any
such assignment). A true and complete copy of each Lease demising space in
excess of 10,000 square feet, together with each modification thereof and
supplement thereto, has heretofore been furnished to the Company for inspection
and has been delivered to the Company on the date hereof. Each Lease constitutes
the entire agreement between the Existing Venture and each Party thereto, and
the Existing Venture has not made any oral promises or agreements amending or
modifying the same. No Person is using or occupying (or is entitled to use or
occupy) the Real Property except under a Lease or the REA.
(i) There are no leases executed by the Existing Venture or other
rights of occupancy or use granted by the Existing Venture or, to
Seller's knowledge, its predecessors in title of any portion of the
Property other than the Leases. Each of the Leases is valid and
subsisting and in full force and effect, and no Rents or other payments
or deposits are held by Seller, the Existing Venture or the Existing
Venture's agent, except the security deposits (together with the amount
of accrued and unpaid interest thereon) described on the Rent Roll and
Rents prepaid for the current month. As of the Closing Date, no Rents
due under, or any other interest in, any of the Leases will be assigned
to any party other than the Existing Lender, or are otherwise pledged
or encumbered in any way. All Security Deposits are being, and have
been, held in compliance with all Legal Requirements.
(ii) Except as set forth on Schedule 6.1(g), no Tenant has made
any written claim which has been received by Seller or the Existing
Venture or, to Seller's knowledge, has any other claim, whether or not
in writing (A) that the Existing Venture
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<PAGE> 16
has defaulted in performing any of its obligations under any of the
Leases which has not heretofore been cured, (B) that any condition
exists which with the passage of time or giving of notice, or both,
would constitute any such default, (C) that such Tenant is entitled to
any reduction in, refund of, or counterclaim or offset against, or is
otherwise disputing, any Rents or other charges paid, payable or to
become payable by such Tenant, or (D) that such Tenant is entitled to
cancel its Lease or to be relieved of its operating covenants
thereunder.
(iii) With the exception of delinquencies in the payment of Rents
which are set forth on Schedule 6.1(f), no material default exists
under any of the Leases on the part of the Tenant thereto and Seller
has no knowledge of any condition, which, with the passage of time, or
giving of notice, would constitute a default under any Lease. With the
exception of any requirement to repair any physical defects in the
Property, the Existing Venture is not in default under the Leases. The
Existing Venture has not delivered any default notices to any Tenant
under any Lease which has not been cured.
(iv) There are no rent abatements, offset rights, "free rent
periods" or other tenant concessions or inducements, including lease
assumptions or buy-outs, applicable to any of the Leases or any rights
to extend or renew any of such Leases except as set forth in the
Leases. There are no expansion rights, options or rights to renew,
extend or terminate the Leases, except as set forth in the Leases.
Neither Seller nor the Existing Venture have granted any rights,
options or rights of first refusal of any kind to any Tenant or
otherwise, which are currently in effect, to purchase or to otherwise
acquire the Property or any part thereof or interest therein. All of
the improvements to be constructed by the landlord under each of the
Leases, or as required under any collateral agreement, plans or
specifications related to the Leases, have been fully completed in
accordance with the terms thereof and have been paid for.
(v) No condition exists that would permit any Party to any Lease
or REA to cancel or terminate such Lease or REA, be released from
liability from such Lease or REA or reduce its obligations under any
Lease or REA.
(vi) Neither Seller nor the Existing Venture or any Affiliate of
any of the foregoing, has made a loan or otherwise extended any credit
to any Tenant.
(h) The REA constitutes the only reciprocal easement agreements or
operating agreements encumbering the Property. A true and complete copy of the
REA has heretofore been furnished to the Company, together with each written
modification thereof and supplement thereto. The REA constitutes the entire
agreement between the Existing Venture and each REA Party thereto, and neither
Seller nor the Existing Venture have made any oral promises or agreements
amending or modifying the same.
(i) The REA is valid and in full force and effect, and no Rents or
other payments or deposits are held by Seller, the Existing Venture or
Seller's agent, except the Rents prepaid for the current month. As of
the Closing Date, no Rents due under, or any other interest in, the REA
will be assigned to any party other than the Existing Lender, or are
otherwise pledged or encumbered in any way.
(ii) Except as set forth on Schedule 6.1(h), none of the REA
Parties has made any written claim which has been received by Seller,
the Existing Venture or, to Seller's knowledge, has any other claim,
whether or not in writing (A) that the Existing
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<PAGE> 17
Venture has defaulted in performing any of its obligations under any of
the REAs which has not heretofore been cured, (B) that any condition
exists which with the passage of time or giving of notice, or both,
would constitute any such default, (C) that such REA Party is entitled
to any reduction in, refund of, or counterclaim or offset against, or
is otherwise disputing, any Rents or other charges paid, payable or to
become payable by such REA Party, (D) that such REA Party is entitled
to cancel its REA or to be relieved of its operating covenants
thereunder, or (E) that there is a violation of any of the covenants,
conditions or restrictions contained in such REA.
(iii) With the exception of delinquencies in the payment of Rents
which are set forth on Schedule 6.1(f), no material default exists
under the REA on the part of the REA Parties thereto and Seller has no
knowledge of any condition which, with the passage of time or giving of
notice, would constitute a default under any REA. With the exception of
any requirement to repair any physical defects in the Property, the
Existing Venture is not in default under the REA. The Existing Venture
has not delivered any default notices to any party under the REA which
has not been cured.
(iv) There are no rent abatements, offset rights, "free rent
periods" or other concessions or inducements, including lease
assumptions or buy-outs, applicable to the REA or any rights to extend
or renew the REA except as set forth in Schedule 6.1(h) or the REA.
There are no options or rights to renew, extend, expand or terminate
the REA, except as set forth in Schedule 6.1(h). Except as set forth in
Schedule 6.1(h), neither Seller nor the Existing Venture have granted
any rights, options or rights of first refusal of any kind to any of
the REA Parties, which are currently in effect, to purchase or to
otherwise acquire the Property or any part thereof or interest therein.
All of the improvements to be constructed by the developer or owner
under the REA, or as required under any collateral agreement, plans or
specifications related to the REA, have been fully completed in
accordance with the terms thereof and paid for. No party to any REA has
given notice that it has ceased or that it intends to cease operating
its store or other property that it is required to operate under the
REA.
(i) Each of the Contracts is in full force and effect. To Seller's
knowledge, there have been no material defaults by any Party to a Contract which
have not heretofore been cured. There has been no material default (without
giving effect to any notice and cure rights) by the Existing Venture under any
Contract or any claim received by Seller or the Existing Venture of any such
default by any party thereto, which has not heretofore been cured except as set
forth on Schedule 6.1(i)(a). Except as set forth on Schedule 6.1(i)(b), all of
the Contracts are terminable upon notice given sixty (60) days or less before
any such termination, without penalty, fee or cost. A true and complete copy of
each Contract listed on Schedule 6.1(i)(b), together with any modifications,
amendments or supplements thereto, has been delivered or made available to the
Company.
(j) Schedule 6.1(j) contains a list of all permits,
authorizations, approvals and licenses currently maintained with respect to the
Property and all such permits, authorizations, approvals and licenses are in
full force and effect. Neither Seller nor the Existing Venture have received any
written notice of violation from any federal, state or municipal entity with
respect to the Property or in connection with the operations conducted thereon
that has not been cured or otherwise resolved to the satisfaction of such
governmental entity. To Seller's knowledge, the permits, authorizations,
approvals and licenses listed on Schedule 6.1(j) are all of the licenses and
permits which are required for the present use of the Property.
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(k) Except for non-friable asbestos and as set forth on Schedule
6.1(k), neither Seller, the Existing Venture nor any other Person has caused or
permitted any Hazardous Material to be maintained, disposed of, stored, treated,
recycled, brought upon, transported over or generated on, under or at the
Property or any part thereof, except for the presence, maintenance, storage, use
or transportation of substances commonly present or stored at or used in the
ordinary operation and maintenance of shopping centers in ordinary quantities
commonly present, stored or used at shopping centers and in compliance with
applicable laws, including Environmental Laws. There has been no release or
threatened release of any Hazardous Materials at, on or under the Property or
any part thereof that will give rise to any obligation or liability to conduct
or pay for any investigation, removal, remediation, monitoring, closure, or
post-closure care at, on or under the Property or any part thereof, nor has
there been any release or threatened release of Hazardous Materials with respect
to any offsite location to which Hazardous Materials have, or are alleged to
have, migrated or been transported from the Property. Seller and the Existing
Venture are in compliance with, and have heretofore complied with, all
applicable Environmental Laws with respect to the Property and as of the date
hereof there are no violations of applicable Environmental Laws at the Property
which have not been remediated in accordance with all applicable Environmental
Laws. Neither Seller nor the Existing Venture have received any written notice
from any governmental unit or other person that it or the Property is not in
compliance with any Environmental Law or that it has any liability with respect
thereto and there are no administrative, regulatory or judicial proceedings
pending or, to the knowledge of Seller, threatened with respect to the Property
pursuant to, or alleging any violation of, or liability under any Environmental
Law. Except as set forth on Schedule 6.1(k), neither Seller nor the Existing
Venture have installed any underground or above ground storage tanks on, under
or about the Property and no such tanks are located on, under or about the
Property.
(l) Except as set forth on Schedule 6.1(l), the Existing Venture
is under no obligation to make contributions or otherwise provide assistance to
any promotional association or promotional fund and has not customarily in the
past made or provided any such contributions or assistance. The promotional
association established with respect to the Property (the "PROMOTIONAL
ASSOCIATION") is an independent association established by and on behalf of the
Tenants, Seller and the Existing Venture having no ownership, management,
fiduciary or monetary interest of any kind therein. Seller and/or the Existing
Venture has remitted to the Promotional Association any amounts received by it
from Tenants and other Parties that constitute contributions to the Promotional
Association. Seller and/or the Existing Venture, as the case may be, has made
all required payments to any such Promotional Association or fund, if any.
(m) Except as provided in Schedule 6.1(m), there is no litigation,
including any arbitration, investigation or other proceeding by or before any
court, arbitrator or governmental or regulatory official, body or authority
which is pending or, to Seller's knowledge, threatened against Seller or the
Existing Venture relating to the Property, Seller's Interest or the
Transactions, there are no unsatisfied arbitration awards or judicial orders
against the Existing Venture and, to Seller's knowledge, there is no basis for
any such arbitration, investigation or other proceeding. Copies of all pleadings
and other documents furnished or made available by Seller to the Company with
respect to the litigation described on Schedule 6.1(m) are true, accurate and
complete in all respects.
(n) No condemnation proceeding or other proceeding or action in
the nature of eminent domain is pending with respect to all or any part of the
Property, and, to Seller's knowledge, no condemnation proceeding or other
proceeding or action in the nature of eminent
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<PAGE> 19
domain is pending with respect to any property owned by a Party to the REA which
is the subject of such REA and to Seller's knowledge no Taking is threatened
with respect to all or any part of the Property, or any property owned by a
Party to the REA which is the subject of such REA.
(o) True, correct and complete copies of current real estate tax
bills with respect to the Property, other than tax bills sent to Tenants who
have the obligation to pay such taxes to the collecting authority, have been
delivered or made available to the Company. No portion of the Property comprises
part of a tax parcel which includes property other than property comprising all
or a portion of the Property. No application or proceeding is pending with
respect to a reduction or an increase of such taxes. There are no tax refund
proceedings relating to the Property which are currently pending and neither
Seller nor the Existing Venture, nor any Affiliate thereof has applied for any
such reduction. Seller has no knowledge of any special tax or assessment to be
levied against the Property or any change in the tax assessment of the Property
other than the annual assessment. Neither Seller nor the Existing Venture has
received written notice of any, or has any knowledge of any special assessments
currently affecting the Property.
(p) Neither Seller nor the Existing Venture have received (i) any
written notice from any governmental authority having jurisdiction over the
Property of, and to Seller's knowledge there does not exist, (A) any violation
of any law, ordinance, order or regulation (including the ADA) affecting the
Property, or any portion thereof, which has not heretofore been complied with or
(B) any other obligation to any such governmental authority for the performance
of any capital improvements or other work to be performed by Seller or the
Existing Venture in or about the Property or donations of monies or land (other
than general real property taxes) which has not been completely performed and
paid for; or (ii) any written notice from any insurance company, insurance
rating organization or Board of Fire Underwriters requiring any alterations,
improvements or changes at the Property, or any portion thereof, which has not
heretofore been complied with.
(q) No approval, consent, waiver, filing, registration or
qualification with any third party, including any governmental bodies, agencies
or instrumentalities is required to be made, obtained or given for the
execution, delivery and performance of this Agreement or any of the Seller
Closing Documents by Seller or the consummation of the Transactions (other than
notification of ownership change or transfer or reissuance of permits as may be
required under Environmental Laws).
(r) The Existing Venture is a general partnership duly formed,
validly existing and in good standing under the laws of the State of Florida
with full power and authority to own the Property and conduct the business now
being conducted by it.
(s) ASM is a limited partnership duly formed, validly existing and
in good standing under the laws of the State of Delaware with full power and
authority to own the interest owned by it in the Existing Venture and conduct
the business now being conducted by it. ASM owns a 50% general partnership
interest in the Existing Venture and no Person has any option or other right to
acquire said interest or portion thereof, any other equity interest in the
Existing Venture or any security or instrument convertible into any such equity
interest.
(t) ASMII is a limited partnership duly formed, validly existing
and in good standing under the laws of the State of Delaware with full power and
authority to own the interest owned by it in the Existing Venture and conduct
the business now being conducted by
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<PAGE> 20
it. ASMII owns a 50% general partnership interest in the Existing Venture and no
Person has any option or other right to acquire said interest or portion
thereof, any other equity interest in the Existing Venture or any security or
instrument convertible into any such equity interest.
(u) ASMLLC is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware with full
power and authority to own the interest owned by it in ASM and ASMII and conduct
the business now being conducted by it. ASMLLC owns a .001% interest as a
general partner in each of ASM and ASMII and no Person has any option or other
right to acquire said interest or portion thereof, any other equity interest in
either ASM or ASMII or any security or instrument convertible into any such
equity interest.
(v) Seller has furnished the Company with the financial statements
of the Existing Venture (consisting of balance sheets and income statements) as
of, and for the calendar years ended, December 31, 1997 and December 31, 1998
(the "FINANCIAL STATEMENTS"). The Financial Statements are consistent with the
books and records and accounts of the Existing Venture and fairly present the
financial condition and results of the Existing Venture as of the dates thereof
and for the periods referred to therein, and the Financial Statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied throughout the periods indicated. Since December 31, 1998,
the Existing Venture has conducted its business in the ordinary course
consistent with past practice and there have been no material adverse changes in
the financial condition of the business, and Seller has no knowledge of any
circumstance or event which, insofar as can be reasonably foreseen, is likely to
result in any such material adverse change.
(w) [Intentionally Deleted].
(x) Schedule 6.1(x) accurately sets forth (i) a true, correct and
complete list of all instruments, agreements and other documents relating to the
Existing Indebtedness and all modifications or amendments thereof and
supplements thereto (including guaranties, indemnity agreements and side
letters) (the "EXISTING INDEBTEDNESS Documents"), (ii) the date of the Existing
Indebtedness Documents and of each modification or amendment thereof and
supplement thereto, (iii) the name of the holders of the Existing Indebtedness
as of the date hereof, (iv) the unpaid balances (including any accrued interest
thereon) thereof as of the date hereof, (v) the security therefor as of the date
hereof and (vi) the amount of any deposits or escrows held or established in
connection therewith. The Existing Indebtedness Documents are in full force and
effect, neither Seller nor the Existing Venture has received or delivered any
notice of default under any Existing Indebtedness Document which default has not
been cured, and, to the knowledge of Seller, no default on the part of the
Existing Venture or any other Party thereto exists thereunder (without regard to
notice and cure provisions). A true and complete copy of the Existing
Indebtedness Documents, including each written modification thereof and
supplement thereto, have heretofore been furnished to the Company. Such
documents constitute the entire agreement between the Existing Venture and each
Party thereto, and there are no oral promises or agreements amending or
modifying the same.
(y) Schedule 6.1(y) contains a true, complete and accurate list
including the amounts thereof of all policies of insurance with respect to the
Property, which policies are and will be kept in full force to and including the
Closing Date. All premiums for such insurance have been paid in full. To
Seller's knowledge, neither Seller nor the Existing Venture have performed,
permitted or suffered any act or omission which would cause the insurance
coverage provided in said policies to be reduced, cancelled, denied or disputed
and neither Seller nor the Existing Venture have received (and has no knowledge
of) any notice or request
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<PAGE> 21
from any insurance company or Board of Fire Underwriters (or organization
exercising functions similar thereto) canceling or threatening to cancel any of
said policies or denying or disputing coverage thereunder.
(z) To Seller's knowledge, there are no material structural or
other material physical defects in the Improvements or any component or system
of the Improvements and all such Improvements are in good condition and repair.
(aa) Neither Seller nor, to Seller's knowledge, the Existing
Venture has received notice that there is, and, to Seller's knowledge, there
does not now exist, any violation of any restriction, condition or agreement
contained in any easement, restrictive covenant or any similar instrument or
agreement affecting the Real Property or any portion thereof.
(bb) The Existing Venture has no employees. There are no
collective bargaining or union agreements with respect to the employees at
Property or to which Seller or the Existing Venture is bound. The Existing
Venture does not maintain or sponsor any employee benefit plan, including any
plans subject to the Employer Retirement Income Security Act of 1974, as
amended. There are no pending claims or, to Seller's knowledge, any threatened
claim against the Existing Venture by any employee whose employment related to
the Property.
(cc) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Seller.
(dd) [Intentionally Deleted].
(ee) All material documents and Books and Records have been
delivered or have been made available to the Company. All of the documents and
Books and Records that have been delivered or made available to the Company by
or on behalf of Seller, are true, correct and complete copies of what they
purport to be and have not been modified or amended, except as specifically
noted therein. All information set forth in the exhibits and schedules to this
Agreement is true, correct and complete in all material respects and not
misleading. Seller does not have any knowledge of any significant adverse fact
or condition relating to the Property, which has not been specifically disclosed
in writing by Seller to the Company.
(ff) There are no lease brokerage agreements, leasing commission
agreements or other agreements providing for payments of any amounts for leasing
activities or procuring tenants (including renewing leases at expanding spaces)
with respect to the Property other than as disclosed in Schedule 6.1(ff).
(gg) Schedule 1.1-2 attached hereto contains a true, correct and
complete description of the Personalty (including the name "Altamonte Mall"),
and except as disclosed on said Schedule 1.1-2, the Existing Venture has good
title to the Personalty free and clear from Liens and other encumbrances other
than the lien of the Existing Indebtedness Documents and the Permitted
Exceptions. The Personalty is all of the personal property that is necessary in
order to operate and maintain the Real Property as a first class regional
shopping center. The Existing Venture has taken all steps necessary in order to
protect its exclusive right to use the name "Altamonte Mall" in connection with
the Real Property.
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<PAGE> 22
(hh) As of October 15, 1999, (i) gift certificates having an
aggregate value of $100,160.00 have been sold, and (ii) gift certificates having
an aggregate value of $55,980.00 are outstanding.
(ii) Except as set forth in Schedule 6.1(ii) attached hereto,
neither Seller, nor any Affiliate of Seller (other than the Existing Venture),
owns (i) any right or interest in any real property adjacent to or neighboring
the Real Property including any outparcel or (ii) any right or interest in any
easement, right of way, development right, water or mineral right or any other
right which in any way affects the Real Property.
(jj) Except for routine work in the ordinary course of operating
the Real Property that will be paid when due, no work has been performed by
Seller or is in progress at Seller's request at the Real Property, and no
materials or supplies have been delivered to the Real Property at Seller's
request, that has resulted in the imposition of, or might provide the basis for
the imposition of, mechanics', materialmen's or other liens against the Real
Property.
(kk) The sales reports heretofore furnished by Seller to the
Company for calendar years 1996,1997 and 1998, and the rolling twelve (12)
months sales report from March 1999, disclose the sales by Tenants at the Retail
Property as reported to Seller by such Tenants.
(ll) All water, storm sewer/sanitary sewer, gas, electricity,
telephone and other utility lines, pipes and other equipment necessary in order
to operate the Real Property as a first class regional shopping center
(collectively, the "Utility Equipment") presently serve the Real Property and,
to Seller's knowledge, are in good working order. Neither Seller nor the
Existing Venture, has any outstanding unpaid obligation to pay the cost of
connection of any utility lines, pipes or other equipment serving the Real
Property.
(mm) The Real Property has not suffered any casualty or other
material damage that has not been fully repaired.
(nn) To Seller's knowledge, all HVAC, electric, gas, fire-safety,
plumbing, mechanical and other systems at the Real Property are in good, working
condition and no portion of same presently require replacement or significant
repair (i.e., repairs which are ordinarily capitalized under generally accepted
accounting principles).
(oo) Except as disclosed on Schedule 6.1(oo) attached hereto, no
capital work is currently in progress or contemplated.
(pp) Neither Seller nor the Existing Venture, has received written
notice from any Governmental Authority, from any Party to any REA, any Tenant or
any party to any other agreement or document, or otherwise has knowledge, that
the number of parking spaces at the Real Property is required under any Legal
Requirement, any Lease, or the REA, to be increased above the number of parking
spaces existing on the date hereof.
(qq) The Existing Venture has (i) filed all tax returns required
to be filed by it under applicable Legal Requirements and (ii) timely paid all
taxes shown to be due and payable on such tax returns.
(rr) Except as shown on the Title Commitment, from and after the
date of the Title Policy no additional Defect has occurred, which if not cured,
would have a material and
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<PAGE> 23
adverse effect on the marketability of title to the Real Property. Seller has no
knowledge of any defects, liens, encumbrances, adverse claims or other matters
insured against under the Title Policy (collectively, the "Insured Matters")
that could result in the issuer of the Title Policy denying its liability to the
Company on the grounds that the Existing Venture or the Company had knowledge of
any such Insured Matters solely by reason of notice thereof imputed to it as a
matter of law through either Seller, the Existing Venture or any Affiliate
thereof.
(ss) Except as set forth on Schedule 6.1(ss), neither Seller nor
the Existing Venture has received any written notice with respect to the Real
Property of any violation of law or municipal ordinances, orders or
requirements, that have been noted in or issued by any federal, state or
municipal department having jurisdiction, and which have not been fully remedied
and discharged of record.
(tt) To Seller's knowledge, Seller has provided the Company with
access to any and all certificates, licenses, permits, leases, ground leases,
operating agreements, books, records, documents and information relating to the
Real Property and the ownership and operation thereof which are in the
possession and control of Seller or the Existing Venture.
(uu) Seller is the owner of 100% of the membership interests in
ASMLLC and a 99.999% interest as a limited partner in each of ASM and ASMII.
Seller owns 100% of the Seller's Interest and Seller's Interest represents 100%
of the ownership interests in the Existing Venture. No Person has any option or
other right to acquire Seller's Interest, any portion thereof or any other
equity interest in Seller's Interest or any security or instrument convertible
into any such equity interest.
Notwithstanding anything to the contrary contained herein, (a)
Seller shall have no liability under this Agreement for the cost of repair,
remediation or correction of any physical defect in the Property except as a
result of a breach of the representations and warranties contained in Sections
6.1(k), (z), (mm) and (nn)) (but nothing contained in this paragraph shall limit
Seller's liability for damages, fines or other amounts owing to Parties,
Governmental Authorities or others on account of any such physical defect to the
extent that such damages, fines or other amounts are not for the cost of repair,
remediation or correction thereof) and (b) Seller shall have no liability for a
breach of representation or warranty contained herein or in the Closing
Documents to the extent that the Company has received a credit therefor under
the provisions of Article V.
6.2 Company Representations and Warranties. The Company represents and
warrants to Seller as follows:
(a) The Company is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware
with full right, power and authority to execute, deliver and perform this
Agreement.
(b) The execution, delivery and performance by the Company of
this Agreement have been duly and validly authorized by all requisite action on
the part of the Company. This Agreement has been, and the Company Closing
Documents will be, duly executed and delivered by the Company. This Agreement
constitutes, and when so executed and delivered the Company Closing Documents
will constitute, the legal, valid and binding obligations of the Company,
enforceable against it in accordance with their terms.
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<PAGE> 24
(c) None of the execution, delivery or performance of this
Agreement or the Company Closing Documents by the Company does or will, with or
without the giving of notice, lapse of time or both, violate, conflict with,
constitute a default or result in a loss of rights under or require the approval
or waiver of or filing with any Person (including any governmental body, agency
or instrumentality) under (i) the organizational documents of the Company or any
material agreement, instrument or other document to which the Company is a party
or by which the Company is bound or (ii) any judgment, decree, order, statute,
injunction, rule, regulation or the like of a governmental unit applicable to
the Company, other than notification of ownership change or transfer or
reissuance of permits as may be required under Environmental Laws.
(d) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of the
Company.
6.3 No Other Representations. Neither Seller nor any officer,
director, shareholder, member, agent, partner, employee, or representative of
Seller (or any officer, director, partner or employee of any agent of Seller)
has made any representation whatsoever regarding the Property or any part
thereof, or anything relating to the subject matter of this Agreement, except as
expressly set forth in this Agreement, and the Company, in executing, delivering
and performing this Agreement, has not and does not rely upon any statement,
information, or representation to whomsoever made or given, whether to the
Company or others, and whether directly or indirectly, verbally or in writing,
made by any person, firm or corporation, except as expressly set forth in this
Agreement or in the Seller Closing Documents.
6.4 Knowledge Defined. For the purposes of this Agreement, "knowledge"
(including "actual knowledge" and other similar terms) with respect to Seller
and the Existing Venture shall mean matters as to which any of the following
individuals have actual knowledge without any duty or responsibility to make any
inquiry, review or investigation: (a) John Bucksbaum, (b) Robert A. Michaels,
(c) Joel Bayer, (d) Bernard Freibaum and (e) Randy Richardson. Actual knowledge
shall not be deemed to exist merely by assertion by the Company of a claim that
any of the foregoing persons should have known of such facts or circumstances,
if such person did not have actual knowledge thereof. Seller hereby represents
and warrants that the foregoing individuals are the individuals with the primary
responsibility for overseeing the sale, management, and operation of the
Property at the level of vice president and above.
ARTICLE VII
Additional Covenants
7.1 Record Retention. Until three (3) years after the Closing, the
Company shall provide Seller upon prior written notice and during normal
business hours with reasonable access to the Books and Records and, at Seller's
cost, copies of all or any portion thereof. The Company either shall retain such
Books and Records until the third anniversary of the date hereof or notify
Seller of its desire to dispose of such Books and Records pertaining to any
period prior to the Closing which have been delivered to the Company and turn
them over to Seller if Seller so requests. Seller agrees to keep, and to
instruct its agents, employees and representatives to keep, confidential such
Books and Records (and any information contained therein) and any information
discovered in any such examinations and inspections, except in connection with
any legal proceedings or to the extent required by law. Upon the Company's
request, for a period of three (3) years after the Closing, Seller shall make
all of Seller's records
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<PAGE> 25
with respect to the Property which are in the possession or control of Seller
available to the Company for inspection, copying and audit by the Company's
designated accountants. The provisions of this Section 7.1 shall survive
Closing.
7.2 Publicity. In no event shall either Seller or the Company issue
any press release or otherwise disclose any non-public information regarding
this Agreement or the Transactions unless the other party has consented thereto
in writing as to the form and substance of any such statement or disclosure (and
Seller and the Company agree not unreasonably to withhold, condition or delay
such consent); provided, however, that nothing herein shall be deemed to limit
or impair in any way any party's ability to disclose the details of or
information concerning this Agreement or the Transactions to the extent
necessary to such party's attorneys, accountants or other advisors or to the
extent such party reasonably deems necessary or desirable pursuant to any court
or governmental order or applicable securities laws or regulations or financial
reporting requirements, or to obtain the Existing Indebtedness Consent
Documents. Further, to the extent necessary, either party may disclose any
information regarding this Agreement or the Transactions to its direct or
indirect constituent partners, members or shareholders, as the case may be (and
to counsel for such constituent partners, members and shareholders) and as
otherwise necessary to comply with the terms of this Agreement. Any disclosure
by a party's advisors or direct or indirect constituent partners, members or
shareholders shall be deemed a breach hereof by such party. If for any reason
this Transaction is not consummated, the Company will promptly return to Seller
all originals and copies of documents, reports and financial and other
information relating to the Property and to Seller which Seller has furnished to
the Company. The obligations of Seller and the Company under this Section 7.2
shall survive the termination hereof, however caused.
7.3 Assistance Following Closing. From and after the Closing, Seller
at the Company's reasonable expense shall provide reasonable assistance to the
Company in connection with the preparation of financial statements and bills and
the adjustment of losses and claims and the enforcement or settlement of any
such claims. Without limiting the foregoing, Seller shall, upon the reasonable
request of the Company from time to time, provide signed representation letters
with respect to revenues and expenses of Seller if required under GAAS to enable
the Company's accountants to render an opinion on the Company's financial
statements.
7.4 Further Assurances. Each of Seller and the Company agree, at any
time and from time to time after the Closing, to execute, acknowledge where
appropriate and deliver such further instruments and other documents (and to
bear its own costs and expenses incidental thereto) and to take such other
actions as the other of them may reasonably request in order to carry out the
intent and purpose of this Agreement; provided, however, that neither Seller nor
the Company shall be obligated, pursuant to this Section 7.4 to incur any
expense of a material nature and/or to incur any material obligations in
addition to those set forth in this Agreement and/or its respective Closing
Documents.
7.5 No Intercompany Accounts. Prior to the Closing Seller shall pay,
distribute, release or otherwise eliminate any and all intercompany debt or
accounts between the Existing Venture and Seller or any Affiliate of Seller.
ARTICLE VIII
Indemnification
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<PAGE> 26
8.1 Indemnification by Seller. From and after the Closing, Seller
shall indemnify, defend and hold harmless the Company and its members, officers,
directors, managers, employees, representatives and agents, and any direct or
indirect partner, shareholder, officer, director or member of any member of the
Company, and their respective successors and assigns (collectively, the
"INDEMNIFIED COMPANY PERSONS") from and against any Losses asserted against,
incurred or suffered by any Indemnified Company Person that results from,
relates to or arises out of (a) the breach or inaccuracy of any representation
or warranty made by Seller in this Agreement or the Seller Closing Documents,
(b) the breach or non-fulfillment by Seller of any of the covenants or
agreements of Seller under this Agreement or the Seller Closing Documents, or
(c) Seller's Liabilities.
8.2 Indemnification by the Company. From and after the Closing, the
Company shall indemnify, defend and hold harmless Seller and its direct or
indirect shareholders, directors, officers, members, partners, employees and
agents, and their respective successors and assigns (collectively the
"INDEMNIFIED SELLER PERSONS") from and against any Losses asserted against,
incurred or suffered by any Indemnified Seller Person that results from, relates
to or arises out of (a) the breach or inaccuracy of any representation or
warranty made by the Company in this Agreement or the Company Closing Documents,
(b) the breach or non-fulfillment by the Company of any of the covenants or
agreements of the Company under this Agreement or the Company Closing Documents,
or (c) the Assumed Liabilities.
8.3 Indemnification Procedure.
(a) Subject to the provisions of Section 8.3(d), the indemnified
party (the "INDEMNIFIED PARTY") shall give the indemnifying party (the
"INDEMNIFYING PARTY") prompt notice of any Losses (or potential Losses) which
may be covered under this Article VIII and such notice shall state the basis for
the claim, action or proceeding and the amount thereof (to the extent such
amount is determinable at the time when such notice is given). In the event the
notice relates to a claim, assertion, action, suit or proceeding by a thirty
party ("THIRD PARTY CLAIM") for which indemnification is provided hereunder, the
Indemnified Party shall permit the Indemnifying Party (or its insurance company)
to assume the defense of such claim, assertion, action, suit or proceeding and
the Indemnifying Party (or its insurance company) may (i) prior to the
commencement of any proceedings in connection with such Losses, undertake the
negotiation of any resolution of the dispute relating to such Losses, including
in accordance with the terms hereof any settlement or release, or (ii) undertake
the defense of any proceeding (including any alternative dispute resolution
proceeding) regarding such Losses by selecting legal counsel who shall be
reasonably acceptable to the Indemnified Party. Failure of the Indemnifying
Party to notify an Indemnified Party of its election to undertake the
Indemnified Party's defense of a Third Party Claim within a reasonable time, but
in no event more than thirty (30) days after notice thereof shall have been
given to the Indemnifying Party, shall be deemed a waiver by the Indemnifying
Party of its right to undertake the defense of such Third Party Claim. Willkie
Farr & Gallagher, Neal, Gerber & Eisenberg and counsel for the Indemnifying
Party's insurance company shall be deemed reasonably acceptable to the
Indemnified Party.
(b) Provided the Indemnifying Party shall have undertaken the
Indemnified Party's defense of a Third Party Claim with legal counsel reasonably
acceptable to the Indemnified Party, and shall have so notified the Indemnified
Party, the Indemnified Party shall be entitled to participate at its own expense
in the aforesaid negotiation or defense of any claim relating to such Losses
(subject to reimbursement to the limited extent provided in Section 8.3(e)), but
such negotiations or defense shall be controlled by counsel to the Indemnifying
Party.
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<PAGE> 27
(c) Except as provided in Section 8.3(e), the Indemnifying Party
shall not be liable for payments relating to the resolution of any dispute or
any settlement of any litigation or proceeding effected without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld, conditioned or delayed. The Indemnifying Party shall not, in the
defense of any such Third Party Claim, consent to the entry of any judgment or
award, or enter into any settlement, except in either event with the prior
consent of each Indemnified Party, which consent shall not be unreasonably
withheld, conditioned or delayed. To the extent any Indemnified Party declines
to consent to a bona fide offer of settlement or compromise, the Indemnifying
Party shall continue to defend, but the amount of such offer shall be the limit
of the Indemnifying Party's liability with respect to such claim, action or
proceeding with respect to the Indemnified Party that declined such offer.
Notwithstanding the foregoing, the Indemnifying Party shall not, without the
Indemnified Party's written consent (which consent may be withheld in the sole
and absolute discretion of the Indemnified Party) resolve any dispute or settle
or compromise any claim regarding Losses from a Third Party Claim or consent to
entry of any judgment which would impose an injunction or other equitable relief
upon the Indemnified Party or which does not include as an unconditional term
thereof the release by the claimant or the plaintiff of the Indemnified Party
from all liability in respect of any such Losses.
(d) The failure to give notice of a claim under this Article VIII
shall not release the Indemnifying Party of its obligations under this Article
VIII, except to the extent of the actual harm suffered thereby.
(e) In the event the Indemnifying Party fails after notice from
the Indemnified Party to timely undertake negotiation of any dispute or defend,
contest or otherwise protect against any claim or suit with respect to a Third
Party Claim, and to so notify the Indemnified Party, the Indemnified Party may,
but will not be obligated to, defend, contest or otherwise protect against the
same, and make any compromise or settlement thereof and recover the entire costs
thereof from the Indemnifying Party, including reasonable attorneys' and
experts' fees, disbursements and all amounts paid as a result of such claim or
suit or the compromise or settlement thereof. The Indemnified Party shall
cooperate and provide such assistance as the Indemnifying Party may reasonably
request in connection with the negotiation of any dispute and the defense of the
matter subject to indemnification and the Indemnifying Party shall reimburse the
Indemnified Party's reasonable costs incurred thereafter in connection with such
cooperation and assistance.
(f) Notwithstanding anything to the contrary contained herein,
neither Seller nor the Company shall be entitled to indemnification hereunder
for any Losses to the extent it has received a credit therefor pursuant to
Article V.
ARTICLE IX
Miscellaneous
9.1 Survival. Except for the representations and warranties of Seller
set forth in Section 6.1(k), which representations and warranties and the
indemnification provision relating thereto shall survive Closing indefinitely,
all other representations, warranties, covenants and agreements of Seller and of
the Company set forth in this Agreement shall survive until the Company ceases
to exist under the terms of the Operating Agreement.
9.2 Notices. Notices must be in writing and sent to the party to whom
or to which such notice is being sent, by (a) certified or registered mail,
postage prepaid and return receipt
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<PAGE> 28
requested, (b) commercial overnight courier service, or (c) delivered by hand
with receipt acknowledged in writing, as follows:
To the Company:
GGP/Homart II L.L.C.
110 North Wacker Drive
Chicago, Illinois 60606
Attention: Matthew Bucksbaum
with a copy thereof to:
The Comptroller of the State of New York,
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Deputy Comptroller
Investments and Cash Management
and
The Comptroller of the State of New York,
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Counsel
and
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6097
Attention: Monty Davis
and
Clarion Partners
335 Madison Avenue
New York, New York 10017
Attn: Jeffrey A. Barclay
To Seller:
GGP Limited Partnership
110 N. Wacker Drive
Chicago, Illinois
Attention: Robert A. Michaels
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<PAGE> 29
with a copy to:
Neal, Gerber & Eisenberg
Two North LaSalle Street, Suite 2200
Chicago, Illinois 60602
Attention: Marshall E. Eisenberg
All notices (i) shall be deemed given when received if delivered by hand or
overnight courier service or, if mailed as described above with appropriate
postage, after 5 business days and (ii) may be given either by a party or by
such party's attorneys. The cost of delivery shall be borne by the party
delivering the notice.
9.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute a single document when at least one counterpart has been executed and
delivered by each party hereto.
9.4 Amendments. Except as otherwise provided herein, this Agreement
may not be changed, modified, supplemented or terminated, except by an
instrument executed by the party hereto which is or will be affected by the
terms of such change, modification, supplement or termination.
9.5 Waiver. Each party shall have the right exercisable in its sole
and absolute discretion, but under no circumstances shall be obligated, to waive
or defer compliance by any other party with its obligations hereunder or to
waive satisfaction of any conditions contained herein for its benefit. No waiver
by any party of a breach of any covenant or a failure to satisfy any condition
shall be deemed a waiver of any other or subsequent breach or failure to satisfy
any other condition. All waivers of any term, breach or condition hereof must be
in writing.
9.6 Successors and Assigns. Subject to the provisions of Section 9.10,
the terms, covenants, agreements, conditions, representations and warranties
contained in this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
9.7 Third Party Beneficiaries. The provisions of this Agreement are
made for the benefit of the parties hereto, and their respective successors in
interest and assigns and are not intended for, and may not be enforced by, any
other person or entity.
9.8 Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
9.9 Governing Law. This Agreement has been made pursuant to and shall
be governed by the laws of the State of Delaware (without regard to conflicts of
law rules).
9.10 Assignment. This Agreement may not be assigned or delegated by any
party without the written consent of the other except that the Company may
assign this Agreement to an Affiliate of the Company, it being acknowledged and
agreed by the Company that no such assignment shall relieve the Company of its
obligations under this Agreement.
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9.11 Headings; Exhibits. The headings or captions of the various
Articles and Sections of this Agreement have been inserted solely for purposes
of convenience, are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
9.12 Gender and Number. Words of any gender shall include the other
gender and the neuter. Whenever the singular is used, the same shall include the
plural wherever appropriate, and whenever the plural is used, the same also
shall include the singular where appropriate.
9.13 Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes any
prior written or oral understandings and/or agreement among them with respect
thereto.
9.14 Costs of Enforcement. In the event that any action is brought by
any party or parties to this Agreement against any other party or parties to
enforce rights under this Agreement, the prevailing party's or parties' costs in
such action, including reasonable attorneys' fees, shall be paid by the other
party or parties. Any amounts owing hereunder which are not paid when due shall
bear interest at the per annum rate equal to the prime rate of Bank of America,
N.A. (or any successor), as the same may change from time to time, plus four
percent.
9.15 Time of the Essence. Time is of the essence with regard to each
provision of this Agreement. If the final date of any period provided for herein
for the performance of an obligation or for the taking of any action falls on a
Saturday, Sunday or banking holiday, then the time of that period shall be
deemed extended to the next day which is not a Sunday, Saturday or banking
holiday. Each and every day described herein shall be deemed to end at 5:00 p.m.
Central Time.
9.16 Indemnification Against Broker Claims. Seller shall indemnify,
defend and hold harmless the Company from and against all loss, liability,
damages, costs and expenses (including reasonable counsel fees) resulting from
any claim that may be made by any broker or other person claiming to have dealt
with Seller in connection with the Transactions, for a commission, fee or other
compensation by reason of the Transactions including any loss, liability, costs
and expenses (including reasonable counsel fees) incurred in enforcing this
indemnity. The Company shall indemnify, defend and hold harmless Seller from all
loss, liability, costs and expenses (including reasonable counsel fees)
resulting from any claim that may be made by any broker or other person claiming
a commission, fee or other compensation by reason of having dealt with the
Company in connection with the Transactions, including any loss, liability,
costs and expenses (including reasonable counsel fees) incurred in enforcing
this indemnity. The provisions of this Section 9.16 shall survive the Closing or
termination of this Agreement.
9.17 Arbitration. Except as otherwise provided herein, in the event of
any dispute in connection with the terms and provisions of this Agreement, the
parties agree to submit such dispute to arbitration in accordance with the
provisions of Section 14.13 of the Operating Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on the day and year first above written.
SELLER: COMPANY:
GGP LIMITED PARTNERSHIP, GGP/HOMART II L.L.C.,
a Delaware limited partnership a Delaware limited liability company
By: GENERAL GROWTH PROPERTIES, INC.
a Delaware corporation,
its general partner By: /s/ Joel Bayer
-------------------------------
Joel Bayer
Senior Vice President
By: /s/ Joel Bayer
-------------------------------
Joel Bayer
Senior Vice President
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<PAGE> 32
LIST OF EXHIBITS AND SCHEDULES
<TABLE>
<CAPTION>
Exhibits/Schedule Description
<S> <C>
Exhibit A Legal Description of the Land
Exhibit B Permitted Exceptions
Exhibit C [Intentionally Deleted]
Schedule 1.1-1 Anchors
Schedule 1.1-2 Personalty
Schedule 2.3(b) List of Approved Leases
Schedule 6.1(e) Rent Roll
Schedule 6.1(f) Schedule of Arrearages
Schedule 6.1(g) Leases
Schedule 6.1(h) Claims under REA
Schedule 6.1(i)(a) List of all Material Defaults Under Contracts
Schedule 6.1(i)(b) List of all Contracts not terminable on 60 days or less notice
Schedule 6.1(j) Permits and Licenses
Schedule 6.1(k) Environmental Disclosure
Schedule 6.1(l) Promotional Association Matters
Schedule 6.1(m) Pending or Threatened litigation
Schedule 6.1(x) List of Existing Indebtedness Documents
Schedule 6.1(y) Insurance Policies
Schedule 6.1(ff) Lease Brokerage Agreements
Schedule 6.1(ii) Seller's Rights in Neighboring Properties
Schedule 6.1(oo) Capital Expenditures in Progress or Contemplated
Schedule 6.1(ss) Notices of Uncured Violations
</TABLE>
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<PAGE> 1
EXHIBIT 2.6
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is dated as of November 10, 1999, by and
between GGP LIMITED PARTNERSHIP, a Delaware limited partnership ("SELLER"), and
GGP/HOMART II L.L.C., a Delaware limited liability company (the "COMPANY").
R E C I T A L S
WHEREAS, Seller owns 99.999% of the membership interests in Northbrook
Court I L.L.C., a Delaware limited liability company ("NCI"), the owner of 80%
of the partnership interests in Westcoast Estates, a California general
partnership (the "EXISTING VENTURE");
WHEREAS, Seller owns 99.999% of the membership interests in Northbrook
Court II L.L.C., a Delaware limited liability company ("NCII"), the owner of 20%
of the partnership interests in the Existing Venture;
WHEREAS, Seller owns 100% of the membership interests in Northbrook
Court L.L.C., a Delaware limited liability company ("NC"), the owner of the
remaining .001% of the membership interests in NCI and the owner of the
remaining .001% of the membership interests in NCII;
WHEREAS, the Existing Venture is the owner of the real property
commonly known as Northbrook Court, Northbrook, Illinois which is more
particularly described on EXHIBIT A attached hereto, other than the property
owned by the Anchors (as hereinafter defined) at such mall; and
WHEREAS, Seller desires to contribute to the capital of the Company all
of its membership interests in NCI, NCII and NC, and the Company desires to
acquire such interests.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
Definitions
1.1 Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
"ADA" shall mean the Americans With Disabilities Act, as amended.
"AFFILIATE" shall mean a Person that directly or indirectly through one
or more intermediaries controls, is controlled by, or is under common control
with the Person specified. The term "control" as used in the immediately
preceding sentence, means (a) the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the
controlled entity or (b) the ownership (directly or indirectly) of not less than
50% of the voting stock of a corporation or not less than 50% of the aggregate
legal and equitable interest in a limited liability company, a partnership or
other business entity.
<PAGE> 2
"AGREEMENT" shall mean this Contribution Agreement, as amended or
modified from time to time hereafter in accordance with the terms hereof.
"ANCHOR" shall mean each Person identified in SCHEDULE 1.1-1.
"ASSUMED LIABILITIES" shall have the meaning set forth in Section 2.3
(a).
"AUDITOR" shall have the meaning set forth in Section 5.2(b).
"BALANCE SHEET SETTLEMENT DATE" shall have the meaning set forth in
Section 5.1(c).
"BOOKS AND RECORDS" shall mean all records, books of account and papers
of the Existing Venture relating to the construction, ownership and operations
of the Property, including architect's drawings, blue prints and as-built plans,
maintenance logs, copies of warranties and guaranties, licenses and permits,
instruction books, employee manuals, records and correspondence relating to
insurance claims, financial statements, operating budgets, paper and electronic
media copies of data and other information relating to the Property available
from personal computers, structural, mechanical, geotechnical or other
engineering studies, soil test reports, environmental reports, underground
storage tank reports, feasibility studies, appraisals, ADA surveys or reports,
OSHA asbestos surveys, marketing studies, mall documents and compilations, lease
summaries and originals and/or copies of Leases, the REA and the Contracts and
correspondence related thereto.
"CLOSING" shall have the meaning set forth in Section 4.1.
"CLOSING BALANCE SHEETS" shall have the meaning set forth in Section
5.1(a).
"CLOSING DATE" shall have the meaning set forth in Section 4.1.
"CLOSING DOCUMENTS" shall mean the Seller Closing Documents and the
Company Closing Documents, collectively.
"CLOSING NET EQUITY" shall mean, in the case of the Preliminary
Proration Date Balance Sheet or Proration Date Balance Sheet, the excess of the
book value of the assets reflected on such balance sheet over the liabilities
reflected thereon.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY CLOSING DOCUMENTS" shall have the meaning set forth in Section
4.3.
"CONTRACTS" shall mean all equipment leases and all service,
maintenance and other contracts and concessions that are currently in effect and
to which the Existing Venture is a party respecting the use, maintenance,
development, sale or operation of the Property or any portion thereof (but
excluding this Agreement, the Leases, the Permitted Exceptions and the REA)
including those which are listed on SCHEDULE 6.1(I), together with any additions
thereto, modifications thereof or substitutions therefor hereafter entered into
in accordance with the provisions of this Agreement.
"CONTRIBUTION AMOUNT" shall have the meaning set forth in Section 2.2.
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<PAGE> 3
"DEFECT" shall mean any Lien, encumbrance, easement, agreement,
restriction, proceeding, lis pendens, notice, encroachment or exception to title
other than a Permitted Exception that materially and adversely affects the title
to or use of the Property.
"ENVIRONMENTAL LAWS" shall mean all federal, state and local statutes,
ordinances, codes, rules, regulations, orders and decrees regulating, relating
to or imposing liability or standards concerning or in connection with Hazardous
Materials, underground storage tanks or the protection of human health, natural
resources or the environment, as any of the same may be amended from time to
time, including the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. ss.9601 et. seq., as amended by the
Superfund Amendments and Reauthorization Act or any equivalent state or local
laws or ordinances; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. ss. 6901 et seq., as amended by the Hazardous and Solid Waste Amendments
of 1984, or any equivalent state or local laws or ordinances; the Federal
Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. ss.136 et. seq.
or any equivalent state or local laws or ordinances; the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq.); the Emergency Planning and
Community Right-to-Know Act ("EPCRA"), 42 U.S.C. ss.11001 et. seq. or any
equivalent state or local laws or ordinances; the Toxic Substance Control Act
("TSCA"), 15 U.S.C. ss.2601 et. seq. or any equivalent state or local laws or
ordinances; the Atomic Energy Act, 42 U.S.C. ss.2011 et. seq., or any equivalent
state or local laws or ordinances; the Clean Water Act (the "Clean Water Act"),
33 U.S.C. ss.1251 et. seq. or any equivalent state or local laws or ordinances;
the Clean Air Act (the "Clean Air Act"), 42 U.S.C. ss.7401 et seq. or any
equivalent state or local laws or ordinances; the Occupational Safety and Health
Act, 29 U.S.C. ss.651 et seq. or any equivalent state or local laws or
ordinances.
"EXISTING INDEBTEDNESS" shall mean the loans listed on Schedule 6.1(x).
"EXISTING INDEBTEDNESS DOCUMENTS" shall have the meaning set forth in
Section 6.1(x).
"EXISTING LENDER" shall mean the holder or holders of the Existing
Indebtedness as specified on Schedule 6.1(x).
"EXISTING MANAGER" shall mean General Growth Management, Inc.
"EXISTING VENTURE" shall mean Westcoast Estates, a California general
partnership.
"EXECUTION DATE" shall mean the date of this Agreement.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
6.1(v).
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"GAAS" shall mean Generally Accepted Auditing Standards as promulgated
by the Auditing Standards Division of the American Institute of Certified Public
Accountants from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state or local
government, court, department, commission, board and office having jurisdiction
over the Property, Seller, Existing Venture or the Company, or any other body
exercising functions similar to those of any of the foregoing.
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<PAGE> 4
"HAZARDOUS MATERIALS" shall mean any substance, material, waste, gas or
particulate matter which (i) is now, or at any future time may be, regulated by
the United States Government, the state in which the Real Property is located,
any other state with jurisdiction, or any local governmental authority, or (ii)
the exposure to, or manufacture, possession, presence, use generation, storage,
transportation, treatment, release, disposal, abatement, cleanup, removal,
remediation or handling of is prohibited, controlled or regulated by any
Environmental Law, or (iii) requires investigation or remediation under any
Environmental Law or common law, or (iv) is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous. Such term includes any material or substance which is (1) defined as
a "hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous waste," "restricted hazardous waste" or any like or similar term under
any applicable Environmental Law; (2) oil and petroleum products; (3) asbestos
or asbestos-containing material as defined in the regulations of the
Occupational Safety and Health Administration at 29 C.F.R. ss.1910.1001; (4)
polychlorinated biphenyls; (5) radioactive material; (6) designated as a "toxic
pollutant" or a "hazardous substance" pursuant to Sections 307 or 311 of the
Clean Water Act; (7) defined as a "hazardous waste" pursuant to Section 1004 of
RCRA; (8) defined as a "hazardous substance" pursuant to Section 101 of CERCLA;
(9) designated as a "hazardous chemical" substance or mixture pursuant to TSCA;
(10) designated as an "extremely hazardous" substance under Section 302 of
EPCRA; (11) designated as a "priority pollutant" or "hazardous air pollutant"
pursuant to the Clean Air Act; (12) designated as a hazardous chemical under the
Occupational Safety and Health Act; (13) radon gas or other radioactive source
material, including special nuclear material, and byproduct materials regulated
under the Atomic Energy Act, 42 U.S.C. ss.2011 et. seq.; (14) subject to
regulation under FIFRA; (15) natural gas, natural gas liquids, liquefied natural
gas, and synthetic gas usable for fuel; or (16) infectious wastes or materials
and pathogenic bacteria or other pathogenic microbial agents.
"IMPROVEMENTS" shall mean improvements, buildings, structures,
fixtures, facilities, installations, machinery and equipment, in, on, over or
under the Land, including the foundations and footings therefor, elevators,
plumbing, air conditioning, heating, ventilating, mechanical, electrical and
utility systems (except to the extent owned by a utility company) and any other
similar systems, signs and light fixtures (except to the extent of trade
fixtures and equipment owned by tenants under the Leases), doors, windows,
fences, parking lots, walks and walkways and each and every other type of
physical improvement to the extent owned, in whole or in part, by the Existing
Venture, located at, on or affixed to the Land, to the full extent such items
constitute or are or can or may be construed as realty under the laws of the
state in which the Real Property is located.
"INDEMNIFIED COMPANY PERSONS" shall have the meaning set forth in
Section 8.1.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 8.3.
"INDEMNIFIED SELLER PERSONS" shall have the meaning set forth in
Section 8.2.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 8.3.
"LAND" shall mean those certain parcels of real estate described on
EXHIBIT A.
"LANDLORD WORK" shall mean all work, improvements, fixtures, fittings
and equipment (other than normal repairs, maintenance or replacements) that are
required (or may in the future be required) to be furnished or provided to
Tenants or REA Parties or paid for by landlord or developer under the terms of
the Leases or the REA, as in effect on the date hereof.
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<PAGE> 5
"LEASES" shall mean all leases, tenancies, concessions, licenses and
occupancy agreements currently in effect and to which the Existing Venture or
any of its predecessors in title is a party affecting or relating to the
Property including those which are listed on SCHEDULE 6.1(G), together with any
additions thereto, modifications thereof or substitutions therefor hereafter
entered into in accordance with the provisions of this Agreement.
"LEGAL REQUIREMENTS" shall mean any laws, ordinances, orders, rules,
regulations and requirements of any Governmental Authority which may be
applicable to the Property, the Existing Venture or Seller.
"LIENS" shall mean any mortgages, deeds of trust, security interests,
judgments or charges, pledges, options, rights of first offer or first refusal,
liens of any type, restrictions, claims and other encumbrances of any nature
whatsoever other than the Existing Indebtedness Documents.
"LIEN SEARCHES" shall mean a search report by an independent search
firm reasonably acceptable to the Company of the Secretary of State records,
county recorder records, local court records (federal, state, county and
municipal) and such other official public records with respect to the Property
that would disclose the presence of any Liens, bankruptcy proceedings, lis
pendens or other matters affecting the Property, the Existing Venture or Seller.
"LOSSES" shall mean any and all claims, actions, suits, proceedings,
demands, losses, damages, liabilities, obligations, judgments, settlements,
awards, penalties, costs or expenses, including reasonable attorneys', experts'
or consultants' fees and expenses.
"NC" shall mean Northbrook Court L.L.C., a Delaware limited liability
company.
"NCI" shall mean Northbrook Court I L.L.C., a Delaware limited
liability company.
"NCII" shall mean Northbrook Court II L.L.C., a Delaware limited
liability company.
"OPERATING AGREEMENT" shall mean that certain Operating Agreement among
the Company, Seller and the New York State Common Retirement Fund dated as of
the date hereof.
"PARTY" shall mean a party to the REA, a Contract or Permitted
Exception Document (or the successor or assignee thereof) or a Tenant under a
Lease, in each case other than the Existing Venture or its predecessors in title
with respect to the Property.
"PERMITTED EXCEPTION DOCUMENT" shall have the meaning set forth in
Section 2.3(b).
"PERMITTED EXCEPTIONS" shall mean the exceptions to title to the
Property listed on EXHIBIT B attached hereto and made a part hereof.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, governmental unit or agency, trust, estate or other entity of
any type.
"PERSONALTY" shall mean all of the personal property, both tangible and
intangible, owned by the Existing Venture (and the Existing Venture's interest
in any of the following) and located in or upon or used in connection with the
operation or maintenance of the Property, including machinery; equipment;
building supplies and materials; consumables; inventories;
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<PAGE> 6
names, logos, trademarks, trade names and copyrights; all assignable licenses,
permits, approvals, authorizations, variances, consents and certificates of
occupancy; all assignable guarantees or warranties (including performance bonds
obtained by, or for the benefit of, the Existing Venture, pertaining to the
ownership, construction or development of the Real Property or any part
thereof); the Books and Records; computer and peripheral equipment; computer
software and data contained in hard drives and on diskette; advertising
materials; and telephone exchange numbers. Without limiting the foregoing,
"Personalty" shall include the property listed on SCHEDULE 1.1-2. Personalty
shall not include personal items belonging to Tenants or to employees of the
Existing Venture and the rights of the Existing Venture in and to the Leases,
the REA and the Contracts.
"PRELIMINARY PRORATION DATE BALANCE SHEET" shall have the meaning set
forth in Section 5.1(a).
"PROMOTIONAL ASSOCIATION" shall have the meaning set forth in Section
6.1(l).
"PROPERTY" shall mean (a) the Real Property, (b) the Personalty, (c)
the rights and interests of the Existing Venture in, to and under all Leases,
(d) the rights and interests of the Existing Venture in, to and under the REA,
(e) the rights and interests of the Existing Venture in, to and under the
Contracts to the extent assignable, (f) the rights and interests of the Existing
Venture in, to and under the Existing Indebtedness Documents.
"PRORATION DATE" shall mean November 30, 1999.
"PRORATION DATE BALANCE SHEET" shall have the meaning set forth in
Section 5.1(a).
"REAL PROPERTY" shall mean the Land and the Improvements, together with
all of the estate, right, title and interest of the Existing Venture therein,
and in and to (a) any land lying in the beds of any streets, roads or avenues,
open or proposed, public or private, in front of or adjoining the Land to the
center lines thereof, and in and to any awards to be made in lieu thereof and in
and to any unpaid awards for damage to the foregoing by reason of the change of
grade of any such streets, roads or avenues; and (b) all easements, rights,
licenses, privileges, rights-of-way, strips and gores, hereditaments and such
other real property rights and interests appurtenant to the foregoing (including
all rights of the Existing Venture under the REA).
"REA" shall mean that certain Memorandum Of Operating Agreement dated
as of June 17, 1975 by and among Homart Development Co., Sears Roebuck and Co.,
Adcor Realty Corporation, and Carter Hawley Hale Stores, Inc., as amended by (a)
that certain First Amendment To Operating Agreement dated as of February 16,
1976 between Homart Development Co., Sears Roebuck and Co., Adcor Realty
Corporation, and Carter Hawley Hale Stores, Inc., as amended by that certain
Correction To First Amendment To Operating Agreement dated as of April 5, 1976
between Homart Development Co., Sears Roebuck and Co., Adcor Realty Corporation,
and Carter Hawley Hale Stores, Inc., as amended by that Second Amendment To
Operating Agreement dated as of August 30, 1978, between Carter Hawley Hale
Stores, Inc., Sears Roebuck and Co., Federated Department Stores, Inc., Adcor
Realty Corporation, and Homart Development Co., as amended by that Third
Amendment To Operating Agreement dated as of November 2, 1983, between Carter
Hawley Hale Stores, Inc., J.C. Penny Properties, Inc., Federated Department
Stores, Inc., Adcor Realty Corporation and Homart Development Co., as amended by
that certain Fourth Amendment To Operating Agreement dated as of February 1,
1994 between, The Neiman Marcus Group, Inc., Marshall Field & Company, and
Westcoast Estates, as amended by that certain Fifth Amendment To
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<PAGE> 7
Operating Agreement dated as of May 7, 1998 between The Neiman Marcus Group,
Inc., Dayton Hudson Corporation, the May Department Stores Company, and
Westcoast Estates, together with any additions thereto, modifications thereof or
substitutions therefor hereafter entered into in accordance with the provisions
of this Agreement.
"REGULATIONS" shall mean the final, temporary or proposed Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"RENT ROLL" shall have the meaning set forth in Section 6.1(e).
"RENTS" shall mean fixed, minimum, additional, percentage and overage
rents, common area maintenance charges, advertising and promotional fees,
insurance charges, rubbish removal charges, sprinkler charges, shoppers aid
charges, water charges, utility charges, HVAC charges, amounts payable with
respect to real estate and any other taxes, and other amounts payable by any
Party under the Leases and the REA.
"RETAINED DEBT" shall have the meaning set forth in the Operating
Agreement.
"SELLER CLOSING DOCUMENTS" shall have the meaning set forth in Section
4.2.
"SELLER'S INTEREST" shall mean the entire membership interest of Seller
in NCI, together with all rights, obligations and powers of Seller as a member
of NCI, together with the entire membership interest of Seller in NCII, together
with all rights, obligations and powers of Seller as a member of NCII, together
with the entire membership interest of Seller in NC, together with all rights,
obligations and powers of Seller as a member of NC.
"SELLER'S LIABILITIES" shall have the meaning set forth in Section
2.3(b).
"SURVEY" shall mean the Urban ALTA/ACSM Land Title Survey of the
Property by Gremley & Biedermann, Project # 991819, Recertified August 12, 1999.
"TENANTS" shall mean tenants, concessionaires, licensees and/or
occupants under the Leases.
"TENANT SERVICES" shall mean all services supplied by or on behalf of
the Existing Venture to Tenants for which Tenants are separately charged, other
than services in the nature of common area maintenance.
"THIRD PARTY CLAIM" shall have the meaning set forth in Section 8.3(a).
"TITLE COMMITMENT" shall mean the Commitment for Title Insurance
No.99-03693 issued by Commonwealth Land Title Insurance Company to the Company
effective March 30, 1999, together with copies of all documents underlying all
exceptions to title and all encumbrances on and other matters of record
affecting the Real Property.
"TITLE COMPANY" shall mean Chicago Title Insurance Company.
"TITLE POLICY" shall mean Owner's Policy of Title Insurance No.
N9800296P issued by Title Company and effective May 13, 1998, insuring the
Existing Venture as owner of good, marketable and indefeasible fee title to the
Property, subject only to the Permitted Exceptions.
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<PAGE> 8
"TRANSACTIONS" shall mean the transactions contemplated by this
Agreement.
"UTILITY DEPOSITS" shall have the meaning set forth in Section 5.8.
1.2 References. All references in this Agreement to particular sections
or articles shall, unless expressly otherwise provided, or unless the context
otherwise requires, be deemed to refer to the specific sections or articles in
this Agreement, and any references to "Exhibit" shall, unless otherwise
specified, refer to one of the exhibits annexed hereto and, by such reference,
be made a part hereof. The words "herein", "hereof", "hereunder", "hereinafter",
"hereinabove" and other words of similar import refer to this Agreement as a
whole and not to any particular section, subsection, paragraph or article
hereof. The words "include", "includes" and "including" shall be deemed in each
case to be followed by the phrase "without limitation".
1.3 Terms Generally. Definitions in this Agreement apply equally to
both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.
ARTICLE II
Contribution
2.1 Contribution of Seller's Interest. Upon the terms and subject to
the conditions contained herein, at the Closing, Seller shall contribute to the
Company, and the Company shall acquire, Seller's Interest, free and clear of all
Liens. The Seller's Interest shall be deemed to have a fair market value equal
to $150,000,000.00, which represents the fair market value of the Property, plus
or minus Closing Net Equity as set forth on the Preliminary Proration Date
Balance Sheet (such amount, as the same is adjusted as hereinafter provided, the
"Contribution Amount").
2.2 Consideration. In consideration for the contribution of Seller's
Interest and certain other property being contributed to the capital of the
Company by Seller, and in addition to the assumption of liabilities and
adjustments as hereinafter provided, on the Closing Date, Seller shall receive
units of membership interest in the Company pursuant to the Operating Agreement.
2.3 Liabilities.
(a) The Existing Venture shall continue to be liable and
responsible for all liabilities and obligations of the Existing Venture other
than the Seller's Liabilities (the "ASSUMED LIABILITIES"). Without limiting the
foregoing, Assumed Liabilities shall include all liabilities and obligations
relating to the Existing Indebtedness (other than Seller's Retained Debt)
notwithstanding any joint and several or other liability of Seller under the
Existing Indebtedness. Further without limiting the foregoing, Assumed
Liabilities shall include all leasing costs, allowances, concessions, rent
abatements, build-out costs, other leasing inducements and leasing commissions
with respect to (i) all leases executed on or after September 1, 1999, and (ii)
all leases identified on Schedule 2.3(b) attached hereto without regard to the
date of execution thereof, including commissions due to Existing Manager.
(b) Seller shall be responsible for all of the following
liabilities or obligations of the Existing Venture, Seller or any predecessor of
any of them (collectively, the "SELLER PARTIES") or other Person specified below
(collectively, the "Seller's Liabilities"): (i) any liability or obligation that
is not related to the Property, (ii) any liability or obligation that arises
from
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contracts or agreements other than the Leases, the Contracts, the REA, the
Existing Indebtedness Documents or the instruments or agreements constituting
the Permitted Exceptions (a "PERMITTED EXCEPTION DOCUMENT") (except to the
extent the Existing Venture accepts the benefits thereof), (iii) any tort
liability arising from any accident, injury, event, circumstance, action or
omission occurring prior to the Closing Date (except to the extent of the
insurance proceeds received by the Existing Venture in connection therewith),
whether or not asserted before or after the Closing, (iv) any liability or
obligation to a Party for breach of, or other payment obligation under, a Lease,
REA, Contract or Permitted Exception Document (including any claimed overcharge
of common area maintenance or other similar charges but excluding the items
covered in clause (v)), to the extent that the liability or obligation relates
to the period or accrued prior to the Closing Date, whether or not asserted
before or after the Closing, (v) all leasing costs, costs of Landlord Work (net
of the value of any additional revenues that are to be received by the Existing
Venture and are directly attributable to the Landlord Work), allowances,
concessions, rent abatements, build-out costs, other leasing inducements and
leasing commissions, with respect to all leases executed prior to September 1,
1999 (except with respect to the leases identified on Schedule 2.3(b) attached
hereto which are included in Assumed Liabilities as set forth in Section 2.3(a)
above), (vi) any fine, penalty or other amount that is imposed or assessed by or
which was payable to (including any installment thereof) a Governmental
Authority for the period prior to the Closing Date, whether or not imposed or
assessed before or after the Closing, (vii) all federal, state and local taxes
of any Seller Party of whatever kind and nature relating to the period prior to
Closing, (viii) liabilities and obligations relating to any employees (current
or former), employee benefit plans or collective bargaining agreements of the
Existing Manager or any Seller Party that accrued, relate to or arise from any
incident, event, circumstance, action or omission occurring during the period
through the Closing Date, including severance pay and accrued vacation pay
obligations and other liabilities of the Existing Manager, any Seller Party, the
Company or others relating to the termination of any of such employees prior to
the Closing or as the result of the consummation of the Transactions, (ix) any
liability or obligation to pay for work performed at, or materials supplied or
delivered to, the Property prior to the Closing, (x) any liability or obligation
relating to litigation that is commenced by Persons other than Parties or
Governmental Authorities and that relates to incidents, events, circumstances,
actions or omissions occurring during the period prior to Closing, whether or
not asserted before or after the Closing and (xi) any other costs or liabilities
imposed on Seller hereunder or under the Operating Agreement, including the
obligations of Seller thereunder as to the Retained Debt. Notwithstanding
anything to the contrary contained herein, Seller's Liabilities shall not
include (i) any liabilities or obligations to the extent that the Company has
received a credit therefor under the provisions of Article V and (ii) subject to
the provisions of Section 2.3(c), the cost of repair, remediation or correction
of any physical defect in the Property (but do include damages, fines or other
amounts owing to Parties, Governmental Authorities or others on account of any
such physical defect to the extent that such damages, fines or other amounts are
not for the cost of repair, remediation or correction thereof).
(c) Nothing contained in this Section 2.3 shall impair the rights
of the Company for a breach of any representation or warranty contained herein
or in the Seller Closing Documents.
ARTICLE III
Costs and Expenses
3.1 Title and Survey Costs. Title and Survey costs shall be paid as
follows:
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(a) The Company shall pay the cost of obtaining the Title
Commitment and the cost of recording any documents required to release, cure or
remove Defects;
(b) The Company shall pay the cost of obtaining the Survey;
(c) The Company shall pay the cost of recording any other
documents;
(d) Subject to any separate agreement between Seller and the
Company, the Company shall be solely responsible for the payment of any real
property transfer taxes levied or imposed upon Seller or the Property as a
result of the transfers to the Company, gains taxes levied or imposed upon
Seller or the Property as a result of the transfers to the Company, sales taxes
levied or imposed upon Seller or the Property as a result of the transfers to
the Company, and documentary stamps and other taxes, fees or charges imposed in
connection with the conveyance of Seller's Interest or any portion thereof;
(e) The Company shall pay all filing fees and charges and any
personal property sales taxes in connection with the indirect transfer of the
Personalty to the Company; and
(f) The Company shall pay the costs of the Lien Search.
3.2 Other Costs. Except for expenses and costs related to the
termination of any existing management agreement and the termination of any
employees, the Company shall pay any and all costs or expenses in connection
with the termination of any Contracts to be terminated in accordance with the
terms of this Agreement. The Company shall pay the legal fees of its counsel and
Seller shall pay the legal fees of Neal, Gerber & Eisenberg incurred in
connection with the drafting and negotiation of this Agreement and the Closing
of the Transactions.
ARTICLE IV
Closing
4.1 Closing. The closing of the Transactions (the "CLOSING") shall take
place at the offices of Neal, Gerber & Eisenberg, Two North LaSalle Street,
Chicago, Illinois 60602, commencing at 10:00 a.m., local time, on the date
hereof (the "CLOSING DATE").
4.2 Seller Closing Documents. On or prior to the Closing Date, Seller
shall deliver, or cause to be delivered, to the Company the following documents
(collectively, the "SELLER CLOSING DOCUMENTS"), duly executed by Seller and the
other parties thereto (other than the Company) and in form and substance
reasonably acceptable to the Company and to Seller unless the form thereof is
attached hereto:
(a) Assignment or assignments of membership interest with respect
to NCI, NCII and NC, assigning Seller's Interest from Seller to the Company.
(b) An affidavit of Seller stating its U.S. taxpayer
identification number and that it is a "United States person", as defined by
Sections 1445(f)(3) and 7701(b) of the Code.
(c) Such certificates as the Company may reasonably request as to
the authorization on the part of Seller of the execution, delivery and
performance of this Agreement and the authority of the Persons executing and
delivering this Agreement and the Seller Closing Documents on behalf of Seller.
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(d) Certificates issued by the Delaware Secretary of State, dated
not more than ten (10) days prior to the Closing Date, certifying the good
standing of Seller and the general partner(s) of Seller, respectively.
(e) Originals or certified copies of the organizational documents
for the Existing Venture, NC, NCI and NCII, including partnership agreements,
operating agreements, articles of organization, by-laws, minute books and
records of meetings, including all amendments thereof.
(f) Original, or copies certified by Seller as true, complete and
correct, of each of the Leases and the REA, together with all Books and Records
including current real estate tax bills, water, sewer and utility bills and all
Tenant correspondence.
(g) Keys and combinations to locked compartments within the
Property.
(h) The Existing Indebtedness Documents.
(i) Any instruments, documents or certificates required to be
executed by Seller with respect to any state, county or local transfer taxes
applicable to the conveyance of Seller's Interest pursuant to this Agreement.
(j) Such other documents, instruments or agreements which Seller
is required to deliver to the Company pursuant to the other provisions of this
Agreement or which the Company reasonably may deem necessary or desirable in
order to consummate the Transactions in accordance with the terms hereof.
4.3 Company Closing Documents. On or prior to the Closing Date, the
Company shall deliver to Seller the following documents (herein referred to
collectively as the "COMPANY CLOSING DOCUMENTS"), duly executed by an authorized
officer on behalf of the Company and the other parties thereto (other than
Seller) and in form and substance reasonably acceptable to Seller and to the
Company unless the form thereof is attached hereto:
(a) An agreement or agreements pursuant to which the Company
accepts assignment of Seller's Interest.
(b) A duly executed and acknowledged Secretary's Certificate,
certifying that the members of the Company have duly adopted resolutions
authorizing the consummation of the Transactions and certifying the authority of
the respective authorized signatories of the Company executing and delivering
this Agreement and the Company Closing Documents in their capacities as officers
of the Company.
(c) A certificate issued by the Secretary of State of Delaware
dated not earlier than ten (10) days prior to the Closing Date certifying the
existence and good standing of the Company as of the date of such certificate.
(d) Copies of the Certificate of Formation of the Company and any
amendments thereto, as of the Closing Date certified by the Secretary of State
of the State of Delaware as of a date not more than twenty (20) days prior to
the Closing Date, together with a
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certificate of an officer of the Company to the effect that the Certificate of
Formation of the Company, as certified by the Secretary of State of Delaware,
has not been further amended, revised, restated, cancelled or rescinded up to
and including the Closing Date.
(e) Any instruments, documents or certificates required to be
executed by the Company with respect to any state, county or local transfer
taxes applicable to the conveyance of Seller's Interest pursuant to this
Agreement.
(f) Such other documents, instruments or agreements which the
Company may be required to deliver to Seller pursuant to the other provisions of
this Agreement or which Seller reasonably may deem necessary or desirable to
consummate the Transactions; provided, however, that any such other document,
instrument or agreement which Seller reasonably deems necessary or desirable
shall not impose upon the Company any obligation or liability other than an
obligation or liability expressly imposed upon the Company pursuant to the terms
of this Agreement or pursuant to the terms of the other the Company Closing
Documents specified in this Section 4.3.
4.4 Joint Deliveries. Seller and the Company shall jointly execute and
deliver the Preliminary Proration Date Balance Sheet.
ARTICLE V
Net Equity Adjustment
5.1 Net Equity Adjustment.
(a) At or prior to Closing, Seller shall prepare and deliver to
the Company a balance sheet with respect to the Property and the Existing
Venture (the "PRELIMINARY PRORATION DATE BALANCE SHEET") prepared as of the last
day of the month prior to the Closing Date, or, if the data as of such date are
unavailable, the last day of the second month prior to the Closing Date. No
later than one hundred twenty (120) days after the Closing Date, the Company
shall cause to be prepared and delivered to Seller an unaudited balance sheet
with respect to the Property and the Existing Venture as of the Proration Date
(the "PRORATION DATE BALANCE SHEET" and, together with the Preliminary Proration
Date Balance Sheet, the "CLOSING BALANCE SHEETS"), showing Closing Net Equity.
The Closing Balance Sheets shall be prepared on an accrual basis in accordance
with GAAP applied in a manner consistent with that utilized in the preparation
of the financial statements for General Growth Properties, Inc. without regard
to any special provisions relating to its REIT status, provided however, that
the following rules shall be employed:
(i) the following assets shall be excluded or eliminated:
deferred rent receivables; deferred financing, leasing and other costs;
tenant lease incentives; prepaid expenses to the extent the full amount
thereof could not reasonably be expected to inure to the benefit of the
Existing Venture (including but not limited to prepaid insurance
premiums);
(ii) no amount shall be recorded under the classification
"Building & Improvements", "Fixtures & Equipment", "Tenant
Improvements" and "Land";
(iii) net carrying amounts for or in respect of the
following shall be eliminated, with such elimination to be done, in
each case net of accumulated amortization and depreciation, allowances
for bad debts and other contra accounts:
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building and improvements, fixtures and equipment, land, capitalized
taxes, tangible personal property and goodwill;
(iv) the following assets shall be included (and shall be
deemed to be part of the assets of the Existing Venture and transferred
to the Company): all cash in the Existing Venture;
(v) the following liabilities shall be excluded or
eliminated: Retained Debt, deferred revenues and income tax accounts;
(vi) at Seller's election, a liability may be excluded to
the extent that it is a Seller's Liability and any reserves or other
assets relating to such excluded liability shall be excluded or
distributed to Seller;
(vii) there shall be excluded from assets an amount equal
to proceeds from condemnation awards (or payments in lieu thereof),
casualty insurance or the termination of any Lease, in each case
received after the date hereof;
(viii) reserves for billed accounts receivable, including
Rent and all other tenant charges, shall be calculated so that (A)
accounts receivable from Tenants in bankruptcy shall utilize a reserve
of 100%, (B) accounts receivable that are 90 days (but less than 120
days) past due shall utilize a reserve of 25%, and (C) accounts
receivable that are more than 120 days past due shall utilize a reserve
of 50%, and in each case accounts receivable shall also include a
reserve of five percent (5%) for unbilled tenant charges, and an
accrual shall be recorded for insurance deductibles based upon
insurance company estimates; and
(ix) any distributions made by Existing Venture during
November shall be treated as though not made.
(b) If, based on the Preliminary Proration Date Balance Sheet,
Closing Net Equity exceeds zero, the Contribution Amount will be increased by
the amount of such excess. If, based on the Preliminary Proration Date Balance
Sheet, Closing Net Equity is less than zero, the Company will receive a credit
against the Contribution Amount equal to the amount of such shortfall.
(c) If, based on the Proration Date Balance Sheet, Closing Net
Equity, adjusted for the amount of any adjustment made pursuant to Section
5.1(b), exceeds zero, the Company will, no later than the later of (i) sixty-one
(61) days following the delivery of the Proration Date Balance Sheet or (ii)
five (5) business days following the resolution of a dispute with respect to an
item on the Proration Date Balance Sheet as set forth in subsection 5.2 hereof
(the "BALANCE SHEET SETTLEMENT DATE"), pay to Seller the amount of such excess
by wire transfer of immediately available funds to an account designated by
Seller. If Closing Net Equity, adjusted for the amount of any adjustment made
pursuant to Section 5.1(b), is less than zero, Seller will pay to the Company no
later than the Balance Sheet Settlement Date the amount of such shortfall by
wire transfer of immediately available funds to an account designated by the
Company.
5.2 Resolution of Disputes on Proration Date Balance Sheet.
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(a) If Seller disagrees with any item on the Proration Date
Balance Sheet, Seller shall notify the Company in writing of such disagreement
within sixty (60) days after Seller's receipt of the Proration Date Balance
Sheet. Such notice shall set forth the basis for such disagreement in reasonable
detail. During such sixty (60) day period, the Company shall afford Seller and
its duly designated representatives access to all of the Existing Venture's
books and records, in each case solely for the purposes of resolving such
disagreement. The Company and Seller shall thereafter negotiate in good faith to
resolve any such disagreements, provided that Seller shall promptly pay to the
Company, or the Company shall promptly pay to Seller, as the case may be, the
amount determined pursuant to Section 5.1(c) that is not subject to dispute.
(b) If the Company and Seller are unable to resolve any such
disagreements within thirty (30) days after the expiration of the sixty (60) day
period referred to in Section 5.2(a), or, if the Company and Seller are unable
to resolve a dispute concerning the final adjustments to the Contribution
Amount, the Company and Seller shall cause Ernst & Young LLP (the "AUDITOR") to
resolve all disagreements on the disputed items as soon as practicable, provided
that the Auditor shall be bound by the provisions of Section 5.1 and may not
assign a value to any item greater than the greatest value for such item claimed
by either party or less than the smallest value for such item claimed by either
party. Each of the Company and Seller shall permit the Auditor to have full
access to its books, records, key employees and independent accountants in order
to resolve any such disagreements. The resolution of such disagreements by the
Auditor shall be final and binding on the Company and Seller. The fees and
expenses of the Auditor shall be paid by the party whose position is most at
variance with the decision of the Auditor.
ARTICLE VI
Representations and Warranties
6.1 Seller's Representations and Warranties. Seller represents and
warrants to the Company as follows:
(a) Seller is a limited partnership duly formed, validly existing
and in good standing under the laws of the State of Delaware with full power and
authority to execute, deliver and perform this Agreement. Seller has delivered
to the Company true, correct and complete copies of its limited partnership
agreement and all amendments and modifications thereto.
(b) The execution, delivery and performance of this Agreement by
Seller have been duly and validly authorized by all necessary action on the part
of Seller. This Agreement has been, and the Seller Closing Documents will be,
duly executed and delivered by Seller. This Agreement constitutes, and when so
executed and delivered the Seller Closing Documents will constitute, the legal,
valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms.
(c) None of the execution, delivery or performance of this
Agreement by Seller does or will, with or without the giving of notice, lapse of
time or both, violate, conflict with, constitute a default, result in a loss of
rights, acceleration of payments due or creation of any Lien upon the Property
or require the approval or waiver of or filing with any Person (including any
governmental body, agency or instrumentality) under (i) the organizational
documents of Seller or its general partner or, any agreement, instrument or
other document to which Seller or
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its general partner is a party or by which it is bound, (ii) any judgment,
decree, order, statute, injunction, rule, regulation or the like of a
governmental unit applicable to the Property, the Existing Venture, Seller or
its general partner (other than notification of ownership change or transfer or
reissuance of permits as may be required under Environmental Laws), or (iii) any
contract or agreement by which Seller or the Existing Venture may be bound.
(d) Seller has good and marketable title to Seller's Interest
free and clear of Liens and, upon execution and delivery of the Seller Closing
Documents, the Company will have good and marketable title to Seller's Interest
free and clear of Liens other than Liens created by, under or through the
Company. No other property (other than the Real Property and property owned by
any Anchor) comprises "Northbrook Court".
(e) Schedule 6.1(e) is a true, correct and complete copy of the
rent roll of the Property (the "RENT ROLL") as of November 1, 1999, prepared in
the format prescribed by the MRI software reporting system currently in place at
the Property. All information therein is accurate as of its date. Except as set
forth to the contrary on Schedule 6.1(e), no Tenant has paid any rent in advance
except for the current month.
(f) Schedule 6.1(f) is a true, correct and complete schedule of
delinquencies in Rent, common area maintenance and other similar charges,
showing amounts payable as of November 1, 1999 by each Party, which schedule
sets forth separately and certifies the items of Rents with respect to which
each such Party is in arrears, the amount of each item and the period of such
arrearage.
(g) Schedule 6.1(g) contains a complete and correct list of all
existing Leases and modifications thereof and supplements thereto regardless of
whether the terms thereof have commenced, setting forth with respect to each (i)
the date thereof and of each modification thereof and supplement thereto and
(ii) the names of the Parties thereto (including the name of the current
assignee, if any, but only if and to the extent Seller has actual notice of any
such assignment). A true and complete copy of each Lease demising space in
excess of 10,000 square feet, together with each modification thereof and
supplement thereto, has heretofore been furnished to the Company for inspection
and has been delivered to the Company on the date hereof. Each Lease constitutes
the entire agreement between the Existing Venture and each Party thereto, and
the Existing Venture has not made any oral promises or agreements amending or
modifying the same. No Person is using or occupying (or is entitled to use or
occupy) the Real Property except under a Lease or the REA.
(i) There are no leases executed by the Existing Venture or other
rights of occupancy or use granted by the Existing Venture or, to
Seller's knowledge, its predecessors in title of any portion of the
Property other than the Leases. Each of the Leases is valid and
subsisting and in full force and effect, and no Rents or other payments
or deposits are held by Seller, the Existing Venture or the Existing
Venture's agent, except the security deposits (together with the amount
of accrued and unpaid interest thereon) described on the Rent Roll and
Rents prepaid for the current month. As of the Closing Date, no Rents
due under, or any other interest in, any of the Leases will be assigned
to any party other than the Existing Lender, or are otherwise pledged
or encumbered in any way. All Security Deposits are being, and have
been, held in compliance with all Legal Requirements.
(ii) Except as set forth on Schedule 6.1(g), no Tenant has made
any written claim which has been received by Seller or the Existing
Venture or, to Seller's
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knowledge, has any other claim, whether or not in writing (A) that the
Existing Venture has defaulted in performing any of its obligations
under any of the Leases which has not heretofore been cured, (B) that
any condition exists which with the passage of time or giving of
notice, or both, would constitute any such default, (C) that such
Tenant is entitled to any reduction in, refund of, or counterclaim or
offset against, or is otherwise disputing, any Rents or other charges
paid, payable or to become payable by such Tenant, or (D) that such
Tenant is entitled to cancel its Lease or to be relieved of its
operating covenants thereunder.
(iii) With the exception of delinquencies in the payment of Rents
which are set forth on Schedule 6.1(f), no material default exists
under any of the Leases on the part of the Tenant thereto and Seller
has no knowledge of any condition, which, with the passage of time, or
giving of notice, would constitute a default under any Lease. With the
exception of any requirement to repair any physical defects in the
Property, the Existing Venture is not in default under the Leases. The
Existing Venture has not delivered any default notices to any Tenant
under any Lease which has not been cured.
(iv) There are no rent abatements, offset rights, "free rent
periods" or other tenant concessions or inducements, including lease
assumptions or buy-outs, applicable to any of the Leases or any rights
to extend or renew any of such Leases except as set forth in the
Leases. There are no expansion rights, options or rights to renew,
extend or terminate the Leases, except as set forth in the Leases.
Neither Seller nor the Existing Venture have granted any rights,
options or rights of first refusal of any kind to any Tenant or
otherwise, which are currently in effect, to purchase or to otherwise
acquire the Property or any part thereof or interest therein. All of
the improvements to be constructed by the landlord under each of the
Leases, or as required under any collateral agreement, plans or
specifications related to the Leases, have been fully completed in
accordance with the terms thereof and have been paid for.
(v) No condition exists that would permit any Party to any Lease
or REA to cancel or terminate such Lease or REA, be released from
liability from such Lease or REA or reduce its obligations under any
Lease or REA.
(vi) Neither Seller nor the Existing Venture or any Affiliate of
any of the foregoing, has made a loan or otherwise extended any credit
to any Tenant.
(h) The REA constitutes the only reciprocal easement agreements
or operating agreements encumbering the Property. A true and complete copy of
the REA has heretofore been furnished to the Company, together with each written
modification thereof and supplement thereto. The REA constitutes the entire
agreement between the Existing Venture and each REA Party thereto, and neither
Seller nor the Existing Venture have made any oral promises or agreements
amending or modifying the same.
(i) The REA is valid and in full force and effect, and no Rents
or other payments or deposits are held by Seller, the Existing Venture
or Seller's agent, except the Rents prepaid for the current month. As
of the Closing Date, no Rents due under, or any other interest in, the
REA will be assigned to any party other than the Existing Lender, or
are otherwise pledged or encumbered in any way.
(ii) Except as set forth on Schedule 6.1(h), none of the REA
Parties has made any written claim which has been received by Seller,
the Existing Venture or, to
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Seller's knowledge, has any other claim, whether or not in writing (A)
that the Existing Venture has defaulted in performing any of its
obligations under any of the REAs which has not heretofore been cured,
(B) that any condition exists which with the passage of time or giving
of notice, or both, would constitute any such default, (C) that such
REA Party is entitled to any reduction in, refund of, or counterclaim
or offset against, or is otherwise disputing, any Rents or other
charges paid, payable or to become payable by such REA Party, (D) that
such REA Party is entitled to cancel its REA or to be relieved of its
operating covenants thereunder, or (E) that there is a violation of any
of the covenants, conditions or restrictions contained in such REA.
(iii) With the exception of delinquencies in the payment of Rents
which are set forth on Schedule 6.1(f), no material default exists
under the REA on the part of the REA Parties thereto and Seller has no
knowledge of any condition which, with the passage of time or giving of
notice, would constitute a default under any REA. With the exception of
any requirement to repair any physical defects in the Property, the
Existing Venture is not in default under the REA. The Existing Venture
has not delivered any default notices to any party under the REA which
has not been cured.
(iv) There are no rent abatements, offset rights, "free rent
periods" or other concessions or inducements, including lease
assumptions or buy-outs, applicable to the REA or any rights to extend
or renew the REA except as set forth in Schedule 6.1(h) or the REA.
There are no options or rights to renew, extend, expand or terminate
the REA, except as set forth in Schedule 6.1(h). Except as set forth in
Schedule 6.1(h), neither Seller nor the Existing Venture have granted
any rights, options or rights of first refusal of any kind to any of
the REA Parties, which are currently in effect, to purchase or to
otherwise acquire the Property or any part thereof or interest therein.
All of the improvements to be constructed by the developer or owner
under the REA, or as required under any collateral agreement, plans or
specifications related to the REA, have been fully completed in
accordance with the terms thereof and paid for. No party to any REA has
given notice that it has ceased or that it intends to cease operating
its store or other property that it is required to operate under the
REA.
(i) Each of the Contracts is in full force and effect. To
Seller's knowledge, there have been no material defaults by any Party to a
Contract which have not heretofore been cured. There has been no material
default (without giving effect to any notice and cure rights) by the Existing
Venture under any Contract or any claim received by Seller or the Existing
Venture of any such default by any party thereto, which has not heretofore been
cured except as set forth on Schedule 6.1(i)(a). Except as set forth on Schedule
6.1(i)(b), all of the Contracts are terminable upon notice given sixty (60) days
or less before any such termination, without penalty, fee or cost. A true and
complete copy of each Contract listed on Schedule 6.1(i)(b), together with any
modifications, amendments or supplements thereto, has been delivered or made
available to the Company.
(j) Schedule 6.1(j) contains a list of all permits,
authorizations, approvals and licenses currently maintained with respect to the
Property and all such permits, authorizations, approvals and licenses are in
full force and effect. Neither Seller nor the Existing Venture have received any
written notice of violation from any federal, state or municipal entity with
respect to the Property or in connection with the operations conducted thereon
that has not been cured or otherwise resolved to the satisfaction of such
governmental entity. To Seller's knowledge, the permits, authorizations,
approvals and licenses listed on Schedule 6.1(j) are all of the licenses and
permits which are required for the present use of the Property.
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<PAGE> 18
(k) Except for non-friable asbestos and as set forth on Schedule
6.1(k), neither Seller, the Existing Venture nor any other Person has caused or
permitted any Hazardous Material to be maintained, disposed of, stored, treated,
recycled, brought upon, transported over or generated on, under or at the
Property or any part thereof, except for the presence, maintenance, storage, use
or transportation of substances commonly present or stored at or used in the
ordinary operation and maintenance of shopping centers in ordinary quantities
commonly present, stored or used at shopping centers and in compliance with
applicable laws, including Environmental Laws. There has been no release or
threatened release of any Hazardous Materials at, on or under the Property or
any part thereof that will give rise to any obligation or liability to conduct
or pay for any investigation, removal, remediation, monitoring, closure, or
post-closure care at, on or under the Property or any part thereof, nor has
there been any release or threatened release of Hazardous Materials with respect
to any offsite location to which Hazardous Materials have, or are alleged to
have, migrated or been transported from the Property. Seller and the Existing
Venture are in compliance with, and have heretofore complied with, all
applicable Environmental Laws with respect to the Property and as of the date
hereof there are no violations of applicable Environmental Laws at the Property
which have not been remediated in accordance with all applicable Environmental
Laws. Neither Seller nor the Existing Venture have received any written notice
from any governmental unit or other person that it or the Property is not in
compliance with any Environmental Law or that it has any liability with respect
thereto and there are no administrative, regulatory or judicial proceedings
pending or, to the knowledge of Seller, threatened with respect to the Property
pursuant to, or alleging any violation of, or liability under any Environmental
Law. Except as set forth on Schedule 6.1(k), neither Seller nor the Existing
Venture have installed any underground or above ground storage tanks on, under
or about the Property and no such tanks are located on, under or about the
Property.
(l) Except as set forth on Schedule 6.1(l), the Existing Venture
is under no obligation to make contributions or otherwise provide assistance to
any promotional association or promotional fund and has not customarily in the
past made or provided any such contributions or assistance. The promotional
association established with respect to the Property (the "PROMOTIONAL
ASSOCIATION") is an independent association established by and on behalf of the
Tenants, Seller and the Existing Venture having no ownership, management,
fiduciary or monetary interest of any kind therein. Seller and/or the Existing
Venture has remitted to the Promotional Association any amounts received by it
from Tenants and other Parties that constitute contributions to the Promotional
Association. Seller and/or the Existing Venture, as the case may be, has made
all required payments to any such Promotional Association or fund, if any.
(m) Except as provided in Schedule 6.1(m), there is no
litigation, including any arbitration, investigation or other proceeding by or
before any court, arbitrator or governmental or regulatory official, body or
authority which is pending or, to Seller's knowledge, threatened against Seller
or the Existing Venture relating to the Property, Seller's Interest or the
Transactions, there are no unsatisfied arbitration awards or judicial orders
against the Existing Venture and, to Seller's knowledge, there is no basis for
any such arbitration, investigation or other proceeding. Copies of all pleadings
and other documents furnished or made available by Seller to the Company with
respect to the litigation described on Schedule 6.1(m) are true, accurate and
complete in all respects.
(n) No condemnation proceeding or other proceeding or action in
the nature of eminent domain is pending with respect to all or any part of the
Property, and, to Seller's knowledge, no condemnation proceeding or other
proceeding or action in the nature of eminent
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<PAGE> 19
domain is pending with respect to any property owned by a Party to the REA which
is the subject of such REA and to Seller's knowledge no Taking is threatened
with respect to all or any part of the Property, or any property owned by a
Party to the REA which is the subject of such REA.
(o) True, correct and complete copies of current real estate tax
bills with respect to the Property, other than tax bills sent to Tenants who
have the obligation to pay such taxes to the collecting authority, have been
delivered or made available to the Company. No portion of the Property comprises
part of a tax parcel which includes property other than property comprising all
or a portion of the Property. No application or proceeding is pending with
respect to a reduction or an increase of such taxes. There are no tax refund
proceedings relating to the Property which are currently pending and neither
Seller nor the Existing Venture, nor any Affiliate thereof has applied for any
such reduction. Seller has no knowledge of any special tax or assessment to be
levied against the Property or any change in the tax assessment of the Property
other than the annual assessment. Neither Seller nor the Existing Venture has
received written notice of any, or has any knowledge of any special assessments
currently affecting the Property.
(p) Neither Seller nor the Existing Venture have received (i) any
written notice from any governmental authority having jurisdiction over the
Property of, and to Seller's knowledge there does not exist, (A) any violation
of any law, ordinance, order or regulation (including the ADA) affecting the
Property, or any portion thereof, which has not heretofore been complied with or
(B) any other obligation to any such governmental authority for the performance
of any capital improvements or other work to be performed by Seller or the
Existing Venture in or about the Property or donations of monies or land (other
than general real property taxes) which has not been completely performed and
paid for; or (ii) any written notice from any insurance company, insurance
rating organization or Board of Fire Underwriters requiring any alterations,
improvements or changes at the Property, or any portion thereof, which has not
heretofore been complied with.
(q) No approval, consent, waiver, filing, registration or
qualification with any third party, including any governmental bodies, agencies
or instrumentalities is required to be made, obtained or given for the
execution, delivery and performance of this Agreement or any of the Seller
Closing Documents by Seller or the consummation of the Transactions (other than
notification of ownership change or transfer or reissuance of permits as may be
required under Environmental Laws).
(r) The Existing Venture is a general partnership duly formed,
validly existing and in good standing under the laws of the State of California
with full power and authority to own the Property and conduct the business now
being conducted by it.
(s) NCI is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware with full
power and authority to own the interest owned by it in the Existing Venture and
conduct the business now being conducted by it. NCI owns an 80% general
partnership interest in the Existing Venture and no Person has any option or
other right to acquire said interest or portion thereof, any other equity
interest in the Existing Venture or any security or instrument convertible into
any such equity interest.
(t) NCII is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware with full
power and authority to own the interest owned by it in the Existing Venture and
conduct the business now being conducted by
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<PAGE> 20
it. NCII owns a 20% general partnership interest in the Existing Venture and no
Person has any option or other right to acquire said interest or portion
thereof, any other equity interest in the Existing Venture or any security or
instrument convertible into any such equity interest.
(u) NC is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware with full
power and authority to own the interest owned by it in NCI and NCII and conduct
the business now being conducted by it. NC owns a .001% membership interest in
each of NCI and NCII and no Person has any option or other right to acquire said
interest or portion thereof, any other equity interest in either NCI or NCII or
any security or instrument convertible into any such equity interest.
(v) Seller has furnished the Company with the financial
statements of the Existing Venture (consisting of balance sheets and income
statements) as of, and for the calendar years ended, December 31, 1997 and
December 31, 1998 (the "FINANCIAL STATEMENTS"). The Financial Statements are
consistent with the books and records and accounts of the Existing Venture and
fairly present the financial condition and results of the Existing Venture as of
the dates thereof and for the periods referred to therein, and the Financial
Statements have been prepared in accordance with generally accepted accounting
principles, consistently applied throughout the periods indicated. Since
December 31, 1998, the Existing Venture has conducted its business in the
ordinary course consistent with past practice and there have been no material
adverse changes in the financial condition of the business, and Seller has no
knowledge of any circumstance or event which, insofar as can be reasonably
foreseen, is likely to result in any such material adverse change.
(w) [Intentionally Deleted].
(x) Schedule 6.1(x) accurately sets forth (i) a true, correct and
complete list of all instruments, agreements and other documents relating to the
Existing Indebtedness and all modifications or amendments thereof and
supplements thereto (including guaranties, indemnity agreements and side
letters) (the "EXISTING INDEBTEDNESS DOCUMENTS"), (ii) the date of the Existing
Indebtedness Documents and of each modification or amendment thereof and
supplement thereto, (iii) the name of the holders of the Existing Indebtedness
as of the date hereof, (iv) the unpaid balances (including any accrued interest
thereon) thereof as of the date hereof, (v) the security therefor as of the date
hereof and (vi) the amount of any deposits or escrows held or established in
connection therewith. The Existing Indebtedness Documents are in full force and
effect, neither Seller nor the Existing Venture has received or delivered any
notice of default under any Existing Indebtedness Document which default has not
been cured, and, to the knowledge of Seller, no default on the part of the
Existing Venture or any other Party thereto exists thereunder (without regard to
notice and cure provisions). A true and complete copy of the Existing
Indebtedness Documents, including each written modification thereof and
supplement thereto, have heretofore been furnished to the Company. Such
documents constitute the entire agreement between the Existing Venture and each
Party thereto, and there are no oral promises or agreements amending or
modifying the same.
(y) Schedule 6.1(y) contains a true, complete and accurate list
including the amounts thereof of all policies of insurance with respect to the
Property, which policies are and will be kept in full force to and including the
Closing Date. All premiums for such insurance have been paid in full. To
Seller's knowledge, neither Seller nor the Existing Venture have performed,
permitted or suffered any act or omission which would cause the insurance
coverage provided in said policies to be reduced, cancelled, denied or disputed
and neither Seller nor the Existing Venture have received (and has no knowledge
of) any notice or request
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<PAGE> 21
from any insurance company or Board of Fire Underwriters (or organization
exercising functions similar thereto) canceling or threatening to cancel any of
said policies or denying or disputing coverage thereunder.
(z) To Seller's knowledge, there are no material structural or
other material physical defects in the Improvements or any component or system
of the Improvements and all such Improvements are in good condition and repair.
(aa) Neither Seller nor, to Seller's knowledge, the Existing
Venture has received notice that there is, and, to Seller's knowledge, there
does not now exist, any violation of any restriction, condition or agreement
contained in any easement, restrictive covenant or any similar instrument or
agreement affecting the Real Property or any portion thereof.
(bb) The Existing Venture has no employees. There are no
collective bargaining or union agreements with respect to the employees at
Property or to which Seller or the Existing Venture is bound. The Existing
Venture does not maintain or sponsor any employee benefit plan, including any
plans subject to the Employer Retirement Income Security Act of 1974, as
amended. There are no pending claims or, to Seller's knowledge, any threatened
claim against the Existing Venture by any employee whose employment related to
the Property.
(cc) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Seller.
(dd) [Intentionally Deleted].
(ee) All material documents and Books and Records have been
delivered or have been made available to the Company. All of the documents and
Books and Records that have been delivered or made available to the Company by
or on behalf of Seller, are true, correct and complete copies of what they
purport to be and have not been modified or amended, except as specifically
noted therein. All information set forth in the exhibits and schedules to this
Agreement is true, correct and complete in all material respects and not
misleading. Seller does not have any knowledge of any significant adverse fact
or condition relating to the Property, which has not been specifically disclosed
in writing by Seller to the Company.
(ff) There are no lease brokerage agreements, leasing commission
agreements or other agreements providing for payments of any amounts for leasing
activities or procuring tenants (including renewing leases at expanding spaces)
with respect to the Property other than as disclosed in Schedule 6.1(ff).
(gg) Schedule 1.1-2 attached hereto contains a true, correct and
complete description of the Personalty (including the name "Northbrook Court"),
and except as disclosed on said Schedule 1.1-2, the Existing Venture has good
title to the Personalty free and clear from Liens and other encumbrances other
than the lien of the Existing Indebtedness Documents and the Permitted
Exceptions. The Personalty is all of the personal property that is necessary in
order to operate and maintain the Real Property as a first class regional
shopping center. The Existing Venture has taken all steps necessary in order to
protect its exclusive right to use the name "Northbrook Court" in connection
with the Real Property.
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<PAGE> 22
(hh) As of October 15, 1999, (i) gift certificates having an
aggregate value of $690,942.00 have been sold, and (ii) gift certificates having
an aggregate value of $157,262.00 are outstanding.
(ii) Except as set forth in Schedule 6.1(ii) attached hereto,
neither Seller, nor any Affiliate of Seller (other than the Existing Venture),
owns (i) any right or interest in any real property adjacent to or neighboring
the Real Property including any outparcel or (ii) any right or interest in any
easement, right of way, development right, water or mineral right or any other
right which in any way affects the Real Property.
(jj) Except for routine work in the ordinary course of operating
the Real Property that will be paid when due, no work has been performed by
Seller or is in progress at Seller's request at the Real Property, and no
materials or supplies have been delivered to the Real Property at Seller's
request, that has resulted in the imposition of, or might provide the basis for
the imposition of, mechanics', materialmen's or other liens against the Real
Property.
(kk) The sales reports heretofore furnished by Seller to the
Company for calendar years 1996,1997 and 1998, and the rolling twelve (12)
months sales report from March 1999, disclose the sales by Tenants at the Retail
Property as reported to Seller by such Tenants.
(ll) All water, storm sewer/sanitary sewer, gas, electricity,
telephone and other utility lines, pipes and other equipment necessary in order
to operate the Real Property as a first class regional shopping center
(collectively, the "UTILITY EQUIPMENT") presently serve the Real Property and,
to Seller's knowledge, are in good working order. Neither Seller nor the
Existing Venture, has any outstanding unpaid obligation to pay the cost of
connection of any utility lines, pipes or other equipment serving the Real
Property.
(mm) The Real Property has not suffered any casualty or other
material damage that has not been fully repaired.
(nn) To Seller's knowledge, all HVAC, electric, gas, fire-safety,
plumbing, mechanical and other systems at the Real Property are in good, working
condition and no portion of same presently require replacement or significant
repair (i.e., repairs which are ordinarily capitalized under generally accepted
accounting principles).
(oo) Except as disclosed on Schedule 6.1(oo) attached hereto, no
capital work is currently in progress or contemplated.
(pp) Neither Seller nor the Existing Venture, has received written
notice from any Governmental Authority, from any Party to any REA, any Tenant or
any party to any other agreement or document, or otherwise has knowledge, that
the number of parking spaces at the Real Property is required under any Legal
Requirement, any Lease, or the REA, to be increased above the number of parking
spaces existing on the date hereof.
(qq) The Existing Venture has (i) filed all tax returns required
to be filed by it under applicable Legal Requirements and (ii) timely paid all
taxes shown to be due and payable on such tax returns.
(rr) Except as shown on the Title Commitment, from and after the
date of the Title Policy no additional Defect has occurred, which if not cured,
would have a material and
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adverse effect on the marketability of title to the Real Property. Seller has no
knowledge of any defects, liens, encumbrances, adverse claims or other matters
insured against under the Title Policy (collectively, the "INSURED MATTERS")
that could result in the issuer of the Title Policy denying its liability to the
Company on the grounds that the Existing Venture or the Company had knowledge of
any such Insured Matters solely by reason of notice thereof imputed to it as a
matter of law through either Seller, the Existing Venture or any Affiliate
thereof.
(ss) Except as set forth on Schedule 6.1(ss), neither Seller nor
the Existing Venture has received any written notice with respect to the Real
Property of any violation of law or municipal ordinances, orders or
requirements, that have been noted in or issued by any federal, state or
municipal department having jurisdiction, and which have not been fully remedied
and discharged of record.
(tt) To Seller's knowledge, Seller has provided the Company with
access to any and all certificates, licenses, permits, leases, ground leases,
operating agreements, books, records, documents and information relating to the
Real Property and the ownership and operation thereof which are in the
possession and control of Seller or the Existing Venture.
(uu) Seller is the owner of 100% of the membership interests in NC
and a 99.999% interest in each of NCI and NCII. Seller owns 100% of the Seller's
Interest and Seller's Interest represents 100% of the ownership interests in the
Existing Venture. No Person has any option or other right to acquire Seller's
Interest, any portion thereof or any other equity interest in Seller's Interest
or any security or instrument convertible into any such equity interest.
Notwithstanding anything to the contrary contained herein, (a)
Seller shall have no liability under this Agreement for the cost of repair,
remediation or correction of any physical defect in the Property except as a
result of a breach of the representations and warranties contained in Sections
6.1(k), (z), (mm) and (nn)) (but nothing contained in this paragraph shall limit
Seller's liability for damages, fines or other amounts owing to Parties,
Governmental Authorities or others on account of any such physical defect to the
extent that such damages, fines or other amounts are not for the cost of repair,
remediation or correction thereof) and (b) Seller shall have no liability for a
breach of representation or warranty contained herein or in the Closing
Documents to the extent that the Company has received a credit therefor under
the provisions of Article V.
6.2 Company Representations and Warranties. The Company
represents and warrants to Seller as follows:
(a) The Company is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware
with full right, power and authority to execute, deliver and perform this
Agreement.
(b) The execution, delivery and performance by the Company of
this Agreement have been duly and validly authorized by all requisite action on
the part of the Company. This Agreement has been, and the Company Closing
Documents will be, duly executed and delivered by the Company. This Agreement
constitutes, and when so executed and delivered the Company Closing Documents
will constitute, the legal, valid and binding obligations of the Company,
enforceable against it in accordance with their terms.
(c) None of the execution, delivery or performance of this
Agreement or the Company Closing Documents by the Company does or will, with or
without the giving of notice,
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<PAGE> 24
lapse of time or both, violate, conflict with, constitute a default or result in
a loss of rights under or require the approval or waiver of or filing with any
Person (including any governmental body, agency or instrumentality) under (i)
the organizational documents of the Company or any material agreement,
instrument or other document to which the Company is a party or by which the
Company is bound or (ii) any judgment, decree, order, statute, injunction, rule,
regulation or the like of a governmental unit applicable to the Company, other
than notification of ownership change or transfer or reissuance of permits as
may be required under Environmental Laws.
(d) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of the
Company.
6.3 No Other Representations. Neither Seller nor any officer, director,
shareholder, member, agent, partner, employee, or representative of Seller (or
any officer, director, partner or employee of any agent of Seller) has made any
representation whatsoever regarding the Property or any part thereof, or
anything relating to the subject matter of this Agreement, except as expressly
set forth in this Agreement, and the Company, in executing, delivering and
performing this Agreement, has not and does not rely upon any statement,
information, or representation to whomsoever made or given, whether to the
Company or others, and whether directly or indirectly, verbally or in writing,
made by any person, firm or corporation, except as expressly set forth in this
Agreement or in the Seller Closing Documents.
6.4 Knowledge Defined. For the purposes of this Agreement, "knowledge"
(including "actual knowledge" and other similar terms) with respect to Seller
and the Existing Venture shall mean matters as to which any of the following
individuals have actual knowledge without any duty or responsibility to make any
inquiry, review or investigation: (a) John Bucksbaum, (b) Robert A. Michaels,
(c) Joel Bayer, (d) Bernard Freibaum and (e) Randy Richardson. Actual knowledge
shall not be deemed to exist merely by assertion by the Company of a claim that
any of the foregoing persons should have known of such facts or circumstances,
if such person did not have actual knowledge thereof. Seller hereby represents
and warrants that the foregoing individuals are the individuals with the primary
responsibility for overseeing the sale, management, and operation of the
Property at the level of vice president and above.
ARTICLE VII
Additional Covenants
7.1 Record Retention. Until three (3) years after the Closing, the
Company shall provide Seller upon prior written notice and during normal
business hours with reasonable access to the Books and Records and, at Seller's
cost, copies of all or any portion thereof. The Company either shall retain such
Books and Records until the third anniversary of the date hereof or notify
Seller of its desire to dispose of such Books and Records pertaining to any
period prior to the Closing which have been delivered to the Company and turn
them over to Seller if Seller so requests. Seller agrees to keep, and to
instruct its agents, employees and representatives to keep, confidential such
Books and Records (and any information contained therein) and any information
discovered in any such examinations and inspections, except in connection with
any legal proceedings or to the extent required by law. Upon the Company's
request, for a period of three (3) years after the Closing, Seller shall make
all of Seller's records with respect to the Property which are in the possession
or control of Seller available to the Company for inspection, copying and audit
by the Company's designated accountants. The provisions of this Section 7.1
shall survive Closing.
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<PAGE> 25
7.2 Publicity. In no event shall either Seller or the Company issue any
press release or otherwise disclose any non-public information regarding this
Agreement or the Transactions unless the other party has consented thereto in
writing as to the form and substance of any such statement or disclosure (and
Seller and the Company agree not unreasonably to withhold, condition or delay
such consent); provided, however, that nothing herein shall be deemed to limit
or impair in any way any party's ability to disclose the details of or
information concerning this Agreement or the Transactions to the extent
necessary to such party's attorneys, accountants or other advisors or to the
extent such party reasonably deems necessary or desirable pursuant to any court
or governmental order or applicable securities laws or regulations or financial
reporting requirements, or to obtain the Existing Indebtedness Consent
Documents. Further, to the extent necessary, either party may disclose any
information regarding this Agreement or the Transactions to its direct or
indirect constituent partners, members or shareholders, as the case may be (and
to counsel for such constituent partners, members and shareholders) and as
otherwise necessary to comply with the terms of this Agreement. Any disclosure
by a party's advisors or direct or indirect constituent partners, members or
shareholders shall be deemed a breach hereof by such party. If for any reason
this Transaction is not consummated, the Company will promptly return to Seller
all originals and copies of documents, reports and financial and other
information relating to the Property and to Seller which Seller has furnished to
the Company. The obligations of Seller and the Company under this Section 7.2
shall survive the termination hereof, however caused.
7.3 Assistance Following Closing. From and after the Closing, Seller at
the Company's reasonable expense shall provide reasonable assistance to the
Company in connection with the preparation of financial statements and bills and
the adjustment of losses and claims and the enforcement or settlement of any
such claims. Without limiting the foregoing, Seller shall, upon the reasonable
request of the Company from time to time, provide signed representation letters
with respect to revenues and expenses of Seller if required under GAAS to enable
the Company's accountants to render an opinion on the Company's financial
statements.
7.4 Further Assurances. Each of Seller and the Company agree, at any
time and from time to time after the Closing, to execute, acknowledge where
appropriate and deliver such further instruments and other documents (and to
bear its own costs and expenses incidental thereto) and to take such other
actions as the other of them may reasonably request in order to carry out the
intent and purpose of this Agreement; provided, however, that neither Seller nor
the Company shall be obligated, pursuant to this Section 7.4 to incur any
expense of a material nature and/or to incur any material obligations in
addition to those set forth in this Agreement and/or its respective Closing
Documents.
7.5 No Intercompany Accounts. Prior to the Closing Seller shall pay,
distribute, release or otherwise eliminate any and all intercompany debt or
accounts between the Existing Venture and Seller or any Affiliate of Seller.
ARTICLE VIII
Indemnification
8.1 Indemnification by Seller. From and after the Closing, Seller shall
indemnify, defend and hold harmless the Company and its members, officers,
directors, managers, employees, representatives and agents, and any direct or
indirect partner, shareholder, officer, director or member of any member of the
Company, and their respective successors and assigns (collectively, the
"INDEMNIFIED COMPANY PERSONS") from and against any Losses
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<PAGE> 26
asserted against, incurred or suffered by any Indemnified Company Person that
results from, relates to or arises out of (a) the breach or inaccuracy of any
representation or warranty made by Seller in this Agreement or the Seller
Closing Documents, (b) the breach or non-fulfillment by Seller of any of the
covenants or agreements of Seller under this Agreement or the Seller Closing
Documents, or (c) Seller's Liabilities.
8.2 Indemnification by the Company. From and after the Closing, the
Company shall indemnify, defend and hold harmless Seller and its direct or
indirect shareholders, directors, officers, members, partners, employees and
agents, and their respective successors and assigns (collectively the
"INDEMNIFIED SELLER PERSONS") from and against any Losses asserted against,
incurred or suffered by any Indemnified Seller Person that results from, relates
to or arises out of (a) the breach or inaccuracy of any representation or
warranty made by the Company in this Agreement or the Company Closing Documents,
(b) the breach or non-fulfillment by the Company of any of the covenants or
agreements of the Company under this Agreement or the Company Closing Documents
or (c) the Assumed Liabilities.
8.3 Indemnification Procedure.
(a) Subject to the provisions of Section 8.3(d), the indemnified
party (the "INDEMNIFIED PARTY") shall give the indemnifying party (the
"INDEMNIFYING PARTY") prompt notice of any Losses (or potential Losses) which
may be covered under this Article VIII and such notice shall state the basis for
the claim, action or proceeding and the amount thereof (to the extent such
amount is determinable at the time when such notice is given). In the event the
notice relates to a claim, assertion, action, suit or proceeding by a third
party ("THIRD PARTY CLAIM") for which indemnification is provided hereunder, the
Indemnified Party shall permit the Indemnifying Party (or its insurance company)
to assume the defense of such claim, assertion, action, suit or proceeding and
the Indemnifying Party (or its insurance company) may (i) prior to the
commencement of any proceedings in connection with such Losses, undertake the
negotiation of any resolution of the dispute relating to such Losses, including
in accordance with the terms hereof any settlement or release, or (ii) undertake
the defense of any proceeding (including any alternative dispute resolution
proceeding) regarding such Losses by selecting legal counsel who shall be
reasonably acceptable to the Indemnified Party. Failure of the Indemnifying
Party to notify an Indemnified Party of its election to undertake the
Indemnified Party's defense of a Third Party Claim within a reasonable time, but
in no event more than thirty (30) days after notice thereof shall have been
given to the Indemnifying Party, shall be deemed a waiver by the Indemnifying
Party of its right to undertake the defense of such Third Party Claim. Willkie
Farr & Gallagher, Neal, Gerber & Eisenberg and counsel for the Indemnifying
Party's insurance company shall be deemed reasonably acceptable to the
Indemnified Party.
(b) Provided the Indemnifying Party shall have undertaken the
Indemnified Party's defense of a Third Party Claim with legal counsel reasonably
acceptable to the Indemnified Party, and shall have so notified the Indemnified
Party, the Indemnified Party shall be entitled to participate at its own expense
in the aforesaid negotiation or defense of any claim relating to such Losses
(subject to reimbursement to the limited extent provided in Section 8.3(e)), but
such negotiations or defense shall be controlled by counsel to the Indemnifying
Party.
(c) Except as provided in Section 8.3(e), the Indemnifying Party
shall not be liable for payments relating to the resolution of any dispute or
any settlement of any litigation or proceeding effected without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld, conditioned or delayed. The Indemnifying Party shall not, in the
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<PAGE> 27
defense of any such Third Party Claim, consent to the entry of any judgment or
award, or enter into any settlement, except in either event with the prior
consent of each Indemnified Party, which consent shall not be unreasonably
withheld, conditioned or delayed. To the extent any Indemnified Party declines
to consent to a bona fide offer of settlement or compromise, the Indemnifying
Party shall continue to defend, but the amount of such offer shall be the limit
of the Indemnifying Party's liability with respect to such claim, action or
proceeding with respect to the Indemnified Party that declined such offer.
Notwithstanding the foregoing, the Indemnifying Party shall not, without the
Indemnified Party's written consent (which consent may be withheld in the sole
and absolute discretion of the Indemnified Party) resolve any dispute or settle
or compromise any claim regarding Losses from a Third Party Claim or consent to
entry of any judgment which would impose an injunction or other equitable relief
upon the Indemnified Party or which does not include as an unconditional term
thereof the release by the claimant or the plaintiff of the Indemnified Party
from all liability in respect of any such Losses.
(d) The failure to give notice of a claim under this Article VIII
shall not release the Indemnifying Party of its obligations under this Article
VIII, except to the extent of the actual harm suffered thereby.
(e) In the event the Indemnifying Party fails after notice from
the Indemnified Party to timely undertake negotiation of any dispute or defend,
contest or otherwise protect against any claim or suit with respect to a Third
Party Claim, and to so notify the Indemnified Party, the Indemnified Party may,
but will not be obligated to, defend, contest or otherwise protect against the
same, and make any compromise or settlement thereof and recover the entire costs
thereof from the Indemnifying Party, including reasonable attorneys' and
experts' fees, disbursements and all amounts paid as a result of such claim or
suit or the compromise or settlement thereof. The Indemnified Party shall
cooperate and provide such assistance as the Indemnifying Party may reasonably
request in connection with the negotiation of any dispute and the defense of the
matter subject to indemnification and the Indemnifying Party shall reimburse the
Indemnified Party's reasonable costs incurred thereafter in connection with such
cooperation and assistance.
(f) Notwithstanding anything to the contrary contained herein,
neither Seller nor the Company shall be entitled to indemnification hereunder
for any Losses to the extent it has received a credit therefor pursuant to
Article V.
ARTICLE IX
Miscellaneous
9.1 Survival. Except for the representations and warranties of Seller
set forth in Section 6.1(k), which representations and warranties and the
indemnification provision relating thereto shall survive Closing indefinitely,
all other representations, warranties, covenants and agreements of Seller and of
the Company set forth in this Agreement shall survive until the Company ceases
to exist under the terms of the Operating Agreement.
9.2 Notices. Notices must be in writing and sent to the party to whom
or to which such notice is being sent, by (a) certified or registered mail,
postage prepaid and return receipt requested, (b) commercial overnight courier
service, or (c) delivered by hand with receipt acknowledged in writing, as
follows:
To the Company:
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GGP/Homart II L.L.C.
110 North Wacker Drive
Chicago, Illinois 60606
Attention: Matthew Bucksbaum
with a copy thereof to:
The Comptroller of the State of New York,
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Deputy Comptroller --
Investments and Cash Management
and
The Comptroller of the State of New York,
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Counsel
and
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6097
Attention: Monty Davis
and
Clarion Partners
335 Madison Avenue
New York, New York 10017
Attention: Jeffrey A. Barclay
To Seller:
GGP Limited Partnership
110 N. Wacker Drive
Chicago, Illinois
Attention: Robert A. Michaels
with a copy to:
Neal, Gerber & Eisenberg
Two North LaSalle Street, Suite 2200
Chicago, Illinois 60602
Attention: Marshall E. Eisenberg
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<PAGE> 29
All notices (i) shall be deemed given when received if delivered by hand or
overnight courier service or, if mailed as described above with appropriate
postage, after 5 business days and (ii) may be given either by a party or by
such party's attorneys. The cost of delivery shall be borne by the party
delivering the notice.
9.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute a single document when at least one counterpart has been executed and
delivered by each party hereto.
9.4 Amendments. Except as otherwise provided herein, this Agreement may
not be changed, modified, supplemented or terminated, except by an instrument
executed by the party hereto which is or will be affected by the terms of such
change, modification, supplement or termination.
9.5 Waiver. Each party shall have the right exercisable in its sole and
absolute discretion, but under no circumstances shall be obligated, to waive or
defer compliance by any other party with its obligations hereunder or to waive
satisfaction of any conditions contained herein for its benefit. No waiver by
any party of a breach of any covenant or a failure to satisfy any condition
shall be deemed a waiver of any other or subsequent breach or failure to satisfy
any other condition. All waivers of any term, breach or condition hereof must be
in writing.
9.6 Successors and Assigns. Subject to the provisions of Section 9.10,
the terms, covenants, agreements, conditions, representations and warranties
contained in this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
9.7 Third Party Beneficiaries. The provisions of this Agreement are
made for the benefit of the parties hereto, and their respective successors in
interest and assigns and are not intended for, and may not be enforced by, any
other person or entity.
9.8 Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
9.9 Governing Law. This Agreement has been made pursuant to and shall
be governed by the laws of the State of Delaware (without regard to conflicts of
law rules).
9.10 Assignment. This Agreement may not be assigned or delegated by any
party without the written consent of the other except that the Company may
assign this Agreement to an Affiliate of the Company, it being acknowledged and
agreed by the Company that no such assignment shall relieve the Company of its
obligations under this Agreement.
9.11 Headings; Exhibits. The headings or captions of the various
Articles and Sections of this Agreement have been inserted solely for purposes
of convenience, are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
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<PAGE> 30
9.12 Gender and Number. Words of any gender shall include the other
gender and the neuter. Whenever the singular is used, the same shall include the
plural wherever appropriate, and whenever the plural is used, the same also
shall include the singular where appropriate.
9.13 Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes any
prior written or oral understandings and/or agreement among them with respect
thereto.
9.14 Costs of Enforcement. In the event that any action is brought by
any party or parties to this Agreement against any other party or parties to
enforce rights under this Agreement, the prevailing party's or parties' costs in
such action, including reasonable attorneys' fees, shall be paid by the other
party or parties. Any amounts owing hereunder which are not paid when due shall
bear interest at the per annum rate equal to the prime rate of Bank of America,
N.A. (or any successor), as the same may change from time to time, plus four
percent.
9.15 Time of the Essence. Time is of the essence with regard to each
provision of this Agreement. If the final date of any period provided for herein
for the performance of an obligation or for the taking of any action falls on a
Saturday, Sunday or banking holiday, then the time of that period shall be
deemed extended to the next day which is not a Sunday, Saturday or banking
holiday. Each and every day described herein shall be deemed to end at 5:00 p.m.
Central Time.
9.16 Indemnification Against Broker Claims. Seller shall indemnify,
defend and hold harmless the Company from and against all loss, liability,
damages, costs and expenses (including reasonable counsel fees) resulting from
any claim that may be made by any broker or other person claiming to have dealt
with Seller in connection with the Transactions, for a commission, fee or other
compensation by reason of the Transactions including any loss, liability, costs
and expenses (including reasonable counsel fees) incurred in enforcing this
indemnity. The Company shall indemnify, defend and hold harmless Seller from all
loss, liability, costs and expenses (including reasonable counsel fees)
resulting from any claim that may be made by any broker or other person claiming
a commission, fee or other compensation by reason of having dealt with the
Company in connection with the Transactions, including any loss, liability,
costs and expenses (including reasonable counsel fees) incurred in enforcing
this indemnity. The provisions of this Section 9.16 shall survive the Closing or
termination of this Agreement.
9.17 Arbitration. Except as otherwise provided herein, in the event of
any dispute in connection with the terms and provisions of this Agreement, the
parties agree to submit such dispute to arbitration in accordance with the
provisions of Section 14.13 of the Operating Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on the day and year first above written.
SELLER: COMPANY:
GGP LIMITED PARTNERSHIP, GGP/HOMART II L.L.C.,
a Delaware limited partnership a Delaware limited liability company
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<PAGE> 31
By: GENERAL GROWTH PROPERTIES, INC.
a Delaware corporation,
its general partner By: /s/ Joel Bayer
-----------------------
Name: Joel Bayer
Title: Senior Vice President
By: /s/ Joel Bayer
---------------------------------
Name: Joel Bayer
Title: Senior Vice President
<PAGE> 32
LIST OF EXHIBITS AND SCHEDULES
Exhibits/Schedule Description
Exhibit A Legal Description of the Land
Exhibit B Permitted Exceptions
Exhibit C [Intentionally Deleted]
Schedule 1.1-1 Anchors
Schedule 1.1-2 Personalty
Schedule 2.3(b) List of Approved Leases
Schedule 6.1(e) Rent Roll
Schedule 6.1(f) Schedule of Arrearages
Schedule 6.1(g) Leases
Schedule 6.1(h) Claims under REA
Schedule 6.1(i)(a) List of all Material Defaults Under
Contracts
Schedule 6.1(i)(b) List of all Contracts not terminable on
60 days or less notice
Schedule 6.1(j) Permits and Licenses
Schedule 6.1(k) Environmental Disclosure
Schedule 6.1(l) Promotional Association Matters
Schedule 6.1(m) Pending or Threatened litigation
Schedule 6.1(x) List of Existing Indebtedness Documents
Schedule 6.1(y) Insurance Policies
Schedule 6.1(ff) Lease Brokerage Agreements
Schedule 6.1(ii) Seller's Rights in Neighboring Properties
Schedule 6.1(oo) Capital Expenditures in Progress or
Contemplated
Schedule 6.1(ss) Notices of Uncured Violations
<PAGE> 1
EXHIBIT 2.7
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is dated as of November 10, 1999, by and
between GGP LIMITED PARTNERSHIP, a Delaware limited partnership ("SELLER"), and
GGP/HOMART II L.L.C., a Delaware limited liability company (the "COMPANY").
R E C I T A L S
WHEREAS, Seller owns 100% of the common shares of GGP-Natick Trust, a
Massachusetts business trust ("NATICK Trust"), the owner of a 99.999% interests
as a limited partner in General Growth Properties-Natick Limited Partnership, a
Delaware limited partnership (the "EXISTING VENTURE");
WHEREAS, Natick Trust owns 100% of the stock of General Growth
Properties-Natick II, Inc., a Delaware corporation ("NATICK II"), the owner of
the remaining .001% interest as a general partner the Existing Venture;
WHEREAS, the Existing Venture is the owner of the real property
commonly known as Natick Mall, Natick, Massachusetts which is more particularly
described on EXHIBIT A attached hereto, other than the property owned by the
Anchors (as hereinafter defined) at such mall; and
WHEREAS, Seller desires to contribute to the capital of the Company all
of the common shares of Natick Trust, and the Company desires to acquire such
common shares.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
Definitions
1.1 Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
"ADA" shall mean the Americans With Disabilities Act, as amended.
"AFFILIATE" shall mean a Person that directly or indirectly through one
or more intermediaries controls, is controlled by, or is under common control
with the Person specified. The term "control" as used in the immediately
preceding sentence, means (a) the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the
controlled entity or (b) the ownership (directly or indirectly) of not less than
50% of the voting stock of a corporation or not less than 50% of the aggregate
legal and equitable interest in a limited liability company, a partnership or
other business entity.
"AGREEMENT" shall mean this Contribution Agreement, as amended or
modified from time to time hereafter in accordance with the terms hereof.
"ANCHOR" shall mean each Person identified in SCHEDULE 1.1-1.
"ASSUMED LIABILITIES" shall have the meaning set forth in Section
2.3(a).
<PAGE> 2
"AUDITOR" shall have the meaning set forth in Section 5.2(b).
"BALANCE SHEET SETTLEMENT DATE" shall have the meaning set forth in
Section 5.1(c.
"BOOKS AND RECORDS" shall mean all records, books of account and papers
of the Existing Venture relating to the construction, ownership and operations
of the Property, including architect's drawings, blue prints and as-built plans,
maintenance logs, copies of warranties and guaranties, licenses and permits,
instruction books, employee manuals, records and correspondence relating to
insurance claims, financial statements, operating budgets, paper and electronic
media copies of data and other information relating to the Property available
from personal computers, structural, mechanical, geotechnical or other
engineering studies, soil test reports, environmental reports, underground
storage tank reports, feasibility studies, appraisals, ADA surveys or reports,
OSHA asbestos surveys, marketing studies, mall documents and compilations, lease
summaries and originals and/or copies of Leases, the REA and the Contracts and
correspondence related thereto.
"CLOSING" shall have the meaning set forth in Section 4.1.
"CLOSING BALANCE SHEETS" shall have the meaning set forth in Section
5.1(a).
"CLOSING DATE" shall have the meaning set forth in Section 4.1.
"CLOSING DOCUMENTS" shall mean the Seller Closing Documents and the
Company Closing Documents, collectively.
"CLOSING NET EQUITY" shall mean, in the case of the Preliminary
Proration Date Balance Sheet or Proration Date Balance Sheet, the excess of the
book value of the assets reflected on such balance sheet over the liabilities
reflected thereon.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY CLOSING DOCUMENTS" shall have the meaning set forth in Section
4.3.
"CONTRACTS" shall mean all equipment leases and all service,
maintenance and other contracts and concessions that are currently in effect and
to which the Existing Venture is a party respecting the use, maintenance,
development, sale or operation of the Property or any portion thereof (but
excluding this Agreement, the Leases, the Permitted Exceptions and the REA)
including those which are listed on SCHEDULE 6.1(I), together with any additions
thereto, modifications thereof or substitutions therefor hereafter entered into
in accordance with the provisions of this Agreement.
"CONTRIBUTION AMOUNT" shall have the meaning set forth in Section 2.2.
"DEFECT" shall mean any Lien, encumbrance, easement, agreement,
restriction, proceeding, lis pendens, notice, encroachment or exception to title
other than a Permitted Exception that materially and adversely affects the title
to or use of the Property.
"ENVIRONMENTAL LAWS" shall mean all federal, state and local statutes,
ordinances, codes, rules, regulations, orders and decrees regulating, relating
to or imposing liability or standards concerning or in connection with Hazardous
Materials, underground storage tanks or the protection of human health, natural
resources or the environment, as any of the same may
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<PAGE> 3
be amended from time to time, including the Comprehensive Environmental
Response, Compensation and Liability Act ("CERCLA"), 42 U.S.C. ss.9601 et. seq.,
as amended by the Superfund Amendments and Reauthorization Act or any equivalent
state or local laws or ordinances; the Resource Conservation and Recovery Act
("RCRA"), 42 U.S.C. ss. 6901 et seq., as amended by the Hazardous and Solid
Waste Amendments of 1984, or any equivalent state or local laws or ordinances;
the Federal Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C.
ss.136 et. seq. or any equivalent state or local laws or ordinances; the
Hazardous Materials Transportation Act (49 U.S.C. ss. 1801 et seq.); the
Emergency Planning and Community Right-to-Know Act ("EPCRA"), 42 U.S.C. ss.11001
et. seq. or any equivalent state or local laws or ordinances; the Toxic
Substance Control Act ("TSCA"), 15 U.S.C. ss.2601 et. seq. or any equivalent
state or local laws or ordinances; the Atomic Energy Act, 42 U.S.C. ss.2011 et.
seq., or any equivalent state or local laws or ordinances; the Clean Water Act
(the "Clean Water Act"), 33 U.S.C. ss.1251 et. seq. or any equivalent state or
local laws or ordinances; the Clean Air Act (the "Clean Air Act"), 42 U.S.C.
ss.7401 et seq. or any equivalent state or local laws or ordinances; the
Occupational Safety and Health Act, 29 U.S.C. ss.651 et seq. or any equivalent
state or local laws or ordinances.
"EXISTING INDEBTEDNESS" shall mean the loans listed on Schedule 6.1(x).
"EXISTING INDEBTEDNESS DOCUMENTS" shall have the meaning set forth in
Section 6.1(x).
"EXISTING LENDER" shall mean the holder or holders of the Existing
Indebtedness as specified on Schedule 6.1(x).
"EXISTING MANAGER" shall mean General Growth Management, Inc.
"EXISTING VENTURE" shall mean General Growth Properties-Natick Limited
Partnership, a Delaware limited partnership.
"EXECUTION DATE" shall mean the date of this Agreement.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
6.1(v).
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"GAAS" shall mean Generally Accepted Auditing Standards as promulgated
by the Auditing Standards Division of the American Institute of Certified Public
Accountants from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state or local
government, court, department, commission, board and office having jurisdiction
over the Property, Seller, Existing Venture or the Company, or any other body
exercising functions similar to those of any of the foregoing.
"HAZARDOUS MATERIALS" shall mean any substance, material, waste, gas or
particulate matter which (i) is now, or at any future time may be, regulated by
the United States Government, the state in which the Real Property is located,
any other state with jurisdiction, or any local governmental authority, or (ii)
the exposure to, or manufacture, possession, presence, use generation, storage,
transportation, treatment, release, disposal, abatement, cleanup, removal,
remediation or handling of is prohibited, controlled or regulated by any
Environmental
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<PAGE> 4
Law, or (iii) requires investigation or remediation under any Environmental Law
or common law, or (iv) is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous. Such term includes
any material or substance which is (1) defined as a "hazardous waste,"
"hazardous material," "hazardous substance," "extremely hazardous waste,"
"restricted hazardous waste" or any like or similar term under any applicable
Environmental Law; (2) oil and petroleum products; (3) asbestos or
asbestos-containing material as defined in the regulations of the Occupational
Safety and Health Administration at 29 C.F.R. ss.1910.1001; (4) polychlorinated
biphenyls; (5) radioactive material; (6) designated as a "toxic pollutant" or a
"hazardous substance" pursuant to Sections 307 or 311 of the Clean Water Act;
(7) defined as a "hazardous waste" pursuant to Section 1004 of RCRA; (8) defined
as a "hazardous substance" pursuant to Section 101 of CERCLA; (9) designated as
a "hazardous chemical" substance or mixture pursuant to TSCA; (10) designated as
an "extremely hazardous" substance under Section 302 of EPCRA; (11) designated
as a "priority pollutant" or "hazardous air pollutant" pursuant to the Clean Air
Act; (12) designated as a hazardous chemical under the Occupational Safety and
Health Act; (13) radon gas or other radioactive source material, including
special nuclear material, and byproduct materials regulated under the Atomic
Energy Act, 42 U.S.C. ss.2011 et. seq.; (14) subject to regulation under FIFRA;
(15) natural gas, natural gas liquids, liquefied natural gas, and synthetic gas
usable for fuel; or (16) infectious wastes or materials and pathogenic bacteria
or other pathogenic microbial agents.
"IMPROVEMENTS" shall mean improvements, buildings, structures,
fixtures, facilities, installations, machinery and equipment, in, on, over or
under the Land, including the foundations and footings therefor, elevators,
plumbing, air conditioning, heating, ventilating, mechanical, electrical and
utility systems (except to the extent owned by a utility company) and any other
similar systems, signs and light fixtures (except to the extent of trade
fixtures and equipment owned by tenants under the Leases), doors, windows,
fences, parking lots, walks and walkways and each and every other type of
physical improvement to the extent owned, in whole or in part, by the Existing
Venture, located at, on or affixed to the Land, to the full extent such items
constitute or are or can or may be construed as realty under the laws of the
state in which the Real Property is located.
"INDEMNIFIED COMPANY PERSONS" shall have the meaning set forth in
Section 8.1.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 8.3.
"INDEMNIFIED SELLER PERSONS" shall have the meaning set forth in
Section 8.2.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 8.3.
"LAND" shall mean those certain parcels of real estate described on
EXHIBIT A.
"LANDLORD WORK" shall mean all work, improvements, fixtures, fittings
and equipment (other than normal repairs, maintenance or replacements) that are
required (or may in the future be required) to be furnished or provided to
Tenants or REA Parties or paid for by landlord or developer under the terms of
the Leases or the REA, as in effect on the date hereof.
"LEASES" shall mean all leases, tenancies, concessions, licenses and
occupancy agreements currently in effect and to which the Existing Venture or
any of its predecessors in title is a party affecting or relating to the
Property including those which are listed on SCHEDULE 6.1(G), together with any
additions thereto, modifications thereof or substitutions therefor hereafter
entered into in accordance with the provisions of this Agreement.
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"LEGAL REQUIREMENTS" shall mean any laws, ordinances, orders, rules,
regulations and requirements of any Governmental Authority which may be
applicable to the Property, the Existing Venture or Seller.
"LIENS" shall mean any mortgages, deeds of trust, security interests,
judgments or charges, pledges, options, rights of first offer or first refusal,
liens of any type, restrictions, claims and other encumbrances of any nature
whatsoever other than the Existing Indebtedness Documents.
"LIEN SEARCHES" shall mean a search report by an independent search
firm reasonably acceptable to the Company of the Secretary of State records,
county recorder records, local court records (federal, state, county and
municipal) and such other official public records with respect to the Property
that would disclose the presence of any Liens, bankruptcy proceedings, lis
pendens or other matters affecting the Property, the Existing Venture or Seller.
"LOSSES" shall mean any and all claims, actions, suits, proceedings,
demands, losses, damages, liabilities, obligations, judgments, settlements,
awards, penalties, costs or expenses, including reasonable attorneys', experts'
or consultants' fees and expenses.
"NATICK II" shall mean General Growth Properties-Natick II, Inc., a
Delaware corporation.
"NATICK TRUST" shall mean GGP-Natick Trust, a Massachusetts business
trust.
"OPERATING AGREEMENT" shall mean that certain Operating Agreement among
the Company, Seller and the New York State Common Retirement Fund dated as of
the date hereof.
"PARTY" shall mean a party to the REA, a Contract or Permitted
Exception Document (or the successor or assignee thereof) or a Tenant under a
Lease, in each case other than the Existing Venture or its predecessors in title
with respect to the Property.
"PERMITTED EXCEPTION DOCUMENT" shall have the meaning set forth in
Section 2.3(b).
"PERMITTED EXCEPTIONS" shall mean the exceptions to title to the
Property listed on EXHIBIT B attached hereto and made a part hereof.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, governmental unit or agency, trust, estate or other entity of
any type.
"PERSONALTY" shall mean all of the personal property, both tangible and
intangible, owned by the Existing Venture (and the Existing Venture's interest
in any of the following) and located in or upon or used in connection with the
operation or maintenance of the Property, including machinery; equipment;
building supplies and materials; consumables; inventories; names, logos,
trademarks, trade names and copyrights; all assignable licenses, permits,
approvals, authorizations, variances, consents and certificates of occupancy;
all assignable guarantees or warranties (including performance bonds obtained
by, or for the benefit of, the Existing Venture, pertaining to the ownership,
construction or development of the Real Property or any part thereof); the Books
and Records; computer and peripheral equipment; computer software and data
contained in hard drives and on diskette; advertising materials; and telephone
exchange numbers. Without limiting the foregoing, "Personalty" shall include the
property listed
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<PAGE> 6
on SCHEDULE 1.1-2. Personalty shall not include personal items belonging to
Tenants or to employees of the Existing Venture and the rights of the Existing
Venture in and to the Leases, the REA and the Contracts.
"PRELIMINARY PRORATION DATE BALANCE SHEET" shall have the meaning set
forth in Section 5.1(a).
"PROMOTIONAL ASSOCIATION" shall have the meaning set forth in Section
6.1(l).
"PROPERTY" shall mean (a) the Real Property, (b) the Personalty, (c)
the rights and interests of the Existing Venture in, to and under all Leases,
(d) the rights and interests of the Existing Venture in, to and under the REA,
(e) the rights and interests of the Existing Venture in, to and under the
Contracts to the extent assignable, (f) the rights and interests of the Existing
Venture in, to and under the Existing Indebtedness Documents.
"PRORATION DATE" shall mean November 30, 1999.
"PRORATION DATE BALANCE SHEET" shall have the meaning set forth in
Section 5.1(a).
"REAL PROPERTY" shall mean the Land and the Improvements, together with
all of the estate, right, title and interest of the Existing Venture therein,
and in and to (a) any land lying in the beds of any streets, roads or avenues,
open or proposed, public or private, in front of or adjoining the Land to the
center lines thereof, and in and to any awards to be made in lieu thereof and in
and to any unpaid awards for damage to the foregoing by reason of the change of
grade of any such streets, roads or avenues; and (b) all easements, rights,
licenses, privileges, rights-of-way, strips and gores, hereditaments and such
other real property rights and interests appurtenant to the foregoing (including
all rights of the Existing Venture under the REA).
"REA" shall mean (i) that certain Memorandum Of Operating Agreement
dated as of May 1, 1964 by and among Federated Department Stores, Inc., and
Sears, Roebuck and Co., as supplemented and/or amended by (a) that certain First
Amendment to Operating Agreement dated as of May 1, 1964 between Federated
Department Stores, Inc., and Sears, Roebuck and Co., (c) that certain Second
Amendment to Operating Agreement dated as of October 5, 1964 by and among
Federated Department Stores, Inc., and Sears, Roebuck and Co., (d) that certain
Third Amendment to Operating Agreement dated as of July 29, 1965 by and among
Federated Department Stores, Inc., and Sears, Roebuck and Co., (e) that
Supplemental Operating Agreement dated as of August 5, 1965 by and among Sears,
Roebuck and Co. and Natick Mall, Inc., (f) that Fourth Amendment to Operating
Agreement dated as of May 4, 1966 by and among Federated Department Stores,
Inc., Sears, Roebuck and Co., Worchester-Natick Properties, Inc., and William D.
Lane, (g) that Assignment and Assumption of Operating Agreement dated as of
April 30, 1988 by and among Federated Department Stores, Inc., and The May
Department Stores Company and (h) as affected by Affidavit of Termination of
Operating Agreement dated September 22, 1993 and (ii) that certain Construction,
Operation and Reciprocal Easement Agreement dated as of September 22, 1993 by
and among Homart Development Co., The May Department Stores Company (in its
capacity as lessee of the Filene's parcel) and The May Department Stores Company
(in its capacity as lessee of the Lord & Taylor's parcel) .
"REGULATIONS" shall mean the final, temporary or proposed Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
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"RENT ROLL" shall have the meaning set forth in Section 6.1(e).
"RENTS" shall mean fixed, minimum, additional, percentage and overage
rents, common area maintenance charges, advertising and promotional fees,
insurance charges, rubbish removal charges, sprinkler charges, shoppers aid
charges, water charges, utility charges, HVAC charges, amounts payable with
respect to real estate and any other taxes, and other amounts payable by any
Party under the Leases and the REA.
"RETAINED DEBT" shall have the meaning set forth in the Operating
Agreement.
"SELLER CLOSING DOCUMENTS" shall have the meaning set forth in Section
4.2.
"SELLER'S INTEREST" shall mean 100% of the common shares of Natick
Trust
"SELLER'S LIABILITIES" shall have the meaning set forth in Section
2.3(b).
"SURVEY" shall mean the Urban ALTA/ACSM Land Title Survey of the
Property by Guerriere & Halnon, Project #F-2307, last revised August 16, 1999.
"TENANTS" shall mean tenants, concessionaires, licensees and/or
occupants under the Leases.
"TENANT SERVICES" shall mean all services supplied by or on behalf of
the Existing Venture to Tenants for which Tenants are separately charged, other
than services in the nature of common area maintenance.
"THIRD PARTY CLAIM" shall have the meaning set forth in Section 8.3(a).
"TITLE COMMITMENT" shall mean the Commitment for Title Insurance No.
9951-25264 issued by the Title Company to the Company effective as of August 12,
1999, together with copies of all documents underlying all exceptions to title
and all encumbrances on and other matters of record affecting the Real Property.
"TITLE COMPANY" shall mean Chicago Title Insurance Company.
"TITLE POLICY" shall mean Owner's Policy of Title Insurance No.
9451-01495-99 issued by Title Company and effective as of January 22, 1996,
insuring the Existing Venture as owner of good, marketable and indefeasible fee
title to the Property, subject only to the Permitted Exceptions.
"TRANSACTIONS" shall mean the transactions contemplated by this
Agreement.
"UTILITY DEPOSITS" shall have the meaning set forth in Section 5.8.
1.2 References. All references in this Agreement to particular sections
or articles shall, unless expressly otherwise provided, or unless the context
otherwise requires, be deemed to refer to the specific sections or articles in
this Agreement, and any references to "Exhibit" shall, unless otherwise
specified, refer to one of the exhibits annexed hereto and, by such reference,
be made a part hereof. The words "herein", "hereof", "hereunder", "hereinafter",
"hereinabove" and other words of similar import refer to this Agreement as a
whole and not to
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<PAGE> 8
any particular section, subsection, paragraph or article hereof. The words
"include", "includes" and "including" shall be deemed in each case to be
followed by the phrase "without limitation".
1.3 Terms Generally. Definitions in this Agreement apply equally to
both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.
ARTICLE II
Contribution
2.1 Contribution of Seller's Interest. Upon the terms and subject to
the conditions contained herein, at the Closing, Seller shall contribute to the
Company, and the Company shall acquire, Seller's Interest, free and clear of all
Liens. The Seller's Interest shall be deemed to have a fair market value equal
to $300,000,000.00, which represents the fair market value of the Property, plus
or minus Closing Net Equity as set forth on the Preliminary Proration Date
Balance Sheet (such amount, as the same is adjusted as hereinafter provided, the
"Contribution Amount").
2.2 Consideration. In consideration for the contribution of Seller's
Interest and certain other property being contributed to the capital of the
Company by Seller, and in addition to the assumption of liabilities and
adjustments as hereinafter provided, on the Closing Date, Seller shall receive
units of membership interest in the Company pursuant to the Operating Agreement.
2.3 Liabilities.
(a) The Existing Venture shall continue to be liable and
responsible for all liabilities and obligations of the Existing Venture other
than the Seller's Liabilities (the "Assumed Liabilities"). Without limiting the
foregoing, Assumed Liabilities shall include all liabilities and obligations
relating to the Existing Indebtedness (other than Seller's Retained Debt)
notwithstanding any joint and several or other liability of Seller under the
Existing Indebtedness. Further without limiting the foregoing, Assumed
Liabilities shall include all leasing costs, allowances, concessions, rent
abatements, build-out costs, other leasing inducements and leasing commissions
with respect to (i) all leases executed on or after September 1, 1999, and (ii)
all leases identified on Schedule 2.3(b) attached hereto without regard to the
date of execution thereof, including commissions due to Existing Manager.
(b) Seller shall be responsible for all of the following
liabilities or obligations of the Existing Venture, Seller or any predecessor of
any of them (collectively, the "SELLER PARTIES") or other Person specified below
(collectively, the "Seller's Liabilities"): (i) any liability or obligation that
is not related to the Property, (ii) any liability or obligation that arises
from contracts or agreements other than the Leases, the Contracts, the REA, the
Existing Indebtedness Documents or the instruments or agreements constituting
the Permitted Exceptions (a "PERMITTED EXCEPTION DOCUMENT") (except to the
extent the Existing Venture accepts the benefits thereof), (iii) any tort
liability arising from any accident, injury, event, circumstance, action or
omission occurring prior to the Closing Date (except to the extent of the
insurance proceeds received by the Existing Venture in connection therewith),
whether or not asserted before or after the Closing, (iv) any liability or
obligation to a Party for breach of, or other payment obligation under, a Lease,
REA, Contract or Permitted Exception Document (including any claimed overcharge
of common area maintenance or other similar charges but excluding the items
covered in clause (v)), to the extent that the liability or obligation relates
to
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<PAGE> 9
the period or accrued prior to the Closing Date, whether or not asserted before
or after the Closing, (v) all leasing costs, costs of Landlord Work (net of the
value of any additional revenues that are to be received by the Existing Venture
and are directly attributable to the Landlord Work), allowances, concessions,
rent abatements, build-out costs, other leasing inducements and leasing
commissions, with respect to all leases executed prior to September 1, 1999
(except with respect to the leases identified on Schedule 2.3(b) attached hereto
which are included in Assumed Liabilities as set forth in Section 2.3(a) above),
(vi) any fine, penalty or other amount that is imposed or assessed by or which
was payable to (including any installment thereof) a Governmental Authority for
the period prior to the Closing Date, whether or not imposed or assessed before
or after the Closing, (vii) all federal, state and local taxes of any Seller
Party of whatever kind and nature relating to the period prior to Closing,
(viii) liabilities and obligations relating to any employees (current or
former), employee benefit plans or collective bargaining agreements of the
Existing Manager or any Seller Party that accrued, relate to or arise from any
incident, event, circumstance, action or omission occurring during the period
through the Closing Date, including severance pay and accrued vacation pay
obligations and other liabilities of the Existing Manager, any Seller Party, the
Company or others relating to the termination of any of such employees prior to
the Closing or as the result of the consummation of the Transactions, (ix) any
liability or obligation to pay for work performed at, or materials supplied or
delivered to, the Property prior to the Closing, (x) any liability or obligation
relating to litigation that is commenced by Persons other than Parties or
Governmental Authorities and that relates to incidents, events, circumstances,
actions or omissions occurring during the period prior to Closing, whether or
not asserted before or after the Closing and (xi) any other costs or liabilities
imposed on Seller hereunder or under the Operating Agreement, including the
obligations of Seller thereunder as to the Retained Debt. Notwithstanding
anything to the contrary contained herein, Seller's Liabilities shall not
include (i) any liabilities or obligations to the extent that the Company has
received a credit therefor under the provisions of Article V and (ii) subject to
the provisions of Section 2.3(c), the cost of repair, remediation or correction
of any physical defect in the Property (but do include damages, fines or other
amounts owing to Parties, Governmental Authorities or others on account of any
such physical defect to the extent that such damages, fines or other amounts are
not for the cost of repair, remediation or correction thereof).
(c) Nothing contained in this Section 2.3 shall impair the
rights of the Company for a breach of any representation or warranty contained
herein or in the Seller Closing Documents.
ARTICLE III
Costs and Expenses
3.1 Title and Survey Costs. Title and Survey costs shall be paid
as follows:
(a) The Company shall pay the cost of obtaining the Title
Commitment and the cost of recording any documents required to release, cure or
remove Defects;
(b) The Company shall pay the cost of obtaining the Survey;
(c) The Company shall pay the cost of recording any other
documents;
(d) Subject to any separate agreement between Seller and the
Company, the Company shall be solely responsible for the payment of any real
property transfer taxes levied
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<PAGE> 10
or imposed upon Seller or the Property as a result of the transfers to the
Company, gains taxes levied or imposed upon Seller or the Property as a result
of the transfers to the Company, sales taxes levied or imposed upon Seller or
the Property as a result of the transfers to the Company, and documentary stamps
and other taxes, fees or charges imposed in connection with the conveyance of
Seller's Interest or any portion thereof;
(e) The Company shall pay all filing fees and charges and any
personal property sales taxes in connection with the indirect transfer of the
Personalty to the Company; and
(f) The Company shall pay the costs of the Lien Search.
3.2 Other Costs. Except for expenses and costs related to the
termination of any existing management agreement and the termination of any
employees, the Company shall pay any and all costs or expenses in connection
with the termination of any Contracts to be terminated in accordance with the
terms of this Agreement. The Company shall pay the legal fees of its counsel and
Seller shall pay the legal fees of Neal, Gerber & Eisenberg incurred in
connection with the drafting and negotiation of this Agreement and the Closing
of the Transactions.
ARTICLE IV
Closing
4.1 Closing. The closing of the Transactions (the "CLOSING") shall take
place at the offices of Neal, Gerber & Eisenberg, Two North LaSalle Street,
Chicago, Illinois 60602, commencing at 10:00 a.m., local time, on the date
hereof (the "CLOSING DATE").
4.2 Seller Closing Documents. On or prior to the Closing Date, Seller
shall deliver, or cause to be delivered, to the Company the following documents
(collectively, the "SELLER CLOSING DOCUMENTS"), duly executed by Seller and the
other parties thereto (other than the Company) and in form and substance
reasonably acceptable to the Company and to Seller unless the form thereof is
attached hereto:
(a) Stock powers or assignments separate from certificate
transferring 100% of the common shares of Natick Trust to the Company, thereby
assigning Seller's Interest from Seller to the Company.
(b) An affidavit of Seller stating its U.S. taxpayer
identification number and that it is a "United States person", as defined by
Sections 1445(f)(3) and 7701(b) of the Code.
(c) Such certificates as the Company may reasonably request
as to the authorization on the part of Seller of the execution, delivery and
performance of this Agreement and the authority of the Persons executing and
delivering this Agreement and the Seller Closing Documents on behalf of Seller.
(d) Certificates issued by the Delaware Secretary of State,
dated not more than ten (10) days prior to the Closing Date, certifying the good
standing of Seller and the general partner(s) of Seller, respectively.
(e) Originals or certified copies of the organizational
documents for the Existing Venture, Natick Trust and Natick II, including
partnership agreements, operating
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<PAGE> 11
agreements, articles of organization, by-laws, minute books and records of
meetings, including all amendments thereof.
(f) Original, or copies certified by Seller as true, complete
and correct, of each of the Leases and the REA, together with all Books and
Records including current real estate tax bills, water, sewer and utility bills
and all Tenant correspondence.
(g) Keys and combinations to locked compartments within the
Property.
(h) The Existing Indebtedness Documents.
(i) Any instruments, documents or certificates required to be
executed by Seller with respect to any state, county or local transfer taxes
applicable to the conveyance of Seller's Interest pursuant to this Agreement.
(j) Such other documents, instruments or agreements which
Seller is required to deliver to the Company pursuant to the other provisions of
this Agreement or which the Company reasonably may deem necessary or desirable
in order to consummate the Transactions in accordance with the terms hereof.
4.3 Company Closing Documents. On or prior to the Closing Date,
the Company shall deliver to Seller the following documents (herein referred to
collectively as the "COMPANY CLOSING DOCUMENTS"), duly executed by an authorized
officer on behalf of the Company and the other parties thereto (other than
Seller) and in form and substance reasonably acceptable to Seller and to the
Company unless the form thereof is attached hereto:
(a) An agreement or agreements pursuant to which the Company
accepts assignment of Seller's Interest.
(b) A duly executed and acknowledged Secretary's Certificate,
certifying that the members of the Company have duly adopted resolutions
authorizing the consummation of the Transactions and certifying the authority of
the respective authorized signatories of the Company executing and delivering
this Agreement and the Company Closing Documents in their capacities as officers
of the Company.
(c) A certificate issued by the Secretary of State of
Delaware dated not earlier than ten (10) days prior to the Closing Date
certifying the existence and good standing of the Company as of the date of such
certificate.
(d) Copies of the Certificate of Formation of the Company and
any amendments thereto, as of the Closing Date certified by the Secretary of
State of the State of Delaware as of a date not more than twenty (20) days prior
to the Closing Date, together with a certificate of an officer of the Company to
the effect that the Certificate of Formation of the Company, as certified by the
Secretary of State of Delaware, has not been further amended, revised, restated,
cancelled or rescinded up to and including the Closing Date.
(e) Any instruments, documents or certificates required to be
executed by the Company with respect to any state, county or local transfer
taxes applicable to the conveyance of Seller's Interest pursuant to this
Agreement.
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<PAGE> 12
(f) Such other documents, instruments or agreements which the
Company may be required to deliver to Seller pursuant to the other provisions of
this Agreement or which Seller reasonably may deem necessary or desirable to
consummate the Transactions; provided, however, that any such other document,
instrument or agreement which Seller reasonably deems necessary or desirable
shall not impose upon the Company any obligation or liability other than an
obligation or liability expressly imposed upon the Company pursuant to the terms
of this Agreement or pursuant to the terms of the other the Company Closing
Documents specified in this Section 4.3.
4.4 Joint Deliveries. Seller and the Company shall jointly
execute and deliver the Preliminary Proration Date Balance Sheet.
ARTICLE V
Net Equity Adjustment
5.1 Net Equity Adjustment.
(a) At or prior to Closing, Seller shall prepare and deliver
to the Company a balance sheet with respect to the Property and the Existing
Venture (the "PRELIMINARY PRORATION DATE BALANCE SHEET") prepared as of the last
day of the month prior to the Closing Date, or, if the data as of such date are
unavailable, the last day of the second month prior to the Closing Date. No
later than one hundred twenty (120) days after the Closing Date, the Company
shall cause to be prepared and delivered to Seller an unaudited balance sheet
with respect to the Property and the Existing Venture as of the Proration Date
(the "PRORATION DATE BALANCE SHEET" and, together with the Preliminary Proration
Date Balance Sheet, the "CLOSING BALANCE SHEETS"), showing Closing Net Equity.
The Closing Balance Sheets shall be prepared on an accrual basis in accordance
with GAAP applied in a manner consistent with that utilized in the preparation
of the financial statements for General Growth Properties, Inc. without regard
to any special provisions relating to its REIT status, provided however, that
the following rules shall be employed:
(i) the following assets shall be excluded or
eliminated: deferred rent receivables; deferred financing, leasing and
other costs; tenant lease incentives; prepaid expenses to the extent
the full amount thereof could not reasonably be expected to inure to
the benefit of the Existing Venture (including but not limited to
prepaid insurance premiums);
(ii) no amount shall be recorded under the
classification "Building & Improvements", "Fixtures & Equipment",
"Tenant Improvements" and "Land";
(iii) net carrying amounts for or in respect of the
following shall be eliminated, with such elimination to be done, in
each case net of accumulated amortization and depreciation, allowances
for bad debts and other contra accounts: building and improvements,
fixtures and equipment, land, capitalized taxes, tangible personal
property and goodwill;
(iv) the following assets shall be included (and
shall be deemed to be part of the assets of the Existing Venture and
transferred to the Company): all cash in the Existing Venture;
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(v) the following liabilities shall be excluded or
eliminated: Retained Debt, deferred revenues and income tax accounts;
(vi) at Seller's election, a liability may be
excluded to the extent that it is a Seller's Liability and any reserves
or other assets relating to such excluded liability shall be excluded
or distributed to Seller;
(vii) there shall be excluded from assets an amount
equal to proceeds from condemnation awards (or payments in lieu
thereof), casualty insurance or the termination of any Lease, in each
case received after the date hereof;
(viii) reserves for billed accounts receivable,
including Rent and all other tenant charges, shall be calculated so
that (A) accounts receivable from Tenants in bankruptcy shall utilize a
reserve of 100%, (B) accounts receivable that are 90 days (but less
than 120 days) past due shall utilize a reserve of 25%, and (C)
accounts receivable that are more than 120 days past due shall utilize
a reserve of 50%, and in each case accounts receivable shall also
include a reserve of five percent (5%) for unbilled tenant charges, and
an accrual shall be recorded for insurance deductibles based upon
insurance company estimates; and
(ix) any distributions made by Existing Venture
during November shall be treated as though not made.
(b) If, based on the Preliminary Proration Date Balance
Sheet, Closing Net Equity exceeds zero, the Contribution Amount will be
increased by the amount of such excess. If, based on the Preliminary Proration
Date Balance Sheet, Closing Net Equity is less than zero, the Company will
receive a credit against the Contribution Amount equal to the amount of such
shortfall.
(c) If, based on the Proration Date Balance Sheet, Closing
Net Equity, adjusted for the amount of any adjustment made pursuant to Section
5.1(b), exceeds zero, the Company will, no later than the later of (i) sixty-one
(61) days following the delivery of the Proration Date Balance Sheet or (ii)
five (5) business days following the resolution of a dispute with respect to an
item on the Proration Date Balance Sheet as set forth in subsection 5.2 hereof
(the "BALANCE SHEET SETTLEMENT DATE"), pay to Seller the amount of such excess
by wire transfer of immediately available funds to an account designated by
Seller. If Closing Net Equity, adjusted for the amount of any adjustment made
pursuant to Section 5.1(b), is less than zero, Seller will pay to the Company no
later than the Balance Sheet Settlement Date the amount of such shortfall by
wire transfer of immediately available funds to an account designated by the
Company.
5.2 Resolution of Disputes on Proration Date Balance Sheet.
(a) If Seller disagrees with any item on the Proration Date
Balance Sheet, Seller shall notify the Company in writing of such disagreement
within sixty (60) days after Seller's receipt of the Proration Date Balance
Sheet. Such notice shall set forth the basis for such disagreement in reasonable
detail. During such sixty (60) day period, the Company shall afford Seller and
its duly designated representatives access to all of the Existing Venture's
books and records, in each case solely for the purposes of resolving such
disagreement. The Company and Seller shall thereafter negotiate in good faith to
resolve any such disagreements, provided that Seller shall promptly pay to the
Company, or the Company shall promptly pay to
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<PAGE> 14
Seller, as the case may be, the amount determined pursuant to Section 5.1(c)
that is not subject to dispute.
(b) If the Company and Seller are unable to resolve any such
disagreements within thirty (30) days after the expiration of the sixty (60) day
period referred to in Section 5.2(a), or, if the Company and Seller are unable
to resolve a dispute concerning the final adjustments to the Contribution
Amount, the Company and Seller shall cause Ernst & Young LLP (the "AUDITOR") to
resolve all disagreements on the disputed items as soon as practicable, provided
that the Auditor shall be bound by the provisions of Section 5.1 and may not
assign a value to any item greater than the greatest value for such item claimed
by either party or less than the smallest value for such item claimed by either
party. Each of the Company and Seller shall permit the Auditor to have full
access to its books, records, key employees and independent accountants in order
to resolve any such disagreements. The resolution of such disagreements by the
Auditor shall be final and binding on the Company and Seller. The fees and
expenses of the Auditor shall be paid by the party whose position is most at
variance with the decision of the Auditor.
ARTICLE VI
Representations and Warranties
6.1 Seller's Representations and Warranties. Seller represents and
warrants to the Company as follows:
(a) Seller is a limited partnership duly formed, validly
existing and in good standing under the laws of the State of Delaware with full
power and authority to execute, deliver and perform this Agreement. Seller has
delivered to the Company true, correct and complete copies of its limited
partnership agreement and all amendments and modifications thereto.
(b) The execution, delivery and performance of this Agreement
by Seller have been duly and validly authorized by all necessary action on the
part of Seller. This Agreement has been, and the Seller Closing Documents will
be, duly executed and delivered by Seller. This Agreement constitutes, and when
so executed and delivered the Seller Closing Documents will constitute, the
legal, valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms.
(c) None of the execution, delivery or performance of this
Agreement by Seller does or will, with or without the giving of notice, lapse of
time or both, violate, conflict with, constitute a default, result in a loss of
rights, acceleration of payments due or creation of any Lien upon the Property
or require the approval or waiver of or filing with any Person (including any
governmental body, agency or instrumentality) under (i) the organizational
documents of Seller or its general partner or, any agreement, instrument or
other document to which Seller or its general partner is a party or by which it
is bound, (ii) any judgment, decree, order, statute, injunction, rule,
regulation or the like of a governmental unit applicable to the Property, the
Existing Venture, Seller or its general partner (other than notification of
ownership change or transfer or reissuance of permits as may be required under
Environmental Laws), or (iii) any contract or agreement by which Seller or the
Existing Venture may be bound.
(d) Seller has good and marketable title to Seller's Interest
free and clear of Liens and, upon execution and delivery of the Seller Closing
Documents, the Company will have good and marketable title to Seller's Interest
free and clear of Liens other than Liens created by,
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<PAGE> 15
under or through the Company. No other property (other than the Real Property
and property owned by any Anchor) comprises "Natick Mall".
(e) Schedule 6.1(e) is a true, correct and complete copy of
the rent roll of the Property (the "RENT ROLL") as of November 1, 1999, prepared
in the format prescribed by the MRI software reporting system currently in place
at the Property. All information therein is accurate as of its date. Except as
set forth to the contrary on Schedule 6.1(e), no Tenant has paid any rent in
advance except for the current month.
(f) Schedule 6.1(f) is a true, correct and complete schedule
of delinquencies in Rent, common area maintenance and other similar charges,
showing amounts payable as of November 1, 1999 by each Party, which schedule
sets forth separately and certifies the items of Rents with respect to which
each such Party is in arrears, the amount of each item and the period of such
arrearage.
(g) Schedule 6.1(g) contains a complete and correct list of
all existing Leases and modifications thereof and supplements thereto regardless
of whether the terms thereof have commenced, setting forth with respect to each
(i) the date thereof and of each modification thereof and supplement thereto and
(ii) the names of the Parties thereto (including the name of the current
assignee, if any, but only if and to the extent Seller has actual notice of any
such assignment). A true and complete copy of each Lease demising space in
excess of 10,000 square feet, together with each modification thereof and
supplement thereto, has heretofore been furnished to the Company for inspection
and has been delivered to the Company on the date hereof. Each Lease constitutes
the entire agreement between the Existing Venture and each Party thereto, and
the Existing Venture has not made any oral promises or agreements amending or
modifying the same. No Person is using or occupying (or is entitled to use or
occupy) the Real Property except under a Lease or the REA.
(i) There are no leases executed by the Existing Venture or
other rights of occupancy or use granted by the Existing Venture or, to
Seller's knowledge, its predecessors in title of any portion of the
Property other than the Leases. Each of the Leases is valid and
subsisting and in full force and effect, and no Rents or other payments
or deposits are held by Seller, the Existing Venture or the Existing
Venture's agent, except the security deposits (together with the amount
of accrued and unpaid interest thereon) described on the Rent Roll and
Rents prepaid for the current month. As of the Closing Date, no Rents
due under, or any other interest in, any of the Leases will be assigned
to any party other than the Existing Lender, or are otherwise pledged
or encumbered in any way. All Security Deposits are being, and have
been, held in compliance with all Legal Requirements.
(ii) Except as set forth on Schedule 6.1(g), no Tenant has
made any written claim which has been received by Seller or the
Existing Venture or, to Seller's knowledge, has any other claim,
whether or not in writing (A) that the Existing Venture has defaulted
in performing any of its obligations under any of the Leases which has
not heretofore been cured, (B) that any condition exists which with the
passage of time or giving of notice, or both, would constitute any such
default, (C) that such Tenant is entitled to any reduction in, refund
of, or counterclaim or offset against, or is otherwise disputing, any
Rents or other charges paid, payable or to become payable by such
Tenant, or (D) that such Tenant is entitled to cancel its Lease or to
be relieved of its operating covenants thereunder.
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<PAGE> 16
(iii) With the exception of delinquencies in the payment of
Rents which are set forth on Schedule 6.1(f), no material default
exists under any of the Leases on the part of the Tenant thereto and
Seller has no knowledge of any condition, which, with the passage of
time, or giving of notice, would constitute a default under any Lease.
With the exception of any requirement to repair any physical defects in
the Property, the Existing Venture is not in default under the Leases.
The Existing Venture has not delivered any default notices to any
Tenant under any Lease which has not been cured.
(iv) There are no rent abatements, offset rights, "free rent
periods" or other tenant concessions or inducements, including lease
assumptions or buy-outs, applicable to any of the Leases or any rights
to extend or renew any of such Leases except as set forth in the
Leases. There are no expansion rights, options or rights to renew,
extend or terminate the Leases, except as set forth in the Leases.
Neither Seller nor the Existing Venture have granted any rights,
options or rights of first refusal of any kind to any Tenant or
otherwise, which are currently in effect, to purchase or to otherwise
acquire the Property or any part thereof or interest therein. All of
the improvements to be constructed by the landlord under each of the
Leases, or as required under any collateral agreement, plans or
specifications related to the Leases, have been fully completed in
accordance with the terms thereof and have been paid for.
(v) No condition exists that would permit any Party to any
Lease or REA to cancel or terminate such Lease or REA, be released from
liability from such Lease or REA or reduce its obligations under any
Lease or REA.
(vi) Neither Seller nor the Existing Venture or any Affiliate
of any of the foregoing, has made a loan or otherwise extended any
credit to any Tenant.
(h) The REA constitutes the only reciprocal easement
agreements or operating agreements encumbering the Property. A true and complete
copy of the REA has heretofore been furnished to the Company, together with each
written modification thereof and supplement thereto. The REA constitutes the
entire agreement between the Existing Venture and each REA Party thereto, and
neither Seller nor the Existing Venture have made any oral promises or
agreements amending or modifying the same.
(i) The REA is valid and in full force and effect, and no
Rents or other payments or deposits are held by Seller, the Existing
Venture or Seller's agent, except the Rents prepaid for the current
month. As of the Closing Date, no Rents due under, or any other
interest in, the REA will be assigned to any party other than the
Existing Lender, or are otherwise pledged or encumbered in any way.
(ii) Except as set forth on Schedule 6.1(h), none of the REA
Parties has made any written claim which has been received by Seller,
the Existing Venture or, to Seller's knowledge, has any other claim,
whether or not in writing (A) that the Existing Venture has defaulted
in performing any of its obligations under any of the REAs which has
not heretofore been cured, (B) that any condition exists which with the
passage of time or giving of notice, or both, would constitute any such
default, (C) that such REA Party is entitled to any reduction in,
refund of, or counterclaim or offset against, or is otherwise
disputing, any Rents or other charges paid, payable or to become
payable by such REA Party, (D) that such REA Party is entitled to
cancel its REA or to be relieved of its operating covenants thereunder,
or (E) that there is a violation of any of the covenants, conditions or
restrictions contained in such REA.
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<PAGE> 17
(iii) With the exception of delinquencies in the payment of
Rents which are set forth on Schedule 6.1(f), no material default
exists under the REA on the part of the REA Parties thereto and Seller
has no knowledge of any condition which, with the passage of time or
giving of notice, would constitute a default under any REA. With the
exception of any requirement to repair any physical defects in the
Property, the Existing Venture is not in default under the REA. The
Existing Venture has not delivered any default notices to any party
under the REA which has not been cured.
(iv) There are no rent abatements, offset rights, "free rent
periods" or other concessions or inducements, including lease
assumptions or buy-outs, applicable to the REA or any rights to extend
or renew the REA except as set forth in Schedule 6.1(h) or the REA.
There are no options or rights to renew, extend, expand or terminate
the REA, except as set forth in Schedule 6.1(h). Except as set forth in
Schedule 6.1(h), neither Seller nor the Existing Venture have granted
any rights, options or rights of first refusal of any kind to any of
the REA Parties, which are currently in effect, to purchase or to
otherwise acquire the Property or any part thereof or interest therein.
All of the improvements to be constructed by the developer or owner
under the REA, or as required under any collateral agreement, plans or
specifications related to the REA, have been fully completed in
accordance with the terms thereof and paid for. No party to any REA has
given notice that it has ceased or that it intends to cease operating
its store or other property that it is required to operate under the
REA.
(i) Each of the Contracts is in full force and effect. To
Seller's knowledge, there have been no material defaults by any Party to a
Contract which have not heretofore been cured. There has been no material
default (without giving effect to any notice and cure rights) by the Existing
Venture under any Contract or any claim received by Seller or the Existing
Venture of any such default by any party thereto, which has not heretofore been
cured except as set forth on Schedule 6.1(i)(a). Except as set forth on Schedule
6.1(i)(b), all of the Contracts are terminable upon notice given sixty (60) days
or less before any such termination, without penalty, fee or cost. A true and
complete copy of each Contract listed on Schedule 6.1(i)(b), together with any
modifications, amendments or supplements thereto, has been delivered or made
available to the Company.
(j) Schedule 6.1(j) contains a list of all permits,
authorizations, approvals and licenses currently maintained with respect to the
Property and all such permits, authorizations, approvals and licenses are in
full force and effect. Neither Seller nor the Existing Venture have received any
written notice of violation from any federal, state or municipal entity with
respect to the Property or in connection with the operations conducted thereon
that has not been cured or otherwise resolved to the satisfaction of such
governmental entity. To Seller's knowledge, the permits, authorizations,
approvals and licenses listed on Schedule 6.1(j) are all of the licenses and
permits which are required for the present use of the Property.
(k) Except for non-friable asbestos and as set forth on
Schedule 6.1(k), neither Seller, the Existing Venture nor any other Person has
caused or permitted any Hazardous Material to be maintained, disposed of,
stored, treated, recycled, brought upon, transported over or generated on, under
or at the Property or any part thereof, except for the presence, maintenance,
storage, use or transportation of substances commonly present or stored at or
used in the ordinary operation and maintenance of shopping centers in ordinary
quantities commonly present, stored or used at shopping centers and in
compliance with applicable laws, including Environmental Laws. There has been no
release or threatened release of any Hazardous Materials at, on or under the
Property or any part thereof that will give
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<PAGE> 18
rise to any obligation or liability to conduct or pay for any investigation,
removal, remediation, monitoring, closure, or post-closure care at, on or under
the Property or any part thereof, nor has there been any release or threatened
release of Hazardous Materials with respect to any offsite location to which
Hazardous Materials have, or are alleged to have, migrated or been transported
from the Property. Seller and the Existing Venture are in compliance with, and
have heretofore complied with, all applicable Environmental Laws with respect to
the Property and as of the date hereof there are no violations of applicable
Environmental Laws at the Property which have not been remediated in accordance
with all applicable Environmental Laws. Neither Seller nor the Existing Venture
have received any written notice from any governmental unit or other person that
it or the Property is not in compliance with any Environmental Law or that it
has any liability with respect thereto and there are no administrative,
regulatory or judicial proceedings pending or, to the knowledge of Seller,
threatened with respect to the Property pursuant to, or alleging any violation
of, or liability under any Environmental Law. Except as set forth on Schedule
6.1(k), neither Seller nor the Existing Venture have installed any underground
or above ground storage tanks on, under or about the Property and no such tanks
are located on, under or about the Property.
(l) Except as set forth on Schedule 6.1(l), the Existing
Venture is under no obligation to make contributions or otherwise provide
assistance to any promotional association or promotional fund and has not
customarily in the past made or provided any such contributions or assistance.
The promotional association established with respect to the Property (the
"PROMOTIONAL ASSOCIATION") is an independent association established by and on
behalf of the Tenants, Seller and the Existing Venture having no ownership,
management, fiduciary or monetary interest of any kind therein. Seller and/or
the Existing Venture has remitted to the Promotional Association any amounts
received by it from Tenants and other Parties that constitute contributions to
the Promotional Association. Seller and/or the Existing Venture, as the case may
be, has made all required payments to any such Promotional Association or fund,
if any.
(m) Except as provided in Schedule 6.1(m), there is no
litigation, including any arbitration, investigation or other proceeding by or
before any court, arbitrator or governmental or regulatory official, body or
authority which is pending or, to Seller's knowledge, threatened against Seller
or the Existing Venture relating to the Property, Seller's Interest or the
Transactions, there are no unsatisfied arbitration awards or judicial orders
against the Existing Venture and, to Seller's knowledge, there is no basis for
any such arbitration, investigation or other proceeding. Copies of all pleadings
and other documents furnished or made available by Seller to the Company with
respect to the litigation described on Schedule 6.1(m) are true, accurate and
complete in all respects.
(n) No condemnation proceeding or other proceeding or action
in the nature of eminent domain is pending with respect to all or any part of
the Property, and, to Seller's knowledge, no condemnation proceeding or other
proceeding or action in the nature of eminent domain is pending with respect to
any property owned by a Party to the REA which is the subject of such REA and to
Seller's knowledge no Taking is threatened with respect to all or any part of
the Property, or any property owned by a Party to the REA which is the subject
of such REA.
(o) True, correct and complete copies of current real estate
tax bills with respect to the Property, other than tax bills sent to Tenants who
have the obligation to pay such taxes to the collecting authority, have been
delivered or made available to the Company. No portion of the Property comprises
part of a tax parcel which includes property other than
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<PAGE> 19
property comprising all or a portion of the Property. No application or
proceeding is pending with respect to a reduction or an increase of such taxes.
There are no tax refund proceedings relating to the Property which are currently
pending and neither Seller nor the Existing Venture, nor any Affiliate thereof
has applied for any such reduction. Seller has no knowledge of any special tax
or assessment to be levied against the Property or any change in the tax
assessment of the Property other than the annual assessment. Neither Seller nor
the Existing Venture has received written notice of any, or has any knowledge of
any special assessments currently affecting the Property.
(p) Neither Seller nor the Existing Venture have received
(i) any written notice from any governmental authority having jurisdiction over
the Property of, and to Seller's knowledge there does not exist, (A) any
violation of any law, ordinance, order or regulation (including the ADA)
affecting the Property, or any portion thereof, which has not heretofore been
complied with or (B) any other obligation to any such governmental authority for
the performance of any capital improvements or other work to be performed by
Seller or the Existing Venture in or about the Property or donations of monies
or land (other than general real property taxes) which has not been completely
performed and paid for; or (ii) any written notice from any insurance company,
insurance rating organization or Board of Fire Underwriters requiring any
alterations, improvements or changes at the Property, or any portion thereof,
which has not heretofore been complied with.
(q) No approval, consent, waiver, filing, registration or
qualification with any third party, including any governmental bodies, agencies
or instrumentalities is required to be made, obtained or given for the
execution, delivery and performance of this Agreement or any of the Seller
Closing Documents by Seller or the consummation of the Transactions (other than
notification of ownership change or transfer or reissuance of permits as may be
required under Environmental Laws).
(r) The Existing Venture is a limited partnership duly
formed, validly existing and in good standing under the laws of the State of
Delaware with full power and authority to own the Property and conduct the
business now being conducted by it.
(s) Natick II is a corporation duly formed, validly existing
and in good standing under the laws of the State of Delaware with full power and
authority to own the interest owned by it in the Existing Venture and conduct
the business now being conducted by it. Natick II owns a .001% interest as a
general partner in the Existing Venture and no Person has any option or other
right to acquire said interest or portion thereof, any other equity interest in
the Existing Venture or any security or instrument convertible into any such
equity interest.
(t) Natick Trust is a business trust duly formed, validly
existing and in good standing under the laws of the State of Massachusetts with
full power and authority to own the interest owned by it in the Existing Venture
and conduct the business now being conducted by it. Natick Trust owns a 99.999%
interest as a limited partner in the Existing Venture and no Person has any
option or other right to acquire said interest or portion thereof, any other
equity interest in the Existing Venture or any security or instrument
convertible into any such equity interest.
(u) Natick Trust owns 100% of the common stock of Natick II
and no Person has any option or other right to acquire said interest or portion
thereof, any other equity interest in Natick II or any security or instrument
convertible into any such equity interest.
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<PAGE> 20
(v) Seller has furnished the Company with the financial
statements of the Existing Venture (consisting of balance sheets and income
statements) as of, and for the calendar years ended, December 31, 1997 and
December 31, 1998 (the "FINANCIAL STATEMENTS"). The Financial Statements are
consistent with the books and records and accounts of the Existing Venture and
fairly present the financial condition and results of the Existing Venture as of
the dates thereof and for the periods referred to therein, and the Financial
Statements have been prepared in accordance with generally accepted accounting
principles, consistently applied throughout the periods indicated. Since
December 31, 1998, the Existing Venture has conducted its business in the
ordinary course consistent with past practice and there have been no material
adverse changes in the financial condition of the business, and Seller has no
knowledge of any circumstance or event which, insofar as can be reasonably
foreseen, is likely to result in any such material adverse change.
(w) [Intentionally Deleted].
(x) Schedule 6.1(x) accurately sets forth (i) a true,
correct and complete list of all instruments, agreements and other documents
relating to the Existing Indebtedness and all modifications or amendments
thereof and supplements thereto (including guaranties, indemnity agreements and
side letters) (the "EXISTING INDEBTEDNESS Documents"), (ii) the date of the
Existing Indebtedness Documents and of each modification or amendment thereof
and supplement thereto, (iii) the name of the holders of the Existing
Indebtedness as of the date hereof, (iv) the unpaid balances (including any
accrued interest thereon) thereof as of the date hereof, (v) the security
therefor as of the date hereof and (vi) the amount of any deposits or escrows
held or established in connection therewith. The Existing Indebtedness Documents
are in full force and effect, neither Seller nor the Existing Venture has
received or delivered any notice of default under any Existing Indebtedness
Document which default has not been cured, and, to the knowledge of Seller, no
default on the part of the Existing Venture or any other Party thereto exists
thereunder (without regard to notice and cure provisions). A true and complete
copy of the Existing Indebtedness Documents, including each written modification
thereof and supplement thereto, have heretofore been furnished to the Company.
Such documents constitute the entire agreement between the Existing Venture and
each Party thereto, and there are no oral promises or agreements amending or
modifying the same.
(y) Schedule 6.1(y) contains a true, complete and accurate
list including the amounts thereof of all policies of insurance with respect to
the Property, which policies are and will be kept in full force to and including
the Closing Date. All premiums for such insurance have been paid in full. To
Seller's knowledge, neither Seller nor the Existing Venture have performed,
permitted or suffered any act or omission which would cause the insurance
coverage provided in said policies to be reduced, cancelled, denied or disputed
and neither Seller nor the Existing Venture have received (and has no knowledge
of) any notice or request from any insurance company or Board of Fire
Underwriters (or organization exercising functions similar thereto) canceling or
threatening to cancel any of said policies or denying or disputing coverage
thereunder.
(z) To Seller's knowledge, there are no material structural
or other material physical defects in the Improvements or any component or
system of the Improvements and all such Improvements are in good condition and
repair.
(aa) Neither Seller nor, to Seller's knowledge, the Existing
Venture has received notice that there is, and, to Seller's knowledge, there
does not now exist, any violation
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<PAGE> 21
of any restriction, condition or agreement contained in any easement,
restrictive covenant or any similar instrument or agreement affecting the Real
Property or any portion thereof.
(bb) The Existing Venture has no employees. There are no
collective bargaining or union agreements with respect to the employees at
Property or to which Seller or the Existing Venture is bound. The Existing
Venture does not maintain or sponsor any employee benefit plan, including any
plans subject to the Employer Retirement Income Security Act of 1974, as
amended. There are no pending claims or, to Seller's knowledge, any threatened
claim against the Existing Venture by any employee whose employment related to
the Property.
(cc) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Seller.
(dd) [Intentionally Deleted].
(ee) All material documents and Books and Records have been
delivered or have been made available to the Company. All of the documents and
Books and Records that have been delivered or made available to the Company by
or on behalf of Seller, are true, correct and complete copies of what they
purport to be and have not been modified or amended, except as specifically
noted therein. All information set forth in the exhibits and schedules to this
Agreement is true, correct and complete in all material respects and not
misleading. Seller does not have any knowledge of any significant adverse fact
or condition relating to the Property, which has not been specifically disclosed
in writing by Seller to the Company.
(ff) There are no lease brokerage agreements, leasing
commission agreements or other agreements providing for payments of any amounts
for leasing activities or procuring tenants (including renewing leases at
expanding spaces) with respect to the Property other than as disclosed in
Schedule 6.1(ff).
(gg) Schedule 1.1-2 attached hereto contains a true, correct
and complete description of the Personalty (including the name "Natick Mall"),
and except as disclosed on said Schedule 1.1-2, the Existing Venture has good
title to the Personalty free and clear from Liens and other encumbrances other
than the lien of the Existing Indebtedness Documents and the Permitted
Exceptions. The Personalty is all of the personal property that is necessary in
order to operate and maintain the Real Property as a first class regional
shopping center. The Existing Venture has taken all steps necessary in order to
protect its exclusive right to use the name "Natick Mall" in connection with the
Real Property.
(hh) As of October 15, 1999, (i) gift certificates having an
aggregate value of $1,777,941.55 have been sold, and (ii) gift certificates
having an aggregate value of $232,520.00 are outstanding.
(ii) Except as set forth in Schedule 6.1(ii) attached hereto,
neither Seller, nor any Affiliate of Seller (other than the Existing Venture),
owns (i) any right or interest in any real property adjacent to or neighboring
the Real Property including any outparcel or (ii) any right or interest in any
easement, right of way, development right, water or mineral right or any other
right which in any way affects the Real Property.
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<PAGE> 22
(jj) Except for routine work in the ordinary course of
operating the Real Property that will be paid when due, no work has been
performed by Seller or is in progress at Seller's request at the Real Property,
and no materials or supplies have been delivered to the Real Property at
Seller's request, that has resulted in the imposition of, or might provide the
basis for the imposition of, mechanics', materialmen's or other liens against
the Real Property.
(kk) The sales reports heretofore furnished by Seller to the
Company for calendar years 1996,1997 and 1998, and the rolling twelve (12)
months sales report from March 1999, disclose the sales by Tenants at the Retail
Property as reported to Seller by such Tenants.
(ll) All water, storm sewer/sanitary sewer, gas, electricity,
telephone and other utility lines, pipes and other equipment necessary in order
to operate the Real Property as a first class regional shopping center
(collectively, the "UTILITY EQUIPMENT") presently serve the Real Property and,
to Seller's knowledge, are in good working order. Neither Seller nor the
Existing Venture, has any outstanding unpaid obligation to pay the cost of
connection of any utility lines, pipes or other equipment serving the Real
Property.
(mm) The Real Property has not suffered any casualty or other
material damage that has not been fully repaired.
(nn) To Seller's knowledge, all HVAC, electric, gas,
fire-safety, plumbing, mechanical and other systems at the Real Property are in
good, working condition and no portion of same presently require replacement or
significant repair (i.e., repairs which are ordinarily capitalized under
generally accepted accounting principles).
(oo) Except as disclosed on Schedule 6.1(oo) attached hereto,
no capital work is currently in progress or contemplated.
(pp) Neither Seller nor the Existing Venture, has received
written notice from any Governmental Authority, from any Party to any REA, any
Tenant or any party to any other agreement or document, or otherwise has
knowledge, that the number of parking spaces at the Real Property is required
under any Legal Requirement, any Lease, or the REA, to be increased above the
number of parking spaces existing on the date hereof.
(qq) The Existing Venture has (i) filed all tax returns
required to be filed by it under applicable Legal Requirements and (ii) timely
paid all taxes shown to be due and payable on such tax returns.
(rr) Except as shown on the Title Commitment, from and after
the date of the Title Policy no additional Defect has occurred, which if not
cured, would have a material and adverse effect on the marketability of title to
the Real Property. Seller has no knowledge of any defects, liens, encumbrances,
adverse claims or other matters insured against under the Title Policy
(collectively, the "INSURED MATTERS") that could result in the issuer of the
Title Policy denying its liability to the Company on the grounds that the
Existing Venture or the Company had knowledge of any such Insured Matters solely
by reason of notice thereof imputed to it as a matter of law through either
Seller, the Existing Venture or any Affiliate thereof.
(ss) Except as set forth on Schedule 6.1(ss), neither Seller
nor the Existing Venture has received any written notice with respect to the
Real Property of any violation of law or municipal ordinances, orders or
requirements, that have been noted in or issued by any
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<PAGE> 23
federal, state or municipal department having jurisdiction, and which have not
been fully remedied and discharged of record.
(tt) To Seller's knowledge, Seller has provided the Company
with access to any and all certificates, licenses, permits, leases, ground
leases, operating agreements, books, records, documents and information relating
to the Real Property and the ownership and operation thereof which are in the
possession and control of Seller or the Existing Venture.
(uu) Seller is the owner of 100% of the common shares of
Natick Trust. Seller owns 100% of the Seller's Interest and Seller's Interest
represents 100% of the ownership interests in the Existing Venture. No Person
has any option or other right to acquire Seller's Interest, any portion thereof
or any other equity interest in Seller's Interest or any security or instrument
convertible into any such equity interest.
Notwithstanding anything to the contrary contained herein, (a)
Seller shall have no liability under this Agreement for the cost of repair,
remediation or correction of any physical defect in the Property except as a
result of a breach of the representations and warranties contained in Sections
6.1(k), (z), (mm) and (nn)) (but nothing contained in this paragraph shall limit
Seller's liability for damages, fines or other amounts owing to Parties,
Governmental Authorities or others on account of any such physical defect to the
extent that such damages, fines or other amounts are not for the cost of repair,
remediation or correction thereof) and (b) Seller shall have no liability for a
breach of representation or warranty contained herein or in the Closing
Documents to the extent that the Company has received a credit therefor under
the provisions of Article V.
6.2 Company Representations and Warranties. The Company represents
and warrants to Seller as follows:
(a) The Company is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware
with full right, power and authority to execute, deliver and perform this
Agreement.
(b) The execution, delivery and performance by the Company
of this Agreement have been duly and validly authorized by all requisite action
on the part of the Company. This Agreement has been, and the Company Closing
Documents will be, duly executed and delivered by the Company. This Agreement
constitutes, and when so executed and delivered the Company Closing Documents
will constitute, the legal, valid and binding obligations of the Company,
enforceable against it in accordance with their terms.
(c) None of the execution, delivery or performance of this
Agreement or the Company Closing Documents by the Company does or will, with or
without the giving of notice, lapse of time or both, violate, conflict with,
constitute a default or result in a loss of rights under or require the approval
or waiver of or filing with any Person (including any governmental body, agency
or instrumentality) under (i) the organizational documents of the Company or any
material agreement, instrument or other document to which the Company is a party
or by which the Company is bound or (ii) any judgment, decree, order, statute,
injunction, rule, regulation or the like of a governmental unit applicable to
the Company, other than notification of ownership change or transfer or
reissuance of permits as may be required under Environmental Laws.
(d) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of the
Company.
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<PAGE> 24
6.3 No Other Representations. Neither Seller nor any officer,
director, shareholder, member, agent, partner, employee, or representative of
Seller (or any officer, director, partner or employee of any agent of Seller)
has made any representation whatsoever regarding the Property or any part
thereof, or anything relating to the subject matter of this Agreement, except as
expressly set forth in this Agreement, and the Company, in executing, delivering
and performing this Agreement, has not and does not rely upon any statement,
information, or representation to whomsoever made or given, whether to the
Company or others, and whether directly or indirectly, verbally or in writing,
made by any person, firm or corporation, except as expressly set forth in this
Agreement or in the Seller Closing Documents.
6.4 Knowledge Defined. For the purposes of this Agreement,
"knowledge" (including "actual knowledge" and other similar terms) with respect
to Seller and the Existing Venture shall mean matters as to which any of the
following individuals have actual knowledge without any duty or responsibility
to make any inquiry, review or investigation: (a) John Bucksbaum, (b) Robert A.
Michaels, (c) Joel Bayer, (d) Bernard Freibaum and (e) Randy Richardson. Actual
knowledge shall not be deemed to exist merely by assertion by the Company of a
claim that any of the foregoing persons should have known of such facts or
circumstances, if such person did not have actual knowledge thereof. Seller
hereby represents and warrants that the foregoing individuals are the
individuals with the primary responsibility for overseeing the sale, management,
and operation of the Property at the level of vice president and above.
ARTICLE VII
Additional Covenants
7.1 Record Retention. Until three (3) years after the Closing, the
Company shall provide Seller upon prior written notice and during normal
business hours with reasonable access to the Books and Records and, at Seller's
cost, copies of all or any portion thereof. The Company either shall retain such
Books and Records until the third anniversary of the date hereof or notify
Seller of its desire to dispose of such Books and Records pertaining to any
period prior to the Closing which have been delivered to the Company and turn
them over to Seller if Seller so requests. Seller agrees to keep, and to
instruct its agents, employees and representatives to keep, confidential such
Books and Records (and any information contained therein) and any information
discovered in any such examinations and inspections, except in connection with
any legal proceedings or to the extent required by law. Upon the Company's
request, for a period of three (3) years after the Closing, Seller shall make
all of Seller's records with respect to the Property which are in the possession
or control of Seller available to the Company for inspection, copying and audit
by the Company's designated accountants. The provisions of this Section 7.1
shall survive Closing.
7.2 Publicity. In no event shall either Seller or the Company
issue any press release or otherwise disclose any non-public information
regarding this Agreement or the Transactions unless the other party has
consented thereto in writing as to the form and substance of any such statement
or disclosure (and Seller and the Company agree not unreasonably to withhold,
condition or delay such consent); provided, however, that nothing herein shall
be deemed to limit or impair in any way any party's ability to disclose the
details of or information concerning this Agreement or the Transactions to the
extent necessary to such party's attorneys, accountants or other advisors or to
the extent such party reasonably deems necessary or desirable pursuant to any
court or governmental order or applicable securities laws or regulations or
financial reporting requirements, or to obtain the Existing Indebtedness Consent
Documents. Further, to the extent necessary, either party may disclose any
information regarding this Agreement or the Transactions to its direct or
indirect constituent partners,
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<PAGE> 25
members or shareholders, as the case may be (and to counsel for such constituent
partners, members and shareholders) and as otherwise necessary to comply with
the terms of this Agreement. Any disclosure by a party's advisors or direct or
indirect constituent partners, members or shareholders shall be deemed a breach
hereof by such party. If for any reason this Transaction is not consummated, the
Company will promptly return to Seller all originals and copies of documents,
reports and financial and other information relating to the Property and to
Seller which Seller has furnished to the Company. The obligations of Seller and
the Company under this Section 7.2 shall survive the termination hereof, however
caused.
7.3 Assistance Following Closing. From and after the Closing,
Seller at the Company's reasonable expense shall provide reasonable assistance
to the Company in connection with the preparation of financial statements and
bills and the adjustment of losses and claims and the enforcement or settlement
of any such claims. Without limiting the foregoing, Seller shall, upon the
reasonable request of the Company from time to time, provide signed
representation letters with respect to revenues and expenses of Seller if
required under GAAS to enable the Company's accountants to render an opinion on
the Company's financial statements.
7.4 Further Assurances. Each of Seller and the Company agree, at
any time and from time to time after the Closing, to execute, acknowledge where
appropriate and deliver such further instruments and other documents (and to
bear its own costs and expenses incidental thereto) and to take such other
actions as the other of them may reasonably request in order to carry out the
intent and purpose of this Agreement; provided, however, that neither Seller nor
the Company shall be obligated, pursuant to this Section 7.4 to incur any
expense of a material nature and/or to incur any material obligations in
addition to those set forth in this Agreement and/or its respective Closing
Documents.
7.5 No Intercompany Accounts. Prior to the Closing Seller shall
pay, distribute, release or otherwise eliminate any and all intercompany debt or
accounts between the Existing Venture and Seller or any Affiliate of Seller.
ARTICLE VIII
Indemnification
8.1 Indemnification by Seller. From and after the Closing, Seller
shall indemnify, defend and hold harmless the Company and its members, officers,
directors, managers, employees, representatives and agents, and any direct or
indirect partner, shareholder, officer, director or member of any member of the
Company, and their respective successors and assigns (collectively, the
"INDEMNIFIED COMPANY PERSONS") from and against any Losses asserted against,
incurred or suffered by any Indemnified Company Person that results from,
relates to or arises out of (a) the breach or inaccuracy of any representation
or warranty made by Seller in this Agreement or the Seller Closing Documents,
(b) the breach or non-fulfillment by Seller of any of the covenants or
agreements of Seller under this Agreement or the Seller Closing Documents, or
(c) Seller's Liabilities.
8.2 Indemnification by the Company. From and after the Closing,
the Company shall indemnify, defend and hold harmless Seller and its direct or
indirect shareholders, directors, officers, members, partners, employees and
agents, and their respective successors and assigns (collectively the
"INDEMNIFIED SELLER PERSONS") from and against any Losses asserted against,
incurred or suffered by any Indemnified Seller Person that results from, relates
to or arises out of (a) the breach or inaccuracy of any representation or
warranty made by the
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<PAGE> 26
Company in this Agreement or the Company Closing Documents, (b) the breach or
non-fulfillment by the Company of any of the covenants or agreements of the
Company under this Agreement or the Company Closing Documents, or (c) the
Assumed Liabilities.
8.3 Indemnification Procedure.
(a) Subject to the provisions of Section 8.3(d), the
indemnified party (the "INDEMNIFIED PARTY") shall give the indemnifying party
(the "INDEMNIFYING PARTY") prompt notice of any Losses (or potential Losses)
which may be covered under this Article VIII and such notice shall state the
basis for the claim, action or proceeding and the amount thereof (to the extent
such amount is determinable at the time when such notice is given). In the event
the notice relates to a claim, assertion, action, suit or proceeding by a third
party ("THIRD PARTY CLAIM") for which indemnification is provided hereunder, the
Indemnified Party shall permit the Indemnifying Party (or its insurance company)
to assume the defense of such claim, assertion, action, suit or proceeding and
the Indemnifying Party (or its insurance company) may (i) prior to the
commencement of any proceedings in connection with such Losses, undertake the
negotiation of any resolution of the dispute relating to such Losses, including
in accordance with the terms hereof any settlement or release, or (ii) undertake
the defense of any proceeding (including any alternative dispute resolution
proceeding) regarding such Losses by selecting legal counsel who shall be
reasonably acceptable to the Indemnified Party. Failure of the Indemnifying
Party to notify an Indemnified Party of its election to undertake the
Indemnified Party's defense of a Third Party Claim within a reasonable time, but
in no event more than thirty (30) days after notice thereof shall have been
given to the Indemnifying Party, shall be deemed a waiver by the Indemnifying
Party of its right to undertake the defense of such Third Party Claim. Willkie
Farr & Gallagher, Neal, Gerber & Eisenberg and counsel for the Indemnifying
Party's insurance company shall be deemed reasonably acceptable to the
Indemnified Party.
(b) Provided the Indemnifying Party shall have undertaken
the Indemnified Party's defense of a Third Party Claim with legal counsel
reasonably acceptable to the Indemnified Party, and shall have so notified the
Indemnified Party, the Indemnified Party shall be entitled to participate at its
own expense in the aforesaid negotiation or defense of any claim relating to
such Losses (subject to reimbursement to the limited extent provided in Section
8.3(e)), but such negotiations or defense shall be controlled by counsel to the
Indemnifying Party.
(c) Except as provided in Section 8.3(e), the Indemnifying
Party shall not be liable for payments relating to the resolution of any dispute
or any settlement of any litigation or proceeding effected without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld, conditioned or delayed. The Indemnifying Party shall not, in the
defense of any such Third Party Claim, consent to the entry of any judgment or
award, or enter into any settlement, except in either event with the prior
consent of each Indemnified Party, which consent shall not be unreasonably
withheld, conditioned or delayed. To the extent any Indemnified Party declines
to consent to a bona fide offer of settlement or compromise, the Indemnifying
Party shall continue to defend, but the amount of such offer shall be the limit
of the Indemnifying Party's liability with respect to such claim, action or
proceeding with respect to the Indemnified Party that declined such offer.
Notwithstanding the foregoing, the Indemnifying Party shall not, without the
Indemnified Party's written consent (which consent may be withheld in the sole
and absolute discretion of the Indemnified Party) resolve any dispute or settle
or compromise any claim regarding Losses from a Third Party Claim or consent to
entry of any judgment which would impose an injunction or other equitable relief
upon the Indemnified Party
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<PAGE> 27
or which does not include as an unconditional term thereof the release by the
claimant or the plaintiff of the Indemnified Party from all liability in respect
of any such Losses.
(d) The failure to give notice of a claim under this Article
VIII shall not release the Indemnifying Party of its obligations under this
Article VIII, except to the extent of the actual harm suffered thereby.
(e) In the event the Indemnifying Party fails after notice
from the Indemnified Party to timely undertake negotiation of any dispute or
defend, contest or otherwise protect against any claim or suit with respect to a
Third Party Claim, and to so notify the Indemnified Party, the Indemnified Party
may, but will not be obligated to, defend, contest or otherwise protect against
the same, and make any compromise or settlement thereof and recover the entire
costs thereof from the Indemnifying Party, including reasonable attorneys' and
experts' fees, disbursements and all amounts paid as a result of such claim or
suit or the compromise or settlement thereof. The Indemnified Party shall
cooperate and provide such assistance as the Indemnifying Party may reasonably
request in connection with the negotiation of any dispute and the defense of the
matter subject to indemnification and the Indemnifying Party shall reimburse the
Indemnified Party's reasonable costs incurred thereafter in connection with such
cooperation and assistance.
(f) Notwithstanding anything to the contrary contained
herein, neither Seller nor the Company shall be entitled to indemnification
hereunder for any Losses to the extent it has received a credit therefor
pursuant to Article V.
ARTICLE IX
Miscellaneous
9.1 Survival. Except for the representations and warranties of
Seller set forth in Section 6.1(k), which representations and warranties and the
indemnification provision relating thereto shall survive Closing indefinitely,
all other representations, warranties, covenants and agreements of Seller and of
the Company set forth in this Agreement shall survive until the Company ceases
to exist under the terms of the Operating Agreement.
9.2 Notices. Notices must be in writing and sent to the party to
whom or to which such notice is being sent, by (a) certified or registered mail,
postage prepaid and return receipt requested, (b) commercial overnight courier
service, or (c) delivered by hand with receipt acknowledged in writing, as
follows:
To the Company:
GGP/Homart II L.L.C.
110 North Wacker Drive
Chicago, Illinois 60606
Attention: Matthew Bucksbaum
with a copy thereof to:
The Comptroller of the State of New York,
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
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<PAGE> 28
New York, New York 10017
Attention: Assistant Deputy Comptroller --
Investments and Cash Management
and
The Comptroller of the State of New York,
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Counsel
and
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6097
Attention: Monty Davis
and
Clarion Partners
335 Madison Avenue
New York, New York 10017
Attention: Jeffrey A. Barclay
To Seller:
GGP Limited Partnership
110 N. Wacker Drive
Chicago, Illinois
Attention: Robert A. Michaels
with a copy to:
Neal, Gerber & Eisenberg
Two North LaSalle Street, Suite 2200
Chicago, Illinois 60602
Attention: Marshall E. Eisenberg
All notices (i) shall be deemed given when received if delivered by hand or
overnight courier service or, if mailed as described above with appropriate
postage, after 5 business days and (ii) may be given either by a party or by
such party's attorneys. The cost of delivery shall be borne by the party
delivering the notice.
9.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute a single document when at least one counterpart has been executed and
delivered by each party hereto.
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<PAGE> 29
9.4 Amendments. Except as otherwise provided herein, this
Agreement may not be changed, modified, supplemented or terminated, except by an
instrument executed by the party hereto which is or will be affected by the
terms of such change, modification, supplement or termination.
9.5 Waiver. Each party shall have the right exercisable in its
sole and absolute discretion, but under no circumstances shall be obligated, to
waive or defer compliance by any other party with its obligations hereunder or
to waive satisfaction of any conditions contained herein for its benefit. No
waiver by any party of a breach of any covenant or a failure to satisfy any
condition shall be deemed a waiver of any other or subsequent breach or failure
to satisfy any other condition. All waivers of any term, breach or condition
hereof must be in writing.
9.6 Successors and Assigns. Subject to the provisions of Section
9.10, the terms, covenants, agreements, conditions, representations and
warranties contained in this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
9.7 Third Party Beneficiaries. The provisions of this Agreement
are made for the benefit of the parties hereto, and their respective successors
in interest and assigns and are not intended for, and may not be enforced by,
any other person or entity.
9.8 Partial Invalidity. If any term or provision of this Agreement
or the application thereof to any person or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby and
each term and provision of this Agreement shall be valid and enforced to the
fullest extent permitted by law.
9.9 Governing Law. This Agreement has been made pursuant to and
shall be governed by the laws of the State of Delaware (without regard to
conflicts of law rules).
9.10 Assignment. This Agreement may not be assigned or delegated by
any party without the written consent of the other except that the Company may
assign this Agreement to an Affiliate of the Company, it being acknowledged and
agreed by the Company that no such assignment shall relieve the Company of its
obligations under this Agreement.
9.11 Headings; Exhibits. The headings or captions of the various
Articles and Sections of this Agreement have been inserted solely for purposes
of convenience, are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
9.12 Gender and Number. Words of any gender shall include the other
gender and the neuter. Whenever the singular is used, the same shall include the
plural wherever appropriate, and whenever the plural is used, the same also
shall include the singular where appropriate.
9.13 Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any prior written or oral understandings and/or agreement among them
with respect thereto.
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<PAGE> 30
9.14 Costs of Enforcement. In the event that any action is brought
by any party or parties to this Agreement against any other party or parties to
enforce rights under this Agreement, the prevailing party's or parties' costs in
such action, including reasonable attorneys' fees, shall be paid by the other
party or parties. Any amounts owing hereunder which are not paid when due shall
bear interest at the per annum rate equal to the prime rate of Bank of America,
N.A. (or any successor), as the same may change from time to time, plus four
percent.
9.15 Time of the Essence. Time is of the essence with regard to
each provision of this Agreement. If the final date of any period provided for
herein for the performance of an obligation or for the taking of any action
falls on a Saturday, Sunday or banking holiday, then the time of that period
shall be deemed extended to the next day which is not a Sunday, Saturday or
banking holiday. Each and every day described herein shall be deemed to end at
5:00 p.m. Central Time.
9.16 Indemnification Against Broker Claims. Seller shall indemnify,
defend and hold harmless the Company from and against all loss, liability,
damages, costs and expenses (including reasonable counsel fees) resulting from
any claim that may be made by any broker or other person claiming to have dealt
with Seller in connection with the Transactions, for a commission, fee or other
compensation by reason of the Transactions including any loss, liability, costs
and expenses (including reasonable counsel fees) incurred in enforcing this
indemnity. The Company shall indemnify, defend and hold harmless Seller from all
loss, liability, costs and expenses (including reasonable counsel fees)
resulting from any claim that may be made by any broker or other person claiming
a commission, fee or other compensation by reason of having dealt with the
Company in connection with the Transactions, including any loss, liability,
costs and expenses (including reasonable counsel fees) incurred in enforcing
this indemnity. The provisions of this Section 9.16 shall survive the Closing or
termination of this Agreement.
9.17 Arbitration. Except as otherwise provided herein, in the event
of any dispute in connection with the terms and provisions of this Agreement,
the parties agree to submit such dispute to arbitration in accordance with the
provisions of Section 14.13 of the Operating Agreement.
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on the day and year first above written.
SELLER: COMPANY:
GGP LIMITED PARTNERSHIP, GGP/HOMART II L.L.C.,
a Delaware limited partnership a Delaware limited liability company
By: GENERAL GROWTH PROPERTIES, INC.
a Delaware corporation,
its general partner By: /s/ Joel Bayer
--------------------------------
Name: Joel Bayer
Title: Senior Vice President
By: /s/ Joel Bayer
-------------------------------
Name: Joel Bayer
Title: Senior Vice President
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<PAGE> 31
LIST OF EXHIBITS AND SCHEDULES
Exhibits/Schedule Description
Exhibit A Legal Description of the Land
Exhibit B Permitted Exceptions
Exhibit C [Intentionally Deleted]
Schedule 1.1-1 Anchors
Schedule 1.1-2 Personalty
Schedule 2.3(b) List of Approved Leases
Schedule 6.1(e) Rent Roll
Schedule 6.1(f) Schedule of Arrearages
Schedule 6.1(g) Leases
Schedule 6.1(h) Claims under REA
Schedule 6.1(i)(a) List of all Material Defaults Under Contracts
Schedule 6.1(i)(b) List of all Contracts not terminable on 60 days or less
notice
Schedule 6.1(j) Permits and Licenses
Schedule 6.1(k) Environmental Disclosure
Schedule 6.1(l) Promotional Association Matters
Schedule 6.1(m) Pending or Threatened litigation
Schedule 6.1(x) List of Existing Indebtedness Documents
Schedule 6.1(y) Insurance Policies
Schedule 6.1(ff) Lease Brokerage Agreements
Schedule 6.1(ii) Seller's Rights in Neighboring Properties
Schedule 6.1(oo) Capital Expenditures in Progress or Contemplated
Schedule 6.1(ss) Notices of Uncured Violations
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<PAGE> 1
EXHIBIT 2.8
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is dated as of November 10, 1999, by and
between GGP LIMITED PARTNERSHIP, a Delaware limited partnership ("SELLER"), and
GGP/HOMART II L.L.C., a Delaware limited liability company (the "COMPANY").
R E C I T A L S
WHEREAS, Seller owns a 99.999% interest as a limited partner in
Stonebriar Mall Limited Partnership, a Delaware limited partnership (the
"EXISTING VENTURE");
WHEREAS, Seller owns 100% of the membership interests in Stonebriar
Mall L.L.C., a Delaware limited liability company ("SMLLC"), the owner of the
remaining .001% interest as a general partner in the Existing Venture;
WHEREAS, the Existing Venture is the owner of the real property
commonly known as Stonebriar Centre, Frisco, Texas which is more particularly
described on EXHIBIT A attached hereto, other than the property owned by the
Anchors (as hereinafter defined) at such mall; and
WHEREAS, Seller desires to contribute to the capital of the Company all
of its partnership and membership interests in SMLLC and the Existing Venture,
and the Company desires to acquire such interests.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
Definitions
1.1 Definitions. For purposes of this Agreement, the following terms
shall have the meanings indicated below:
"ADA" shall mean the Americans With Disabilities Act, as amended.
"ADJUSTMENT DATE" shall mean November 30, 1999.
"ADJUSTMENT DATE COST SCHEDULE" shall have the meaning set forth in
Section 5.1.
"AFFILIATE" shall mean a Person that directly or indirectly through one
or more intermediaries controls, is controlled by, or is under common control
with the Person specified. The term "control" as used in the immediately
preceding sentence, means (a) the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the
controlled entity or (b) the ownership (directly or indirectly) of not less than
50% of the voting stock of a corporation or not less than 50% of the aggregate
legal and equitable interest in a limited liability company, a partnership or
other business entity.
"AGREEMENT" shall mean this Contribution Agreement, as amended or
modified from time to time hereafter in accordance with the terms hereof.
<PAGE> 2
"ANCHOR" shall mean each Person identified in SCHEDULE 1.1-1.
"ASSUMED LIABILITIES" shall have the meaning set forth in Section
2.3(a).
"AUDITOR" shall have the meaning set forth in Section 5.2(b).
"BOOKS AND RECORDS" shall mean all records, books of account and papers
of the Existing Venture relating to the construction, ownership and operations
of the Property, including architect's drawings, blue prints and as-built plans,
maintenance logs, copies of warranties and guaranties, licenses and permits,
instruction books, employee manuals, records and correspondence relating to
insurance claims, financial statements, operating budgets, paper and electronic
media copies of data and other information relating to the Property available
from personal computers, structural, mechanical, geotechnical or other
engineering studies, soil test reports, environmental reports, underground
storage tank reports, feasibility studies, appraisals, ADA surveys or reports,
OSHA asbestos surveys, marketing studies, mall documents and compilations, lease
summaries and originals and/or copies of Leases, the REA and the Contracts and
correspondence related thereto.
"BUDGET" shall mean the budget attached hereto as EXHIBIT D.
"CLOSING" shall have the meaning set forth in Section 4.1.
"CLOSING DATE" shall have the meaning set forth in Section 4.1.
"CLOSING DOCUMENTS" shall mean the Seller Closing Documents and the
Company Closing Documents, collectively.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY CLOSING DOCUMENTS" shall have the meaning set forth in Section
4.3.
"CONTRACTS" shall mean all construction contracts, architectural
agreements, development agreements (including the Development Agreement),
equipment leases and all service, maintenance and other contracts and
concessions that are currently in effect and to which the Existing Venture is a
party respecting the construction, use, maintenance, development, sale or
operation of the Property or any portion thereof (but excluding this Agreement,
the Leases, the Permitted Exceptions and the REA) including those which are
listed on SCHEDULE 6.1(G), together with any additions thereto, modifications
thereof or substitutions therefor hereafter entered into in accordance with the
provisions of this Agreement.
"CONTRIBUTION AMOUNT" shall have the meaning set forth in Section 2.2.
"COST SCHEDULE SETTLEMENT DATE" shall have the meaning set forth in
Section 5.1.
"DEVELOPMENT AGREEMENT" shall mean the Mall Development Agreement dated
June 4, 1996, between the City of Frisco and General Growth Properties, Inc., as
amended by First Amendment to Mall Development Agreement dated April 20, 1999,
among the City of Frisco, Frisco Economic Development Corporation, Frisco
Community Development Corporation and the Existing Venture.
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<PAGE> 3
"DEFECT" shall mean any Lien, encumbrance, easement, agreement,
restriction, proceeding, lis pendens, notice, encroachment or exception to title
other than a Permitted Exception that materially and adversely affects the title
to or use of the Property.
"ENVIRONMENTAL LAWS" shall mean all federal, state and local statutes,
ordinances, codes, rules, regulations, orders and decrees regulating, relating
to or imposing liability or standards concerning or in connection with Hazardous
Materials, underground storage tanks or the protection of human health, natural
resources or the environment, as any of the same may be amended from time to
time, including the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. ss.9601 et. seq., as amended by the
Superfund Amendments and Reauthorization Act or any equivalent state or local
laws or ordinances; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. ss. 6901 et seq., as amended by the Hazardous and Solid Waste Amendments
of 1984, or any equivalent state or local laws or ordinances; the Federal
Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. ss.136 et. seq.
or any equivalent state or local laws or ordinances; the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq.); the Emergency Planning and
Community Right-to-Know Act ("EPCRA"), 42 U.S.C. ss.11001 et. seq. or any
equivalent state or local laws or ordinances; the Toxic Substance Control Act
("TSCA"), 15 U.S.C. ss.2601 et. seq. or any equivalent state or local laws or
ordinances; the Atomic Energy Act, 42 U.S.C. ss.2011 et. seq., or any equivalent
state or local laws or ordinances; the Clean Water Act (the "Clean Water Act"),
33 U.S.C. ss.1251 et. seq. or any equivalent state or local laws or ordinances;
the Clean Air Act (the "Clean Air Act"), 42 U.S.C. ss.7401 et seq. or any
equivalent state or local laws or ordinances; the Occupational Safety and Health
Act, 29 U.S.C. ss.651 et seq. or any equivalent state or local laws or
ordinances.
"EXISTING MANAGER" shall mean General Growth Management, Inc.
"EXISTING VENTURE" shall mean Stonebriar Mall Limited Partnership, a
Delaware limited partnership.
"EXECUTION DATE" shall mean the date of this Agreement.
"GAAS" shall mean Generally Accepted Auditing Standards as promulgated
by the Auditing Standards Division of the American Institute of Certified Public
Accountants from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state or local
government, court, department, commission, board and office having jurisdiction
over the Property, Seller, the Existing Venture or the Company, or any other
body exercising functions similar to those of any of the foregoing.
"HAZARDOUS MATERIALS" shall mean any substance, material, waste, gas or
particulate matter which (i) is now, or at any future time may be, regulated by
the United States Government, the state in which the Real Property is located,
any other state with jurisdiction, or any local governmental authority, or (ii)
the exposure to, or manufacture, possession, presence, use generation, storage,
transportation, treatment, release, disposal, abatement, cleanup, removal,
remediation or handling of is prohibited, controlled or regulated by any
Environmental Law, or (iii) requires investigation or remediation under any
Environmental Law or common law, or (iv) is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous. Such term includes any material or substance which is (1) defined as
a "hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous
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<PAGE> 4
waste," "restricted hazardous waste" or any like or similar term under any
applicable Environmental Law; (2) oil and petroleum products; (3) asbestos or
asbestos-containing material as defined in the regulations of the Occupational
Safety and Health Administration at 29 C.F.R. ss.1910.1001; (4) polychlorinated
biphenyls; (5) radioactive material; (6) designated as a "toxic pollutant" or a
"hazardous substance" pursuant to Sections 307 or 311 of the Clean Water Act;
(7) defined as a "hazardous waste" pursuant to Section 1004 of RCRA; (8) defined
as a "hazardous substance" pursuant to Section 101 of CERCLA; (9) designated as
a "hazardous chemical" substance or mixture pursuant to TSCA; (10) designated as
an "extremely hazardous" substance under Section 302 of EPCRA; (11) designated
as a "priority pollutant" or "hazardous air pollutant" pursuant to the Clean Air
Act; (12) designated as a hazardous chemical under the Occupational Safety and
Health Act; (13) radon gas or other radioactive source material, including
special nuclear material, and byproduct materials regulated under the Atomic
Energy Act, 42 U.S.C. ss.2011 et. seq.; (14) subject to regulation under FIFRA;
(15) natural gas, natural gas liquids, liquefied natural gas, and synthetic gas
usable for fuel; or (16) infectious wastes or materials and pathogenic bacteria
or other pathogenic microbial agents.
"IMPROVEMENTS" shall mean improvements, buildings, structures,
fixtures, facilities, installations, machinery and equipment, in, on, over or
under the Land, whether under construction or completed, including the
foundations and footings therefor, elevators, plumbing, air conditioning,
heating, ventilating, mechanical, electrical and utility systems (except to the
extent owned by a utility company) and any other similar systems, signs and
light fixtures (except to the extent of trade fixtures and equipment owned by
tenants under the Leases), doors, windows, fences, parking lots, walks and
walkways and each and every other type of physical improvement to the extent
owned, in whole or in part, by the Existing Venture, located at, on or affixed
to the Land, to the full extent such items constitute or are or can or may be
construed as realty under the laws of the state in which the Real Property is
located.
"INDEMNIFIED COMPANY PERSONS" shall have the meaning set forth in
Section 8.1.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 8.3.
"INDEMNIFIED SELLER PERSONS" shall have the meaning set forth in
Section 8.2.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 8.3.
"LAND" shall mean those certain parcels of real estate described on
EXHIBIT A.
"LEASES" shall mean all leases, tenancies, concessions, licenses and
occupancy agreements currently in effect and to which the Existing Venture or
any of its predecessors in title is a party affecting or relating to the
Property including those which are listed on SCHEDULE 6.1(E), together with any
additions thereto, modifications thereof or substitutions therefor hereafter
entered into in accordance with the provisions of this Agreement.
"LEGAL REQUIREMENTS" shall mean any laws, ordinances, orders, rules,
regulations and requirements of any Governmental Authority which may be
applicable to the Property, the Existing Venture or Seller.
"LIENS" shall mean any mortgages, deeds of trust, security interests,
judgments or charges, pledges, options, rights of first offer or first refusal,
liens of any type, restrictions, claims and other encumbrances of any nature
whatsoever.
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<PAGE> 5
"LIEN SEARCHES" shall mean a search report by an independent search
firm reasonably acceptable to the Company of the Secretary of State records,
county recorder records, local court records (federal, state, county and
municipal) and such other official public records with respect to the Property
that would disclose the presence of any Liens, bankruptcy proceedings, lis
pendens or other matters affecting the Property, the Existing Venture or Seller.
"LOSSES" shall mean any and all claims, actions, suits, proceedings,
demands, losses, damages, liabilities, obligations, judgments, settlements,
awards, penalties, costs or expenses, including reasonable attorneys', experts'
and consultants' fees and expenses.
"OPERATING AGREEMENT" shall mean that certain Operating Agreement among
the Company, Seller and the New York State Common Retirement Fund dated as of
the date hereof.
"PARTY" shall mean a party to the REA or a Contract (or the successor
or assignee thereof) or a Tenant under a Lease, in each case other than the
Existing Venture or its predecessors in title with respect to the Property.
"PERMITTED EXCEPTIONS" shall mean the exceptions to title to the
Property listed on EXHIBIT B attached hereto and made a part hereof.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, governmental unit or agency, trust, estate or other entity of
any type.
"PERSONALTY" shall mean all of the personal property, both tangible and
intangible, owned by the Existing Venture (and the Existing Venture's interest
in any of the following) and located in or upon or used in connection with the
operation or maintenance of the Property, including machinery; equipment;
building supplies and materials; consumables; inventories; names, logos,
trademarks, trade names and copyrights; all assignable licenses, permits,
approvals, authorizations, variances, consents and certificates of occupancy;
all assignable guarantees or warranties (including performance bonds obtained
by, or for the benefit of, the Existing Venture, pertaining to the ownership,
construction or development of the Real Property or any part thereof); the Books
and Records; computer and peripheral equipment; computer software and data
contained in hard drives and on diskette; advertising materials; and telephone
exchange numbers. Without limiting the foregoing, "Personalty" shall include the
property listed on SCHEDULE 1.1-2. Personalty shall not include personal items
belonging to Tenants or to employees of the Existing Venture, the rights of the
Existing Venture in and to the Leases, the REA and the Contracts.
"PRECLOSING COST SCHEDULE" shall have the meaning set forth in Section
4.2(j).
"PROPERTY" shall mean (a) the Real Property, (b) the Personalty, (c)
the rights and interests of the Existing Venture in, to and under all Leases,
(d) the rights and interests of the Existing Venture in, to and under the REA,
and (e) the rights and interests of the Existing Venture in, to and under the
Contracts.
"REAL PROPERTY" shall mean the Land and the Improvements, together with
all of the estate, right, title and interest of the Existing Venture therein,
and in and to (a) any land lying in the beds of any streets, roads or avenues,
open or proposed, public or private, in front of or adjoining the Land to the
center lines thereof, and in and to any awards to be made in lieu thereof and in
and to any unpaid awards for damage to the foregoing by reason of the change of
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grade of any such streets, roads or avenues; and (b) all easements, rights,
licenses, privileges, rights-of-way, strips and gores, hereditaments and such
other real property rights and interests appurtenant to the foregoing (including
all rights of the Existing Venture under the REA).
"REA" shall mean that certain Construction, Operation and Reciprocal
Easement Agreement dated as of November 20, 1998 by and among GGP Limited
Partnership, Nordstrom, Inc., J.C. Penney Properties, Inc., Sears, Roebuck and
Co., and Macy's West, Inc., as supplemented by Supplemental Agreement dated as
of November 20, 1998, between the Existing Venture and Sears, Roebuck and Co.,
Supplement to Construction, Operation and Reciprocal Easement Agreement dated as
of November 20, 1998, between the Existing Venture and Nordstrom, Inc.,
Supplement to Construction, Operation and Reciprocal Easement Agreement dated as
of November 20, 1998, between the Existing Venture and J. C. Penney Properties,
Inc. and Amended and Restated Supplement to Construction, Operation and
Reciprocal Easement Agreement dated as of October 22, 1999, between the Existing
Venture and Macy's Texas, Inc.
"REGULATIONS" shall mean the final, temporary or proposed Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"SELLER CLOSING DOCUMENTS" shall have the meaning set forth in Section
4.2.
"SELLER'S INTEREST" shall mean the entire membership interest of Seller
in SMLLC, together with all rights, obligations and powers of Seller as a member
of SMLLC, together with the entire interest of Seller as a limited partner in
the Existing Venture, together with all rights, obligations and powers of Seller
as a limited partner in the Existing Venture.
"SELLER'S LIABILITIES" shall have the meaning set forth in Section
2.3(b).
"SMLLC" shall mean Stonebriar Mall L.L.C., a Delaware limited liability
company.
"SURVEY" shall mean the Urban ALTA/ACSM Land Title Survey of the
Property by P. B. S. & J., Project #87097.30, last revised July 28, 1999.
"TENANTS" shall mean tenants, concessionaires, licensees and/or
occupants under the Leases.
"THIRD PARTY CLAIM" shall have the meaning set forth in Section 8.3(a).
"TITLE COMMITMENT" shall mean the Commitment for Title Insurance No. 44
008 80 30647 issued by the Title Company to the Company effective as of August
23, 1999, together with copies of all documents underlying all exceptions to
title and all encumbrances on and other matters of record affecting the Real
Property.
"TITLE COMPANY" shall mean Chicago Title Insurance Company.
"TITLE POLICY" shall mean Owner's Policy of Title Insurance No. 44 0042
100 00007795 issued by Title Company and effective August 30, 1996, insuring the
Existing Venture as owner of good, marketable and indefeasible fee title to the
Property, subject only to the Permitted Exceptions.
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"TRANSACTIONS" shall mean the transactions contemplated by this
Agreement.
1.2 References. All references in this Agreement to particular sections
or articles shall, unless expressly otherwise provided, or unless the context
otherwise requires, be deemed to refer to the specific sections or articles in
this Agreement, and any references to "Exhibit" shall, unless otherwise
specified, refer to one of the exhibits annexed hereto and, by such reference,
be made a part hereof. The words "herein", "hereof", "hereunder", "hereinafter",
"hereinabove" and other words of similar import refer to this Agreement as a
whole and not to any particular section, subsection, paragraph or article
hereof. The words "include", "includes" and "including" shall be deemed in each
case to be followed by the phrase "without limitation".
1.3 Terms Generally. Definitions in this Agreement apply equally to
both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.
ARTICLE II
Contribution
2.1 Contribution of Seller's Interest. Upon the terms and subject to
the conditions contained herein, at the Closing, Seller shall contribute to the
Company, and the Company shall acquire, Seller's Interest, free and clear of all
Liens. The Seller's Interest shall be deemed to have a fair market value of
$65,376,468 (the "CONTRIBUTION AMOUNT").
2.2 Consideration. In consideration for the contribution of Seller's
Interest and certain other property being contributed to the capital of the
Company by Seller, and in addition to the assumption of liabilities and
adjustments as hereinafter provided, on the Closing Date Seller shall receive
units of membership interest in the Company pursuant to the Operating Agreement.
2.3 Assumption of Liabilities. The Existing Venture shall continue to
be liable and responsible for, or hereby assumes, (a) any and all liabilities
and obligations of the Existing Venture and the Property, and (b) any and all
liabilities and obligations of Seller with respect to the Property and the
construction and development at the Property, whether arising prior to or after
the Closing Date. All of the obligations described in the immediately preceding
sentence of this Section 2.3 are hereinafter referred to as the "ASSUMED
LIABILITIES". Nothing contained in this 2.3 shall impair the rights of the
Company for a breach of any representation or warranty contained herein or in
the Seller Closing Documents.
ARTICLE III
Costs and Expenses
3.1 Title and Survey Costs. Title and Survey costs shall be paid as
follows:
(a) The Company shall pay the cost of obtaining the Title
Commitment and the cost of recording any documents required to release, cure or
remove Defects;
(b) The Company shall pay the cost of obtaining the Survey;
(c) The Company shall pay the cost of recording any other
documents;
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<PAGE> 8
(d) Subject to any separate agreement between Seller and the
Company, the Company shall be solely responsible for the payment of any real
property transfer taxes levied or imposed upon Seller or the Property as a
result of the transfers to the Company, gains taxes levied or imposed upon
Seller or the Property as a result of the transfers to the Company, sales taxes
levied or imposed upon Seller or the Property as a result of the transfers to
the Company and documentary stamps and other taxes, fees or charges imposed in
connection with the transfer of the Seller's Interest or any portion thereof;
(e) The Company shall pay all filing fees and charges and any
personal property sales taxes in connection with the indirect transfer of the
Personalty to the Company; and
(f) The Company shall pay the costs of the Lien Search.
3.2 Other Costs. Except for expenses and costs related to the
termination of any existing management agreement and the termination of any
employees, the Company shall pay any and all costs or expenses in connection
with the termination of any Contracts to be terminated in accordance with the
terms of this Agreement. The Company shall pay the legal fees of its counsel and
Seller shall pay the legal fees of Neal, Gerber & Eisenberg incurred in
connection with the drafting and negotiation of this Agreement and the Closing
of the Transactions.
ARTICLE IV
Closing
4.1 Closing. The closing of the Transactions (the "CLOSING") shall take
place at the offices of Neal, Gerber & Eisenberg, Two North LaSalle Street,
Chicago, Illinois 60602, commencing at 10:00 a.m., local time, on the date
hereof (the "CLOSING DATE").
4.2 Seller Closing Documents. On or prior to the Closing Date, Seller
shall deliver, or cause to be delivered, to the Company the following documents
(collectively, the "SELLER CLOSING DOCUMENTS"), duly executed by Seller and the
other parties thereto (other than the Company) and in form and substance
reasonably acceptable to the Company and to Seller unless the form thereof is
attached hereto:
(a) Assignment or assignments of membership interest with respect
to SMLLC, together with an assignment of Seller's interest as a limited partner
in the Existing Venture, assigning Seller's Interest from Seller to the Company.
(b) An affidavit of Seller stating its U.S. taxpayer
identification number and that it is a "United States person", as defined by
Sections 1445(f)(3) and 7701(b) of the Code.
(c) Such certificates as the Company may reasonably request as to
the authorization on the part of Seller of the execution, delivery and
performance of this Agreement and the authority of the Persons executing and
delivering this Agreement and the Seller Closing Documents on behalf of Seller.
(d) Certificates issued by the Delaware Secretary of State, dated
not more than ten (10) days prior to the Closing Date, certifying the good
standing of Seller and the general partner(s) of Seller, respectively.
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<PAGE> 9
(e) Originals or certified copies of the organizational documents
for the Existing Venture and SMLLC, including partnership agreements, operating
agreements, articles of organization, by-laws, minute books and records of
meetings, including all amendments thereof.
(f) Original, or copies certified by Seller as true, complete and
correct, of each of the Leases and the REA, together with all Books and Records
including current real estate tax bills, water, sewer and utility bills and all
Tenant correspondence.
(g) Keys and combinations to locked compartments within the
Property.
(h) Any instruments, documents or certificates required to be
executed by Seller with respect to any state, county or local transfer taxes
applicable to the conveyance of Seller's Interest pursuant to this Agreement.
(i) A schedule listing all costs incurred through the Closing
Date (the "PRECLOSING COST SCHEDULE" for which the Company is to reimburse
Seller, in the form attached hereto as EXHIBIT E.
(j) The Budget.
(k) Such other documents, instruments or agreements which Seller
is required to deliver to the Company pursuant to the other provisions of this
Agreement or which the Company reasonably may deem necessary or desirable in
order to consummate the Transactions in accordance with the terms hereof.
4.3 Company Closing Documents. On or prior to the Closing Date, the
Company shall deliver to Seller the following documents (herein referred to
collectively as the "COMPANY CLOSING DOCUMENTS"), duly executed by an authorized
officer on behalf of the Company and the other parties thereto (other than
Seller) and in form and substance reasonably acceptable to Seller and to the
Company unless the form thereof is attached hereto:
(a) An agreement or agreements pursuant to which the Company
accepts assignment of Seller's Interest.
(b) A duly executed and acknowledged Secretary's Certificate,
certifying that the members of the Company have duly adopted resolutions
authorizing the consummation of the Transactions and certifying the authority of
the respective authorized signatories of the Company executing and delivering
this Agreement and the Company Closing Documents in their capacities as officers
of the Company.
(c) A certificate issued by the Secretary of State of Delaware
dated not earlier than ten (10) days prior to the Closing Date certifying the
existence and good standing of the Company as of the date of such certificate.
(d) Copies of the Certificate of Formation of the Company and any
amendments thereto, as of the Closing Date certified by the Secretary of State
of the State of Delaware as of a date not more than twenty (20) days prior to
the Closing Date, together with a certificate of an officer of the Company to
the effect that the Certificate of Formation of the Company, as certified by the
Secretary of State of Delaware, has not been further amended, revised, restated,
cancelled or rescinded up to and including the Closing Date.
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<PAGE> 10
(e) Any instruments, documents or certificates required to be
executed by the Company with respect to any state, county or local transfer
taxes applicable to the conveyance of Seller's Interest pursuant to this
Agreement.
(f) Such other documents, instruments or agreements which the
Company may be required to deliver to Seller pursuant to the other provisions of
this Agreement or which Seller reasonably may deem necessary or desirable to
consummate the Transactions; provided, however, that any such other document,
instrument or agreement which Seller reasonably deems necessary or desirable
shall not impose upon the Company any obligation or liability other than an
obligation or liability expressly imposed upon the Company pursuant to the terms
of this Agreement or pursuant to the terms of the other the Company Closing
Documents specified in this Section 4.3.
4.4 Joint Deliveries. Seller and the Company shall jointly execute and
deliver the Preclosing Cost Schedule.
ARTICLE V
Prorations and Adjustments
5.1 Adjustment of Costs. The Contribution Amount reflects all income,
expense and other items with respect to the Existing Venture and the Property
through the Closing Date. The parties have agreed upon the Preclosing Cost
Schedule prepared as of October 31, 1999; provided, however, that items totaling
$279,706.64 (the "REVIEW ITEMS") as shown on the Preclosing Cost Schedule have
been deducted from the total amount shown on the Preclosing Cost Schedule
pending further review by Clarion Partners, the advisor to The New York State
Common Retirement Fund. Seller shall continue to fund costs, expenses and
construction draws for the construction of the Improvements and with respect to
the Property from November 1, 1999 through the Adjustment Date. No later than
sixty (60) days after the Closing Date, Seller shall cause to be prepared and
delivered to the Company (including to Clarion Partners as advisor to the New
York State Common Retirement Fund) a revised cost schedule with respect to the
Property for the period from November 1, 1999 through the Adjustment Date (the
"ADJUSTMENT DATE COST SCHEDULE"), showing all costs, expenses and construction
draws for the construction of the Improvements and with respect to the Property
from the Closing Date through the Adjustment Date. The Adjustment Date Cost
Schedule shall be prepared in a manner consistent with that utilized in the
preparation of the Preclosing Cost Schedule. No later than sixty (60) days after
the Closing Date, Seller and the Company shall use reasonable efforts to
determine whether the Review Items, or any portion of them, are to be included
in the Adjustment Date Cost Schedule for payment to Seller. The Company will, no
later than the later of (i) sixty-one (61) days following the delivery of the
Adjustment Date Cost Schedule or (ii) five (5) business days following the
resolution of a dispute with respect to the Review Items or an item on the
Adjustment Date Cost Schedule as set forth in subsection 5.2 hereof (the "COST
SCHEDULE SETTLEMENT DATE"), pay to Seller the amount shown on the Adjustment
Date Cost Schedule by wire transfer of immediately available funds to an account
designated by Seller.
5.2 Resolution of Disputes on Adjustment Date Cost Schedule.
(a) If the Company (including Clarion Partners as advisor to the
New York State Common Retirement Fund) disagrees with any item on the Adjustment
Date Cost Schedule, including the inclusion of any of the Review Items, the
Company shall notify Seller in writing of such disagreement within sixty (60)
days after the Company's receipt of the Adjustment Date Cost Schedule. Such
notice shall set forth the basis for such disagreement in
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reasonable detail. During such sixty (60) day period, Seller shall afford the
Company and its duly designated representatives (including Clarion Partners as
advisor to the New York State Common Retirement Fund) access to all of Seller's
books and records with respect to the Property and the construction of the
Improvements, in each case solely for the purposes of resolving such
disagreement. The Company and Seller shall thereafter negotiate in good faith to
resolve any such disagreements, provided that the Company shall promptly pay to
Seller the amount determined pursuant to Section 5.1 that is not subject to
dispute.
(b) If the Company and Seller are unable to resolve any such
disagreements within thirty (30) days after the expiration of the sixty (60) day
period referred to in Section 5.2(a), the Company and Seller shall cause Ernst &
Young LLP (the "AUDITOR") to resolve all disagreements on the disputed items as
soon as practicable, provided that the Auditor shall be bound by the provisions
of Section 5.1 and may not assign a value to any item greater than the greatest
value for such item claimed by either party or less than the smallest value for
such item claimed by either party. Each of the Company and Seller shall permit
the Auditor to have full access to its books, records, key employees and
independent accountants in order to resolve any such disagreements. The
resolution of such disagreements by the Auditor shall be final and binding on
the Company and Seller. The fees and expenses of the Auditor shall be paid by
the party whose position is most at variance with the decision of the Auditor.
5.3 Adjustment of Costs. Except as set forth in this Article V, there
shall be no proration, adjustment or reproration of any income, expense or other
items with respect to the Existing Venture, the Property or the construction and
development at the Property.
ARTICLE VI
Representations and Warranties
6.1 Seller's Representations and Warranties. Seller represents and
warrants to the Company as follows:
(a) Seller is a limited partnership duly formed, validly existing
and in good standing under the laws of the State of Delaware with full power and
authority to execute, deliver and perform this Agreement. Seller has delivered
to the Company true, correct and complete copies of its limited partnership
agreement and all amendments and modifications thereto.
(b) The execution, delivery and performance of this Agreement by
Seller have been duly and validly authorized by all necessary action on the part
of Seller. This Agreement has been, and the Seller Closing Documents will be,
duly executed and delivered by Seller. This Agreement constitutes, and when so
executed and delivered the Seller Closing Documents will constitute, the legal,
valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms.
(c) None of the execution, delivery or performance of this
Agreement by Seller does or will, with or without the giving of notice, lapse of
time or both, violate, conflict with, constitute a default, result in a loss of
rights, acceleration of payments due or creation of any Lien upon the Property
or require the approval or waiver of or filing with any Person (including any
governmental body, agency or instrumentality) under (i) the organizational
documents of Seller or its general partner or, any agreement, instrument or
other document to which Seller or its general partner is a party or by which it
is bound, (ii) any judgment, decree, order, statute, injunction, rule,
regulation or the like of a governmental unit applicable to the Property, Seller
or
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<PAGE> 12
its general partner (other than notification of ownership change or transfer or
reissuance of permits as may be required under Environmental Laws), or (iii) any
contract or agreement by which Seller or the Existing Venture may be bound.
(d) Seller has good and marketable title to Seller's Interest
free and clear of Liens and, upon execution and delivery of the Seller Closing
Documents, the Company will have good and marketable title to Seller's Interest
free and clear of Liens other than Liens created by, under or through the
Company. No other property (other than the Real Property and property owned by
any Anchor) comprises "Stonebriar Centre".
(e) Schedule 6.1(e) contains a complete and correct list of all
existing Leases and modifications thereof and supplements thereto regardless of
whether the terms thereof have commenced, setting forth with respect to each (i)
the date thereof and of each modification thereof and supplement thereto and
(ii) the names of the Parties thereto (including the name of the current
assignee, if any, but only if and to the extent Seller has actual notice of any
such assignment). A true and complete copy of each Lease demising space in
excess of 10,000 square feet, together with each modification thereof and
supplement thereto, has heretofore been furnished to the Company for inspection
and has been delivered to the Company on the date hereof. Each Lease constitutes
the entire agreement between the Existing Venture and each Party thereto, and
the Existing Venture has not made any oral promises or agreements amending or
modifying the same. No Person is using or occupying (or is entitled to use or
occupy) the Real Property except under a Lease or the REA.
(i) There are no leases executed by the Existing Venture or other
rights of occupancy or use granted by the Existing Venture or, to
Seller's knowledge, its predecessors in title of any portion of the
Property other than the Leases. Each of the Leases is valid and
subsisting and in full force and effect.
(ii) Except as set forth on Schedule 6.1(e), no Tenant has made
any written claim which has been received by Seller or the Existing
Venture or, to Seller's knowledge, has any other claim, whether or not
in writing (A) that the Existing Venture has defaulted in performing
any of its obligations under any of the Leases which has not heretofore
been cured, (B) except for any requirement to complete construction of
the Improvements, that any condition exists which with the passage of
time or giving of notice, or both, would constitute any such default,
(C) that such Tenant is entitled to any reduction in, refund of, or
counterclaim or offset against, or is otherwise disputing, any rents or
other charges paid, payable or to become payable by such Tenant, or (D)
that such Tenant is entitled to cancel its Lease or to be relieved of
its operating covenants thereunder.
(iii) No material default exists under any of the Leases on the
part of the Tenant thereto and Seller has no knowledge of any
condition, which, with the passage of time, or giving of notice, would
constitute a default under any Lease. The Existing Venture is not in
default under the Leases. The Existing Venture has not delivered any
default notices to any Tenant under any Lease which has not been cured.
(iv) There are no rent abatements, offset rights, "free rent
periods" or other tenant concessions or inducements, including lease
assumptions or buy-outs, applicable to any of the Leases or any rights
to extend or renew any of such Leases, in either case except as set
forth in the Leases. There are no expansion rights, options or rights
to renew, extend or terminate the Leases, except as set forth in the
Leases. Neither Seller
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<PAGE> 13
nor the Existing Venture have granted any rights, options or rights of
first refusal of any kind to any Tenant or otherwise, which are
currently in effect, to purchase or to otherwise acquire the Property
or any part thereof or interest therein. The option to repurchase held
by Gaylord Properties, Inc. has expired.
(v) Except for any requirement to complete construction of the
Improvements, no condition exists that would permit any Party to any
Lease or REA to cancel or terminate such Lease or REA, be released from
liability from such Lease or REA or reduce its obligations under any
Lease or REA.
(f) The REA constitutes the only reciprocal easement agreements
or operating agreements encumbering the Property. A true and complete copy of
the REA has heretofore been furnished to Buyer, together with each written
modification thereof and supplement thereto. The REA constitutes the entire
agreement between the Existing Venture and each REA Party thereto, and neither
Seller nor the Existing Venture have made any oral promises or agreements
amending or modifying the same.
(i) The REA is valid and in full force and effect.
(ii) Except as set forth on Schedule 6.1(f), none of the REA
Parties has made any written claim which has been received by Seller,
the Existing Venture or, to Seller's knowledge, has any other claim,
whether or not in writing (A) that the Existing Venture has defaulted
in performing any of its obligations under any of the REAs which has
not heretofore been cured, (B) except for any requirement to complete
construction of the Improvements, that any condition exists which with
the passage of time or giving of notice, or both, would constitute any
such default, (C) that such REA Party is entitled to any reduction in,
refund of, or counterclaim or offset against, or is otherwise
disputing, any rents or other charges paid, payable or to become
payable by such REA Party, (D) that such REA Party is entitled to
cancel its REA or to be relieved of its operating covenants thereunder,
or (E) that there is a violation of any of the covenants, conditions or
restrictions contained in such REA.
(iii) No material default exists under the REA on the part of the
REA Parties thereto and Seller has no knowledge of any condition which,
with the passage of time or giving of notice, would constitute a
default under any REA. The Existing Venture is not in default under the
REA. The Existing Venture has not delivered any default notices to any
party under the REA which has not been cured.
(iv) There are no rent abatements, offset rights, "free rent
periods" or other concessions or inducements, including lease
assumptions or buy-outs, applicable to the REA or any rights to extend
or renew the REA except as set forth in Schedule 6.1(f) or the REA.
There are no options or rights to renew, extend, expand or terminate
the REA, except as set forth in Schedule 6.1(f). Except as set forth in
Schedule 6.1(f), neither Seller nor the Existing Venture have granted
any rights, options or rights of first refusal of any kind to any of
the REA Parties, which are currently in effect, to purchase or to
otherwise acquire the Property or any part thereof or interest therein.
No party to any REA has given notice that it has ceased or that it
intends to cease operating its store or other property that it is
required to operate under the REA.
(g) Schedule 6.1(g) contains a true and complete list of all
Contracts other than contracts and agreements relating to the construction and
development of the Property,
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<PAGE> 14
including all modifications thereof. Each of the Contracts is in full force and
effect. To Seller's knowledge, there have been no material defaults by any Party
to a Contract which have not heretofore been cured. Except for unpaid amounts
under construction contracts or material supply contracts, there has been no
material default (without giving effect to any notice and cure rights) by the
Existing Venture under any Contract or any claim received by Seller or the
Existing Venture of any such default by any party thereto, which has not
heretofore been cured except as set forth on Schedule 6.1(g).
(h) Schedule 6.1(h) contains a list of all permits,
authorizations, approvals and licenses currently maintained with respect to the
Property and all such permits, authorizations, approvals and licenses are in
full force and effect. Neither Seller nor the Existing Venture have received any
written notice of violation from any federal, state or municipal entity with
respect to the Property or in connection with the operations conducted thereon
that has not been cured or otherwise resolved to the satisfaction of such
governmental entity. To Seller's knowledge, except as set forth on Schedule
6.1(h), the permits, authorizations, approvals and licenses listed on Schedule
6.1(h) are all of the licenses and permits which are required for the present
use of and construction on the Property.
(i) Except as set forth on Schedule 6.1(i), neither Seller, the
Existing Venture nor any other Person has caused or permitted any Hazardous
Material to be maintained, disposed of, stored, treated, recycled, brought upon,
transported over or generated on, under or at the Property or any part thereof
or any real property adjacent thereto, except for the presence, storage,
maintenance, use or transportation of substances commonly present or stored at
or used in the ordinary construction, operation and maintenance of shopping
centers in ordinary quantities commonly present, stored or used at shopping
centers during construction or operation thereof and in compliance with
applicable laws, including Environmental Laws. There has been no release or
threatened release of any Hazardous Materials at, on or under the Property or
any part thereof that will give rise to any obligation or liability to conduct
or pay for any investigation, removal, remediation, monitoring, closure, or
post-closure care at, on or under the Property or any part thereof, nor has
there been any release or threatened release of Hazardous Materials with respect
to any offsite location to which Hazardous Materials have, or are alleged to
have, migrated or been transported from the Property. Except as set forth on
Schedule 6.1(i), Seller and the Existing Venture are in compliance with, and
have heretofore complied with, all applicable Environmental Laws with respect to
the Property and as of the date hereof there are no violations of applicable
Environmental Laws at the Property which have not been remediated in accordance
with applicable Environmental Laws. Except as set forth on Schedule 6.1(i),
neither Seller nor the Existing Venture have received any written notice from
any governmental unit or other person that it or the Property is not in
compliance with any Environmental Law or that it has any liability with respect
thereto and there are no administrative, regulatory or judicial proceedings
pending or, to the knowledge of Seller, threatened with respect to the Property
pursuant to, or alleging any violation of, or liability under any Environmental
Law. Except as set forth on Schedule 6.1(i), neither Seller nor the Existing
Venture have installed any underground or above ground storage tanks on, under
or about the Property and no such tanks are located on, under or about the
Property.
(j) Except as provided in Schedule 6.1(j), there is no
litigation, including any arbitration, investigation or other proceeding by or
before any court, arbitrator or governmental or regulatory official, body or
authority which is pending or, to Seller's knowledge, threatened against Seller
or the Existing Venture relating to the Property, Seller's Interest or the
Transactions, there are no unsatisfied arbitration awards or judicial orders
against the Existing Venture and, to Seller's knowledge, there is no basis for
any such arbitration, investigation or
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<PAGE> 15
other proceeding. Copies of all pleadings and other documents furnished or made
available by Seller to the Company with respect to the litigation described on
Schedule 6.1(j) are true, accurate and complete in all respects.
(k) No condemnation proceeding or other proceeding or action in
the nature of eminent domain is pending with respect to all or any part of the
Property, and, to Seller's knowledge, no condemnation proceeding or other
proceeding or action in the nature of eminent domain is pending with respect to
any property owned by a Party to the REA which is the subject of such REA and to
Seller's knowledge no Taking is threatened with respect to all or any part of
the Property, or any property owned by a Party to the REA which is the subject
of such REA.
(l) True, correct and complete copies of current real estate tax
bills with respect to the Property, other than tax bills sent to Tenants who
have the obligation to pay such taxes to the collecting authority, have been
delivered or made available to the Company. No application or proceeding is
pending with respect to a reduction or an increase of such taxes. There are no
tax refund proceedings relating to the Property which are currently pending and
neither Seller nor the Existing Venture, nor any Affiliate thereof has applied
for any such reduction.
(m) Except as set forth on Schedule 6.1(m), neither Seller nor
the Existing Venture have received (i) any written notice from any governmental
authority having jurisdiction over the Property of, and to Seller's knowledge
there does not exist, any violation of any law, ordinance, order or regulation
(including the ADA) affecting the Property, or any portion thereof, which has
not heretofore been complied with; or (ii) any written notice from any insurance
company, insurance rating organization or Board of Fire Underwriters requiring
any alterations, improvements or changes at the Property, or any portion
thereof, which has not heretofore been complied with.
(n) No approval, consent, waiver, filing, registration or
qualification with any third party, including any governmental bodies, agencies
or instrumentalities is required to be made, obtained or given for the
execution, delivery and performance of this Agreement or any of the Seller
Closing Documents by Seller or the consummation of the Transactions (other than
notification of ownership change or transfer or reissuance of permits as may be
required under Environmental Laws).
(o) The Existing Venture is a limited partnership duly formed,
validly existing and in good standing under the laws of the State of Delaware
with full power and authority to own the Property and conduct the business now
being conducted by it.
(p) SMLLC is a limited liability company duly formed, validly
existing and in good standing under the laws of the State of Delaware with full
power and authority to own the interest owned by it in the Existing Venture and
conduct the business now being conducted by it. SMLLC owns a .001% interest as a
general partner in the Existing Venture free and clear of all Liens and no
Person has any option or other right to acquire said interest or any portion
thereof, any other equity interest in SMLLC or the Existing Venture or any
security or instrument convertible into any such equity interest.
(q) Schedule 6.1(q) contains a true, complete and accurate list
including the amounts thereof of all policies of insurance with respect to the
Property, which policies are and will be kept in full force to and including the
Closing Date. All premiums for such insurance have
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<PAGE> 16
been paid in full. To Seller's knowledge, neither Seller nor the Existing
Venture have performed, permitted or suffered any act or omission which would
cause the insurance coverage provided in said policies to be reduced, cancelled,
denied or disputed and neither Seller nor the Existing Venture have received (or
have knowledge of) any notice or request from any insurance company or Board of
Fire Underwriters (or organization exercising functions similar thereto)
cancelling or threatening to cancel any of said policies or denying or disputing
coverage thereunder.
(r) Neither Seller nor, to Seller's knowledge, the Existing
Venture has received notice that there is, and, to Seller's knowledge, there
does not now exist, any violation of any restriction, condition or agreement
contained in any easement, restrictive covenant or any similar instrument or
agreement affecting the Real Property or any portion thereof.
(s) The Existing Venture has no employees. The Existing Venture
does not maintain or sponsor any employee benefit plan, including any plans
subject to the Employer Retirement Income Security Act of 1974, as amended.
There are no pending claims or, to Seller's knowledge, any threatened claim
against the Existing Venture by any employee whose employment related to the
Property.
(t) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the Existing Venture's acquisition of the Property. No broker, finder,
investment banker or other person is entitled to any brokerage, finder's or
other fee or commission in connection with the Transactions based upon
arrangements made by or on behalf of Seller.
(u) [Intentionally Deleted].
(v) All material documents and Books and Records have been
delivered or have been made available to the Company. All of the documents and
Books and Records that have been delivered or made available to the Company by
or on behalf of Seller, are true, correct and complete copies of what they
purport to be and have not been modified or amended, except as specifically
noted therein. All information set forth in the exhibits and schedules to this
Agreement is true, correct and complete in all material respects and not
misleading. Seller does not have any knowledge of any significant adverse fact
or condition relating to the Property, which has not been specifically disclosed
in writing by Seller to the Company.
(w) To Seller's knowledge, there are no lease brokerage
agreements, leasing commission agreements or other agreements providing for
payments of any amounts for leasing activities or procuring tenants (including
renewing leases at expanding spaces) with respect to the Property other than as
disclosed in Schedule 6.1(w).
(x) Except as set forth in Schedule 6.1(x) attached hereto,
neither Seller, nor any Affiliate of Seller (other than the Existing Venture),
owns (i) any right or interest in any real property adjacent to or neighboring
the Real Property including any outparcel or (ii) any right or interest in any
easement, right of way, development right, water or mineral right or any other
right which in any way affects the Real Property.
(y) All water, storm sewer/sanitary sewer, gas, electricity,
telephone and other utility lines or pipes necessary in order to operate the
Real Property as a first class regional shopping center (collectively, the
"Utility Equipment") are in existence at the boundary
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<PAGE> 17
to the Real Property. All contemplated utility hook-up charges and fees are
included in the Budget.
(z) The Real Property has not suffered any casualty or other
material damage that has not been fully repaired.
(aa) Neither Seller nor the Existing Venture, has received written
notice from any Governmental Authority, from any Party to any REA, any Tenant or
any party to any other agreement or document, or otherwise has knowledge, that
the number of parking spaces at the Real Property is required under any Legal
Requirement, any Lease, or the REA, to be increased above the number of parking
spaces proposed on the date hereof.
(bb) The Existing Venture has (i) filed all tax returns required
to be filed under applicable Legal Requirements and (ii) timely paid all taxes
shown to be due and payable on such tax returns.
(cc) Except for mechanic liens which will be released or bonded
over in the ordinary course of construction, Seller has no knowledge of any
defects, liens, encumbrances, adverse claims or other matters insured against
under the Title Policy (collectively, the "Insured Matters") that could result
in the issuer of the Title Policy denying its liability to the Company on the
grounds that the Existing Venture or the Company had knowledge of any such
Insured Matters solely by reason of notice thereof imputed to it as a matter of
law through either Seller, the Existing Venture or any Affiliate thereof.
(dd) Except as set forth on Schedule 6.1(dd), neither Seller nor
the Existing Venture has received any written notice with respect to the Real
Property of any violation of law or municipal ordinances, orders or
requirements, that have been noted in or issued by any federal, state or
municipal department having jurisdiction, and which have not been fully remedied
and discharged of record.
(ee) To Seller's knowledge, Seller has provided the Company with
access to any and all certificates, licenses, permits, leases, ground leases,
operating agreements, books, records, documents and information relating to the
Real Property and the ownership and operation thereof which are in the
possession and control of Seller or the Existing Venture.
(ff) Seller is the owner of 100% of the interests in SMLLC. Seller
owns 100% of the Seller's Interest and Seller's Interest represents 100% of the
ownership interests in the Existing Venture.
6.2 Company Representations and Warranties. The Company represents and
warrants to Seller as follows:
(a) The Company is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware
with full right, power and authority to execute, deliver and perform this
Agreement.
(b) The execution, delivery and performance by the Company of
this Agreement have been duly and validly authorized by all requisite action on
the part of the Company. This Agreement has been, and the Company Closing
Documents will be, duly executed and delivered by the Company. This Agreement
constitutes, and when so executed
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<PAGE> 18
and delivered the Company Closing Documents will constitute, the legal, valid
and binding obligations of the Company, enforceable against it in accordance
with their terms.
(c) None of the execution, delivery or performance of this
Agreement or the Company Closing Documents by the Company does or will, with or
without the giving of notice, lapse of time or both, violate, conflict with,
constitute a default or result in a loss of rights under or require the approval
or waiver of or filing with any Person (including any governmental body, agency
or instrumentality) under (i) the organizational documents of the Company or any
material agreement, instrument or other document to which the Company is a party
or by which the Company is bound or (ii) any judgment, decree, order, statute,
injunction, rule, regulation or the like of a governmental unit applicable to
the Company, other than notification of ownership change or transfer or
reissuance of permits as may be required under Environmental Laws. (d) No
broker, finder, investment banker or other person is entitled to any brokerage,
finder's or other fee or commission in connection with the Transactions based
upon arrangements made by or on behalf of the Company.
6.3 No Other Representations. Neither Seller nor any officer, director,
shareholder, member, agent, partner, employee, or representative of Seller (or
any officer, director, partner or employee of any agent of Seller) has made any
representation whatsoever regarding the Property or any part thereof, or
anything relating to the subject matter of this Agreement, including that the
Improvements and other construction on the Property can be completed for the
amounts set forth in the Budget, except as expressly set forth in this
Agreement, and the Company, in executing, delivering and performing this
Agreement, has not and does not rely upon any statement, information, or
representation to whomsoever made or given, whether to the Company or others,
and whether directly or indirectly, verbally or in writing, made by any person,
firm or corporation, except as expressly set forth in this Agreement or in the
Seller Closing Documents.
6.4 Knowledge Defined. For the purposes of this Agreement, "knowledge"
(including "actual knowledge" and other similar terms) with respect to Seller
and the Existing Venture shall mean matters as to which any of the following
individuals have actual knowledge without any duty or responsibility to make any
inquiry, review or investigation: (i) John Bucksbaum, (ii) Robert A. Michaels,
(iii) Joel Bayer, (iv) Bernard Freibaum, (v) Jon Batesole, (vi) Thomas Gates and
(vii) Larry Howard. Actual knowledge shall not be deemed to exist merely by
assertion by the Company or Seller of a claim that any of the foregoing persons
should have known of such facts or circumstances, if such person did not have
actual knowledge thereof. Seller hereby represents and warrants that the
foregoing individuals are the individuals with the primary responsibility for
overseeing the sale, management, and operation of the Property at the level of
vice president and above.
ARTICLE VII
Additional Covenants
7.1 Record Retention. Until three (3) years after the Closing, the
Company shall provide Seller upon prior written notice and during normal
business hours with reasonable access to the Books and Records and, at Seller's
cost, copies of all or any portion thereof. The Company either shall retain such
Books and Records until the third anniversary of the date hereof or notify
Seller of its desire to dispose of such Books and Records pertaining to any
period prior to the Closing which have been delivered to the Company and turn
them over to Seller if Seller so requests. Seller agrees to keep, and to
instruct its agents, employees and representatives to keep, confidential such
Books and Records (and any information contained
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<PAGE> 19
therein) and any information discovered in any such examinations and
inspections, except in connection with any legal proceedings or to the extent
required by law. Upon the Company's request, for a period of three (3) years
after the Closing, Seller shall make all of Seller's records with respect to the
Property which are in the possession or control of Seller available to the
Company for inspection, copying and audit by the Company's designated
accountants. The provisions of this Section 7.1 shall survive Closing.
7.2 Publicity. In no event shall either Seller or the Company issue any
press release or otherwise disclose any non-public information regarding this
Agreement or the Transactions unless the other party has consented thereto in
writing and to the form and substance of any such statement or disclosure (and
Seller and the Company agree not unreasonably to withhold, condition or delay
such consent); provided, however, that nothing herein shall be deemed to limit
or impair in any way any party's ability to disclose the details of or
information concerning this Agreement, the Transactions or the Property to the
extent necessary to such party's attorneys, accountants or other advisors or to
the extent such party reasonably deems necessary or desirable pursuant to any
court or governmental order or applicable securities laws or regulations or
financial reporting requirements. Further, to the extent necessary, either party
may disclose any information regarding this Agreement or the Transactions to its
direct or indirect constituent partners, members or shareholders, as the case
may be (and to counsel for such constituent partners, members and shareholders)
and as otherwise necessary to comply with the terms of this Agreement. Any
disclosure by a party's advisors or direct or indirect constituent partners,
members or shareholders shall be deemed a breach hereof by such party. If for
any reason this Transaction is not consummated, the Company will promptly return
to Seller all originals and copies of documents, reports and financial and other
information relating to the Property and to Seller which Seller has furnished to
the Company. The obligations of Seller and the Company under this Section 7.2
shall survive the termination hereof, however caused.
7.3 Assistance Following Closing. From and after the Closing, Seller at
the Company's reasonable expense shall provide reasonable assistance to the
Company in connection with the preparation of financial statements and bills and
the adjustment of losses and claims and the enforcement or settlement of any
such claims. Without limiting the foregoing, Seller shall, upon the reasonable
request of the Company from time to time, provide signed representation letters
with respect to revenues and expenses of Seller if required under GAAS to enable
the Company's accountants to render an opinion on the Company's financial
statements.
7.4 Further Assurances. Each of Seller and the Company agree, at any
time and from time to time after the Closing, to execute, acknowledge where
appropriate and deliver such further instruments and other documents (and to
bear its own costs and expenses incidental thereto) and to take such other
actions as the other of them may reasonably request in order to carry out the
intent and purpose of this Agreement; provided, however, that neither Seller nor
the Company shall be obligated, pursuant to this Section 7.4 to incur any
expense of a material nature and/or to incur any material obligations in
addition to those set forth in this Agreement and/or its respective Closing
Documents.
7.5 Post-Closing Environmental Matters. Within forty-five (45) days of
Closing, or such shorter time necessary to avoid any fines or penalties, Seller
shall cause a qualified environmental consultant to develop, and shall
implement, a written Storm Water Pollution Prevention Plan ("SWPP PLAN") that
meets all applicable requirements of the stormwater construction general permit
(no. TXR101V28) covering the Property. If the SWPP is developed
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<PAGE> 20
by an environmental consultant other than Law Engineering and Environmental
Services, Inc. ("LAW ENGINEERING") then upon completion, Seller shall submit the
SWPP Plan to Law Engineering, or such other qualified environmental consultant
reasonably acceptable to the Company (the "ENVIRONMENTAL CONSULTANT"), for
review. Seller shall promptly implement any provisions reasonably recommended by
the Environmental Consultant.
ARTICLE VIII
Indemnification
8.1 Indemnification by Seller. From and after the Closing, Seller shall
indemnify, defend and hold harmless the Company and its members, officers,
directors, managers, employees, representatives and agents, and any direct or
indirect partner, shareholder, officer, director or member of any member of the
Company, and their respective successors and assigns (collectively, the
"INDEMNIFIED COMPANY PERSONS") from and against any Losses asserted against,
incurred or suffered by any Indemnified Company Person that results from,
relates to or arises out of (a) the breach or inaccuracy of any representation
or warranty made by Seller in this Agreement or the Seller Closing Documents, or
(b) the breach or non-fulfillment by Seller of any of the covenants or
agreements of Seller under this Agreement or the Seller Closing Documents.
8.2 Indemnification by the Company. From and after the Closing, the
Company shall indemnify, defend and hold harmless Seller and its direct or
indirect shareholders, directors, officers, members, partners, employees and
agents, and their respective successors and assigns (collectively the
"INDEMNIFIED SELLER PERSONS") from and against any Losses asserted against,
incurred or suffered by any Indemnified Seller Person that results from, relates
to or arises out of (a) the breach or inaccuracy of any representation or
warranty made by the Company in this Agreement or the Company Closing Documents,
(b) the breach or non-fulfillment by the Company of any of the covenants or
agreements of the Company under this Agreement or the Company Closing Documents,
or (c) the Assumed Liabilities.
8.3 Indemnification Procedure.
(a) Subject to Section 8.3(d), the indemnified party (the
"INDEMNIFIED PARTY") shall give the indemnifying party (the "INDEMNIFYING
PARTY") prompt notice of any Losses (or potential Losses) which may be covered
under this Article VIII and such notice shall state the basis for the claim,
action or proceeding and the amount thereof (to the extent such amount is
determinable at the time when such notice is given). In the event the notice
relates to a claim, assertion, action, suit or proceeding by a thirty party
("THIRD PARTY CLAIM") for which indemnification is provided hereunder, the
Indemnified Party shall permit the Indemnifying Party (or its insurance company)
to assume the defense of such claim, action or proceeding and the Indemnifying
Party (or its insurance company) may (i) prior to the commencement of any
proceedings in connection with such Losses, undertake the negotiation of any
resolution of the dispute relating to such Losses, including in accordance with
the terms hereof any settlement or release, or (ii) undertake the defense of any
proceeding (including any alternative dispute resolution proceeding) regarding
such Losses by selecting legal counsel who shall be reasonably acceptable to the
Indemnified Party. Failure of the Indemnifying Party to notify an Indemnified
Party of its election to undertake the Indemnified Party's defense of a Third
Party Claim within a reasonable time, but in no event more than thirty (30) days
after notice thereof shall have been given to the Indemnifying Party, shall be
deemed a waiver by the Indemnifying Party of its right to undertake the defense
of such Third Party Claim. Willkie Farr & Gallagher,
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Neal, Gerber & Eisenberg and counsel for the Indemnifying Party's insurance
company shall be deemed reasonably acceptable to the Indemnified Party.
(b) Provided the Indemnifying Party shall have undertaken the
Indemnified Party's defense of a Third Party Claim with legal counsel reasonably
acceptable to the Indemnified Party, and shall have so notified the Indemnified
Party, the Indemnified Party shall be entitled to participate at its own expense
in the aforesaid negotiation or defense of any claim relating to such Losses
(subject to reimbursement to the limited extent provided in Section 8.3(e)), but
such negotiations or defense shall be controlled by counsel to the Indemnifying
Party.
(c) Except as provided in Section 8.3(e), the Indemnifying Party
shall not be liable for payments relating to the resolution of any dispute or
any settlement of any litigation or proceeding effected without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld, conditioned or delayed. The Indemnifying Party shall not, in the
defense of any such Third Party Claim, consent to the entry of any judgment or
award, or enter into any settlement, except in either event with the prior
consent of each Indemnified Party, which consent shall not be unreasonably
withheld, conditioned or delayed. To the extent any Indemnified Party declines
to consent to a bona fide offer of settlement or compromise, the Indemnifying
Party shall continue to defend, but the amount of such offer shall be the limit
of the Indemnifying Party's liability with respect to such claim, action or
proceeding with respect to the Indemnified Party that declined such offer.
Notwithstanding the foregoing, the Indemnifying Party shall not, without the
Indemnified Party's written consent (which consent may be withheld in the sole
and absolute discretion of the Indemnified Party) resolve any dispute or settle
or compromise any claim regarding Losses from a Third Party Claim or consent to
entry of any judgment which would impose an injunction or other equitable relief
upon the Indemnified Party or which does not include as an unconditional term
thereof the release by the claimant or the plaintiff of the Indemnified Party
from all liability in respect of any such Losses.
(d) The failure to give notice of a claim under this Article VIII
shall not release the Indemnifying Party of its obligations under this Article
VIII, except to the extent of the actual harm suffered thereby.
(e) In the event the Indemnifying Party fails after notice from
the Indemnified Party to timely undertake negotiation of any dispute or defend,
contest or otherwise protect against any claim or suit with respect to a Third
Party Claim, and to so notify the Indemnified Party, the Indemnified Party may,
but will not be obligated to, defend, contest or otherwise protect against the
same, and make any compromise or settlement thereof and recover the entire costs
thereof from the Indemnifying Party, including reasonable attorneys' and
experts' fees, disbursements and all amounts paid as a result of such claim or
suit or the compromise or settlement thereof. The Indemnified Party shall
cooperate and provide such assistance as the Indemnifying Party may reasonably
request in connection with the negotiation of any dispute and the defense of the
matter subject to indemnification and the Indemnifying Party shall reimburse the
Indemnified Party's reasonable costs incurred thereafter in connection with such
cooperation and assistance.
ARTICLE IX
Miscellaneous
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<PAGE> 22
9.1 Survival. Except for the representations and warranties of Seller
set forth in Section 6.1(i), which representations and warranties and the
indemnification provisions relating thereto shall survive Closing indefinitely,
all other representations, warranties, covenants and agreements of Seller and of
the Company set forth in this Agreement shall survive until the Company ceases
to exist under the terms of the Operating Agreement.
9.2 Notices. Notices must be in writing and sent to the party to whom
or to which such notice is being sent, by (a) certified or registered mail,
postage prepaid and return receipt requested, (b) commercial overnight courier
service, or (c) delivered by hand with receipt acknowledged in writing, as
follows:
To the Company:
GGP/Homart II L.L.C.
110 North Wacker Drive
Chicago, Illinois 60606
Attention: Matthew Bucksbaum
with a copy thereof to:
The Comptroller of the State of New York,
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Deputy Comptroller --
Investments and Cash Management
and
The Comptroller of the State of New York,
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Counsel
and
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6097
Attention: Monty Davis
and
Clarion Partners
335 Madison Avenue
New York, New York 10017
Attn: Jeffrey A. Barclay
To Seller:
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<PAGE> 23
GGP Limited Partnership
110 N. Wacker Drive
Chicago, Illinois
Attention: Robert A. Michaels
with a copy to:
Neal, Gerber & Eisenberg
Two North LaSalle Street, Suite 2200
Chicago, Illinois 60602
Attention: Marshall E. Eisenberg
All notices (i) shall be deemed given when received if delivered by hand or
overnight courier service or, if mailed as described above with appropriate
postage, after 5 business days and (ii) may be given either by a party or by
such party's attorneys. The cost of delivery shall be borne by the party
delivering the notice.
9.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute a single document when at least one counterpart has been executed and
delivered by each party hereto.
9.4 Amendments. Except as otherwise provided herein, this Agreement may
not be changed, modified, supplemented or terminated, except by an instrument
executed by the party hereto which is or will be affected by the terms of such
change, modification, supplement or termination.
9.5 Waiver. Each party shall have the right exercisable in its sole and
absolute discretion, but under no circumstances shall be obligated, to waive or
defer compliance by any other party with its obligations hereunder or to waive
satisfaction of any conditions contained herein for its benefit. No waiver by
any party of a breach of any covenant or a failure to satisfy any condition
shall be deemed a waiver of any other or subsequent breach or failure to satisfy
any other condition. All waivers of any term, breach or condition hereof must be
in writing.
9.6 Successors and Assigns. Subject to the provisions of Section 9.10,
the terms, covenants, agreements, conditions, representations and warranties
contained in this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
9.7 Third Party Beneficiaries. The provisions of this Agreement are
made for the benefit of the parties hereto, and their respective successors in
interest and assigns and are not intended for, and may not be enforced by, any
other person or entity.
9.8 Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
9.9 Governing Law. This Agreement has been made pursuant to and shall
be governed by the laws of the State of Delaware (without regard to conflicts of
law rules).
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9.10 Assignment. This Agreement may not be assigned or delegated by any
party without the written consent of the other except that the Company may
assign this Agreement to an Affiliate of the Company, it being acknowledged and
agreed by the Company that no such assignment shall relieve the Company of its
obligations under this Agreement.
9.11 Headings; Exhibits. The headings or captions of the various
Articles and Sections of this Agreement have been inserted solely for purposes
of convenience, are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
9.12 Gender and Number. Words of any gender shall include the other
gender and the neuter. Whenever the singular is used, the same shall include the
plural wherever appropriate, and whenever the plural is used, the same also
shall include the singular where appropriate.
9.13 Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes any
prior written or oral understandings and/or agreement among them with respect
thereto.
9.14 Costs of Enforcement. In the event that any action is brought by
any party or parties to this Agreement against any other party or parties to
enforce rights under this Agreement, the prevailing party's or parties' costs in
such action, including reasonable attorneys' fees, shall be paid by the other
party or parties. Any amounts owing hereunder which are not paid when due shall
bear interest at the per annum rate equal to the prime rate of Bank of America,
N.A. (or any successor), as the same may change from time to time, plus four
percent.
9.15 Time of the Essence. Time is of the essence with regard to each
provision of this Agreement. If the final date of any period provided for herein
for the performance of an obligation or for the taking of any action falls on a
Saturday, Sunday or banking holiday, then the time of that period shall be
deemed extended to the next day which is not a Sunday, Saturday or banking
holiday. Each and every day described herein shall be deemed to end at 5:00 p.m.
Central Time.
9.16 Indemnification Against Broker Claims. Seller shall indemnify,
defend and hold harmless the Company from and against all loss, liability,
damages, costs and expenses (including reasonable counsel fees) resulting from
any claim that may be made by any broker or other person claiming to have dealt
with Seller in connection with the Transactions, for a commission, fee or other
compensation by reason of the Transactions including any loss, liability, costs
and expenses (including reasonable counsel fees) incurred in enforcing this
indemnity. The Company shall indemnify, defend and hold harmless Seller from all
loss, liability, costs and expenses (including reasonable counsel fees)
resulting from any claim that may be made by any broker or other person claiming
a commission, fee or other compensation by reason of having dealt with the
Company in connection with the Transactions, including any loss, liability,
costs and expenses (including reasonable counsel fees) incurred in enforcing
this indemnity. The provisions of this Section 9.16 shall survive the Closing or
termination of this Agreement.
9.17 Arbitration. In the event of any dispute in connection with the
terms and provisions of this Agreement, the parties agree to submit such dispute
to arbitration in accordance with the provisions of Section 14.13 of the
Operating Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on the day and year first above written.
SELLER: COMPANY:
GGP LIMITED PARTNERSHIP, GGP/HOMART II L.L.C.,
a Delaware limited partnership a Delaware limited liability company
By: GENERAL GROWTH PROPERTIES, INC.
a Delaware corporation,
its general partner By: /s/ Joel Bayer
------------------------------
Name: Joel Bayer
Title: Senior Vice President
By: /s/ Joel Bayer
---------------------------------
Name: Joel Bayer
Title: Senior Vice President
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<PAGE> 26
LIST OF EXHIBITS AND SCHEDULES
Exhibits/Schedule Description
Exhibit A Legal Description of the Land
Exhibit B Permitted Exceptions
Exhibit C [Intentionally Deleted]
Exhibit D Budget
Exhibit E Schedule of Costs
Schedule 1.1-1 Anchors
Schedule 1.1-2 Personalty
Schedule 6.1(e) Leases
Schedule 6.1(f) Claims under REA
Schedule 6.1(g) List of all Contracts
Schedule 6.1(h) Permits and Licenses
Schedule 6.1(i) Environmental Disclosure
Schedule 6.1(j) Pending or Threatened litigation
Schedule 6.1(m) Notices for Governmental Authorities
Schedule 6.1(q) Insurance Policies
Schedule 6.1(w) Lease Brokerage Agreements
Schedule 6.1(x) Seller's Rights in Neighboring Properties
Schedule 6.1(dd) Notices of Uncured Violations
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<PAGE> 1
EXHIBIT 2.9
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is dated as of November 10, 1999, by and
between THE COMPTROLLER OF THE STATE OF NEW YORK AS TRUSTEE OF THE COMMON
RETIREMENT FUND, ("SELLER"), and GGP/HOMART II L.L.C., a Delaware limited
liability company (the "COMPANY").
RECITALS
WHEREAS, Seller owns 100% of membership in Carolina Place L.L.C.
("EXISTING VENTURE"), a Delaware limited liability company, which is the
successor by a merger pursuant to Section 18-209 of the Delaware LLC Act, to
Carolina Place Joint Venture, a New York general partnership (the "CPJV");
WHEREAS, the Existing Venture is the owner of the real property
commonly known as Carolina Place Mall, Charlotte, North Carolina ("CAROLINA
PLACE MALL") which is more particularly described on Exhibit A attached hereto,
other than the property owned by the Anchors (as hereinafter defined) at such
mall;
WHEREAS, Seller desires to contribute to the Company all of its
membership interest in the Existing Venture, and the Company desires to acquire
such interests.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows::
ARTICLE I.
DEFINITIONS
1.1. For purposes of this Agreement, the following terms shall have
the meanings indicated below:
"ADA" shall mean the Americans With Disabilities Act, as amended.
"AFFILIATE" shall mean a Person that directly or indirectly through one
or more intermediaries controls, is controlled by, or is under common control
with the Person specified. The term "control" as used in the immediately
preceding sentence, means (a) the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the
controlled entity or (b) the ownership (directly or indirectly) of not less than
50% of the voting stock of a corporation or not less than 50% of the aggregate
legal and equitable interest in a limited liability company, a partnership or
other business entity.
"AGREEMENT" shall mean this Contribution Agreement, as amended or
modified from time to time hereafter in accordance with the terms hereof.
"ANCHOR" shall mean each Person identified in SCHEDULE 1.1-1.
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"ASSUMED LIABILITIES" shall have the meaning set forth in Section
2.3(a).
"AUDITOR" shall have the meaning set forth in Section 5.2(b).
"BALANCE SHEET SETTLEMENT DATE" shall have the meaning set forth in
Section 5.1(c).
"BOOKS AND RECORDS" shall mean all records, books of account and papers
of the Existing Venture relating to the construction, ownership and operations
of the Property, including architect's drawings, blue prints and as-built plans,
maintenance logs, copies of warranties and guaranties, licenses and permits,
instruction books, employee manuals, records and correspondence relating to
insurance claims, financial statements, operating budgets, paper and electronic
media copies of data and other information relating to the Property available
from personal computers, structural, mechanical, geotechnical or other
engineering studies, soil test reports, environmental reports, underground
storage tank reports, feasibility studies, appraisals, ADA surveys or reports,
OSHA asbestos surveys, marketing studies, mall documents and compilations, lease
summaries and originals and/or copies of Leases, the REA and the Contracts and
correspondence related thereto.
"CLOSING" shall have the meaning set forth in Section 4.1.
"CLOSING BALANCE SHEETS" shall have the meaning set forth in Section
5.1(a).
"CLOSING DATE" shall have the meaning set forth in Section 4.1 .
"CLOSING DOCUMENTS" shall mean the Seller Closing Documents and the
Company Closing Documents, collectively.
"CLOSING NET EQUITY" shall mean, in the case of the Preliminary
Proration Date Balance Sheet or Proration Date Balance Sheet, the excess of the
book value of the assets reflected on such balance sheet over the liabilities
reflected thereon.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY CLOSING DOCUMENTS" shall have the meaning set forth in Section
4.3.
"CPJV" shall mean Carolina Place Joint Venture, a New York general
partnership;
"CONTRACTS" shall mean all equipment leases and all service,
maintenance and other contracts and concessions that are currently in effect and
to which the Existing Venture or CPJV, is a party respecting the use,
maintenance, development, sale or operation of the Property or any portion
thereof (but excluding this Agreement, the Leases, the Permitted Exceptions and
the REA) including those which are listed on SCHEDULE 6.1(I), together with any
additions thereto, modifications thereof or substitutions therefor hereafter
entered into in accordance with the provisions of this Agreement.
"CONTRIBUTION AMOUNT" shall have the meaning set forth in Section 2.2.
"DEFECT" shall mean any Lien, encumbrance, easement, agreement,
restriction, proceeding, lis pendens, notice, encroachment or exception to title
other than a Permitted Exception that materially and adversely affects the title
to or use of the Property.
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"ENVIRONMENTAL LAWS" shall mean all federal, state and local statutes,
ordinances, codes, rules, regulations, orders and decrees regulating, relating
to or imposing liability or standards concerning or in connection with Hazardous
Materials, underground storage tanks or the protection of human health, natural
resources or the environment, as any of the same may be amended from time to
time, including the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. ss.9601 et. seq., as amended by the
Superfund Amendments and Reauthorization Act or any equivalent state or local
laws or ordinances; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. ss. 6901 et seq., as amended by the Hazardous and Solid Waste Amendments
of 1984, or any equivalent state or local laws or ordinances; the Federal
Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. ss.136 et. seq.
or any equivalent state or local laws or ordinances; the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq .); the Emergency Planning and
Community Right-to-Know Act ("EPCRA"), 42 U.S.C. ss.11001 et. seq. or any
equivalent state or local laws or ordinances; the Toxic Substance Control Act
("TSCA"), 15 U.S.C. ss.2601 et. seq. or any equivalent state or local laws or
ordinances; the Atomic Energy Act, 42 U.S.C. ss.2011 et. seq., or any equivalent
state or local laws or ordinances; the Clean Water Act (the "Clean Water Act"),
33 U.S.C. ss.1251 et. seq. or any equivalent state or local laws or ordinances;
the Clean Air Act (the "Clean Air Act"), 42 U.S.C. ss.7401 et seq. or any
equivalent state or local laws or ordinances; the Occupational Safety and Health
Act, 29 U.S.C. ss.651 et seq. or any equivalent state or local laws or
ordinances.
"EXECUTION DATE" shall mean the date of this Agreement.
"EXISTING MANAGER" shall mean Clarion Realty Services.
"EXISTING VENTURE" shall mean Carolina Place L.L.C.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
6.1(v).
"GAAP" Shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"GAAS" shall mean Generally Accepted Auditing Standards as promulgated
by the Auditing Standards Division of the American Institute of Certified Public
Accountants from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state or local
government, court, department, commission, board and office having jurisdiction
over the Property, Seller, the Existing Venture or the Company, or any other
body exercising functions similar to those of any of the foregoing.
"HAZARDOUS MATERIALS" shall mean any substance, material, waste, gas or
particulate matter which (i) is now, or at any future time may be, regulated by
the United States Government, the state in which the Real Property is located,
any other state with jurisdiction, or any local governmental authority, or (ii)
the exposure to, or manufacture, possession, presence, use generation, storage,
transportation, treatment, release, disposal, abatement, cleanup, removal,
remediation or handling of is prohibited, controlled or regulated by any
Environmental Law, or (iii) requires investigation or remediation under any
Environmental Law or common law, or (iv) is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic
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<PAGE> 4
or otherwise hazardous. Such term includes any material or substance which is
(1) defined as a "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste" or any like or similar
term under any applicable Environmental Law; (2) oil and petroleum products; (3)
asbestos or asbestos-containing material as defined in the regulations of the
Occupational Safety and Health Administration at 29 C.F.R. ss.1910.1001; (4)
polychlorinated biphenyls; (5) radioactive material; (6) designated as a "toxic
pollutant" or a "hazardous substance" pursuant to Sections 307 or 311 of the
Clean Water Act; (7) defined as a "hazardous waste" pursuant to Section 1004 of
RCRA; (8) defined as a "hazardous substance" pursuant to Section 101 of CERCLA;
(9) designated as a "hazardous chemical" substance or mixture pursuant to TSCA;
(10) designated as an "extremely hazardous" substance under Section 302 of
EPCRA; (11) designated as a "priority pollutant" or "hazardous air pollutant"
pursuant to the Clean Air Act; (12) designated as a hazardous chemical under the
Occupational Safety and Health Act; (13) radon gas or other radioactive source
material, including special nuclear material, and byproduct materials regulated
under the Atomic Energy Act, 42 U.S.C. ss.2011 et. seq.; (14) subject to
regulation under FIFRA; (15) natural gas, natural gas liquids, liquefied natural
gas, and synthetic gas usable for fuel; or (16) infectious wastes or materials
and pathogenic bacteria or other pathogenic microbial agents.
"IMPROVEMENTS" shall mean improvements, buildings, structures,
fixtures, facilities, installations, machinery and equipment, in, on, over or
under the Land, including the foundations and footings therefor, elevators,
plumbing, air conditioning, heating, ventilating, mechanical, electrical and
utility systems (except to the extent owned by a utility company) and any other
similar systems, signs and light fixtures (except to the extent of trade
fixtures and equipment owned by tenants under the Leases), doors, windows,
fences, parking lots, walks and walkways and each and every other type of
physical improvement to the extent owned, in whole or in part, by the Existing
Venture, located at, on or affixed to the Land, to the full extent such items
constitute or are or can or may be construed as realty under the laws of the
state in which the Real Property is located.
"INDEMNIFIED COMPANY PERSONS" shall have the meaning set forth in
Section 8.1.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 8.3.
"INDEMNIFIED SELLER PERSONS" shall have the meaning set forth in
Section 8.2.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 8.3.
"LAND" shall mean those certain parcels of real estate described on
EXHIBIT A.
"LANDLORD WORK" shall mean all work, improvements, fixtures, fittings
and equipment(other than normal repairs, maintenance or replacements) that are
required (or may in the future be required) to be furnished or provided to
Tenants or REA Parties or paid for or by landlord or developer under the terms
of the Leases or the REA, as in effect on the date hereof.
"LEASES" shall mean all leases, tenancies, concessions, licenses and
occupancy agreements currently in effect and to which the Existing Venture or
any of its predecessors in title is a party affecting or relating to the
Property including those which are listed on SCHEDULE
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6.1(G), together with any additions thereto, modifications thereof or
substitutions therefor hereafter entered into in accordance with the provisions
of this Agreement.
"LEGAL REQUIREMENTS" shall mean any laws, ordinances, orders, rules,
regulations and requirements of any Governmental Authority which may be
applicable to the Property, the Existing Venture or Seller.
"LIENS" shall mean any mortgages, deeds of trust, security interests,
judgments or charges, pledges, options, rights of first offer or first refusal,
liens of any type, restrictions, claims and other encumbrances of any nature
whatsoever.
"LIEN SEARCHES" shall mean a search report by an independent search
firm reasonably acceptable to the Company of the Secretary of State records,
county recorder records, local court records (federal, state, county and
municipal) and such other official public records with respect to the Property
that would disclose the presence of any Liens, bankruptcy proceedings, lis
pendens or other matters affecting the Property, the Existing Venture or Seller.
"LOSSES" shall mean any and all claims, actions, suits, proceedings,
demands, losses, damages, liabilities, obligations, judgments, settlements,
awards, penalties, costs or expenses, including reasonable attorneys', experts'
or consultants' fees and expenses.
"OPERATING AGREEMENT" shall mean that certain Operating Agreement among
the Company, Seller and GGP Limited Partnership, dated as of the date hereof.
"PARTY" shall mean a party to the REA, a Contract or Permitted
Exception Document (or the successor or assignee thereof) or a Tenant under a
Lease, in each case other than the Existing Venture or its predecessors in title
with respect to the Property.
"PERMITTED EXCEPTIONS" shall mean the exceptions to title to the
Property listed on EXHIBIT B attached hereto and made a part hereof.
"PERMITTED EXCEPTION DOCUMENT" shall have the meaning set forth in
Section 2.3(b).
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, governmental unit or agency, trust, estate or other entity of
any type.
"PERSONALTY" shall mean all of the personal property, both tangible and
intangible, owned by the Existing Venture (and the Existing Venture's interest
in any of the following) and located in or upon or used in connection with the
operation or maintenance of the Property, including machinery; equipment;
building supplies and materials; consumables; inventories; names, logos,
trademarks, trade names and copyrights; all assignable licenses, permits,
approvals, authorizations, variances, consents and certificates of occupancy;
all assignable guarantees or warranties (including performance bonds obtained
by, or for the benefit of, the Existing Venture, pertaining to the ownership,
construction or development of the Real Property or any part thereof); the Books
and Records; computer and peripheral equipment; computer software and data
contained in hard drives and on diskette; advertising materials; and telephone
exchange numbers. Without limiting the foregoing, "Personalty" shall include the
property listed on SCHEDULE 1.1-2 . Personalty shall not include personal items
belonging to Tenants or to employees, the Existing Venture and the rights of the
Existing Venture in and to the Leases, the REA and the Contracts.
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"PRELIMINARY PRORATION DATE BALANCE SHEET" shall have the meaning set
forth in Section 5.1(a).
"PROMOTIONAL ASSOCIATION" shall have the meaning set forth in Section
6.1(l).
"PROPERTY" shall mean (a) the Real Property, (b) the Personalty, (c)
the rights and interests of the Existing Venture in, to and under all Leases,
(d) the rights and interests of the Existing Venture in, to and under the REA
and (e) the rights and interests of the Existing Venture in, to and under the
Contracts to the extent assignable.
"PRORATION DATE" shall mean November 30, 1999.
"PRORATION DATE BALANCE SHEET" shall have the meaning set forth in
Section 5.1(a).
"REAL PROPERTY" shall mean the Land and the Improvements, together with
all of the estate, right, title and interest of the Existing Venture therein,
and in and to (a) any land lying in the beds of any streets, roads or avenues,
open or proposed, public or private, in front of or adjoining the Land to the
center lines thereof, and in and to any awards to be made in lieu thereof and in
and to any unpaid awards for damage to the foregoing by reason of the change of
grade of any such streets, roads or avenues; and (b) all easements, rights,
licenses, privileges, rights-of-way, strips and gores, hereditaments and such
other real property rights and interests appurtenant to the foregoing (including
all rights of the Existing Venture under the REA).
"REA" shall mean that certain Amended and Restated Construction,
operating and Reciprocal Easement Agreement dated April, 30, 1993 by and among
Carolina Place Associate Limited Partnership, and The May Department Stores
Company, Dillard Department Stores, Inc. and Construction Developers,
Incorporated and Belk Charlotte, Inc., Carolina , recorded April 30, 1993 in
Deed Book 7283, Page 34, Mecklenburg County Registry; as supplement by a
Supplemental Agreement dated as of __________, 1993, between Carolina Place
Associates Limited Partnership and Dillard Department Stores, Inc. and
Construction Developers, Incorporated and by a Supplemental Agreement by and
between Carolina Place Associates Limited Partnership and The May Department
Stores Company dated as of _________________, 1993, together with any additions
thereto, modifications thereof or substitutions therefor hereafter entered into
in accordance with the provisions of this Contribution Agreement.
"REGULATIONS" shall mean the final, temporary or proposed Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"RENT ROLL" shall have the meaning set forth in Section 6.1(e).
"RENTS" shall mean fixed, minimum, additional, percentage and overage
rents, common area maintenance charges, advertising and promotional fees,
insurance charges, rubbish removal charges, sprinkler charges, shoppers aid
charges, water charges, utility charges, HVAC charges, amounts payable with
respect to real estate and any other taxes, and other amounts payable by any
Party under the Leases and the REA.
"SELLER CLOSING DOCUMENTS" shall have the meaning set forth in Section
4.2.
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"SELLER'S INTEREST" shall mean the entire interest of the Seller as the
sole member of the Existing Venture, together with all rights, obligations and
powers of Seller as the sole member of the Existing Venture.
"SELLER'S LIABILITIES" shall have the meaning set forth in Section
2.3(b).
"SURVEY" shall mean the Urban ALTA/ACSM Land Title Survey of the
Property by J.C. Smith & Associates, Network Project No. 990128/2, dated August
3, 1999, last revised September 8, 1999.
"TENANTS" shall mean tenants, concessionaires, licensees and/or
occupants under the Leases.
"TENANT SERVICES" shall mean all services supplied by or on behalf of
the Existing Venture to Tenants for which Tenants are separately charged, other
than services in the nature of common area maintenance.
"THIRD PARTY CLAIM" shall have the meaning set forth in Section 8.3(a).
"TITLE COMMITMENT" shall mean the Proforma Policy of Title Insurance
No. 165-715498 issued by the Title Company to the Existing Venture dated
November 3, 1999, together with copies of all documents underlying all
exceptions to title and all encumbrances on and other matters of record
affecting the Real Property.
"TITLE COMPANY" shall mean Commonwealth Land Title Insurance Company.
"TITLE POLICY" shall mean the Owner's Policy of Title Insurance to be
issued by Title Company and effective the date hereof, insuring the Existing
Venture as owner of good, marketable and indefeasible fee title to the Property,
subject only to the Permitted Exceptions.
"TRANSACTIONS" shall mean the transactions contemplated by this
Agreement.
"UTILITY DEPOSITS" shall have the meaning set forth in Section 5.8.
1.2. References. All references in this Agreement to particular
sections or articles shall, unless expressly otherwise provided, or unless the
context otherwise requires, be deemed to refer to the specific sections or
articles in this Agreement, and any references to "Exhibit" shall, unless
otherwise specified, refer to one of the exhibits annexed hereto and, by such
reference, be made a part hereof. The words "herein", "hereof", "hereunder",
"hereinafter", "hereinabove" and other words of similar import refer to this
Agreement as a whole and not to any particular section, subsection, paragraph or
article hereof. The words "include", "includes" and "including" shall be deemed
in each case to be followed by the phrase "without limitation".
1.3. Terms Generally. Definitions in this Agreement apply equally to
both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.
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ARTICLE II.
CONTRIBUTION
2.1. Contribution of Seller's Interest. Upon the terms and subject to
the conditions contained herein, at the Closing, Seller shall contribute to the
Company, and the Company shall acquire, Seller's Interest, free and clear of all
Liens. The Seller's Interest shall be deemed to have a fair market value equal
to $140,000,000, which represents the fair market value of the Property, plus or
minus Closing Net Equity as set forth on the Preliminary Proration Date Balance
Sheet (such amount, as the same is adjusted as hereinafter provided, the
"Contribution Amount").
2.2. Consideration. In consideration for the contribution of Seller's
Interest and certain other property being contributed to the capital of the
Company by Seller, and in addition to the assumption of liabilities and
adjustments as hereinafter provided, on the Closing Date, Seller shall receive
units of membership interest in the Company pursuant to the Operating Agreement.
2.3. Liabilities.
1. The Existing Venture shall be liable and responsible for all
liabilities and obligations of the Existing Venture other than the Seller's
Liabilities (the "ASSUMED LIABILITIES"). Further, without limiting the
foregoing, Assumed Liabilities shall include all leasing costs, allowances,
concessions, rent abatements, build-out costs, other leasing inducements and
leasing commissions with respect to all leases executed on or after September 1,
1999, provided, however, that with respect to any leases executed on or after
January 1, 2000 the Company shall only pay commissions due to General Growth
Management, Inc. and Seller shall remain liable for and shall pay commissions
due to Existing Manager.
(b) Seller shall be responsible for all of the following
liabilities or obligations of the Existing Venture, Seller or any predecessor of
any of them (collectively, the "SELLER PARTIES") or other Person specified below
(collectively, the "SELLER'S LIABILITIES"): (i) any liability or obligation that
is not related to the Property, (ii) any liability or obligation that arises
from contracts or agreements other than the Leases, the Contracts, the REA or
the instruments or agreements constituting the Permitted Exceptions (a
"PERMITTED EXCEPTION DOCUMENT"), (iii) any tort liability arising from any
accident, injury, event, circumstance, action or omission occurring prior to the
Closing Date (except to the extent of the insurance proceeds received by the
Existing Venture in connection therewith), whether or not asserted before or
after the Closing, (iv) any liability or obligation to a Party for breach of, or
other payment obligation under, a Lease, REA, Contract or Permitted Exception
Document (including any claimed overcharge of common area maintenance or other
similar charges but excluding the items covered in clause (v)) to the extent
that the liability or obligation relates to the period or accrued prior to the
Closing Date, whether or not asserted before or after the Closing, (v) all
leasing costs, costs of Landlord Work (net of the value of any additional
revenues that are to be received by the Existing Venture and are directly
attributable to the Landlord Work), allowances, concessions, rent abatements,
build-out costs, other leasing inducements and leasing commissions, with respect
to all leases executed prior to September 1, 1999, (vi) any fine, penalty or
other amount that is imposed or assessed by or which was payable to (including
any installment thereof) a Governmental Authority for the period prior to the
Closing Date, whether
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<PAGE> 9
or not imposed or assessed before or after the Closing, (vii) all federal, state
and local taxes of any Seller Party of whatever kind and nature relating to the
period prior to Closing, (viii) liabilities and obligations relating to any
employees (current or former), employee benefit plans or collective bargaining
agreements of the Existing Manager or any Seller Party that accrued, relate to
or arise from any incident, event, circumstance, action or omission occurring
during the period through the effective termination date of the management
agreement with the Existing manager, including severance pay and accrued
vacation pay obligations and other liabilities of the Existing Manager, any
Seller Party, the Company or others relating to the termination of any of such
employees prior to the effective termination date of the management agreement
with the Existing Manager or as the result of the consummation of the
Transactions, (ix) any liability or obligation to pay for work performed at, or
materials supplied or delivered to, the Property prior to the Closing, (x) any
liability or obligation relating to litigation that is commenced by Persons
other than Parties or Governmental Authorities and that relates to incidents,
events, circumstances, actions or omissions occurring during the period prior to
Closing, whether or not asserted before or after the Closing, (xi)any liability
or obligation arising out of the termination of the management agreement with
the Existing Manager, (xii) any commissions due to Existing Manager with respect
to leases executed on or after January 1, 2000, and (xiii) any other costs or
liabilities imposed on Seller hereunder or under the Operating Agreement.
Notwithstanding anything to the contrary contained herein, Seller's Liabilities
shall not include (i) any liabilities or obligations to the extent that the
Company has received a credit therefor under the provisions of Article V and
(ii) subject to the provisions of Section 2.3(c), the cost of repair,
remediation or correction of any physical defect in the Property (but do include
damages, fines or other amounts owing to Parties, Governmental Authorities or
others on account of any such physical defect to the extent that such damages,
fines or other amounts are not for the cost of repair, remediation or correction
thereof).
(c) Nothing contained in this Section 2.3 shall impair the
rights of the Company for a breach of any representation or warranty contained
herein or in the Seller Closing Documents.
ARTICLE III.
COSTS AND EXPENSES
3.1. Title and Survey Costs. Title and Survey costs shall be paid as
follows:
(a) The Company shall pay the cost of obtaining the Title
Commitment and the cost of recording any documents required to release, cure or
remove Defects;
(b) The Company shall pay the cost of obtaining the Survey;
(c) The Company shall pay the cost of recording any other
documents;
(d) Subject to any separate agreement between Seller and the
Company, the Company shall be solely responsible for the payment of any real
property transfer taxes levied or imposed upon Seller, the Existing Venture or
the Property as a result of the merger of CPJV into the Existing Venture or the
transfers to the Company, gains taxes
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levied or imposed upon Seller, the Existing Venture or the Property as a result
of the merger of CPJV into the Existing Venture or the transfers to the Company,
sales taxes levied or imposed upon Seller, the Existing Venture or the Property
as a result of the merger of CPJV into the Existing Venture or the transfers to
the Company and documentary stamps and other taxes, fees or charges imposed in
connection with the conveyance of the Seller's Interest or any portion thereof;
(e) The Company shall pay all filing fees and charges and any
personal property sales taxes in connection with the indirect transfer of the
Personalty to the Company; and
(f) The Company shall pay the costs of the Lien Search.
3.2. Other Costs. Except for expenses and costs related to the
termination of any existing management agreement and the termination of any
employees, the Company shall pay any and all costs or expenses in connection
with the termination of any Contracts, other than the termination of management
contracts (which shall be at the cost and expense of Seller), to be terminated
in accordance with the terms of this Agreement. The Company shall pay the legal
fees of its counsel and Seller shall pay the legal fees of Willkie Farr &
Gallagher incurred in connection with the drafting and negotiation of this
Agreement and the Closing of the Transactions.
ARTICLE IV.
CLOSING
4.1. Closing. The closing of the Transactions (the " CLOSING") shall
take place at the offices of Neal, Gerber & Eisenberg, Two North LaSalle Street,
Chicago, Illinois 60602, commencing at 10:00 a.m., local time, on the date
hereof (the " CLOSING DATE").
4.2. Seller Closing Documents. On or prior to the Closing Date, Seller
shall deliver, or cause to be delivered, to the Company the following documents
(collectively, the "SELLER CLOSING DOCUMENTS"), duly executed by Seller and the
other parties thereto (other than the Company) and in form and substance
reasonably acceptable to the Company and to Seller unless the form thereof is
attached hereto:
(a) Assignment of membership interests with respect to assigning
Seller's Interest from Seller to the Company.
(b) An affidavit of the Existing Venture stating its U.S.
taxpayer identification number and that it is a "United States person", as
defined by Sections 1445(f)(3) and 7701(b) of the Code.
(c) Copies of the Certificate of Formation of the Carolina Place
L.L.C. and any amendments thereto, as of the Closing Date certified by the
Secretary of State of the State of Delaware as of a date not more than ten (10)
days prior to the Closing Date, together with a certificate of an officer of the
Company to the effect that the Certificate of Formation of the Company, as
certified by the Secretary of State of Delaware, has not been further amended,
revised, restated, canceled or rescinded up to and including the Closing Date.
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(d) Originals or certified copies of the organizational
documents for the Existing Venture, including operating agreements, articles of
organization, by-laws, minute books and records of meetings, including all
amendments thereof.
(e) Original, or copies certified by Seller as true, complete
and correct, of each of the Leases and the REA, together with all Books and
Records including current real estate tax bills, water, sewer and utility bills
and all Tenant correspondence.
(f) Any instruments, documents or certificates required to be
executed by the Existing Venture or the Seller with respect to any state, county
or local transfer taxes applicable to the conveyance of Seller's Interest
pursuant to this Agreement.
(g) Keys and combinations to locked compartments within the
Property.
(h) Such other documents, instruments or agreements which Seller
or the Existing Venture is required to deliver to the Company pursuant to the
other provisions of this Agreement or which the Company reasonably may deem
necessary or desirable in order to consummate the Transactions in accordance
with the terms hereof.
(i) Any Tenant security deposits in Seller's (as opposed to the
Existing Venture's) possession or control.
4.3. Company Closing Documents. On or prior to the Closing Date, the
Company shall deliver to Seller the following documents (herein referred to
collectively as the "COMPANY CLOSING DOCUMENTS"), duly executed by an authorized
officer on behalf of the Company and the other parties thereto (other than
Seller) and in form and substance reasonably acceptable to Seller and to the
Company unless the form thereof is attached hereto:
(a) An agreement or agreements pursuant to which the Company
accepts assignment of Seller's Interest.
(b) A duly executed and acknowledged Secretary's Certificates,
certifying that the members of the Company have duly adopted resolutions
authorizing the consummation of the Transactions and certifying the authority of
the respective authorized signatories of the Company executing and delivering
this Agreement and the Company Closing Documents in their capacities as officers
of the Company.
(c) A certificate issued by the Secretary of State of Delaware
dated not earlier than ten (10) days prior to the Closing Date certifying the
existence and good standing of the Company as of the date of such certificate.
(d) Copies of the Certificate of Formation of the Company and
any amendments thereto, as of the Closing Date certified by the Secretary of
State of the State of Delaware as of a date not more than twenty (20) days prior
to the Closing Date, together with a certificate of an officer of the Company to
the effect that the Certificate of Formation of the Company, as certified by the
Secretary of State of Delaware, has not been further amended, revised, restated,
canceled or rescinded up to and including the Closing Date.
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<PAGE> 12
(e) Certificate of merger merging Carolina Place Joint Venture
into Carolina Place L.L.C.
(f) Any instruments, documents or certificates required to be
executed by the Company with respect to any state, county or local transfer
taxes applicable to the conveyance of Seller's Interest pursuant to this
Agreement.
(g) Such other documents, instruments or agreements which the
Company may be required to deliver to Seller pursuant to the other provisions of
this Agreement or which Seller reasonably may deem necessary or desirable to
consummate the Transactions; provided, however, that any such other document,
instrument or agreement which Seller reasonably deems necessary or desirable
shall not impose upon the Company or the Existing Venture any obligation or
liability other than an obligation or liability expressly imposed upon the
Company and the Existing Venture pursuant to the terms of this Agreement or
pursuant to the terms of the other the Company Closing Documents specified in
this Section 4.3.
4.4. Joint Deliveries. Seller and the Company shall jointly execute
and deliver a Preliminary Proration Date Balance Sheet.
ARTICLE V.
Net Equity Adjustment
5.1 Net Equity Adjustment.
(a) At or prior to Closing, Seller shall prepare and deliver to
the Company a balance sheet with respect to the Property and the Existing
Venture (the "PRELIMINARY PRORATION DATE BALANCE SHEET") prepared as of the last
day of the month prior to the Closing Date, or, if the data as of such date are
unavailable, the last day of the second month prior to the Closing Date. No
later than one hundred twenty (120) days after the Closing Date, the Company
shall cause to be prepared and delivered to Seller an unaudited balance sheet
with respect to the Property and the Existing Venture as of the Proration Date
(the "PRORATION DATE BALANCE SHEET" and, together with the Preliminary Proration
Date Balance Sheet, the "CLOSING BALANCE SHEETS"), showing Closing Net Equity.
The Closing Balance Sheets shall be prepared on an accrual basis in accordance
with GAAP applied in a manner consistent with that utilized in the preparation
of the financial statements General Growth Properties, Inc., without regard to
any special provisions relating to its REIT status, provided however, that the
following rules shall be employed:
(i) The following assets shall be excluded or eliminated:
deferred rent receivables; deferred financing, leasing and other costs;
tenant lease incentives; prepaid expenses to the extent the full amount
thereof could not reasonably be expected to inure to the benefit of the
Existing Venture (including but not limited to prepaid insurance
premiums);
(ii) no amount shall be recorded under the classification
"Building & Improvements", "Fixtures & Equipment", "Tenant
Improvements" and "Land;"
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<PAGE> 13
(iii) net carrying amounts for or in respect of the
following shall be eliminated, with such elimination to be done, in
each case net of accumulated amortization and depreciation, allowances
for bad debts and other contra accounts: building and improvements,
fixtures and equipment, land, capitalized taxes, tangible personal
property and goodwill;
(iv) the following assets shall be included (and shall be
deemed to be part of the assets of the Existing Venture and transferred
to the Company): all cash in the Existing Venture;
(v) the following liabilities shall be excluded or
eliminated: deferred revenues and income tax accounts;
(vi) at Seller's election, a liability may be excluded to
the extent that it is a Seller's liability and any reserves or other
assets relating to such excluded liability shall be excluded or
distributed to Seller
(vii) there shall be excluded from assets an amount equal
to proceeds from condemnation or casualty insurance or awards for the
Property or the termination of any Lease, in each case received after
the date hereof;
(viii) reserves for billed accounts receivable, including
Rent and all other tenant charges, shall be calculated so that (A)
accounts receivable from Tenants in bankruptcy shall utilize a reserve
of 100%, (B) accounts receivable that are 90 days (but less than 120
days) past due shall utilize a reserve of 25%, and (C) accounts
receivable that are more than 120 days past due shall utilize a reserve
of 50%, and in each case accounts receivable shall also include a
reserve of five percent (5%) for unbilled tenant charges, and an
accrual shall be recorded for insurance deductibles based upon
insurance company estimates; and
(ix) any distribution made by Existing Venture during the
month of November shall be treated as though not made.
(b) If based on the Preliminary Proration Date Balance Sheet,
Closing Net Equity exceeds zero, the Contribution Amount will be increased by
the amount of such excess. If, based on the Preliminary Proration Date Balance
Sheet, Closing Net Equity is less than zero, the Company will receive a credit
against the Contribution Amount equal to the amount of such shortfall.
(c) If, based on the Proration Date Balance Sheet, Closing Net
Equity, adjusted for the amount of any adjustment made pursuant to Section
5.1(b), exceeds zero, the Company will, no later than the later of (i) sixty-one
(61) days following the delivery of the Proration Date Balance Sheet or (ii)
five (5) business days following the resolution of a dispute with respect to an
item on the Proration Date Balance Sheet as set forth in subsection 5.2 hereof
(the "Balance Sheet Settlement Date"), pay to Seller the amount of such excess
by wire transfer of immediately available funds to an account designated by
Seller. If Closing Net Equity, adjusted for the amount of any adjustment made
pursuant to Section 5.1(b), is less than zero, Seller will pay to the Company no
later than the Balance Sheet Settlement Date
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<PAGE> 14
the amount of such shortfall by wire transfer of immediately available funds to
an account designated by the Company.
(d) Seller shall use reasonable efforts to cause Existing
Manager to cooperate with and assist the Company in the preparation of the
Proration Date Balance Sheet.
5.2 Resolution of Disputes on Proration Date Balance Sheet.
(a) If Seller disagrees with any item on the Proration Date
Balance Sheet, Seller shall notify the Company in writing of such disagreement
within sixty (60) days after Seller's receipt of the Proration Date Balance
Sheet. Such notice shall set forth the basis for such disagreement in reasonable
detail. During such sixty (60) day period, the Company shall afford Seller and
its duly designated representatives access to all of the Existing Venture's
books and records, in each case solely for the purposes of resolving such
disagreement. The Company and Seller shall thereafter negotiate in good faith to
resolve any such disagreements, provided that Seller shall promptly pay to the
Company, or the Company shall promptly pay to Seller, as the case may be, the
amount determined pursuant to Section 5.1(c) that is not subject to dispute.
(b) If the Company and Seller are unable to resolve any such
disagreements within thirty (30) days after the expiration of the sixty (60) day
period referred to in Section 5.2(a), or, if the Company and Seller are unable
to resolve a dispute concerning the final adjustments to the Contribution
Amount, the Company and Seller shall cause Ernst & Young LLP (the "Auditor") to
resolve all disagreements on the disputed items as soon as practicable, provided
that the Auditor shall be bound by the provisions of Section 5.1 and may not
assign a value to any item greater than the greatest value for such item claimed
by either party or less than the smallest value for such item claimed by either
party. Each of the Company and Seller shall permit the Auditor to have full
access to its books, records, key employees and independent accountants in order
to resolve any such disagreements. The resolution of such disagreements by the
Auditor shall be final and binding on the Company and Seller. The fees and
expenses of the Auditor shall be paid by the party whose position is most at
variance with the decision of the Auditor.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
6.1. Seller's Representations and Warranties. Seller represents and
warrants to the Company as follows:
(a) Seller is an instrumentality of the State of New York,
validly existing under the laws of the State of New York with full power and
authority to execute, deliver and perform this Agreement.
(b) The execution, delivery and performance of this Agreement by
Seller have been duly and validly authorized by all necessary action on the part
of Seller. This Agreement has been, and the Seller Closing Documents will be,
duly executed and delivered by Seller or the Existing Venture , as applicable.
This Agreement constitutes, and when so executed and delivered the Seller
Closing Documents will constitute, the legal, valid and binding
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<PAGE> 15
obligations of Seller or the Existing Venture, as applicable, enforceable
against Seller or the Existing Venture, as applicable, in accordance with their
respective terms.
(c) None of the execution, delivery or performance of this
Agreement by Seller does or will, with or without the giving of notice, lapse of
time or both, violate, conflict with, constitute a default, result in a loss of
rights, acceleration of payments due or creation of any Lien upon the Property
or require the approval or waiver of or filing with any Person (including any
governmental body, agency or instrumentality) under (i) the organizational
documents of Seller or the Existing Venture, any agreement, instrument or other
document to which Seller or the Existing Venture is a party or by which it is
bound, (ii) any judgment, decree, order, statute, injunction, rule, regulation
or the like of a governmental unit applicable to the Property, the Existing
Venture, or Seller (other than notification of ownership change or transfer or
reissuance of permits as may be required under Environmental Laws), or (iii) any
contract or agreement by which Seller, or the Existing Venture may be bound.
(d) Seller has good and marketable title to Seller's Interest
free and clear of Liens and, upon execution and delivery of the Seller Closing
Documents, the Company will have good and marketable title to Seller's interest
free and clear of Liens other than Liens created by, under or through the
Company. No other property (other than the Real Property and property owned by
any Anchor) comprises "Carolina Place Mall".
(e) Schedule 6.1(e) is a true, correct and complete copy of the
rent roll of the Property (the "RENT ROLL") as of November 1, 1999, prepared in
the format prescribed by the MRI software reporting system currently in place at
the Property. All information therein is accurate as of its date. Except as set
forth to the contrary on Schedule 6.1(e), no Tenant has paid any rent in advance
except for the current month.
(f) Schedule 6.1(f) is a true, correct and complete schedule of
delinquencies in Rent, common area maintenance and other similar charges,
showing amounts payable as of November 1, 1999, by each Party, which schedule
sets forth separately and certifies the items of Rents with respect to which
each such Party is in arrears, the amount of each item and the period of such
arrearage.
(g) Schedule 6.1(g) contains a complete and correct list of all
existing Leases and modifications thereof and supplements thereto regardless of
whether the terms thereof have commenced, setting forth with respect to each (i)
the date thereof and of each modification thereof and supplement thereto and
(ii) the names of the Parties thereto (including the name of the current
assignee, if any, but only if and to the extent Seller has actual notice of any
such assignment). A true and complete copy of each Lease demising space in
excess of 10,000 square feet, together with each modification thereof and
supplement thereto, has heretofore been furnished to the Company for inspection
and has been delivered to the Company on the date hereof. Each Lease constitutes
the entire agreement between the Existing Venture or CPJV and each Party
thereto, and the Existing Venture and CPJV have not made any oral promises or
agreements amending or modifying the same. No Person is using or occupying (or
is entitled to use or occupy) the Real Property except under a Lease or the REA.
(i) There are no leases executed by the Existing Venture
or CPJV or other rights of occupancy or use granted by the Existing Venture or
CPJV or, to
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<PAGE> 16
Seller's knowledge, its predecessors in title of any portion of the Property
other than the Leases. Each of the Leases is valid and subsisting and in full
force and effect, and no Rents or other payments or deposits are held by Seller,
the Existing Venture or the Existing Venture's agent, except the security
deposits (together with the amount of accrued and unpaid interest thereon)
described on the Rent Roll and Rents prepaid for the current month. As of the
Closing Date, no Rents due under, or any other interest in, any of the Leases
will be assigned to any party other than the Existing Venture, or are otherwise
pledged or encumbered in any way. All Security Deposits are being, and have
been, held in compliance with all Legal Requirements.
(ii) Except as set forth on Schedule 6.1(g), no Tenant has
made any written claim which has been received by Seller, CPJV or the Existing
Venture or, to Seller's knowledge, has any other claim, whether or not in
writing (A) that either CPJV or the Existing Venture has defaulted in performing
any of its obligations under any of the Leases which has not heretofore been
cured, (B) that any condition exists which with the passage of time or giving of
notice, or both, would constitute any such default, (C) that such Tenant is
entitled to any reduction in, refund of, or counterclaim or offset against, or
is otherwise disputing, any Rents or other charges paid, payable or to become
payable by such Tenant, or (D) that such Tenant is entitled to cancel its Lease
or to be relieved of its operating covenants thereunder.
(iii) With the exception of delinquencies in the payment of
Rents which are set forth on Schedule 6.1(f), no material default exists under
any of the Leases on the part of the Tenant thereto and Seller has no knowledge
of any condition, which, with the passage of time, or giving of notice, would
constitute a default under any Lease. With the exception of any requirement to
repair any physical defects in the Property, the Existing Venture and CPJV are
not in default under the Leases. The Existing Venture and CPJV have not
delivered any default notices to any Tenant under any Lease which has not been
cured.
(iv) There are no rent abatements, offset rights, "free
rent periods" or other tenant concessions or inducements, including lease
assumptions or buy-outs, applicable to any of the Leases or any rights to extend
or renew any of such Leases except as set forth in the Leases. There are no
expansion rights, options or rights to renew, extend or terminate the Leases,
except as set forth in the Leases. Neither Seller, CPJV, nor the Existing
Venture have granted any rights, options or rights of first refusal of any kind
to any Tenant or otherwise, which are currently in effect, to purchase or to
otherwise acquire the Property or any part thereof or interest therein. All of
the improvements to be constructed by the landlord under each of the Leases, or
as required under any collateral agreement, plans or specifications related to
the Leases, have been fully completed in accordance with the terms thereof and
have been paid for.
(v) No condition exists that would permit any Party to
any Lease or REA to cancel or terminate such Lease or REA, be released from
liability from such Lease or REA or reduce its obligations under any Lease or
REA.
(vi) Neither Seller, CPJV nor the Existing Venture or any
Affiliate of any of the foregoing, has made a loan or otherwise extended any
credit to any Tenant.
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<PAGE> 17
(h) The REA constitutes the only reciprocal easement agreements
or operating agreements encumbering the Property. A true and complete copy of
the REA has heretofore been furnished to the Company, together with each written
modification thereof and supplement thereto. The REA constitutes the entire
agreement between the Existing Venture or CPJV and each REA Party thereto, and
neither Seller, CPJV nor the Existing Venture have made any oral promises or
agreements amending or modifying the same.
(i) The REA is valid and in full force and effect, and no
Rents or other payments or deposits are held by Seller, the Existing Venture or
Seller's agent, except the Rents prepaid for the current month. As of the
Closing Date, no Rents due under, or any other interest in, the REA will be
assigned to any party other than the Existing Venture, or are otherwise pledged
or encumbered in any way.
(ii) Except as set forth on Schedule 6.1(h), none of the
REA Parties has made any written claim which has been received by Seller, CPJV,
the Existing Venture or, to Seller's knowledge, has any other claim, whether or
not in writing (A) that CPJV or the Existing Venture has defaulted in performing
any of its obligations under any of the REAs which has not heretofore been
cured, (B) that any condition exists which with the passage of time or giving of
notice, or both, would constitute any such default, (C) that such REA Party is
entitled to any reduction in, refund of, or counterclaim or offset against, or
is otherwise disputing, any Rents or other charges paid, payable or to become
payable by such REA Party, (D) that such REA Party is entitled to cancel its REA
or to be relieved of its operating covenants thereunder, or (E) that there is a
violation of any of the covenants, conditions or restrictions contained in such
REA.
(iii) With the exception of delinquencies in the payment of
Rents which are set forth on Schedule 6.1(f), no material default exists under
the REA on the part of the REA Parties thereto and, Seller has no knowledge of
any condition which, with the passage of time or giving of notice, would
constitute a default under any REA. With the exception of any requirement to
repair any physical defects in the Property, the Existing Venture and CPJV are
not in default under the REA. The Existing Venture and CPJV have not delivered
any default notices to any party under the REA which has not been cured.
(iv) There are no rent abatements, offset rights, "free
rent periods" or other concessions or inducements, including lease assumptions
or buy-outs, applicable to the REA or any rights to extend or renew the REA
except as set forth in Schedule 6.1(h) or the REA. There are no options or
rights to renew, extend, expand or terminate the REA, except as set forth in
Schedule 6.1(h). Except as set forth in Schedule 6.1(h), neither Seller, CPJV
nor the Existing Venture have granted any rights, options or rights of first
refusal of any kind to any of the REA Parties, which are currently in effect, to
purchase or to otherwise acquire the Property or any part thereof or interest
therein. All of the improvements to be constructed by the developer or owner
under the REA, or as required under any collateral agreement, plans or
specifications related to the REA, have been fully completed in accordance with
the terms thereof and paid for. No party to any REA has given notice that it has
ceased or that it intends to cease operating its store or other property that it
is required to operate under the REA.
(i) Each of the Contracts is in full force and effect. To
Seller's knowledge, there have been no material defaults by any Party to a
Contract which have not
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<PAGE> 18
heretofore been cured. There has been no material default (without giving effect
to any notice and cure rights) by CPJV or the Existing Venture under any
Contract or any claim received by Seller, CPJV or the Existing Venture of any
such default by any party thereto, which has not heretofore been cured except as
set forth on Schedule 6.1(i)(a). Except as set forth on Schedule 6.1(i)(b), all
of the Contracts are terminable upon notice given sixty (60) days or less before
any such termination, without penalty, fee or cost. A true and complete copy of
each Contract listed on Schedule 6.1(i)(b), together with any modifications,
amendments or supplements thereto, has been delivered or made available to the
Company.
(j) Schedule 6.1(j) contains a list of all permits,
authorizations, approvals and licenses currently maintained with respect to the
Property and all such permits, authorizations, approvals and licenses are in
full force and effect. Neither Seller, CPJV nor the Existing Venture have
received any written notice of violation from any federal, state or municipal
entity with respect to the Property or in connection with the operations
conducted thereon that has not been cured or otherwise resolved to the
satisfaction of such governmental entity. To Seller's knowledge, the permits,
authorizations, approvals and licenses listed on Schedule 6.1(j) are all of the
licenses and permits which are required for the present use of the Property.
(k) Except as disclosed in the Phase I Environmental Assessment
delivered to the Company, and except for non-friable asbestos and as set forth
on Schedule 6.1(k), neither Seller, CPJV, the Existing Venture nor to Seller's
knowledge, any other Person has caused or permitted any Hazardous Material to be
maintained, disposed of, stored, treated, recycled, brought upon, transported
over, released or generated on, under or at the Property or any part thereof or
any real property adjacent thereto, except for the presence, maintenance,
storage, use or transportation of substances commonly present or stored at or
used in the ordinary operation and maintenance of shopping centers in ordinary
quantities commonly present, stored or used at shopping centers and in
compliance with applicable laws, including Environmental Laws. Except as
disclosed in the Phase I Environmental assessment delivered to the Company,
there has been no release or threatened release of any Hazardous Materials at
the Property or any part thereof that will give rise to any obligation or
liability to conduct or pay for any investigation, removal, remediation,
monitoring, closure, or post-closure care at, on or under the Property or any
part thereof, nor has any release or threatened release of Hazardous Material
at, on or under the Property or any part thereof or with respect to any offsite
location to which Hazardous Material have, or are alleged to have, migrated or
been transported from the Property or any part thereof. Except as disclosed in
the Phase I Environmental Assessment delivered to the Company, Seller, CPJV and
the Existing Venture are in compliance with, and have heretofore complied with,
all applicable Environmental Laws with respect to the Property and as of the
date hereof there are no violation of applicable Environmental Laws at the
Property which have not been remediated in accordance with all applicable
Environmental Laws. Neither Seller, CPJV nor the Existing Venture have received
any written notice from any governmental unit or other person that it or the
Property is not in compliance with any Environmental Law or that it has any
liability with respect thereto and there are no administrative, regulatory or
judicial proceedings pending or, to the knowledge of Seller, threatened with
respect to the Property pursuant to, or alleging any violation of, or liability
under any Environmental Law. Except as set forth on Schedule 6.1(k), neither
Seller, CPJV nor the Existing Venture have installed any underground or above
ground storage tanks on, under or about the Property and, no such tanks are
located on, under or about the Property.
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<PAGE> 19
(l) Except as set forth on Schedule 6.1(l), the Existing Venture
and CPJV are under no obligation to make contributions or otherwise provide
assistance to any promotional association or promotional fund and has not
customarily in the past made or provided any such contributions or assistance.
The promotional association established with respect to the Property (the
"PROMOTIONAL ASSOCIATION") is an independent association established by and on
behalf of the Tenants, Seller and the Existing Venture having no ownership,
management, fiduciary or monetary interest of any kind therein. Seller, CPJV
and/or the Existing Venture has remitted to the Promotional Association any
amounts received by it from Tenants and other Parties that constitute
contributions to the Promotional Association. Seller, CPJV and/or the Existing
Venture, as the case may be, has made all required payments to any such
Promotional Association or fund, if any.
(m) Except as provided in Schedule 6.1(m), there is no
litigation, including any arbitration, investigation or other proceeding by or
before any court, arbitrator or governmental or regulatory official, body or
authority which is pending or, to Seller's knowledge, threatened against Seller,
CPJV or the Existing Venture relating to the Property, Seller's Interest or the
Transactions, there are no unsatisfied arbitration awards or judicial orders
against CPJV, the Existing Venture and, to Seller's knowledge, there is no basis
for any such arbitration, investigation or other proceeding. Copies of all
pleadings and other documents furnished or made available by Seller to the
Company with respect to the litigation described on Schedule 6.1(m) are true,
accurate and complete in all respects.
(n) No condemnation proceeding or other proceeding or action in
the nature of eminent domain is pending with respect to all or any part of the
Property, and, to Seller's knowledge, no condemnation proceeding or other
proceeding or action in the nature of eminent domain is pending with respect to
any property owned by a Party to the REA which is the subject of such REA and to
Seller's knowledge no Taking is threatened with respect to all or any part of
the Property, or any property owned by a Party to the REA which is the subject
of such REA.
(o) True, correct and complete copies of current real estate tax
bills with respect to the Property, other than tax bills sent to Tenants who
have the obligation to pay such taxes to the collecting authority, have been
delivered or made available to the Company. No portion of the Property comprises
part of a tax parcel which includes property other than property comprising all
or a portion of the Property. No application or proceeding is pending with
respect to a reduction or an increase of such taxes. There are no tax refund
proceedings relating to the Property which are currently pending and neither
Seller, CPJV nor the Existing Venture, nor any Affiliate thereof has applied for
any such reduction. Seller has no knowledge of any special tax or assessment to
be levied against the Property or any change in the tax assessment of the
Property other than the annual assessment. Neither Seller, CPJV nor the Existing
Venture has received written notice of any, or has any knowledge of any special
assessments currently affecting the Property.
(p) Neither Seller, CPJV nor the Existing Venture have received
(i) any written notice from any governmental authority having jurisdiction over
the Property of, and to Seller's knowledge there does not exist, (A) any
violation of any law, ordinance, order or regulation (including the ADA)
affecting the Property, or any portion thereof, which has not heretofore been
complied with or (B) any other obligation to any such governmental authority for
the performance of any capital improvements or other work to be performed by
Seller, CPJV
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<PAGE> 20
or the Existing Venture in or about the Property or donations of monies or land
(other than general real property taxes) which has not been completely performed
and paid for; or (ii) any written notice from any insurance company, insurance
rating organization or Board of Fire Underwriters requiring any alterations,
improvements or changes at the Property, or any portion thereof, which has not
heretofore been complied with.
(q) No approval, consent, waiver, filing, registration or
qualification with any third party, including any governmental bodies, agencies
or instrumentalities is required to be made, obtained or given for the
execution, delivery and performance of this Agreement or any of the Seller
Closing Documents by Seller, CPJV, the Existing Venture or the consummation of
the Transactions (other than notification of ownership change or transfer or
reissuance of permits as may be required under Environmental Laws).
(r) The Existing Venture is a limited liability company duly
formed, validly existing and in good standing under the laws of the State of
Delaware with full power and authority to own the Property and conduct the
business now being conducted by it.
(s) [Intentionally Deleted]
(t) [Intentionally Deleted]
(u) [Intentionally Deleted]
(v) Seller has furnished the Company with the financial
statements of CPJV or the Existing Venture (consisting of balance sheets and
income statements) as of, and for the calendar years ended, December 31, 1997
and December 31, 1998 (the " FINANCIAL STATEMENTS"). The Financial Statements
are consistent with the books and records and accounts of CPJV and the Existing
Venture and fairly present the financial condition and results of CPJV and the
Existing Venture as of the dates thereof and for the periods referred to
therein, and the Financial Statements have been prepared in accordance with
generally accepted accounting principles, consistently applied throughout the
periods indicated. Since December 31, 1998, CPJV or the Existing Venture has
conducted its business in the ordinary course consistent with past practice and
there have been no material adverse changes in the financial condition of the
business, and Seller has no knowledge of any circumstance or event which,
insofar as can be reasonably foreseen, is likely to result in any such material
adverse change.
(w) [Intentionally Deleted].
(x) [Intentionally Deleted].
(y) Schedule 6.1(y) contains a true, complete and accurate list
including the amounts thereof of all policies of insurance with respect to the
Property, which policies are and will be kept in full force to and including the
Closing Date. All premiums for such insurance have been paid in full. To
Seller's knowledge, neither Seller, CPJV nor the Existing Venture have
performed, permitted or suffered any act or omission which would cause the
insurance coverage provided in said policies to be reduced, cancelled, denied or
disputed and neither Seller, CPJV nor the Existing Venture have received (and
has no knowledge of) any notice or request from any insurance company or Board
of Fire Underwriters (or organization
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<PAGE> 21
exercising functions similar thereto) canceling or threatening to cancel any of
said policies or denying or disputing coverage thereunder.
(z) To Seller's knowledge, there are no material structural or
other material physical defects in the Improvements or any component or system
of the Improvements and all such Improvements are in good condition and repair.
(aa) Neither Seller nor, to Seller's knowledge, CPJV or the
Existing Venture has received notice that there is, and, to Seller's knowledge,
there does not now exist, any violation of any restriction, condition or
agreement contained in any easement, restrictive covenant or any similar
instrument or agreement affecting the Real Property or any portion thereof.
(bb) The Existing Venture has no employees. There are no
collective bargaining or union agreements with respect to the employees at the
Property or to which Seller, CPJV or the Existing Venture is bound. The Existing
Venture does not maintain or sponsor any employee benefit plan, including any
plans subject to the Employer Retirement Income Security Act of 1974, as
amended. There are no pending claims or, to Seller's knowledge, any threatened
claim against CPJV or the Existing Venture by any employee whose employment is
related to the Property.
(cc) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Seller.
(dd) [Intentionally Deleted].
(ee) All material documents and Books and Records have been
delivered or have been made available to the Company. All of the documents and
Books and Records that have been delivered or made available to the Company by
or on behalf of Seller, are true, correct and complete copies of what they
purport to be and have not been modified or amended, except as specifically
noted therein. All information set forth in the exhibits and schedules to this
Agreement is true, correct and complete in all material respects and not
misleading. Seller does not have any knowledge of any significant adverse fact
or condition relating to the Property, which has not been specifically disclosed
in writing by Seller to the Company.
(ff) There are no lease brokerage agreements, leasing commission
agreements or other agreements providing for payments of any amounts for leasing
activities or procuring tenants (including renewing leases at expanding spaces)
with respect to the Property other than as disclosed in Schedule 6.1(ff).
(gg) Schedule 1.1-2 attached hereto contains a true, correct and
complete description of the Personalty (including the name "Carolina Place
Mall"), and except as disclosed on said Schedule 1.1-2, the Existing Venture has
good title to the Personalty free and clear from Liens and other encumbrances
other than the Permitted Exceptions. The Personalty is all of the personal
property that is necessary in order to operate and maintain the Real Property as
a first class regional shopping center. The Existing Venture or CPJV has
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<PAGE> 22
taken all steps necessary in order to protect its exclusive right to use the
name "Carolina Place Mall" in connection with the Real Property.
(hh) As of November 1, 1999, (i) gift certificates having an
aggregate value of N/A have been sold, and (ii) gift certificates having an
aggregate value of N/A are outstanding (program administered by third party
contractor).
(ii) Except as set forth in Schedule 6.1(dd) attached hereto,
neither Seller, nor any Affiliate of Seller (other than the Existing Venture),
owns (i) any right or interest in any real property adjacent to or neighboring
the Real Property including any outparcel or (ii) any right or interest in any
easement, right of way, development right, water or mineral right or any other
right which in any way affects the Real Property.
(jj) Except for routine work in the ordinary course of operating
the Real Property that will be paid when due, no work has been performed by
Seller or is in progress at Seller's request at the Real Property, and no
materials or supplies have been delivered to the Real Property at Seller's
request, that has resulted in the imposition of, or might provide the basis for
the imposition of, mechanics', materialmen's or other liens against the Real
Property.
(kk) The sales reports heretofore furnished by Seller to the
Company for calendar years 1996, 1997 and 1998, and the rolling twelve (12)
months sales report from March 1999, disclose the sales by Tenants at the Retail
Property as reported to Seller by such Tenants.
(ll) All water, storm sewer/sanitary sewer, gas, electricity,
telephone and other utility lines, pipes and other equipment necessary in order
to operate the Real Property as a first class regional shopping center
(collectively, the "Utility Equipment") presently serve the Real Property and to
Seller's knowledge, are in good working order. Neither Seller, CPJV nor the
Existing Venture, has any outstanding unpaid obligation to pay the cost of
connection of any utility lines, pipes or other equipment serving the Real
Property.
(mm) The Real Property has not suffered any casualty or other
material damage that has not been fully repaired.
(nn) To Seller's knowledge, all HVAC, electric, gas, fire-safety,
plumbing, mechanical and other systems at the Real Property are in good, working
condition and no portion of same presently require replacement or significant
repair (i.e., repairs which are ordinarily capitalized under generally accepted
accounting principles).
(oo) Except as disclosed on Schedule 6.1(oo) attached hereto, no
capital work is currently in progress or contemplated.
(pp) Neither Seller, CPJV nor the Existing Venture, has received
written notice from any Governmental Authority, from any Party to any REA, any
Tenant or any party to any other agreement or document, or otherwise has
knowledge, that the number of parking spaces at the Real Property is required
under any Legal Requirement, any Lease, or the REA, to be increased above the
number of parking spaces existing on the date hereof.
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<PAGE> 23
(qq) CPJV and the Existing Venture have (i) filed all tax returns
required to be filed under applicable Legal Requirements and (ii) timely paid
all taxes shown to be due and payable on such tax returns.
(rr) Seller has no knowledge of any defects, liens, encumbrances,
adverse claims or other matters to be insured against under the Title Policy
(collectively, the "Insured Matters") that could result in the issuer of the
Title Policy denying its liability to the Company on the grounds that the
Existing Venture or the Company had knowledge of any such Insured Matters solely
by reason of notice thereof imputed to it as a matter of law through either
Seller, the Existing Venture or any Affiliate thereof.
(ss) Except as set forth on Schedule 6.1(ss), neither Seller,
CPJV nor the Existing Venture has received any written notice with respect to
the Real Property of any violation of law or municipal ordinances, orders or
requirements, that have been noted in or issued by any federal, state or
municipal department having jurisdiction, and which have not been fully remedied
and discharged of record.
(tt) To Seller's knowledge, Seller has provided the Company with
access to any and all certificates, licenses, permits, leases, ground leases,
operating agreements, books, records, documents and information relating to the
Real Property and the ownership and operation thereof which are in the
possession and control of Seller or the Existing Venture.
(uu) Seller is the owner of 100% of the membership interests in
the Existing Venture. No other Person has any option or other right to acquire
Seller's Interest, any portion thereof or any other equity interest in Seller's
Interest or any security or instrument convertible into any such equity
interest.
Notwithstanding anything to the contrary contained herein, (a)
Seller shall have no liability under this Agreement for the cost of repair,
remediation or correction of any physical defect in the Property except as a
result of a breach of the representations and warranties contained in Sections
6.1(k), (z), (mm) and (nn) (but nothing contained in this paragraph shall limit
Seller's liability for damages or fines or other amounts owing to Parties,
Governmental Authorities or others on account of any such physical defect to the
extent that such damages, fines or other amounts are not for the cost of repair,
remediation or correction thereof, and (b) Seller shall have no liability for a
breach of representation or warranty contained herein or in the Closing
Documents to the extent that the Company has received a credit therefor under
the provisions of Article V.
6.2. Company Representations and Warranties. The Company represents
and warrants to Seller as follows:
(a) The Company is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware
with full right, power and authority to execute, deliver and perform this
Agreement.
(b) The execution, delivery and performance by the Company of
this Agreement have been duly and validly authorized by all requisite action on
the part of the Company. This Agreement has been, and the Company Closing
Documents will be, duly
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<PAGE> 24
executed and delivered by the Company. This Agreement constitutes, and when so
executed and delivered the Company Closing Documents will constitute, the legal,
valid and binding obligations of the Company, enforceable against it in
accordance with their terms.
(c) None of the execution, delivery or performance of this
Agreement or the Company Closing Documents by the Company does or will, with or
without the giving of notice, lapse of time or both, violate, conflict with,
constitute a default or result in a loss of rights under or require the approval
or waiver of or filing with any Person (including any governmental body, agency
or instrumentality) under (i) the organizational documents of the Company or any
material agreement, instrument or other document to which the Company is a party
or by which the Company is bound or (ii) any judgment, decree, order, statute,
injunction, rule, regulation or the like of a governmental unit applicable to
the Company, other than notification of ownership change or transfer or
reissuance of permits as may be required under Environmental Laws.
(d) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of the
Company.
6.3. No Other Representations . Neither Seller nor any officer,
director, shareholder, member, agent, partner, employee, or representative of
Seller (or any officer, director, partner or employee of any agent of Seller)
has made any representation whatsoever regarding the Property or any part
thereof, or anything relating to the subject matter of this Agreement, except as
expressly set forth in this Agreement, and the Company, in executing, delivering
and performing this Agreement, has not and does not rely upon any statement,
information, or representation to whomsoever made or given, whether to the
Company or others, and whether directly or indirectly, verbally or in writing,
made by any person, firm or corporation, except as expressly set forth in this
Agreement or in the Seller Closing Documents.
6.4. Knowledge Defined. For the purposes of this Agreement,
"knowledge" (including "actual knowledge" and other similar terms) with respect
to Seller, CPJV and the Existing Venture shall mean matters as to which any of
the following individuals have actual knowledge without any duty or
responsibility to make any inquiry, review or investigation: (i) Jeffrey
Barkley, (ii) Robert P. Neiffer, Jr., (iii) Frank Sullivan, (iv) Vicki Kahn, (v)
Marjorie Tsang and (vi) Yvonne Nelson. Actual knowledge shall not be deemed to
exist merely by assertion by the Company of a claim that any of the foregoing
persons should have known of such facts or circumstances, if such person did not
have actual knowledge thereof. Seller hereby represents and warrants that the
foregoing individuals are the individuals with the primary responsibility for
overseeing the sale, management, and operation of the Property at the level of
vice president and above.
ARTICLE VII.
ADDITIONAL COVENANTS
7.1. Record Retention. Until three (3) years after the Closing, the
Company shall provide Seller upon prior written notice and during normal
business hours with reasonable access to the Books and Records and, at Seller's
cost, copies of all or any portion thereof. The Company either shall retain such
Books and Records until the third anniversary of the date
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<PAGE> 25
hereof or notify Seller of its desire to dispose of such Books and Records
pertaining to any period prior to the Closing which have been delivered to the
Company and turn them over to Seller if Seller so requests. Seller agrees to
keep, and to instruct its agents, employees and representatives to keep,
confidential such Books and Records (and any information contained therein) and
any information discovered in any such examinations and inspections, except in
connection with any legal proceedings or to the extent required by law. Upon the
Company's request, for a period of three (3) years after the Closing, Seller
shall make all of Seller's records with respect to the Property which are in the
possession or control of Seller available to the Company for inspection, copying
and audit by the Company's designated accountants. The provisions of this
Section 7.1 shall survive Closing.
7.2. Publicity. In no event shall either Seller or the Company issue
any press release or otherwise disclose any non-public information regarding
this Agreement or the Transactions unless the other party has consented thereto
in writing as to the form and substance of any such statement or disclosure (and
Seller and the Company agree not unreasonably to withhold, condition or delay
such consent); provided, however, that nothing herein shall be deemed to limit
or impair in any way any party's ability to disclose the details of or
information concerning this Agreement or the Transactions to the extent
necessary to such party's attorneys, accountants or other advisors or to the
extent such party reasonably deems necessary or desirable pursuant to any court
or governmental order or applicable securities laws or regulations or financial
reporting requirements, or to obtain the Existing Indebtedness Consent
Documents. Further, to the extent necessary, either party may disclose any
information regarding this Agreement or the Transactions to its direct or
indirect constituent partners, members or shareholders, as the case may be (and
to counsel for such constituent partners, members and shareholders) and as
otherwise necessary to comply with the terms of this Agreement. Any disclosure
by a party's advisors or direct or indirect constituent partners, members or
shareholders shall be deemed a breach hereof by such party. If for any reason
this Transaction is not consummated, the Company will promptly return to Seller
all originals and copies of documents, reports and financial and other
information relating to the Property and to Seller which Seller has furnished to
the Company. The obligations of Seller and the Company under this Section 7.2
shall survive the termination hereof, however caused.
7.3. Assistance Following Closing. From and after the Closing, Seller
at the Company's reasonable expense shall provide reasonable assistance to the
Company in connection with the preparation of financial statements and bills and
the adjustment of losses and claims and the enforcement or settlement of any
such claims. Without limiting the foregoing, Seller shall, upon the reasonable
request of the Company from time to time, provide signed representation letters
with respect to revenues and expenses of Seller if required under GAAS to enable
the Company's accountants to render an opinion on the Company's financial
statements.
7.4. Further Assurances. Each of Seller and the Company agree, at any
time and from time to time after the Closing, to execute, acknowledge where
appropriate and deliver such further instruments and other documents (and to
bear its own costs and expenses incidental thereto) and to take such other
actions as the other of them may reasonably request in order to carry out the
intent and purpose of this Agreement; provided, however, that neither Seller nor
the Company shall be obligated, pursuant to this Section 7.4 to incur any
expense of a material nature and/or to incur any material obligations in
addition to those set forth in this Agreement and/or its respective Closing
Documents.
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<PAGE> 26
7.5. NO INTERCOMPANY ACCOUNTS. Prior to the Closing, Seller shall pay,
distribute, release or otherwise eliminate any and all intercompany debt or
accounts between the Existing Venture and Seller or any Affiliate of Seller.
ARTICLE VIII.
INDEMNIFICATION
8.1. Indemnification by Seller. From and after the Closing, Seller
shall indemnify, defend and hold harmless the Company and its members, officers,
directors, managers, employees, representatives and agents, and any direct or
indirect partner, shareholder, officer, director or member of any member of the
Company, and their respective successors and assigns (collectively, the
"INDEMNIFIED COMPANY PERSONS") from and against any Losses asserted against,
incurred or suffered by any Indemnified Company Person that results from,
relates to or arises out of (a) the breach or inaccuracy of any representation
or warranty made by Seller in this Agreement or the Seller Closing Documents,
(b) the breach or non-fulfillment by Seller of any of the covenants or
agreements of Seller under this Agreement or the Seller Closing Documents, or
(c) Seller's Liabilities.
8.2. Indemnification by the Company. From and after the Closing, the
Company shall indemnify, defend and hold harmless Seller and its direct or
indirect shareholders, directors, officers, members, partners employees and
agents, and their respective successors and assigns (collectively the
"INDEMNIFIED SELLER PERSONS") from and against any Losses asserted against,
incurred or suffered by any Indemnified Seller Person that results from, relates
to or arises out of (a) the breach or inaccuracy of any representation or
warranty made by the Company in this Agreement or the Company Closing Documents,
(b) the breach or non-fulfillment by the Company of any of the covenants or
agreements of the Company under this Agreement or the Company Closing Documents,
or (c) the Assumed Liabilities.
8.3. Indemnification Procedure.
(a) Subject to the provisions of Section 8.3(d), the indemnified
party (the "INDEMNIFIED PARTY") shall give the indemnifying party (the
"INDEMNIFYING PARTY") prompt notice of any Losses (or potential Losses) which
may be covered under this Article VIII and such notice shall state the basis for
the claim, action or proceeding and the amount thereof (to the extent such
amount is determinable at the time when such notice is given). In the event the
notice relates to a claim, assertion, action, suit or proceeding by a
third-party ("THIRD PARTY CLAIM") for which indemnification is provided
hereunder, the Indemnified Party shall permit the Indemnifying Party (or its
insurance company) to assume the defense of such claim, assertion, action, suit
or proceeding and the Indemnifying Party (or its insurance company) may (i)
prior to the commencement of any proceedings in connection with such Losses,
undertake the negotiation of any resolution of the dispute relating to such
Losses, including in accordance with the terms hereof any settlement or release,
or (ii) undertake the defense of any proceeding (including any alternative
dispute resolution proceeding) regarding such Losses by selecting legal counsel
who shall be reasonably acceptable to the Indemnified Party. Failure of the
Indemnifying Party to notify an Indemnified Party of its election to undertake
the Indemnified Party's defense of a Third Party Claim within a reasonable time,
but in no event more than thirty (30) days after notice thereof shall have been
given to the Indemnifying Party, shall be deemed a waiver by the Indemnifying
Party of its right to undertake the defense of such Third Party
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<PAGE> 27
Claim. Willkie Farr & Gallagher, Neal, Gerber & Eisenberg and counsel for the
Indemnifying Party's insurance company shall be deemed reasonably acceptable to
the Indemnified Party.
(b) Provided the Indemnifying Party shall have undertaken the
Indemnified Party's defense of a Third Party Claim with legal counsel reasonably
acceptable to the Indemnified Party, and shall have so notified the Indemnified
Party, the Indemnified Party shall be entitled to participate at its own expense
in the aforesaid negotiation or defense of any claim relating to such Losses
(subject to reimbursement to the limited extent provided in Section 8.3(e)), but
such negotiations or defense shall be controlled by counsel to the Indemnifying
Party.
(c) EXCEPT AS PROVIDED IN SECTION 8.3(E), the Indemnifying Party
shall not be liable for payments relating to the resolution of any dispute or
any settlement of any litigation or proceeding effected without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld, conditioned or delayed. The Indemnifying Party shall not, in the
defense of any such Third Party Claim, consent to the entry of any judgment or
award, or enter into any settlement, except in either event with the prior
consent of each Indemnified Party, which consent shall not be unreasonably
withheld, conditioned or delayed. To the extent any Indemnified Party declines
to consent to a bona fide offer of settlement or compromise, the Indemnifying
Party shall continue to defend, but the amount of such offer shall be the limit
of the Indemnifying Party's liability with respect to such claim, action or
proceeding with respect to the Indemnified Party that declined such offer.
Notwithstanding the foregoing, the Indemnifying Party shall not, without the
Indemnified Party's written consent, (which consent may be withheld in the sole
and absolute discretion of the Indemnified Party) resolve any dispute or settle
or compromise any claim regarding Losses from a Third Party Claim or consent to
entry of any judgment which would impose an injunction or other equitable relief
upon the Indemnified Party or which does not include as an unconditional term
thereof the release by the claimant or the plaintiff of the Indemnified Party
from all liability in respect of any such Losses.
(d) The failure to give notice of a claim under this Article
VIII shall not release the Indemnifying Party of its obligations under this
Article VIII, except to the extent of the actual harm suffered thereby.
(e) In the event the Indemnifying Party fails after notice from
the Indemnified Party to timely undertake negotiation of any dispute or defend,
contest or otherwise protect against any claim or suit with respect to a Third
Party Claim, and to so notify the Indemnified Party, the Indemnified Party may,
but will not be obligated to, defend, contest or otherwise protect against the
same, and make any compromise or settlement thereof and recover the entire costs
thereof from the Indemnifying Party, including reasonable attorneys' and
experts' fees, disbursements and all amounts paid as a result of such claim or
suit or the compromise or settlement thereof. The Indemnified Party shall
cooperate and provide such assistance as the Indemnifying Party may reasonably
request in connection with the negotiation of any dispute and the defense of the
matter subject to indemnification and the Indemnifying Party shall reimburse the
Indemnified Party's reasonable costs incurred thereafter in connection with such
cooperation and assistance.
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<PAGE> 28
(f) Notwithstanding anything to the contrary contained herein,
neither Seller nor the Company shall be entitled to indemnification hereunder
for any Losses to the extent it has received a credit therefor pursuant to
Article V.
ARTICLE IX.
MISCELLANEOUS
9.1. Survival. Except for the representations and warranties of Seller
set forth in Section 6.1(k),which representations and warranties and the
indemnification provisions relating thereto shall survive Closing indefinitely,
all other warranties, representations, covenants and agreements of Seller and of
the Company set forth in this Agreement shall survive until the Company ceases
to exist under the terms of the Operating Agreement.
9.2. Notices. Notices must be in writing and sent to the party to whom
or to which such notice is being sent, by (a) certified or registered mail,
postage prepaid and return receipt requested, (b) commercial overnight courier
service, or (c) delivered by hand with receipt acknowledged in writing, as
follows:
To the Company:
GGP/Homart II L.L.C.
110 North Wacker Drive
Chicago, Illinois 60606
Attention: Matthew Bucksbaum
with a copy thereof to:
The Comptroller of the State of New York
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Deputy Comptroller
Investments and Cash Management
and
The Comptroller of the State of New York
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Counsel
and
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6097
Attention: Monty Davis
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<PAGE> 29
and
Clarion Partners
335 Madison Avenue
New York, New York 10017
Attn: Jeffrey A. Barclay
and
Neal, Gerber & Eisenberg
Two North LaSalle Street, Suite 2200
Chicago, Illinois 60602
Attention: Marshall E. Eisenberg
To Seller:
The Comptroller of the State of New York
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Deputy Comptroller
Investments and Cash Management
with a copy to
The Comptroller of the State of New York
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Counsel
and
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6097
Attention: Monty Davis
and
Clarion Partners
335 Madison Avenue
New York, New York 10017
Attn: Jeffrey A. Barclay
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<PAGE> 30
All notices (i) shall be deemed given when received if delivered by hand or
overnight courier service or, if mailed as described above with appropriate
postage, after 5 business days and (ii) may be given either by a party or by
such party's attorneys. The cost of delivery shall be borne by the party
delivering the notice.
9.3. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute a single document when at least one counterpart has been executed and
delivered by each party hereto.
9.4. Amendments. Except as otherwise provided herein, this Agreement
may not be changed, modified, supplemented or terminated, except by an
instrument executed by the party hereto which is or will be affected by the
terms of such change, modification, supplement or termination.
9.5. Waiver. Each party shall have the right exercisable in its sole
and absolute discretion, but under no circumstances shall be obligated, to waive
or defer compliance by any other party with its obligations hereunder or to
waive satisfaction of any conditions contained herein for its benefit. No waiver
by any party of a breach of any covenant or a failure to satisfy any condition
shall be deemed a waiver of any other or subsequent breach or failure to satisfy
any other condition. All waivers of any term, breach or condition hereof must be
in writing.
9.6. Successors and Assigns. Subject to the provisions of Section 9.10
, the terms, covenants, agreements, conditions, representations and warranties
contained in this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
9.7. Third Party Beneficiaries. The provisions of this Agreement are
made for the benefit of the parties hereto, and their respective successors in
interest and assigns and are not intended for, and may not be enforced by, any
other person or entity.
9.8. Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
9.9. Governing Law. This Agreement has been made pursuant to and shall
be governed by the laws of the State of Delaware (without regard to conflicts of
law rules).
9.10. Assignment. This Agreement may not be assigned or delegated by
any party without the written consent of the other except that the Company may
assign this Agreement to an Affiliate of the Company, it being acknowledged and
agreed by the Company that no such assignment shall relieve the Company of its
obligations under this Agreement.
9.11. Headings; Exhibits. The headings or captions of the various
Articles and Sections of this Agreement have been inserted solely for purposes
of convenience, are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
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<PAGE> 31
9.12. Gender and Number. Words of any gender shall include the other
gender and the neuter. Whenever the singular is used, the same shall include the
plural wherever appropriate, and whenever the plural is used, the same also
shall include the singular where appropriate.
9.13. Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes any
prior written or oral understandings and/or agreement among them with respect
thereto.
9.14. Costs of Enforcement. In the event that any action is brought by
any party or parties to this Agreement against any other party or parties to
enforce rights under this Agreement, the prevailing party's or parties' costs in
such action, including reasonable attorneys' fees, shall be paid by the other
party or parties. Any amounts owing hereunder which are not paid when due shall
bear interest at the per annum rate equal to the prime rate of Bank of America,
N.A. (or any successor), as the same may change from time to time, plus four
percent.
9.15. Time of the Essence. Time is of the essence with regard to each
provision of this Agreement. If the final date of any period provided for herein
for the performance of an obligation or for the taking of any action falls on a
Saturday, Sunday or banking holiday, then the time of that period shall be
deemed extended to the next day which is not a Sunday, Saturday or banking
holiday. Each and every day described herein shall be deemed to end at 5:00 p.m.
Central Time.
9.16. Indemnification Against Broker Claims. Seller shall indemnify,
defend and hold harmless the Company from and against all loss, liability,
damages, costs and expenses (including reasonable counsel fees) resulting from
any claim that may be made by any broker or other person claiming to have dealt
with Seller in connection with the Transactions, for a commission, fee or other
compensation by reason of the Transactions including any loss, liability, costs
and expenses (including reasonable counsel fees) incurred in enforcing this
indemnity. The Company shall indemnify, defend and hold harmless Seller from all
loss, liability, costs and expenses (including reasonable counsel fees)
resulting from any claim that may be made by any broker or other person claiming
a commission, fee or other compensation by reason of having dealt with the
Company in connection with the Transactions, including any loss, liability,
costs and expenses (including reasonable counsel fees) incurred in enforcing
this indemnity. The provisions of this Section 9.16 shall survive the Closing or
termination of this Agreement.
9.16.1. Arbitration. Except as otherwise provided herein, in the event
of any dispute in connection with the terms and provisions of this Agreement,
the parties agree to submit such dispute to arbitration in accordance with the
provisions of Section 14.13 of the Operating Agreement.
<PAGE> 32
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on the day and year first above written.
SELLER: COMPANY:
THE COMPTROLLER OF THE STATE OF GGP/HOMART II L.L.C.,
NEW YORK AS TRUSTEE OF THE a Delaware limited
COMMON RETIREMENT FUND liability company
By: /s/ John E. Hull By: /s/ Joel Bayer
------------------------------ -------------------------
Name: John E. Hull Name: Joel Bayer
Title: Deputy Comptroller of Title: Senior Vice President
Investments & Cash Management
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<PAGE> 33
Contrib-Carolina.DOC
LIST OF EXHIBITS AND SCHEDULES
Exhibits/Schedule Description
Exhibit A Legal Description of the Land
Exhibit B Permitted Exceptions
Schedule 1.1-1 Anchors
Schedule 1.1-2 Personalty
Schedule 6.1(e) Rent Roll
Schedule 6.1(f) Schedule of Arrearages
Schedule 6.1(g) Leases
Schedule 6.1(h) Claims under REA
Schedule 6.1(i) (a) List of all Contracts
Schedule 6.1(i) (b) List of all Contracts not terminable on 60 days
or less notice
Schedule 6.1(j) Permits and Licenses
Schedule 6.1(k) Environmental Disclosure
Schedule 6.1(l) Promotional Association Matters
Schedule 6.1(m) Pending or Threatened litigation
Schedule 6.1(x) List of Existing Indebtedness Documents
Schedule 6.1(y) Insurance Policies
Schedule 6.1(ff) Lease Brokerage Agreements
Schedule 6.1(ii) Seller's Rights in Neighboring Properties
Schedule 6.1(oo) Capital Expenditures in Progress or Contemplated
Schedule 6.1(ss) Notices of Uncured Violations
<PAGE> 1
EXHIBIT 2.10
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is dated as of November 10, 1999, by and
between THE COMPTROLLER OF THE STATE OF NEW YORK AS TRUSTEE OF THE COMMON
RETIREMENT FUND, ("SELLER"), and GGP/HOMART II L.L.C., a Delaware limited
liability company (the "COMPANY").
RECITALS
WHEREAS, Seller owns 100% of the membership interests in Alderwood Mall
L.L.C. ("AMLLC"), a Delaware limited liability company, the owner of 100% of the
stock of Acquiport Seven Corporation, a Delaware corporation, (the "ORIGINAL
VENTURE");
WHEREAS, the Original Venture is the owner of the real property
commonly known as Alderwood Mall, Seattle, Washington ("ALDERWOOD MALL") which
is more particularly described on Exhibit A attached hereto, other than the
property owned by the Anchors (as hereinafter defined) at such mall;
WHEREAS, Seller intends to cause the Original Venture to convey fee
title to Alderwood Mall to AMLLC, together with all leases, operating
agreements, contracts and other assets;
WHEREAS, Seller desires to contribute to the capital of the Company all
of its membership interest in AMLLC, and the Company desires to acquire such
interests.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and agreements contained herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I.
DEFINITIONS
1.1. For purposes of this Agreement, the following terms shall have
the meanings indicated below:
"ADA" shall mean the Americans With Disabilities Act, as amended.
"AFFILIATE" shall mean a Person that directly or indirectly through one
or more intermediaries controls, is controlled by, or is under common control
with the Person specified. The term "control" as used in the immediately
preceding sentence, means (a) the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the
controlled entity or (b) the ownership (directly or indirectly) of not less than
50% of the voting stock of a corporation or not less than 50% of the aggregate
legal and equitable interest in a limited liability company, a partnership or
other business entity.
"AGREEMENT" shall mean this Contribution Agreement, as amended or
modified from time to time hereafter in accordance with the terms hereof.
"AMLLC" shall mean Alderwood Mall L.L.C., a Delaware limited liability
company.
<PAGE> 2
"ANCHOR" shall mean each Person identified in SCHEDULE 1.1-1.
"ASSUMED LIABILITIES" shall have the meaning set forth in Section
2.3(a).
"AUDITOR" shall have the meaning set forth in Section 5.2(b).
"BALANCE SHEET SETTLEMENT DATE" shall have the meaning set forth in
Section 5.1(c).
"BOOKS AND RECORDS" shall mean all records, books of account and papers
of the Original Venture relating to the construction, ownership and operations
of the Property, including architect's drawings, blue prints and as-built plans,
maintenance logs, copies of warranties and guaranties, licenses and permits,
instruction books, employee manuals, records and correspondence relating to
insurance claims, financial statements, operating budgets, paper and electronic
media copies of data and other information relating to the Property available
from personal computers, structural, mechanical, geotechnical or other
engineering studies, soil test reports, environmental reports, underground
storage tank reports, feasibility studies, appraisals, ADA surveys or reports,
OSHA asbestos surveys, marketing studies, mall documents and compilations, lease
summaries and originals and/or copies of Leases, the REA and the Contracts and
correspondence related thereto.
"CLOSING" shall have the meaning set forth in Section 4.1.
"CLOSING BALANCE SHEETS" shall have the meaning set forth in Section
5.1(a).
"CLOSING DATE" shall have the meaning set forth in Section 4.1.
"CLOSING DOCUMENTS" shall mean the Seller Closing Documents and the
Company Closing Documents, collectively.
"CLOSING NET EQUITY" shall mean, in the case of the Preliminary
Proration Date Balance Sheet or Proration Date Balance Sheet, the excess of the
book value of the assets reflected on such balance sheet over the liabilities
reflected thereon.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY CLOSING DOCUMENTS" shall have the meaning set forth in Section
4.3.
"CONTRACTS" shall mean all equipment leases and all service,
maintenance and other contracts and concessions that are currently in effect and
to which the Original Venture is a party respecting the use, maintenance,
development, sale or operation of the Property or any portion thereof (but
excluding this Agreement, the Leases, the Permitted Exceptions and the REA)
including those which are listed on SCHEDULE 6.1(i), together with any additions
thereto, modifications thereof or substitutions therefor hereafter entered into
in accordance with the provisions of this Agreement.
"CONTRIBUTION AMOUNT" shall have the meaning set forth in Section 2.2.
"DEFECT" shall mean any Lien, encumbrance, easement, agreement,
restriction, proceeding, lis pendens, notice, encroachment or exception to title
other than a Permitted Exception that materially and adversely affects the title
to or use of the Property.
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"ENVIRONMENTAL LAWS" shall mean all federal, state and local statutes,
ordinances, codes, rules, regulations, orders and decrees regulating, relating
to or imposing liability or standards concerning or in connection with Hazardous
Materials, underground storage tanks or the protection of human health, natural
resources or the environment, as any of the same may be amended from time to
time, including the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. ss.9601 et. seq., as amended by the
Superfund Amendments and Reauthorization Act or any equivalent state or local
laws or ordinances; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. ss. 6901 et seq., as amended by the Hazardous and Solid Waste Amendments
of 1984, or any equivalent state or local laws or ordinances; the Federal
Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. ss.136 et. seq.
or any equivalent state or local laws or ordinances; the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq.); the Emergency Planning and
Community Right-to-Know Act ("EPCRA"), 42 U.S.C. ss.11001 et. seq. or any
equivalent state or local laws or ordinances; the Toxic Substance Control Act
("TSCA"), 15 U.S.C. ss.2601 et. seq. or any equivalent state or local laws or
ordinances; the Atomic Energy Act, 42 U.S.C. ss.2011 et. seq., or any equivalent
state or local laws or ordinances; the Clean Water Act (the "Clean Water Act"),
33 U.S.C. ss.1251 et. seq. or any equivalent state or local laws or ordinances;
the Clean Air Act (the "Clean Air Act"), 42 U.S.C. ss.7401 et seq. or any
equivalent state or local laws or ordinances; the Occupational Safety and Health
Act, 29 U.S.C. ss.651 et seq. or any equivalent state or local laws or
ordinances.
"EXISTING MANAGER" shall mean General Growth Management, Inc.
"EXECUTION DATE" shall mean the date of this Agreement.
"FINANCIAL STATEMENTS" shall have the meaning set forth in Section
6.1(v).
"GAAP" shall mean generally accepted accounting principles in the
United States of America in effect from time to time.
"GAAS" shall mean Generally Accepted Auditing Standards as promulgated
by the Auditing Standards Division of the American Institute of Certified Public
Accountants from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state or local
government, court, department, commission, board and office having jurisdiction
over the Property, Seller, AMLLC, Original Venture or the Company, or any other
body exercising functions similar to those of any of the foregoing.
"HAZARDOUS MATERIALS" shall mean any substance, material, waste, gas or
particulate matter which (i) is now, or at any future time may be, regulated by
the United States Government, the state in which the Real Property is located,
any other state with jurisdiction, or any local governmental authority, or (ii)
the exposure to, or manufacture, possession, presence, use generation, storage,
transportation, treatment, release, disposal, abatement, cleanup, removal,
remediation or handling of is prohibited, controlled or regulated by any
Environmental Law, or (iii) requires investigation or remediation under any
Environmental Law or common law, or (iv) is toxic, explosive, corrosive,
flammable, infectious, radioactive, carcinogenic, mutagenic or otherwise
hazardous. Such term includes any material or substance which is (1) defined as
a "hazardous waste," "hazardous material," "hazardous substance," "extremely
hazardous
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<PAGE> 4
waste," "restricted hazardous waste" or any like or similar term under
any applicable Environmental Law; (2) oil and petroleum products; (3) asbestos
or asbestos-containing material as defined in the regulations of the
Occupational Safety and Health Administration at 29 C.F.R. ss.1910.1001; (4)
polychlorinated biphenyls; (5) radioactive material; (6) designated as a "toxic
pollutant" or a "hazardous substance" pursuant to Sections 307 or 311 of the
Clean Water Act; (7) defined as a "hazardous waste" pursuant to Section 1004 of
RCRA; (8) defined as a "hazardous substance" pursuant to Section 101 of CERCLA;
(9) designated as a "hazardous chemical" substance or mixture pursuant to TSCA;
(10) designated as an "extremely hazardous" substance under Section 302 of
EPCRA; (11) designated as a "priority pollutant" or "hazardous air pollutant"
pursuant to the Clean Air Act; (12) designated as a hazardous chemical under the
Occupational Safety and Health Act; (13) radon gas or other radioactive source
material, including special nuclear material, and byproduct materials regulated
under the Atomic Energy Act, 42 U.S.C. ss.2011 et. seq.; (14) subject to
regulation under FIFRA; (15) natural gas, natural gas liquids, liquefied natural
gas, and synthetic gas usable for fuel; or (16) infectious wastes or materials
and pathogenic bacteria or other pathogenic microbial agents.
"IMPROVEMENTS" shall mean improvements, buildings, structures,
fixtures, facilities, installations, machinery and equipment, in, on, over or
under the Land, including the foundations and footings therefor, elevators,
plumbing, air conditioning, heating, ventilating, mechanical, electrical and
utility systems (except to the extent owned by a utility company) and any other
similar systems, signs and light fixtures (except to the extent of trade
fixtures and equipment owned by tenants under the Leases), doors, windows,
fences, parking lots, walks and walkways and each and every other type of
physical improvement to the extent owned, in whole or in part, by the Original
Venture, located at, on or affixed to the Land, to the full extent such items
constitute or are or can or may be construed as realty under the laws of the
state in which the Real Property is located.
"INDEMNIFIED COMPANY PERSONS" shall have the meaning set forth in
Section 8.1.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 8.3.
"INDEMNIFIED SELLER PERSONS" shall have the meaning set forth in
Section 8.2.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 8.3.
"LAND" shall mean those certain parcels of real estate described on
EXHIBIT A.
"LANDLORD WORK" shall mean all work, improvements, fixtures, fittings
and equipment (other than normal repairs, maintenance or replacements) that are
required (or may in the future be required to be furnished or provided to
Tenants or REA Parties or paid for by landlord or developer under the terms of
the Leases or the REA, as in effect on the date hereof.
"LEASES" shall mean all leases, tenancies, concessions, licenses and
occupancy agreements currently in effect and to which the Original Venture or
any of its predecessors in title is a party affecting or relating to the
Property including those which are listed on SCHEDULE 6.1(g), together with any
additions thereto, modifications thereof or substitutions therefor hereafter
entered into in accordance with the provisions of this Agreement.
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"LEGAL REQUIREMENTS" shall mean any laws, ordinances, orders, rules,
regulations and requirements of any Governmental Authority which may be
applicable to the Property, AMLLC, the Original Venture or Seller.
"LIENS" shall mean any mortgages, deeds of trust, security interests,
judgments or charges, pledges, options, rights of first offer or first refusal,
liens of any type, restrictions, claims and other encumbrances of any nature
whatsoever.
"LIEN SEARCHES" shall mean a search report by an independent search
firm reasonably acceptable to the Company of the Secretary of State records,
county recorder records, local court records (federal, state, county and
municipal) and such other official public records with respect to the Property
that would disclose the presence of any Liens, bankruptcy proceedings, lis
pendens or other matters affecting the Property, the Original Venture or Seller.
"LOSSES" shall mean any and all claims, actions, suits, proceedings,
demands, losses, damages, liabilities, obligations, judgments, settlements,
awards, penalties, costs or expenses, including reasonable attorneys', experts'
or consultants' fees and expenses.
"OPERATING AGREEMENT" shall mean that certain Operating Agreement among
the Company, Seller and GGP Limited Partnership dated as of the date hereof.
"ORIGINAL VENTURE" shall mean Acquiport Seven Corporation, a Delaware
corporation.
"PARTY" shall mean a party to the REA, a Contract or Permitted
Exception Document (or the successor or assignee thereof) or a Tenant under a
Lease, in each case other than AMLLC, the Original Venture or its predecessors
in title with respect to the Property.
"PERMITTED EXCEPTIONS" shall mean the exceptions to title to the
Property listed on EXHIBIT B attached hereto and made a part hereof.
"PERMITTED EXCEPTION DOCUMENT" shall have the meaning set forth in
Section 2.3(b).
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, governmental unit or agency, trust, estate or other entity of
any type.
"PERSONALTY" shall mean all of the personal property, both tangible and
intangible, owned by the Original Venture and AMLLC (and the Original Venture's
and AMLLC's interest in any of the following) and located in or upon or used in
connection with the operation or maintenance of the Property, including
machinery; equipment; building supplies and materials; consumables; inventories;
names, logos, trademarks, trade names and copyrights; all assignable licenses,
permits, approvals, authorizations, variances, consents and certificates of
occupancy; all assignable guarantees or warranties (including performance bonds
obtained by, or for the benefit of, the Original Venture, pertaining to the
ownership, construction or development of the Real Property or any part
thereof); the Books and Records; computer and peripheral equipment; computer
software and data contained in hard drives and on diskette; advertising
materials; and telephone exchange numbers. Without limiting the foregoing,
"Personalty" shall include the property listed on SCHEDULE 1.1-2. Personalty
shall not include: (a) personal items belonging to Tenants, employees of AMLLC
or the Original Venture and (b) the rights of the Original Venture or AMLLC in
and to the Leases, the REA and the Contracts.
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"PRELIMINARY PRORATION DATE BALANCE SHEET" shall have the meaning set
forth in Section 5.1(a).
"PROMOTIONAL ASSOCIATION" shall have the meaning set forth in Section
6.1(l).
"PROPERTY" shall mean (a) the Real Property, (b) the Personalty, (c)
the rights and interests of AMLLC in, to and under all Leases, (d) the rights
and interests of AMLLC in, to and under the REA, and (e) the rights and
interests of AMLLC in, to and under the Contracts to the extent assignable.
"PRORATION DATE" shall mean November 30, 1999.
"PRORATION DATE BALANCE SHEET" shall have the meaning set forth in
Section 5.1(a).
"REAL PROPERTY" shall mean the Land and the Improvements, together with
all of the estate, right, title and interest of AMLLC therein, and in and to (a)
any land lying in the beds of any streets, roads or avenues, open or proposed,
public or private, in front of or adjoining the Land to the center lines
thereof, and in and to any awards to be made in lieu thereof and in and to any
unpaid awards for damage to the foregoing by reason of the change of grade of
any such streets, roads or avenues; and (b) all easements, rights, licenses,
privileges, rights-of-way, strips and gores, hereditaments and such other real
property rights and interests appurtenant to the foregoing (including all rights
of AMLLC under the REA).
"REA" shall mean that certain Operating Agreement dated as of November
13, 1979 by and among Alstores Realty Corporation ("Alstores"), Allied Stores
Corporation ("Bon"), Nordstrom, Inc. ("Nordstrom"), Nordstrom Realty, Inc.
("Nordstrom Realty"), J.C. Penney Properties, Inc. ("Penney"), Lamonts Apparel,
Inc. ("Lamonts"), Sears Roebuck and Co. ("Sears") and Alderwood Associates
("Developer"), as amended by that certain First Amendment to Operating Agreement
dated as of May 8, 1980 by and among Alstores, Bon, Nordstrom, Nordstrom Realty,
Penney, Lamonts, Sears and Developer dated May 8, 1980, as supplemented by that
certain (i) Supplement to Operating Agreement by and between Alstores, Bon and
Developer dated November 13, 1979, (ii) Supplement to Operating Agreement by and
between Lamonts and Developer, dated November 13, 1979, (iii) Supplement to
Operating Agreement by and between Nordstrom Realty and Developer, dated
November 13, 1979, (iv) Supplement to Operating Agreement by and between Penney
and Developer, dated November 13, 1979, (v) Supplement to Operating Agreement by
and between Sears and Developer dated November 13, 1979, together with any
additions thereto, modifications thereof or substitutions therefor hereafter
entered into in accordance with the provisions of this Contribution Agreement.
"REGULATIONS" shall mean the final, temporary or proposed Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"RENT ROLL" shall have the meaning set forth in Section 6.1(e).
"RENTS" shall mean fixed, minimum, additional, percentage and overage
rents, common area maintenance charges, advertising and promotional fees,
insurance charges, rubbish removal charges, sprinkler charges, shoppers aid
charges,
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water charges, utility charges, HVAC charges, amounts payable with respect to
real estate and any other taxes, and other amounts payable by any Party under
the Leases and the REA.
"SELLER CLOSING DOCUMENTS" shall have the meaning set forth in Section
4.2.
"SELLER'S INTEREST" shall mean the entire interest of Seller as the
sole member of AMLLC, together with all rights, obligations and powers of Seller
as the sole member of AMLLC.
"SELLER'S LIABILITIES" shall have the meaning set forth in Section
2.3(b).
"SURVEY" shall mean the Urban ALTA/ACSM Land Title Survey of the
Property by Bush, Roed & Hitchings, Inc., Job #98164.01, last revised 10/28/99.
"TENANTS" shall mean tenants, concessionaires, licensees and/or
occupants under the Leases.
"TENANT SERVICES" shall mean all services supplied by or on behalf of
the Original Venture to Tenants for which Tenants are separately charged, other
than services in the nature of common area maintenance.
"THIRD PARTY CLAIM" shall have the meaning set forth in Section 8.3(a).
"TITLE COMMITMENT" shall mean the Proforma Policy of Title Insurance
No. 527226A issued by the Title Company to AMLLC dated November 4, 1999,
together with copies of all documents underlying all exceptions to title and all
encumbrances on and other matters of record affecting the Real Property.
"TITLE COMPANY" shall mean Commonwealth Land Title Insurance Company.
"TITLE POLICY" shall mean Owner's Policy of Title Insurance to be
issued by Title Company and effective the date hereof, insuring AMLLC as owner
of good, marketable and indefeasible fee title to the Property, subject only to
the Permitted Exceptions.
"TRANSACTIONS" shall mean the transactions contemplated by this
Agreement.
"UTILITY DEPOSITS" shall have the meaning set forth in Section 5.8.
1.2. References. All references in this Agreement to particular
sections or articles shall, unless expressly otherwise provided, or unless the
context otherwise requires, be deemed to refer to the specific sections or
articles in this Agreement, and any references to "Exhibit" shall, unless
otherwise specified, refer to one of the exhibits annexed hereto and, by such
reference, be made a part hereof. The words "herein", "hereof", "hereunder",
"hereinafter", "hereinabove" and other words of similar import refer to this
Agreement as a whole and not to any particular section, subsection, paragraph or
article hereof. The words "include", "includes" and "including" shall be deemed
in each case to be followed by the phrase "without limitation".
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1.3. Terms Generally. Definitions in this Agreement apply equally
to both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.
ARTICLE II.
CONTRIBUTION
2.1. Contribution of Seller's Interest. Upon the terms and subject
to the conditions contained herein, at the Closing, Seller shall contribute to
the Company, and the Company shall acquire, Seller's Interest, free and clear of
all Liens. The Seller's Interest shall be deemed to have a fair market value
equal to $162,000,000.00, which represents the fair market value of the
Property, plus or minus Closing Net Equity as set forth on the Preliminary
Proration Date Balance Sheet (such amount, as the same is adjusted as
hereinafter provided, the Contribution Amount"). The $162,000,000.00 amount set
forth above reflects an $8,000,000 adjustment in the fair market value of the
Property to reflect the parties' agreement that Seller is making no
representation about and shall have no liability with respect to, any
allegations made by J.C. Penney or any other Anchor that the construction of the
food court located on the Property was in violation of the REA.
2.2. Consideration. In consideration for the contribution of
Seller's Interest and certain other property being contributed to the capital
of the Company by Seller, and in addition to the assumption of liabilities and
adjustments as hereinafter provided, on the Closing Date, Seller shall receive
units of membership interest in the Company pursuant to the Operating Agreement.
2.3. Liabilities.
(a) AMLLC shall be liable and responsible for all liabilities
and obligations of AMLLC and the Original Venture, including all liabilities and
obligations arising out of any claim by any Anchor that the construction of the
food court located on the Real Property was made without the required consent of
any such Anchor, other than the Seller's Liabilities (the "ASSUMED
LIABILITIES"). Further, without limiting the foregoing, Assumed Liabilities
shall include all leasing costs, allowances, concessions, rent abatements,
build-out costs, other leasing inducements and leasing commissions with respect
to all leases executed on or after September 1, 1999.
(b) Seller shall be responsible for all of the following
liabilities or obligations of AMLLC, the Original Venture, Seller or any
predecessor of any of them (collectively, the "SELLER PARTIES") or other Person
specified below (collectively, the "SELLER'S LIABILITIES"): (i) any liability or
obligation that is not related to the Property, (ii) any liability or obligation
that arises from contracts or agreements other than the Leases, the Contracts,
the REA or the instruments or agreements constituting the Permitted Exceptions
(a "PERMITTED EXCEPTION DOCUMENT") (except to the extent AMLCC accepts the
benefit thereof, (iii) any tort liability arising from any accident, injury,
event, circumstance, action or omission occurring prior to the Closing Date
(except to the extent of the insurance proceeds received by the Original Venture
in connection therewith), whether or not asserted before or after the Closing,
(iv) any liability or obligation to a Party for breach of, or other payment
obligation under, a Lease, REA (other than those relating to the food court
referred to in Section 2.3(a)), Contract or Permitted Exception Document
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<PAGE> 9
(including any claimed overcharge of common area maintenance or other similar
charges but excluding the items covered in clause (v)) to the extent that the
liability or obligation relates to the period or accrued prior to the Closing
Date, whether or not asserted before or after the Closing, (v) all leasing
costs, costs of Landlord Work (net of the value of any additional revenues that
are to be received by AMLCC and are directly attributable to the Landlord Work),
allowances, concessions, rent abatements, build-out costs, other leasing
inducements and leasing commissions, with respect to all leases executed prior
to September 1, 1999, (vi) any fine, penalty or other amount that is imposed or
assessed by or which was payable to (including any installment thereof) a
Governmental Authority for the period prior to the Closing Date, whether or not
imposed or assessed before or after the Closing, (vii) all federal, state and
local taxes of any Seller Party of whatever kind and nature relating to the
period prior to Closing, (viii) liabilities and obligations relating to any
employees (current or former), employee benefit plans or collective bargaining
agreements of the Existing Manager or any Seller Party that accrued, relate to
or arise from any incident, event, circumstance, action or omission occurring
during the period through the Closing Date, including severance pay and accrued
vacation pay obligations and other liabilities of the Existing Manager, any
Seller Party, the Company or others relating to the termination of any of such
employees prior to the Closing or as the result of the consummation of the
Transactions, (ix) any liability or obligation to pay for work performed at, or
materials supplied or delivered to, the Property prior to the Closing, (x) any
liability or obligation relating to litigation that is commenced by Persons
other than Parties or Governmental Authorities and that relates to incidents,
events, circumstances, actions or omissions occurring during the period prior to
Closing, whether or not asserted before or after the Closing and (xi) any other
costs or liabilities imposed on Seller hereunder or under the Operating
Agreement. Notwithstanding anything to the contrary contained herein, Seller's
Liabilities shall not include (i) any liabilities or obligations to the extent
that the Company has received a credit therefor under the provisions of Article
V and (ii) subject to the provisions of Section 2.3(c), the cost of repair,
remediation or correction of any physical defect in the Property (but do include
damages, fines or other amounts owing to Parties, Governmental Authorities or
others on account of any such physical defect to the extent that such damages,
fines or other amounts are not for the cost of repair, remediation or correction
thereof).
(c) Nothing contained in this Section 2.3 shall impair the
rights of the Company for a breach of any representation or warranty contained
herein or in the Seller Closing Documents.
ARTICLE III.
COSTS AND EXPENSES
3.1. Title and Survey Costs. Title and Survey costs shall be paid
as follows:
(a) The Company shall pay the cost of obtaining the Title
Commitment and the cost of recording any documents required to release, cure or
remove Defects;
(b) The Company shall pay the cost of obtaining the Survey;
(c) The Company shall pay the cost of recording any other
documents;
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(d) Subject to any separate agreement between Seller and the
Company, the Company shall be solely responsible for the payment of any real
property transfer taxes levied or imposed upon Seller, AMLLC, the Original
Venture or the Property as a result of the transfers to AMLLC or the Company,
gains taxes levied or imposed upon Seller, AMLLC, the Original Venture or the
Property as a result of the transfers to AMLLC or the Company, sales taxes
levied or imposed upon Seller, AMLLC or the Property as a result of the
transfers to AMLLC or the Company and documentary stamps and other taxes, fees
or charges imposed in connection with the conveyance of the Seller's Interest or
any portion thereof;
(e) The Company shall pay all filing fees and charges and any
personal property sales taxes in connection with the indirect transfer of the
Personalty to the Company; and
(f) The Company shall pay the costs of the Lien Search.
3.2. Other Costs. Except for expenses and costs related to the
termination of any existing management agreement and the termination of any
employees, the Company shall pay any and all costs or expenses in connection
with the termination of any Contracts, other than the termination of management
contracts (which shall be at the cost and expense of Seller), to be terminated
in accordance with the terms of this Agreement. The Company shall pay the legal
fees of its counsel and Seller shall pay the legal fees of Willkie Farr &
Gallagher incurred in connection with the drafting and negotiation of this
Agreement and the Closing of the Transactions.
ARTICLE IV.
CLOSING
4.1. Closing. The closing of the Transactions (the "CLOSING")
shall take place at the offices of Neal, Gerber & Eisenberg, Two North LaSalle
Street, Chicago, Illinois 60602, commencing at 10:00 a.m., local time, on the
date hereof (the "CLOSING DATE").
4.2. Seller Closing Documents. On or prior to the Closing Date,
Seller shall deliver, or cause to be delivered, to the Company the following
documents (collectively, the "SELLER CLOSING DOCUMENTS"), duly executed by
Seller and the other parties thereto (other than the Company) and in form and
substance reasonably acceptable to the Company and to Seller unless the form
thereof is attached hereto:
(a) Bargain and Sale Deed and Assignments conveying the entire
interest of the Original Venture in and to the Property to AMLLC.
(b) Assignment of membership interests with respect to AMLCC,
assigning Seller's interest to the Company.
(c) An affidavit of the Original Venture stating its U.S.
taxpayer identification number and that it is a "United States person", as
defined by Sections 1445(f)(3) and 7701(b) of the Code.
(d) Certificates issued by the Delaware Secretary of State,
dated not more than ten (10) days prior to the Closing Date, certifying the good
standing of AMLLC and
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<PAGE> 11
the Original Venture. Copies of the Certificates of Formation of AMLLC and any
amendments thereto, as of the Closing Date certified by the Secretary of State
of the State of Delaware as of a date not more than ten (10) days prior to the
Closing Date.
(e) Originals or certified copies of the organizational
documents for AMLCC and the Original Venture, Operating Agreement including
operating agreements, articles of organization, by-laws, minute books and
records of meetings, including all amendments thereof.
(f) Original, or copies certified by Seller as true, complete
and correct, of each of the Leases and the REA, together with all Books and
Records including current real estate tax bills, water, sewer and utility bills
and all Tenant correspondence.
(g) Any instruments, documents or certificates required to be
executed by AMLLC, the Original Venture or the Seller with respect to any state,
county or local transfer taxes applicable to the conveyance of the Property and
Seller's Interest pursuant to this Agreement.
(h) Keys and combinations to locked compartments within the
Property.
(i) Such other documents, instruments or agreements which
Seller or the Original Venture is required to deliver to the Company pursuant to
the other provisions of this Agreement or which the Company reasonably may deem
necessary or desirable in order to consummate the Transactions in accordance
with the terms hereof.
(j) Any Tenant security deposits in Seller's (as opposed to
the Original Venture's or AMLLC's) possession or control.
4.3. Company Closing Documents. On or prior to the Closing Date,
the Company shall deliver to Seller the following documents (herein referred to
collectively as the "COMPANY CLOSING DOCUMENTS"), duly executed by an authorized
officer on behalf of the Company and the other parties thereto (other than
Seller) and in form and substance reasonably acceptable to Seller and to the
Company unless the form thereof is attached hereto:
(a) An agreement or agreements pursuant to which the Company accepts
assignment of Seller's Interest.
(b) A duly executed and acknowledged Secretary's Certificate,
certifying that the members of the Company have duly adopted resolutions
authorizing the consummation of the Transactions and certifying the authority of
the respective authorized signatories of the Company, executing and delivering
this Agreement and the Company Closing Documents in their capacities as officers
of the Company.
(c) A certificate issued by the Secretary of State of Delaware dated
not earlier than ten (10) days prior to the Closing Date certifying the
existence and good standing of the Company as of the date of such certificate.
(d) Copies of the Certificate of Formation of the Company and any
amendments thereto, as of the Closing Date certified by the Secretary of State
of the State of
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<PAGE> 12
Delaware as of a date not more than twenty (20) days prior to the Closing Date,
together with a certificate of an officer of the Company to the effect that the
Certificate of Formation of the Company, as certified by the Secretary of State
of Delaware, has not been further amended, revised, restated, canceled or
rescinded up to and including the Closing Date.
(e) Any instruments, documents or certificates required to be executed
by the Company with respect to any state, county or local transfer taxes
applicable to the conveyance of Seller's Interest pursuant to this Agreement.
(f) Such other documents, instruments or agreements which the Company
may be required to deliver to Seller pursuant to the other provisions of this
Agreement or which Seller reasonably may deem necessary or desirable to
consummate the Transactions; provided, however, that any such other document,
instrument or agreement which Seller reasonably deems necessary or desirable
shall not impose upon the Company any obligation or liability other than an
obligation or liability expressly imposed upon the Company pursuant to the terms
of this Agreement or pursuant to the terms of the other the Company Closing
Documents specified in this Section 4.3.
4.4. Joint Deliveries. Seller and the Company shall jointly execute and
deliver the Preliminary Proration Date Balance Sheet.
ARTICLE V.
Net Equity Adjustment
5.1 Net Equity Adjustment.
(a) At or prior to Closing, Seller shall prepare and deliver
to the Company a balance sheet with respect to the Property and the Original
Venture (the "PRELIMINARY PRORATION DATE BALANCE SHEET") prepared as of the last
day of the month prior to the Closing Date, or, if the data as of such date are
unavailable, the last day of the second month prior to the Closing Date. No
later than one hundred twenty (120) days after the Closing Date, the Company
shall cause to be prepared and delivered to Seller an unaudited balance sheet
with respect to the Property and AMLCC as of the Proration Date (the "PRORATION
DATE BALANCE SHEET" and, together with the Preliminary Proration Date Balance
Sheet, the "CLOSING BALANCE SHEETS"), showing Closing Net Equity. The Closing
Balance Sheets shall be prepared on an accrual basis in accordance with GAAP
applied in a manner consistent with that utilized in the preparation of the
financial statements for General Growth Properties, Inc., without regard to any
special provisions relating to its REIT status, provided however, that the
following rules shall be employed:
(i) The following assets shall be excluded or eliminated:
deferred rent receivables; deferred financing, leasing and other costs;
tenant lease incentives; prepaid expenses to the extent the full amount
thereof could not reasonably be expected to inure to the benefit of
AMLLC and/or the Original Venture (including but not limited to prepaid
insurance premiums);
(ii) no amount shall be recorded under the classification
"Building & Improvements", "Fixtures & Equipment", "Tenant
Improvements" and "Land;"
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<PAGE> 13
(iii) net carrying amounts for or in respect of the
following shall be eliminated, with such elimination to be done, in
each case net of accumulated amortization and depreciation, allowances
for bad debts and other contra accounts: building and improvements,
fixtures and equipment, land, capitalized taxes, tangible personal
property and goodwill;
(iv) the following assets shall be included (and shall be
deemed to be part of the assets of the Original Venture and transferred
to the Company): all cash in the Original Venture;
(v) the following liabilities shall be excluded or
eliminated:) deferred revenues and income tax accounts;
(vi) at Seller's election, a liability may be excluded to
the extent that it is a Seller's liability and any reserves or other
assets relating to such excluded liability shall be excluded or
distributed to Seller;
(vii) there shall be excluded from assets an amount equal
to proceeds from condemnation or casualty insurance or awards for the
Property or the termination of any Lease, in each case received after
the date hereof;
(viii) reserves for billed accounts receivable, including
Rent and all other tenant charges, shall be calculated so that (A)
accounts receivable from Tenants in bankruptcy shall utilize a reserve
of 100%, (B) accounts receivable that are 90 days (but less than 120
days) past due shall utilize a reserve of 25%, and (C) accounts
receivable that are more than 120 days past due shall utilize a reserve
of 50%, and in each case accounts receivable shall also include a
reserve of five percent (5%) for unbilled tenant charges, and an
accrual shall be recorded for insurance deductibles based upon
insurance company estimates; and
(ix) any distributions made by AMLCC or the Original
Venture during November shall be treated as though not made.
(b) If based on the Preliminary Proration Date Balance Sheet,
Closing Net Equity exceeds zero, the Contribution Amount will be increased by
the amount of such excess. If, based on the Preliminary Proration Date Balance
Sheet, Closing Net Equity is less than zero, the Company will receive a credit
against the Contribution Amount equal to the amount of such shortfall.
(c) If, based on the Proration Date Balance Sheet, Closing Net
Equity, adjusted for the amount of any adjustment made pursuant to Section
5.1(b), exceeds zero, the Company will, no later than the later of (i) sixty-one
(61) days following the delivery of the Proration Date Balance Sheet or (ii)
five (5) business days following the resolution of a dispute with respect to an
item on the Proration Date Balance Sheet as set forth in subsection 5.2 hereof
(the "Balance Sheet Settlement Date"), pay to Seller the amount of such excess
by wire transfer of immediately available funds to an account designated by
Seller. If Closing Net Equity, adjusted for the amount of any adjustment made
pursuant to Section 5.1(b), is less than zero, Seller will pay to the Company no
later than the Balance Sheet Settlement Date the
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<PAGE> 14
amount of such shortfall by wire transfer of immediately available funds to an
account designated by the Company.
5.2 Resolution of Disputes on Proration Date Balance Sheet.
(a) If Seller disagrees with any item on the Proration Date
Balance Sheet, Seller shall notify the Company in writing of such disagreement
within sixty (60) days after Seller's receipt of the Proration Date Balance
Sheet. Such notice shall set forth the basis for such disagreement in reasonable
detail. During such sixty (60) day period, the Company shall afford Seller and
its duly designated representatives access to all of the Original Venture's
books and records, in each case solely for the purposes of resolving such
disagreement. The Company and Seller shall thereafter negotiate in good faith to
resolve any such disagreements, provided that Seller shall promptly pay to the
Company, or the Company shall promptly pay to Seller, as the case may be, the
amount determined pursuant to Section 5.1(c) that is not subject to dispute.
(b) If the Company and Seller are unable to resolve any such
disagreements within thirty (30) days after the expiration of the sixty (60) day
period referred to in Section 5.2(a), or, if the Company and Seller are unable
to resolve a dispute concerning the final adjustments to the Contribution
Amount, the Company and Seller shall cause Ernst & Young (the "Auditor") to
resolve all disagreements on the disputed items as soon as practicable, provided
that the Auditor shall be bound by the provisions of Section 5.1 and may not
assign a value to any item greater than the greatest value for such item claimed
by either party or less than the smallest value for such item claimed by either
party. Each of the Company and Seller shall permit the Auditor to have full
access to its books, records, key employees and independent accountants in order
to resolve any such disagreements. The resolution of such disagreements by the
Auditor shall be final and binding on the Company and Seller. The fees and
expenses of the Auditor shall be paid by the party whose position is most at
variance with the decision of the Auditor.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
6.1. Seller's Representations and Warranties. Seller represents and
warrants to the Company as follows:
(a) Seller is an instrumentality of the State of New York,
validly existing under the laws of the State of New York with full power and
authority to execute, deliver and perform this Agreement.
(b) The execution, delivery and performance of this Agreement
by Seller have been duly and validly authorized by all necessary action on the
part of Seller. This Agreement has been, and the Seller Closing Documents will
be, duly executed and delivered by Seller, AMLLC or the Original Venture, as
applicable. This Agreement constitutes, and when so executed and delivered the
Seller Closing Documents will constitute, the legal, valid and binding
obligations of Seller, AMLLC or the Original Venture, as applicable, enforceable
against Seller, AMLLC or the Original Venture, as applicable, in accordance with
their respective terms.
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<PAGE> 15
(c) None of the execution, delivery or performance of this
Agreement by Seller or the Original Venture does or will, with or without the
giving of notice, lapse of time or both, violate, conflict with, constitute a
default, result in a loss of rights, acceleration of payments due or creation of
any Lien upon the Property or require the approval or waiver of or filing with
any Person (including any governmental body, agency or instrumentality) under
(i) the organizational documents of Seller or the Original Venture, any
agreement, instrument or other document to which Seller or the Original Venture
is a party or by which it is bound, (ii) any judgment, decree, order, statute,
injunction, rule, regulation or the like of a governmental unit applicable to
the Property, AMLLC, the Original Venture, or Seller (other than notification of
ownership change or transfer or reissuance of permits as may be required under
Environmental Laws), or (iii) any contract or agreement by which Seller, AMLLC
or the Original Venture may be bound.
(d) Seller has good and marketable title to Seller's Interest
free and clear of Liens and, upon execution and delivery of the Seller Closing
Documents, the Company will have good and marketable title to Seller's interest
free and clear of Liens other than Liens created by, under or through the
Company. All right, title and interest or the Original Venture in and to the
Property has been transferred to AMLLC. No other property (other than the Real
Property and property owned by any Anchor) comprises "Alderwood Mall".
(e) Schedule 6.1(e) is a true, correct and complete copy of
the rent roll of the Property (the "RENT ROLL") as of November 1, 1999, prepared
in the format prescribed by the MRI software reporting system currently in place
at the Property. All information therein is accurate as of its date. Except as
set forth to the contrary on Schedule 6.1(e), no Tenant has paid any rent in
advance except for the current month.
(f) Schedule 6.1(f) is a true, correct and complete schedule
of delinquencies in Rent, common area maintenance and other similar charges,
showing amounts payable as of November 1, 1999 by each Party, which schedule
sets forth separately and certifies the items of Rents with respect to which
each such Party is in arrears, the amount of each item and the period of such
arrearage.
(g) Schedule 6.1(g) contains a complete and correct list of
all existing Leases and modifications thereof and supplements thereto regardless
of whether the terms thereof have commenced, setting forth with respect to each
(i) the date thereof and of each modification thereof and supplement thereto and
(ii) the names of the Parties thereto (including the name of the current
assignee, if any, but only if and to the extent Seller has actual notice of any
such assignment). A true and complete copy of each Lease demising space in
excess of 10,000 square feet, together with each modification thereof and
supplement thereto, has heretofore been furnished to the Company for inspection
and has been delivered to the Company on the date hereof. Each Lease constitutes
the entire agreement between the Original Venture and each Party thereto, and
the Original Venture has not made any oral promises or agreements amending or
modifying the same. No Person is using or occupying (or is entitled to use or
occupy) the Real Property except under a Lease or the REA.
(i) There are no leases executed by the Original Venture
or other rights of occupancy or use granted by the Original Venture or,
to Seller's knowledge, its predecessors in title of any portion of the
Property other than the Leases. Each of the Leases is valid and
subsisting and in full force and effect, and no Rents or other payments
or deposits
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<PAGE> 16
are held by Seller, AMLLC, the Original Venture or the Original
Venture's agent, except the security deposits (together with the amount
of accrued and unpaid interest thereon) described on the Rent Roll and
Rents prepaid for the current month. As of the Closing Date, no Rents
due under, or any other interest in, any of the Leases will be assigned
to any party other than the AMLLC, or are otherwise pledged or
encumbered in any way. All Security Deposits are being, and have been,
held in compliance with all Legal Requirements.
(ii) Except as set forth on Schedule 6.1(g), no Tenant has
made any written claim which has been received by Seller or the
Original Venture or, to Seller's knowledge, has any other claim,
whether or not in writing (A) that the Original Venture has defaulted
in performing any of its obligations under any of the Leases which has
not heretofore been cured, (B) that any condition exists which with the
passage of time or giving of notice, or both, would constitute any such
default, (C) that such Tenant is entitled to any reduction in, refund
of, or counterclaim or offset against, or is otherwise disputing, any
Rents or other charges paid, payable or to become payable by such
Tenant, or (D) that such Tenant is entitled to cancel its Lease or to
be relieved of its operating covenants thereunder.
(iii) With the exception of delinquencies in the payment
of Rents which are set forth on Schedule 6.1(f), no material default
exists under any of the Leases on the part of the Tenant thereto and
Seller has no knowledge of any condition, which, with the passage of
time, or giving of notice, would constitute a default under any Lease.
With the exception of any requirement to repair any physical defects in
the Property, the Original Venture and AMLLC are not in default under
the Leases. The Original Venture has not delivered any default notices
to any Tenant under any Lease which has not been cured.
(iv) There are no rent abatements, offset rights, "free
rent periods" or other tenant concessions or inducements, including
lease assumptions or buy-outs, applicable to any of the Leases or any
rights to extend or renew any of such Leases except as set forth in the
Leases. There are no expansion rights, options or rights to renew,
extend or terminate the Leases, except as set forth in the Leases.
Neither Seller nor the Original Venture have granted any rights,
options or rights of first refusal of any kind to any Tenant or
otherwise, which are currently in effect, to purchase or to otherwise
acquire the Property or any part thereof or interest therein. All of
the improvements to be constructed by the landlord under each of the
Leases, or as required under any collateral agreement, plans or
specifications related to the Leases, have been fully completed in
accordance with the terms thereof and have been paid for.
(v) Except with respect to the construction of the food
court located on the Real Property, no condition exists that would
permit any Party to any Lease or REA to cancel or terminate such Lease
or REA, be released from liability from such Lease or REA or reduce its
obligations under any Lease or REA.
(vi) Neither Seller nor the Original Venture or any
Affiliate of any of the foregoing, has made a loan or otherwise
extended any credit to any Tenant.
(h) The REA constitutes the only reciprocal easement
agreements or operating agreements encumbering the Property. A true and complete
copy of the REA has heretofore been furnished to the Company, together with each
written modification thereof and supplement thereto. The REA constitutes the
entire agreement between the Original Venture
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<PAGE> 17
and each REA Party thereto, and neither Seller nor the Original Venture have
made any oral promises or agreements amending or modifying the same.
(i) The REA is valid and in full force and effect, and no
Rents or other payments or deposits are held by Seller, the Original
Venture, AMLCC or Seller's agent, except the Rents prepaid for the
current month. As of the Closing Date, no Rents due under, or any other
interest in, the REA will be assigned to any party other than the
Existing Lender, or are otherwise pledged or encumbered in any way.
(ii) Except with respect to the construction of the food
court located on the Real Property and except as set forth on Schedule
6.1(h), none of the REA Parties has made any written claim which has
been received by Seller, the Original Venture or, to Seller's
knowledge, has any other claim, whether or not in writing (A) that the
Original Venture has defaulted in performing any of its obligations
under any of the REAs which has not heretofore been cured, (B) that any
condition exists which with the passage of time or giving of notice, or
both, would constitute any such default, (C) that such REA Party is
entitled to any reduction in, refund of, or counterclaim or offset
against, or is otherwise disputing, any Rents or other charges paid,
payable or to become payable by such REA Party, (D) that such REA Party
is entitled to cancel its REA or to be relieved of its operating
covenants thereunder, or (E) that there is a violation of any of the
covenants, conditions or restrictions contained in such REA.
(iii) With the exception of delinquencies in the payment
of Rents which are set forth on Schedule 6.1(f), no material default
exists under the REA on the part of the REA Parties thereto and, except
with respect to the construction of the food court located on the Real
Property, Seller has no knowledge of any condition which, with the
passage of time or giving of notice, would constitute a default under
any REA. With the exception of any requirement to repair any physical
defects in the Property, the Original Venture and AMLLC are not in
default under the REA. The Original Venture has not delivered any
default notices to any party under the REA which has not been cured.
(iv) There are no rent abatements, offset rights, "free
rent periods" or other concessions or inducements, including lease
assumptions or buy-outs, applicable to the REA or any rights to extend
or renew the REA except as set forth in Schedule 6.1(h) or the REA.
There are no options or rights to renew, extend, expand or terminate
the REA, except as set forth in Schedule 6.1(h). Except as set forth in
Schedule 6.1(h), neither Seller nor the Original Venture have granted
any rights, options or rights of first refusal of any kind to any of
the REA Parties, which are currently in effect, to purchase or to
otherwise acquire the Property or any part thereof or interest therein.
All of the improvements to be constructed by the developer or owner
under the REA, or as required under any collateral agreement, plans or
specifications related to the REA, have been fully completed in
accordance with the terms thereof and paid for. No party to any REA has
given notice that it has ceased or that it intends to cease operating
its store or other property that it is required to operate under the
REA.
(i) Each of the Contracts is in full force and effect. To
Seller's knowledge, there have been no material defaults by any Party to a
Contract which have not heretofore been cured. There has been no material
default (without giving effect to any notice and cure rights) by the Original
Venture under any Contract or any claim received by Seller or the Original
Venture of any such default by any party thereto, which has not heretofore been
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<PAGE> 18
cured except as set forth on Schedule 6.1(i)(a). Except as set forth on Schedule
6.1(i)(b), all of the Contracts are terminable upon notice given sixty (60) days
or less before any such termination, without penalty, fee or cost. A true and
complete copy of each Contract listed on Schedule 6.1(i)(a), together with any
modifications, amendments or supplements thereto, has been delivered or made
available to the Company.
(j) Schedule 6.1(j) contains a list of all permits,
authorizations, approvals and licenses currently maintained with respect to the
Property and all such permits, authorizations, approvals and licenses are in
full force and effect. Neither Seller nor the Original Venture have received any
written notice of violation from any federal, state or municipal entity with
respect to the Property or in connection with the operations conducted thereon
that has not been cured or otherwise resolved to the satisfaction of such
governmental entity. To Seller's knowledge, the permits, authorizations,
approvals and licenses listed on Schedule 6.1(j) are all of the licenses and
permits which are required for the present use of the Property.
(k) Except as disclosed in the Phase I Environmental
Assessment delivered to the Company, and except for non-friable asbestos and as
set forth on Schedule 6.1(k), neither Seller, the Original Venture nor to
Seller's knowledge, any other Person has caused or permitted any Hazardous
Material to be maintained, disposed of, stored, treated, recycled, brought upon,
transported over, released or generated on, under or at the Property or any part
thereof or any real property adjacent thereto, except for the presence,
maintenance, storage, use or transportation of substances commonly present or
stored at or used in the ordinary operation and maintenance of shopping centers
in ordinary quantities commonly present, stored or used at shopping centers and
in compliance with applicable laws, including Environmental Laws. Except as
disclosed in the Phase I Environmental Assessment delivered to the Company,
there has been no release or threatened release of any Hazardous Materials at
the Property or any part thereof that will give rise to any obligation or
liability to conduct or pay for any investigation, removal, remediation,
monitoring, closure, or post-closure care at, on or under the Property or any
part thereof, nor has any release or threatened release of Hazardous Material
at, on or under the Property or any part thereof or with respect to any offsite
location to which Hazardous Material have, or are alleged to have, migrated or
been transported from the Property or any part thereof. Except as disclosed in
the Phase I Environmental Assessment delivered to the Company, Seller and the
Original Venture are in compliance with, and have heretofore complied with, all
applicable Environmental Laws with respect to the Property and as of the date
hereof there are no violations of applicable Environmental Laws at the Property
which have not been remediated in accordance with all applicable Environmental
Laws. Neither Seller nor the Original Venture have received any written notice
from any governmental unit or other person that it or the Property is not in
compliance with any Environmental Law or that it has any liability with respect
thereto and there are no administrative, regulatory or judicial proceedings
pending or, to the knowledge of Seller, threatened with respect to the Property
pursuant to, or alleging any violation of, or liability under any Environmental
Law. Except as set forth on Schedule 6.1(k), neither Seller nor the Original
Venture have installed any underground or above ground storage tanks on, under
or about the Property and no such tanks are located on, under or about the
Property.
(l) Except as set forth on Schedule 6.1(l), the Original
Venture is under no obligation to make contributions or otherwise provide
assistance to any promotional association or promotional fund and has not
customarily in the past made or provided any such
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<PAGE> 19
contributions or assistance. The promotional association established with
respect to the Property (the "Promotional Association") is an independent
association established by and on behalf of the Tenants, Seller and the Original
Venture having no ownership, management, fiduciary or monetary interest of any
kind therein. Seller and/or the Existing Venture has remitted to the Promotional
Association any amounts received by it from Tenants and other Parties that
constitute contributions to the Promotional Association. Seller and/or the
Original Venture, as the case may be, has made all required payments to any such
Promotional Association or fund, if any.
(m) Except as provided in Schedule 6.1(m), there is no
litigation, including any arbitration, investigation or other proceeding by or
before any court, arbitrator or governmental or regulatory official, body or
authority which is pending or, to Seller's knowledge, threatened against Seller
or the Original Venture relating to the Property, Seller's Interest or the
Transactions, there are no unsatisfied arbitration awards or judicial orders
against the Original Venture and, to Seller's knowledge, there is no basis for
any such arbitration, investigation or other proceeding. Copies of all pleadings
and other documents furnished or made available by Seller to the Company with
respect to the litigation described on Schedule 6.1(m) are true, accurate and
complete in all respects.
(n) No condemnation proceeding or other proceeding or action
in the nature of eminent domain is pending with respect to all or any part of
the Property, and, to Seller's knowledge, no condemnation proceeding or other
proceeding or action in the nature of eminent domain is pending with respect to
any property owned by a Party to the REA which is the subject of such REA and to
Seller's knowledge no Taking is threatened with respect to all or any part of
the Property, or any property owned by a Party to the REA which is the subject
of such REA.
(o) True, correct and complete copies of current real estate
tax bills with respect to the Property, other than tax bills sent to Tenants who
have the obligation to pay such taxes to the collecting authority, have been
delivered or made available to the Company. No portion of the Property comprises
part of a tax parcel which includes property other than property comprising all
or a portion of the Property. No application or proceeding is pending with
respect to a reduction or an increase of such taxes. There are no tax refund
proceedings relating to the Property which are currently pending and neither
Seller nor the Original Venture, nor any Affiliate thereof has applied for any
such reduction. Seller has no knowledge of any special tax or assessment to be
levied against the Property or any change in the tax assessment of the Property
other than the annual assessment. Neither Seller nor the Existing Venture has
received written notice of any, or has any knowledge of any special assessments
currently affecting the Property.
(p) Neither Seller nor the Original Venture have received (i)
any written notice from any governmental authority having jurisdiction over the
Property of, and to Seller's knowledge there does not exist, (A) any violation
of any law, ordinance, order or regulation (including the ADA) affecting the
Property, or any portion thereof, which has not heretofore been complied with or
(B) any other obligation to any such governmental authority for the performance
of any capital improvements or other work to be performed by Seller or the
Original Venture in or about the Property or donations of monies or land (other
than general real property taxes) which has not been completely performed and
paid for; or (ii) any written notice from any insurance company, insurance
rating organization or Board of Fire Underwriters
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<PAGE> 20
requiring any alterations, improvements or changes at the Property, or any
portion thereof, which has not heretofore been complied with.
(q) No approval, consent, waiver, filing, registration or
qualification with any third party, including any governmental bodies, agencies
or instrumentalities is required to be made, obtained or given for the
execution, delivery and performance of this Agreement or any of the Seller
Closing Documents by Seller, the Original Venture, or AMLCC or the consummation
of the Transactions (other than notification of ownership change or transfer or
reissuance of permits as may be required under Environmental Laws).
(r) The Original Venture is corporation duly formed, validly
existing and in good standing under the laws of the State of Delaware with full
power and authority to own the Property and conduct the business now being
conducted by it.
(s) AMLLC is a limited liability company, duly formed and
validly existing and in good standing under the laws of the State of Delaware
with full power and authority to own the property and conduct the business now
being conducted by it.
(t) [Intentionally Deleted]
(u) [Intentionally Deleted]
(v) Seller has furnished the Company with the financial
statements of the Original Venture (consisting of balance sheets and income
statements) as of, and for the calendar years ended, December 31, 1997 and
December 31, 1998 (the "FINANCIAL STATEMENTS"). The Financial Statements are
consistent with the books and records and accounts of the Original Venture and
fairly present the financial condition and results of the Original Venture as of
the dates thereof and for the periods referred to therein, and the Financial
Statements have been prepared in accordance with generally accepted accounting
principles, consistently applied throughout the periods indicated. Since
December 31, 1998, the Original Venture has conducted its business in the
ordinary course consistent with past practice and there have been no material
adverse changes in the financial condition of the business, and Seller has no
knowledge of any circumstance or event which, insofar as can be reasonably
foreseen, is likely to result in any such material adverse change.
(w) [Intentionally Deleted]
(x) [Intentionally Deleted]
(y) Schedule 6.1(y) contains a true, complete and accurate
list including the amounts thereof of all policies of insurance with respect to
the Property, which policies are and will be kept in full force to and including
the Closing Date. All premiums for such insurance have been paid in full. To
Seller's knowledge, neither Seller nor the Original Venture have performed,
permitted or suffered any act or omission which would cause the insurance
coverage provided in said policies to be reduced, cancelled, denied or disputed
and neither Seller nor the Original Venture have received (and has no knowledge
of) any notice or request from any insurance company or Board of Fire
Underwriters (or organization exercising functions similar thereto) canceling or
threatening to cancel any of said policies or denying or disputing coverage
thereunder.
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<PAGE> 21
(z) To Seller's knowledge, there are no material structural or
other material physical defects in the Improvements or any component or system
of the Improvements and all such Improvements are in good condition and repair.
(aa) Neither Seller nor, to Seller's knowledge, the
Original Venture has received notice that there is, and, to Seller's knowledge,
there does not now exist, any violation of any restriction, condition or
agreement contained in any easement, restrictive covenant or any similar
instrument or agreement affecting the Real Property or any portion thereof.
(bb) The Original Venture and AMLLC have no employees.
There are no collective bargaining or union agreements with respect to the
employees at Property or to which Seller, AMLCC or the Original Venture is
bound. Neither the Original Venture nor AMLLC maintain or sponsor any employee
benefit plan, including any plans subject to the Employer Retirement Income
Security Act of 1974, as amended. There are no pending claims or, to Seller's
knowledge, any threatened claim against AMLLC or the Original Venture by any
employee whose employment related to the Property.
(cc) No broker, finder, investment banker or other person
is entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Seller.
(dd) [Intentionally Deleted]
(ee) All material documents and Books and Records have
been delivered or have been made available to the Company. All of the documents
and Books and Records that have been delivered or made available to the Company
by or on behalf of Seller, are true, correct and complete copies of what they
purport to be and have not been modified or amended, except as specifically
noted therein. All information set forth in the exhibits and schedules to this
Agreement is true, correct and complete in all material respects and not
misleading. Seller does not have any knowledge of any significant adverse fact
or condition relating to the Property, which has not been specifically disclosed
in writing by Seller to the Company.
(ff) There are no lease brokerage agreements, leasing
commission agreements or other agreements providing for payments of any amounts
for leasing activities or procuring tenants (including renewing leases at
expanding spaces) with respect to the Property other than as disclosed in
Schedule 6.1(ff).
(gg) Schedule 1.1-2 attached hereto contains a true,
correct and complete description of the Personalty (including the name
"Alderwood Mall"), and except as disclosed on said Schedule 1.1-2, the Original
Venture has good title to the Personalty free and clear from Liens and other
encumbrances other than the Permitted Exceptions. The Personalty is all of the
personal property that is necessary in order to operate and maintain the Real
Property as a first class regional shopping center. The Original Venture has
taken all steps necessary in order to protect its exclusive right to use the
name "Alderwood Mall" in connection with the Real Property.
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<PAGE> 22
(hh) (i) Since May, 1997 gift certificates having an
aggregate value of $1,500,256.00 have been minted, and (ii) gift certificates
having an aggregate value of $135,895.00 are outstanding as of November 7, 1999.
(ii) Except as set forth in Schedule 6.1(ii) attached
hereto, neither Seller, nor any Affiliate of Seller (other than the Original
Venture), owns (i) any right or interest in any real property adjacent to or
neighboring the Real Property including any outparcel or (ii) any right or
interest in any easement, right of way, development right, water or mineral
right or any other right which in any way affects the Real Property.
(jj) Except for routine work in the ordinary course of
operating the Real Property that will be paid when due, no work has been
performed by Seller or is in progress at Seller's request at the Real Property,
and no materials or supplies have been delivered to the Real Property at
Seller's request, that has resulted in the imposition of, or might provide the
basis for the imposition of, mechanics', materialmen's or other liens against
the Real Property.
(kk) The sales reports heretofore furnished by Seller to
the Company for calendar years 1996, 1997 and 1998, and the rolling twelve (12)
months sales report from March 1999, disclose the sales by Tenants at the Retail
Property as reported to Seller by such Tenants.
(ll) All water, storm sewer/sanitary sewer, gas,
electricity, telephone and other utility lines, pipes and other equipment
necessary in order to operate the Real Property as a first class regional
shopping center (collectively, the "Utility Equipment") presently serve the Real
Property and to Seller's knowledge, are in good working order. Neither Seller
nor the Original Venture, has any outstanding unpaid obligation to pay the cost
of connection of any utility lines, pipes or other equipment serving the Real
Property.
(mm) The Real Property has not suffered any casualty or
other material damage that has not been fully repaired.
(nn) To Seller's knowledge, all HVAC, electric, gas,
fire-safety, plumbing, mechanical and other systems at the Real Property are in
good, working condition and no portion of same presently require replacement or
significant repair (i.e., repairs which are ordinarily capitalized under
generally accepted accounting principles).
(oo) Except as disclosed on Schedule 6.1(oo) attached
hereto, no capital work is currently in progress or contemplated.
(pp) Neither Seller nor the Original Venture, has received
written notice from any Governmental Authority, from any Party to any REA, any
Tenant or any party to any other agreement or document, or otherwise has
knowledge, that the number of parking spaces at the Real Property is required
under any Legal Requirement, any Lease, or the REA, to be increased above the
number of parking spaces existing on the date hereof.
(qq) The Original Venture has (i) filed all tax returns
required to be filed by it under applicable Legal Requirements and (ii) timely
paid all taxes shown to be due and payable on such tax returns.
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<PAGE> 23
(rr) Seller has no knowledge of any defects, liens,
encumbrances, adverse claims or other matters to be insured against under the
Title Policy (collectively, the "Insured Matters") that could result in the
issuer of the Title Policy denying its liability to the Company on the grounds
that AMLLC, the Original Venture or the Company had knowledge of any such
Insured Matters solely by reason of notice thereof imputed to it as a matter of
law through either Seller, AMLLC the Original Venture or any Affiliate thereof.
(ss) Except as set forth on Schedule 6.1(ss), neither
Seller nor the Original Venture has received any written notice with respect to
the Real Property of any violation of law or municipal ordinances, orders or
requirements, that have been noted in or issued by any federal, state or
municipal department having jurisdiction, and which have not been fully remedied
and discharged of record.
(tt) To Seller's knowledge, Seller has provided the
Company with access to any and all certificates, licenses, permits, leases,
ground leases, operating agreements, books, records, documents and information
relating to the Real Property and the ownership and operation thereof which are
in the possession and control of Seller or the Original Venture.
(uu) Seller is the owner of 100% of the membership
interests in AMLLC. No other Person has any option or other right to acquire
Seller's Interest, any portion thereof or any other equity interest in AMLLC or
any security or instrument convertible into any such equity interest.
Notwithstanding anything to the contrary contained herein,
(a) Seller shall have no liability under this Agreement for the cost of repair,
remediation or correction of any physical defect in the Property as a result of
a breach of the representations and warranties contained in Sections 6.1(k),
(z), (mm) and (nn) (but nothing contained in this paragraph shall limit Seller's
liability for damages or fines or other amounts owing to Parties, Governmental
Authorities or others on account of any such physical defect to the extent that
such damages, fines or other amounts are not for the cost of repair, remediation
or correction thereof), (b) Seller shall have no liability for a breach of
representation or warranty contained herein or in the Closing Documents to the
extent that the Company has received a credit therefor under the provisions of
Article V, and (c) Seller shall have no liability under this Agreement due to
the allegation by J.C. Penney and any other Anchor asserting that the
construction of the food court located on the Property was in violation of REA,
and the effect of any such allegation upon Seller and any predecessor in
interest of Seller are expressly excluded from the representations and
warranties, express or implied, of the Seller hereunder.
6.2. Company Representations and Warranties. The Company represents
and warrants to Seller as follows:
(a) The Company is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware
with full right, power and authority to execute, deliver and perform this
Agreement.
(b) The execution, delivery and performance by the Company of
this Agreement have been duly and validly authorized by all requisite action on
the part of the Company. This Agreement has been, and the Company Closing
Documents will be, duly
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<PAGE> 24
executed and delivered by the Company. This Agreement constitutes, and when so
executed and delivered the Company Closing Documents will constitute, the legal,
valid and binding obligations of the Company, enforceable against it in
accordance with their terms.
(c) None of the execution, delivery or performance of this
Agreement or the Company Closing Documents by the Company does or will, with or
without the giving of notice, lapse of time or both, violate, conflict with,
constitute a default or result in a loss of rights under or require the approval
or waiver of or filing with any Person (including any governmental body, agency
or instrumentality) under (i) the organizational documents of the Company or any
material agreement, instrument or other document to which the Company is a party
or by which the Company is bound or (ii) any judgment, decree, order, statute,
injunction, rule, regulation or the like of a governmental unit applicable to
the Company, other than notification of ownership change or transfer or
reissuance of permits as may be required under Environmental Laws.
(d) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of the
Company.
6.3. No Other Representations. Neither Seller nor any officer,
director, shareholder, member, agent, partner, employee, or representative of
Seller (or any officer, director, partner or employee of any agent of Seller)
has made any representation whatsoever regarding the Property or any part
thereof, or anything relating to the subject matter of this Agreement, except as
expressly set forth in this Agreement, and the Company, in executing, delivering
and performing this Agreement, has not and does not rely upon any statement,
information, or representation to whomsoever made or given, whether to the
Company or others, and whether directly or indirectly, verbally or in writing,
made by any person, firm or corporation, except as expressly set forth in this
Agreement or in the Seller Closing Documents.
6.4. Knowledge Defined. For the purposes of this Agreement,
"knowledge" (including "actual knowledge" and other similar terms) with respect
to Seller and the Original Venture shall mean matters as to which any of the
following individuals have actual knowledge without any duty or responsibility
to make any inquiry, review or investigation: (i) Jeffrey Barkley, (ii) Robert
P. Neiffer, Jr., (iii) Frank Sullivan, (iv) Vicki Kahn, (v) Steve VanTil, (vi)
Marjorie Tsang and (vii) Yvonne Nelson. Actual knowledge shall not be deemed to
exist merely by assertion by the Company of a claim that any of the foregoing
persons should have known of such facts or circumstances, if such person did not
have actual knowledge thereof. Seller hereby represents and warrants that the
foregoing individuals are the individuals with the primary responsibility for
overseeing the sale, management, and operation of the Property at the level of
vice president and above.
ARTICLE VII.
ADDITIONAL COVENANTS
7.1. Record Retention. Until three (3) years after the Closing, the
Company shall provide Seller upon prior written notice and during normal
business hours with reasonable access to the Books and Records and, at Seller's
cost, copies of all or any portion thereof. The Company either shall retain such
Books and Records until the third anniversary of the date
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<PAGE> 25
hereof or notify Seller of its desire to dispose of such Books and Records
pertaining to any period prior to the Closing which have been delivered to the
Company and turn them over to Seller if Seller so requests. Seller agrees to
keep, and to instruct its agents, employees and representatives to keep,
confidential such Books and Records (and any information contained therein) and
any information discovered in any such examinations and inspections, except in
connection with any legal proceedings or to the extent required by law. Upon the
Company's request, for a period of three (3) years after the Closing, Seller
shall make all of Seller's records with respect to the Property which are in the
possession or control of Seller available to the Company for inspection, copying
and audit by the Company's designated accountants. The provisions of this
Section 7.1 shall survive Closing.
7.2. Publicity. In no event shall either Seller or the Company
issue any press release or otherwise disclose any non-public information
regarding this Agreement or the Transactions unless the other party has
consented thereto in writing as to the form and substance of any such statement
or disclosure (and Seller and the Company agree not unreasonably to withhold,
condition or delay such consent); provided, however, that nothing herein shall
be deemed to limit or impair in any way any party's ability to disclose the
details of or information concerning this Agreement or the Transactions to the
extent necessary to such party's attorneys, accountants or other advisors or to
the extent such party reasonably deems necessary or desirable pursuant to any
court or governmental order or applicable securities laws or regulations or
financial reporting requirements, or to obtain the Existing Indebtedness Consent
Documents. Further, to the extent necessary, either party may disclose any
information regarding this Agreement or the Transactions to its direct or
indirect constituent partners, members or shareholders, as the case may be (and
to counsel for such constituent partners, members and shareholders) and as
otherwise necessary to comply with the terms of this Agreement. Any disclosure
by a party's advisors or direct or indirect constituent partners, members or
shareholders shall be deemed a breach hereof by such party. If for any reason
this Transaction is not consummated, the Company will promptly return to Seller
all originals and copies of documents, reports and financial and other
information relating to the Property and to Seller which Seller has furnished to
the Company. The obligations of Seller and the Company under this Section 7.2
shall survive the termination hereof, however caused.
7.3. Assistance Following Closing. From and after the Closing,
Seller at the Company's reasonable expense shall provide reasonable assistance
to the Company in connection with the preparation of financial statements and
bills and the adjustment of losses and claims and the enforcement or settlement
of any such claims. Without limiting the foregoing, Seller shall, upon the
reasonable request of the Company from time to time, provide signed
representation letters with respect to revenues and expenses of Seller if
required under GAAS to enable the Company's accountants to render an opinion on
the Company's financial statements.
7.4. Further Assurances. Each of Seller and the Company agree, at
any time and from time to time after the Closing, to execute, acknowledge where
appropriate and deliver such further instruments and other documents (and to
bear its own costs and expenses incidental thereto) and to take such other
actions as the other of them may reasonably request in order to carry out the
intent and purpose of this Agreement; provided, however, that neither Seller nor
the Company shall be obligated, pursuant to this SECTION 7.4 to incur any
expense of a material nature and/or to incur any material obligations in
addition to those set forth in this Agreement and/or its respective Closing
Documents.
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<PAGE> 26
7.5. No Intercompany Accounts. Prior to the Closing, Seller shall
pay, distribute, release or otherwise eliminate any and all intercompany debt or
accounts between the Original Venture, AMLLC and Seller or any Affiliate of
Seller.
ARTICLE VIII.
INDEMNIFICATION
8.1. Indemnification by Seller. From and after the Closing, Seller
shall indemnify, defend and hold harmless the Company and its members, officers,
directors, managers, employees, representatives and agents, and any direct or
indirect partner, shareholder, officer, director or member of any member of the
Company, and their respective successors and assigns (collectively, the
"INDEMNIFIED COMPANY PERSONS") from and against any Losses asserted against,
incurred or suffered by any Indemnified Company Person that results from,
relates to or arises out of (a) the breach or inaccuracy of any representation
or warranty made by Seller in this Agreement or the Seller Closing Documents,
(b) the breach or non-fulfillment by Seller of any of the covenants or
agreements of Seller under this Agreement or the Seller Closing Documents, or
(c) Seller's Liabilities.
8.2. Indemnification by the Company. From and after the Closing,
the Company shall indemnify, defend and hold harmless Seller and its direct or
indirect shareholders, directors, officers, members, partners employees and
agents, and their respective successors and assigns (collectively the
"INDEMNIFIED SELLER PERSONS") from and against any Losses asserted against,
incurred or suffered by any Indemnified Seller Person that results from, relates
to or arises out of (a) the breach or inaccuracy of any representation or
warranty made by the Company in this Agreement or the Company Closing Documents,
(b) the breach or non-fulfillment by the Company of any of the covenants or
agreements of the Company under this Agreement or the Company Closing Documents,
or (c) the Assumed Liabilities.
8.3. Indemnification Procedure.
(a) Subject to the provisions of Section 8.3(d), the
indemnified party (the "INDEMNIFIED PARTY") shall give the indemnifying party
(the "INDEMNIFYING PARTY") prompt notice of any Losses (or potential Losses)
which may be covered under this Article VIII and such notice shall state the
basis for the claim, action or proceeding and the amount thereof (to the extent
such amount is determinable at the time when such notice is given). In the event
the notice relates to a claim, assertion, action, suit or proceeding by a
third-party ("THIRD PARTY CLAIM") for which indemnification is provided
hereunder, the Indemnified Party shall permit the Indemnifying Party (or its
insurance company) to assume the defense of such claim, assertion, action, suit
or proceeding and the Indemnifying Party (or its insurance company) may (i)
prior to the commencement of any proceedings in connection with such Losses,
undertake the negotiation of any resolution of the dispute relating to such
Losses, including in accordance with the terms hereof any settlement or release,
or (ii) undertake the defense of any proceeding (including any alternative
dispute resolution proceeding) regarding such Losses by selecting legal counsel
who shall be reasonably acceptable to the Indemnified Party. Failure of the
Indemnifying Party to notify an Indemnified Party of its election to undertake
the Indemnified Party's defense of a Third Party
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<PAGE> 27
Claim within a reasonable time, but in no event more than thirty (30) days after
notice thereof shall have been given to the Indemnifying Party, shall be deemed
a waiver by the Indemnifying Party of its right to undertake the defense of such
Third Party Claim. Willkie Farr & Gallagher, Neal, Gerber & Eisenberg and
counsel for the Indemnifying Party's insurance company shall be deemed
reasonably acceptable to the Indemnified Party.
(b) Provided the Indemnifying Party shall have undertaken the
Indemnified Party's defense of a Third Party Claim with legal counsel reasonably
acceptable to the Indemnified Party, and shall have so notified the Indemnified
Party, the Indemnified Party shall be entitled to participate at its own expense
in the aforesaid negotiation or defense of any claim relating to such Losses
(subject to reimbursement to the limited extent provided in Section 8.3(e)), but
such negotiations or defense shall be controlled by counsel to the Indemnifying
Party.
(c) EXCEPT AS PROVIDED IN SECTION 8.3(e), the Indemnifying
Party shall not be liable for payments relating to the resolution of any dispute
or any settlement of any litigation or proceeding effected without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld, conditioned or delayed. The Indemnifying Party shall not, in the
defense of any such Third Party Claim, consent to the entry of any judgment or
award, or enter into any settlement, except in either event with the prior
consent of each Indemnified Party, which consent shall not be unreasonably
withheld, conditioned or delayed. To the extent any Indemnified Party declines
to consent to a bona fide offer of settlement or compromise, the Indemnifying
Party shall continue to defend, but the amount of such offer shall be the limit
of the Indemnifying Party's liability with respect to such claim, action or
proceeding with respect to the Indemnified Party that declined such offer.
Notwithstanding the foregoing, the Indemnifying Party shall not, without the
Indemnified Party's written consent, (which consent may be withheld in the sole
and absolute discretion of the Indemnified Party) resolve any dispute or settle
or compromise any claim regarding Losses from a Third Party Claim or consent to
entry of any judgment which would impose an injunction or other equitable relief
upon the Indemnified Party or which does not include as an unconditional term
thereof the release by the claimant or the plaintiff of the Indemnified Party
from all liability in respect of any such Losses.
(d) The failure to give notice of a claim under this Article
VIII shall not release the Indemnifying Party of its obligations under this
Article VIII, except to the extent of the actual harm suffered thereby.
(e) In the event the Indemnifying Party fails after notice
from the Indemnified Party to timely undertake negotiation of any dispute or
defend, contest or otherwise protect against any claim or suit with respect to a
Third Party Claim, and to so notify the Indemnified Party, the Indemnified Party
may, but will not be obligated to, defend, contest or otherwise protect against
the same, and make any compromise or settlement thereof and recover the entire
costs thereof from the Indemnifying Party, including reasonable attorneys' and
experts' fees, disbursements and all amounts paid as a result of such claim or
suit or the compromise or settlement thereof. The Indemnified Party shall
cooperate and provide such assistance as the Indemnifying Party may reasonably
request in connection with the negotiation of any dispute and the defense of the
matter subject to indemnification and the Indemnifying Party shall reimburse the
Indemnified Party's reasonable costs incurred thereafter in connection with such
cooperation and assistance.
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<PAGE> 28
(f) Notwithstanding anything to the contrary contained herein,
neither Seller nor the Company shall be entitled to indemnification hereunder
for any Losses to the extent it has received a credit therefor pursuant to
Article V.
ARTICLE IX.
MISCELLANEOUS
9.1. Survival. Except for the representations and warranties of
Seller set forth in Section 6.1(k), which representations and warranties and the
indemnification provisions relating thereto shall survive Closing indefinitely,
all other warranties, representations, covenants and agreements of Seller and of
the Company set forth in this Agreement shall survive until the Company ceases
to exist under the terms of the Operating Agreement.
9.2. Notices. Notices must be in writing and sent to the party to
whom or to which such notice is being sent, by (a) certified or registered mail,
postage prepaid and return receipt requested, (b) commercial overnight courier
service, or (c) delivered by hand with receipt acknowledged in writing, as
follows:
To the Company:
GGP/Homart II L.L.C.
110 North Wacker Drive
Chicago, Illinois 60606
Attention: Matthew Bucksbaum
with a copy thereof to:
The Comptroller of the State of New York
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Deputy Comptroller
Investments and Cash Management
with a copy thereof to:
The Comptroller of the State of New York
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Counsel
and
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<PAGE> 29
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6097
Attention: Monty Davis
and
Clarion Partners
335 Madison Avenue
New York, New York 10017
Attn: Jeffrey A. Barclay
and
Neal, Gerber & Eisenberg
Two North LaSalle Street, Suite 2200
Chicago, Illinois 60602
Attention: Marshall E. Eisenberg
To Seller:
with a copy thereof to:
The Comptroller of the State of New York
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Deputy Comptroller
Investments and Cash Management
with a copy to:
The Comptroller of the State of New York
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Counsel
and
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6097
Attention: Monty Davis
and
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<PAGE> 30
Clarion Partners
335 Madison Avenue
New York, New York 10017
Attn: Jeffrey A. Barclay
All notices (i) shall be deemed given when received if delivered by hand or
overnight courier service or, if mailed as described above with appropriate
postage, after 5 business days and (ii) may be given either by a party or by
such party's attorneys. The cost of delivery shall be borne by the party
delivering the notice.
9.3. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute a single document when at least one counterpart has been executed and
delivered by each party hereto.
9.4. Amendments. Except as otherwise provided herein, this
Agreement may not be changed, modified, supplemented or terminated, except by an
instrument executed by the party hereto which is or will be affected by the
terms of such change, modification, supplement or termination.
9.5. Waiver. Each party shall have the right exercisable in its
sole and absolute discretion, but under no circumstances shall be obligated, to
waive or defer compliance by any other party with its obligations hereunder or
to waive satisfaction of any conditions contained herein for its benefit. No
waiver by any party of a breach of any covenant or a failure to satisfy any
condition shall be deemed a waiver of any other or subsequent breach or failure
to satisfy any other condition. All waivers of any term, breach or condition
hereof must be in writing.
9.6. Successors and Assigns. Subject to the provisions of Section
9.10, the terms, covenants, agreements, conditions, representations and
warranties contained in this Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and assigns.
9.7. Third Party Beneficiaries. The provisions of this Agreement
are made for the benefit of the parties hereto, and their respective successors
in interest and assigns and are not intended for, and may not be enforced by,
any other person or entity.
9.8. Partial Invalidity. If any term or provision of this Agreement
or the application thereof to any person or circumstance shall, to any extent,
be invalid or unenforceable, the remainder of this Agreement, or the application
of such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby and
each term and provision of this Agreement shall be valid and enforced to the
fullest extent permitted by law.
9.9. Governing Law. This Agreement has been made pursuant to and
shall be governed by the laws of the State of Delaware (without regard to
conflicts of law rules).
9.10. Assignment. This Agreement may not be assigned or delegated by
any party without the written consent of the other except that the Company may
assign this Agreement to
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<PAGE> 31
an Affiliate of the Company, it being acknowledged and agreed by the Company
that no such assignment shall relieve the Company of its obligations under this
Agreement.
9.11. Headings; Exhibits. The headings or captions of the various
Articles and Sections of this Agreement have been inserted solely for purposes
of convenience, are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
9.12. Gender and Number. Words of any gender shall include the other
gender and the neuter. Whenever the singular is used, the same shall include the
plural wherever appropriate, and whenever the plural is used, the same also
shall include the singular where appropriate.
9.13. Entire Agreement. This Agreement constitutes the entire
agreement among the parties with respect to the subject matter hereof and
supersedes any prior written or oral understandings and/or agreement among them
with respect thereto.
9.14. Costs of Enforcement. In the event that any action is brought
by any party or parties to this Agreement against any other party or parties to
enforce rights under this Agreement, the prevailing party's or parties' costs in
such action, including reasonable attorneys' fees, shall be paid by the other
party or parties. Any amounts owing hereunder which are not paid when due shall
bear interest at the per annum rate equal to the prime rate of Bank of America,
N.A. (or any successor), as the same may change from time to time, plus four
percent.
9.15. Time of the Essence. Time is of the essence with regard to
each provision of this Agreement. If the final date of any period provided for
herein for the performance of an obligation or for the taking of any action
falls on a Saturday, Sunday or banking holiday, then the time of that period
shall be deemed extended to the next day which is not a Sunday, Saturday or
banking holiday. Each and every day described herein shall be deemed to end at
5:00 p.m. Central Time.
9.16. Indemnification Against Broker Claims. Seller shall indemnify,
defend and hold harmless the Company from and against all loss, liability,
damages, costs and expenses (including reasonable counsel fees) resulting from
any claim that may be made by any broker or other person claiming to have dealt
with Seller in connection with the Transactions, for a commission, fee or other
compensation by reason of the Transactions including any loss, liability, costs
and expenses (including reasonable counsel fees) incurred in enforcing this
indemnity. The Company shall indemnify, defend and hold harmless Seller from all
loss, liability, costs and expenses (including reasonable counsel fees)
resulting from any claim that may be made by any broker or other person claiming
a commission, fee or other compensation by reason of having dealt with the
Company in connection with the Transactions, including any loss, liability,
costs and expenses (including reasonable counsel fees) incurred in enforcing
this indemnity. The provisions of this Section 9.16 shall survive the Closing or
termination of this Agreement.
9.16.1. Arbitration. Except as otherwise provided herein, in the event
of any dispute in connection with the terms and provisions of this Agreement,
the parties agree to submit such dispute to arbitration in accordance with the
provisions of Section 14.13 of the
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Operating Agreement.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto on the day and year first above written.
SELLER: COMPANY:
THE COMPTROLLER OF THE STATE OF, GGP/HOMART II L.L.C.,
NEW YORK AS TRUSTEE OF THE a Delaware limited
COMMON RETIREMENT FUND liability company
By: /s/ John E. Hull By: /s/ Joel Bayer
---------------------------- ---------------------------
Name: John E. Hull Name: Joel Bayer
Title: Deputy Comptroller of Title: Senior Vice President
Investments & Cash
Management
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<PAGE> 34
LIST OF EXHIBITS AND SCHEDULES
Exhibits/Schedule Description
Exhibit A Legal Description of the Land
Exhibit B Permitted Exceptions
Schedule 1.1-1 Anchors
Schedule 1.1-2 Personalty
Schedule 6.1(e) Rent Roll
Schedule 6.1(f) Schedule of Arrearages
Schedule 6.1(g) Leases
Schedule 6.1(h) Claims under REA
Schedule 6.1(i) (a) List of all Contracts
Schedule 6.1(i) (b) List of all Contracts not terminable on 60 days
or less notice
Schedule 6.1(j) Permits and Licenses
Schedule 6.1(k) Environmental Disclosure
Schedule 6.1(l) Promotional Association Matters
Schedule 6.1(m) Pending or Threatened litigation
Schedule 6.1(x) List of Existing Indebtedness Documents
Schedule 6.1(y) Insurance Policies
Schedule 6.1(ff) Lease Brokerage Agreements
Schedule 6.1(ii) Seller's Rights in Neighboring Properties
Schedule 6.1(oo) Capital Expenditures in Progress or Contemplated
Schedule 6.1(ss) Notices of Uncured Violations
<PAGE> 1
EXHIBIT 2.11
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT is dated as of November 10, 1999, by and
between THE COMPTROLLER OF THE STATE OF NEW YORK AS TRUSTEE OF THE COMMON
RETIREMENT FUND, ("SELLER"), and GGP/HOMART II L.L.C., a Delaware limited
liability company (the "COMPANY").
RECITALS
WHEREAS, Seller owns 100% of the Stock of Acquiport Five Corporation, a
Delaware corporation, (the "ORIGINAL VENTURE");
WHEREAS, the Original Venture is the owner of the real property commonly
known as Montclair Plaza, Montclair, California ("MONTCLAIR PLAZA") which is
more particularly described on Exhibit A attached hereto, other than the
property owned by the Anchors (as hereinafter defined) at such mall;
WHEREAS, Seller intends to cause the Original Venture to convey fee
title to Montclair Plaza to Montclair Plaza, L.L.C. ("MPLCC"), a Delaware
limited liability company (a wholly owned subsidiary of the Company) together
with all leases, operating agreements, contracts and other assets
WHEREAS, Seller desires to contribute to the capital of the Company by
causing the Seller's Interest (as hereinafter defined) to be transferred to
MPLLC, and the Company desires to acquire such interests in MPLCC.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
agreements contained herein, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows::
ARTICLE I.
DEFINITIONS
1.1. For purposes of this Agreement, the following terms shall have the
meanings indicated below:
"ADA" shall mean the Americans With Disabilities Act, as amended.
"AFFILIATE" shall mean a Person that directly or indirectly through one
or more intermediaries controls, is controlled by, or is under common control
with the Person specified. The term "control" as used in the immediately
preceding sentence, means (a) the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of the
controlled entity or (b) the ownership (directly or indirectly) of not less than
50% of the voting stock of a corporation or not less than 50% of the aggregate
legal and equitable interest in a limited liability company, a partnership or
other business entity.
"AGREEMENT" shall mean this Contribution Agreement, as amended or
modified from time to time hereafter in accordance with the terms hereof.
<PAGE> 2
"ANCHOR" shall mean each Person identified in SCHEDULE 1.1-1.
"ASSUMED LIABILITIES" shall have the meaning set forth in
Section 2.3(a).
"AUDITOR" shall have the meaning set forth in Section 5.2(b).
"BALANCE SHEET SETTLEMENT DATE" shall have the meaning set forth in
Section 5.1(c).
"BOOKS AND RECORDS" shall mean all records, books of account and papers
of the Original Venture relating to the construction, ownership and operations
of the Property, including architect's drawings, blue prints and as-built plans,
maintenance logs, copies of warranties and guaranties, licenses and permits,
instruction books, employee manuals, records and correspondence relating to
insurance claims, financial statements, operating budgets, paper and electronic
media copies of data and other information relating to the Property available
from personal computers, structural, mechanical, geotechnical or other
engineering studies, soil test reports, environmental reports, underground
storage tank reports, feasibility studies, appraisals, ADA surveys or reports,
OSHA asbestos surveys, marketing studies, mall documents and compilations, lease
summaries and originals and/or copies of Leases, the REA and the Contracts and
correspondence related thereto.
"CLOSING" shall have the meaning set forth in Section 4.1.
"CLOSING BALANCE SHEETS" shall have the meaning set forth in
Section 5.1(a).
"CLOSING DATE" shall have the meaning set forth in Section 4.1 .
"CLOSING DOCUMENTS" shall mean the Seller Closing Documents and the
Company Closing Documents, collectively.
"CLOSING NET EQUITY" shall mean, in the case of the Preliminary
Proration Date Balance Sheet or Proration Date Balance Sheet, the excess of the
book value of the assets reflected on such balance sheet over the liabilities
reflected thereon.
"CODE" shall mean the Internal Revenue Code of 1986, as amended.
"COMPANY CLOSING DOCUMENTS" shall have the meaning set forth in
Section 4.3.
"CONTRACTS" shall mean all equipment leases and all service, maintenance
and other contracts and concessions that are currently in effect and to which
the Original Venture is a party respecting the use, maintenance, development,
sale or operation of the Property or any portion thereof (but excluding this
Agreement, the Leases, the Permitted Exceptions and the REA) including those
which are listed on SCHEDULE 6.1(I), together with any additions thereto,
modifications thereof or substitutions therefor hereafter entered into in
accordance with the provisions of this Agreement.
"CONTRIBUTION AMOUNT" shall have the meaning set forth in Section 2.2.
"DEFECT" shall mean any Lien, encumbrance, easement, agreement,
restriction, proceeding, lis pendens, notice, encroachment or exception to title
other than a Permitted Exception that materially and adversely affects the title
to or use of the Property.
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"ENVIRONMENTAL LAWS" shall mean all federal, state and local statutes,
ordinances, codes, rules, regulations, orders and decrees regulating, relating
to or imposing liability or standards concerning or in connection with Hazardous
Materials, underground storage tanks or the protection of human health, natural
resources or the environment, as any of the same may be amended from time to
time, including the Comprehensive Environmental Response, Compensation and
Liability Act ("CERCLA"), 42 U.S.C. ss.9601 et. seq., as amended by the
Superfund Amendments and Reauthorization Act or any equivalent state or local
laws or ordinances; the Resource Conservation and Recovery Act ("RCRA"), 42
U.S.C. ss. 6901 et seq., as amended by the Hazardous and Solid Waste Amendments
of 1984, or any equivalent state or local laws or ordinances; the Federal
Insecticide, Fungicide, and Rodenticide Act ("FIFRA"), 7 U.S.C. ss.136 et. seq.
or any equivalent state or local laws or ordinances; the Hazardous Materials
Transportation Act (49 U.S.C. ss. 1801 et seq.); the Emergency Planning and
Community Right-to-Know Act ("EPCRA"), 42 U.S.C. ss.11001 et. seq. or any
equivalent state or local laws or ordinances; the Toxic Substance Control Act
("TSCA"), 15 U.S.C. ss.2601 et. seq. or any equivalent state or local laws or
ordinances; the Atomic Energy Act, 42 U.S.C. ss.2011 et. seq., or any equivalent
state or local laws or ordinances; the Clean Water Act (the "Clean Water Act"),
33 U.S.C. ss.1251 et. seq. or any equivalent state or local laws or ordinances;
the Clean Air Act (the "Clean Air Act"), 42 U.S.C. ss.7401 et seq. or any
equivalent state or local laws or ordinances; the Occupational Safety and Health
Act, 29 U.S.C. ss.651 et seq. or any equivalent state or local laws or
ordinances.
"EXISTING INDEBTEDNESS" shall mean the loans listed on Schedule 6.1(X).
"EXISTING INDEBTEDNESS DOCUMENTS" shall have the meaning set forth in
Section 6.1(X).
"EXISTING LENDER" shall mean the holder or holders of the Existing
Indebtedness as specified on Schedule 6.1(X).
"EXISTING MANAGER" shall mean Donahue Schriber.
"EXECUTION DATE" shall mean the date of this Agreement.
"FINANCIAL STATEMENTS" shall have the meaning set forth in
Section 6.1(v).
"GAAP" Shall mean generally accepted accounting principles in the United
States of America in effect from time to time.
"GAAS" shall mean Generally Accepted Auditing Standards as promulgated
by the Auditing Standards Division of the American Institute of Certified Public
Accountants from time to time.
"GOVERNMENTAL AUTHORITY" shall mean any federal, state or local
government, court, department, commission, board and office having jurisdiction
over the Property, Seller, Original Venture or the Company, or any other body
exercising functions similar to those of any of the foregoing.
"HAZARDOUS MATERIALS" shall mean any substance, material, waste, gas or
particulate matter which (i) is now, or at any future time may be, regulated by
the United States Government, the state in which the Real Property is located,
any other state with jurisdiction, or
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<PAGE> 4
any local governmental authority, or (ii) the exposure to, or manufacture,
possession, presence, use generation, storage, transportation, treatment,
release, disposal, abatement, cleanup, removal, remediation or handling of is
prohibited, controlled or regulated by any Environmental Law, or (iii) requires
investigation or remediation under any Environmental Law or common law, or (iv)
is toxic, explosive, corrosive, flammable, infectious, radioactive,
carcinogenic, mutagenic or otherwise hazardous. Such term includes any material
or substance which is (1) defined as a "hazardous waste," "hazardous material,"
"hazardous substance," "extremely hazardous waste," "restricted hazardous waste"
or any like or similar term under any applicable Environmental Law; (2) oil and
petroleum products; (3) asbestos or asbestos-containing material as defined in
the regulations of the Occupational Safety and Health Administration at 29
C.F.R. ss.1910.1001; (4) polychlorinated biphenyls; (5) radioactive material;
(6) designated as a "toxic pollutant" or a "hazardous substance" pursuant to
Sections 307 or 311 of the Clean Water Act; (7) defined as a "hazardous waste"
pursuant to Section 1004 of RCRA; (8) defined as a "hazardous substance"
pursuant to Section 101 of CERCLA; (9) designated as a "hazardous chemical"
substance or mixture pursuant to TSCA; (10) designated as an "extremely
hazardous" substance under Section 302 of EPCRA; (11) designated as a "priority
pollutant" or "hazardous air pollutant" pursuant to the Clean Air Act; (12)
designated as a hazardous chemical under the Occupational Safety and Health Act;
(13) radon gas or other radioactive source material, including special nuclear
material, and byproduct materials regulated under the Atomic Energy Act, 42
U.S.C. ss.2011 et. seq.; (14) subject to regulation under FIFRA; (15) natural
gas, natural gas liquids, liquefied natural gas, and synthetic gas usable for
fuel; or (16) infectious wastes or materials and pathogenic bacteria or other
pathogenic microbial agents.
"IMPROVEMENTS" shall mean improvements, buildings, structures, fixtures,
facilities, installations, machinery and equipment, in, on, over or under the
Land, including the foundations and footings therefor, elevators, plumbing, air
conditioning, heating, ventilating, mechanical, electrical and utility systems
(except to the extent owned by a utility company) and any other similar systems,
signs and light fixtures (except to the extent of trade fixtures and equipment
owned by tenants under the Leases), doors, windows, fences, parking lots, walks
and walkways and each and every other type of physical improvement to the extent
owned, in whole or in part, by the Original Venture, located at, on or affixed
to the Land, to the full extent such items constitute or are or can or may be
construed as realty under the laws of the state in which the Real Property is
located.
"INDEMNIFIED COMPANY PERSONS" shall have the meaning set forth in
Section 8.1.
"INDEMNIFIED PARTY" shall have the meaning set forth in Section 8.3.
"INDEMNIFIED SELLER PERSONS" shall have the meaning set forth in
Section 8.2.
"INDEMNIFYING PARTY" shall have the meaning set forth in Section 8.3.
"LAND" shall mean those certain parcels of real estate described on
EXHIBIT A.
"LANDLORD WORK" shall mean all work, improvements, fixtures, fittings
and equipment(other than normal repairs, maintenance or replacements) that are
required (or may in the future be required to be furnished or provided to
Tenants or REA Parties or paid for or by landlord or developer under the terms
of the Leases or the REA, as in effect on the date hereof.
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<PAGE> 5
"LEASES" shall mean all leases, tenancies, concessions, licenses and
occupancy agreements currently in effect and to which the Original Venture or
any of its predecessors in title is a party affecting or relating to the
Property including those which are listed on SCHEDULE 6.1(G), together with any
additions thereto, modifications thereof or substitutions therefor hereafter
entered into in accordance with the provisions of this Agreement.
"LEGAL REQUIREMENTS" shall mean any laws, ordinances, orders, rules,
regulations and requirements of any Governmental Authority which may be
applicable to the Property, the Original Venture or Seller.
"LIENS" shall mean any mortgages, deeds of trust, security interests,
judgments or charges, pledges, options, rights of first offer or first refusal,
liens of any type, restrictions, claims and other encumbrances of any nature
whatsoever other than the Existing Indebtedness Documents.
"LIEN SEARCHES" shall mean a search report by an independent search firm
reasonably acceptable to the Company of the Secretary of State records, county
recorder records, local court records (federal, state, county and municipal) and
such other official public records with respect to the Property that would
disclose the presence of any Liens, bankruptcy proceedings, lis pendens or other
matters affecting the Property, the Original Venture or Seller.
"LOSSES" shall mean any and all claims, actions, suits, proceedings,
demands, losses, damages, liabilities, obligations, judgments, settlements,
awards, penalties, costs or expenses, including reasonable attorneys', experts'
or consultants' fees and expenses.
"OPERATING AGREEMENT" shall mean that certain Operating Agreement among
the Company, Seller and GGP Limited Partnership, dated as of the date hereof.
"ORIGINAL VENTURE" shall mean Acquiport Five Corporation, a Delaware
corporation.
"PARTY" shall mean a party to the REA, a Contract or Permitted Exception
Document (or the successor or assignee thereof) or a Tenant under a Lease, in
each case other than the Original Venture or its predecessors in title with
respect to the Property.
"PERMITTED EXCEPTION DOCUMENT" shall have the meaning set forth in
Section 2.3(b).
"PERMITTED EXCEPTIONS" shall mean the exceptions to title to the
Property listed on EXHIBIT B attached hereto and made a part hereof.
"PERSON" shall mean any individual, corporation, partnership, limited
liability company, governmental unit or agency, trust, estate or other entity of
any type.
"PERSONALTY" shall mean all of the personal property, both tangible and
intangible, owned by the Original Venture (and the Original Venture's interest
in any of the following) and located in or upon or used in connection with the
operation or maintenance of the Property, including machinery; equipment;
building supplies and materials; consumables; inventories; names, logos,
trademarks, trade names and copyrights; all assignable licenses, permits,
approvals, authorizations, variances, consents and certificates of occupancy;
all assignable guarantees or warranties (including performance bonds obtained
by, or for the benefit of, the Original Venture, pertaining to the ownership,
construction or development of the Real Property
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<PAGE> 6
or any part thereof); the Books and Records; computer and peripheral equipment;
computer software and data contained in hard drives and on diskette; advertising
materials; and telephone exchange numbers. Without limiting the foregoing,
"Personalty" shall include the property listed on SCHEDULE 1.1-2. Personalty
shall not include personal items belonging to Tenants or to employees of the
Original Venture and the rights of the Original Venture or AMLLC in and to the
Leases, the REA and the Contracts.
"PRELIMINARY PRORATION DATE BALANCE SHEET" shall have the meaning set
forth in Section 5.1(a).
"PROMOTIONAL ASSOCIATION" shall have the meaning set forth in
Section 6.1(l).
"PROPERTY" shall mean (a) the Real Property, (b) the Personalty, (c) the
rights and interests of the Original Venture in, to and under all Leases, (d)
the rights and interests of the Original Venture in, to and under the REA, (e)
the rights and interests of the Original Venture in, to and under the Contracts
to the extent assignable, (f) the rights and interests of the Original Venture
in, to and under the Existing Indebtedness Documents.
"PRORATION DATE" shall mean November 30, 1999.
"PRORATION DATE BALANCE SHEET" shall have the meaning set forth in
Section 5.1(a).
"REAL PROPERTY" shall mean the Land and the Improvements, together with
all of the estate, right, title and interest of the Original Venture therein,
and in and to (a) any land lying in the beds of any streets, roads or avenues,
open or proposed, public or private, in front of or adjoining the Land to the
center lines thereof, and in and to any awards to be made in lieu thereof and in
and to any unpaid awards for damage to the foregoing by reason of the change of
grade of any such streets, roads or avenues; and (b) all easements, rights,
licenses, privileges, rights-of-way, strips and gores, hereditaments and such
other real property rights and interests appurtenant to the foregoing (including
all rights of the Original Venture under the REA).
"REA" shall mean that certain Declaration of Restrictions, Easements,
Agreements and Covenants dated October 15, 1968, which declaration was recorded
on November 8, 1968 in Book 7127, page 315, Official Records and amended by
Amendment No. 1, recorded August 6, 1970 in Book 7493, page 577, Official
Records and amended by Amendment No. 2, recorded September 26, 1995 as
Instrument No. 95-332627, Official Records; that certain Construction, Operation
and Reciprocal Easement Agreement dated as of the 29th day of March, 1966,
recorded April 1,1966, in Book 6600, Page 1 through 200, inclusive, Official
Records, as amended by First Amendment, recorded September 8, 1967 in Book 6886,
Page(s) 928, Official Records, as amended by Second Amendment, recorded November
15, 1967, in Book 6924, Page 525, Official Records,and as amended by Third
Amendment, recorded August 6, 1970, in Book 7493, Page 548, Official Records;
and as amended by Fourth Amendment Amendment to and Restatement of Construction,
Operation and Reciprocal and Restatement of Construction, Operation and
Reciprocal Easement Agreement, dated as of October 1, 1985, by and between
Homart Development Corporation ("Developer"), Carter Hawley Hale Stores, Inc.
("Broadway"), Sears Roebuck Co. ("Sears"), J.C. Penney Company, Inc. ("Penney"),
May Department Stores Company ("May") and Nordstrom, Inc. ("Nordstrom") recorded
June 30, 1987 as Instrument No. 87-222844, as supplemented by that certain (i)
Separate Agreement dated October 31, 1985, by and between Developer and
Broadway, (ii) Separate Agreement
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dated October 31, 1985 by and between Developer and May, (iii) Separate
Agreement dated __________, 198_ by and between Developer and Sears, and (iv)
Supplemental Agreement dated __________, 198_ by and between Developer and
Nordstrom, Inc. together with any additions thereto, modifications thereof or
substitutions therefor hereafter entered into in accordance with the provisions
of this Contribution Agreement.
"REGULATIONS" shall mean the final, temporary or proposed Income Tax
Regulations promulgated under the Code, as such regulations may be amended from
time to time (including corresponding provisions of succeeding regulations).
"RENT ROLL" shall have the meaning set forth in Section 6.1(e).
"RENTS" shall mean fixed, minimum, additional, percentage and overage
rents, common area maintenance charges, advertising and promotional fees,
insurance charges, rubbish removal charges, sprinkler charges, shoppers aid
charges, water charges, utility charges, HVAC charges, amounts payable with
respect to real estate and any other taxes, and other amounts payable by any
Party under the Leases and the REA.
"RETAINED DEBT" shall have the meaning set forth in the Operating
Agreement.
"SELLER CLOSING DOCUMENTS" shall have the meaning set forth in
Section 4.2.
"SELLER'S INTEREST" shall mean all right title and interest of the
Original Venture in the Property.
"SELLER'S LIABILITIES" shall have the meaning set forth in
Section 2.3(b).
"SURVEY" shall mean the Urban ALTA/ACSM Land Title Survey of the
Property by David J. MacArthur, Job #990128-1, last revised 10/5/99.
"TENANTS" shall mean tenants, concessionaires, licensees and/or
occupants under the Leases.
"TENANT SERVICES" shall mean all services supplied by or on behalf of
the Original Venture to Tenants for which Tenants are separately charged, other
than services in the nature of common area maintenance.
"THIRD PARTY CLAIM" shall have the meaning set forth in Section 8.3(a).
"TITLE COMMITMENT" shall mean the Proforma Policy of Title Insurance No.
6008399 issued by the Title Company to MPLLC dated November 4, 1999, together
with copies of all documents underlying all exceptions to title and all
encumbrances on and other matters of record affecting the Real Property.
"TITLE COMPANY" shall mean Commonwealth Land Title Insurance Company.
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"TITLE POLICY" shall mean Owner's Policy of Title Insurance to be issued
by Title Company and effective as of the date hereof, insuring MPLLC as owner of
good, marketable and indefeasible fee title to the Property, subject only to the
Permitted Exceptions.
"TRANSACTIONS" shall mean the transactions contemplated by this
Agreement.
"UTILITY DEPOSITS" shall have the meaning set forth in Section 5.8.
1.2. References. All references in this Agreement to particular
sections or articles shall, unless expressly otherwise provided, or unless the
context otherwise requires, be deemed to refer to the specific sections or
articles in this Agreement, and any references to "Exhibit" shall, unless
otherwise specified, refer to one of the exhibits annexed hereto and, by such
reference, be made a part hereof. The words "herein", "hereof", "hereunder",
"hereinafter", "hereinabove" and other words of similar import refer to this
Agreement as a whole and not to any particular section, subsection, paragraph or
article hereof. The words "include", "includes" and "including" shall be deemed
in each case to be followed by the phrase "without limitation".
1.3. Terms Generally. Definitions in this Agreement apply equally to
both the singular and plural forms of the terms defined. Whenever the context
may require, any pronoun shall include the corresponding masculine, feminine and
neuter forms.
ARTICLE II.
CONTRIBUTION
2.1. Contribution of Seller's Interest. Upon the terms and subject to
the conditions contained herein, at the Closing, Seller shall contribute to the
Company, and the Company shall acquire, Seller's Interest, free and clear of all
Liens. The Seller's Interest shall be deemed to have a fair market value equal
to $160,000,000.00, which represents the fair market value of the Property, plus
or minus Closing Net Equity as set forth on the Preliminary Proration Date
Balance Sheet (such amount, as the same is adjusted as hereinafter provided, the
"CONTRIBUTION AMOUNT").
2.2. Consideration. In consideration for the contribution of Seller's
Interest and certain other property being contributed to the capital of the
Company by Seller, and in addition to the assumption of liabilities and
adjustments as hereinafter provided, on the Closing Date, Seller shall receive
units of membership interest in the Company pursuant to the Operating Agreement.
2.3. Liabilities.
(a) MPLLC shall be liable and responsible for all liabilities and
obligations of the Original Venture other than the Seller's Liabilities (the
"ASSUMED LIABILITIES"). Without limiting the foregoing, Assumed Liabilities
shall include all liabilities and obligations relating to the Existing
Indebtedness (other than Seller's Retained Debt) notwithstanding any joint and
several or other liability of Seller under the Existing Indebtedness Documents.
Further, without limiting the foregoing, Assumed Liabilities shall include all
leasing costs, allowances, concessions, rent abatements, build-out costs, other
leasing inducements and leasing commissions with respect to all leases executed
on or after September 1, 1999, provided,
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however, that with respect to any leases executed on or after January 1, 2000
the Company shall only pay commissions due to General Growth Management, Inc.
and Seller shall remain liable for and shall pay commissions due to Existing
Manager.
(b) The Seller shall be responsible for all of the following
liabilities or obligations of the Original Venture, Seller or any predecessor of
any of them (collectively, the "SELLER PARTIES")or other Person specified below
(collectively, the "SELLER'S LIABILITIES"): (i) any liability or obligation that
is not related to the Property, (ii) any liability or obligation that arises
from contracts or agreements other than the Leases, the Contracts, the REA, the
Existing Indebtedness Documents or the instruments or agreements constituting
the Permitted Exceptions (a "PERMITTED EXCEPTION DOCUMENT"), (iii) any tort
liability arising from any accident, injury, event, circumstance, action or
omission occurring prior to the Closing Date (except to the extent of the
insurance proceeds received by the Original Venture in connection therewith),
whether or not asserted before or after the Closing, (iv) any liability or
obligation to a Party for breach of, or other payment obligation under, a Lease,
REA, Contract or Permitted Exception Document (including any claimed overcharge
of common area maintenance or other similar charges but excluding the items
covered in clause (v)) to the extent that the liability or obligation relates to
the period or accrued prior to the Closing Date, whether or not asserted before
or after the Closing, (v) all leasing costs, costs of Landlord Work (net of the
value of any additional revenues that are to be received by MPLLC and are
directly attributable to the Landlord Work), allowances, concessions, rent
abatements, build-out costs, other leasing inducements and leasing commissions,
with respect to all leases executed prior to September 1, 1999, (vi) any fine,
penalty or other amount that is imposed or assessed by or which was payable to
(including any installment thereof) a Governmental Authority for the period
prior to the Closing Date, whether or not imposed or assessed before or after
the Closing, (vii) all federal, state and local taxes of any Seller Party of
whatever kind and nature relating to the period prior to Closing, (viii)
liabilities and obligations relating to any employees (current or former),
employee benefit plans or collective bargaining agreements of the Existing
Manager or any Seller Party that accrued, relate to or arise from any incident,
event, circumstance, action or omission occurring during the period through the
effective termination date of the management agreement with the Existing
Manager, including severance pay and accrued vacation pay obligations and other
liabilities of the Existing Manager, any Seller Party, the Company or others
relating to the termination of any of such employees prior to the effective
termination date of the management agreement with the Existing Manager or as the
result of the consummation of the Transactions, (ix) any liability or obligation
to pay for work performed at, or materials supplied or delivered to, the
Property prior to the Closing, (x) any liability or obligation relating to
litigation that is commenced by Persons other than Parties or Governmental
Authorities and that relates to incidents, events, circumstances, actions or
omissions occurring during the period prior to Closing, whether or not asserted
before or after the Closing, (xi) any liability or obligation arising out of the
termination of the management agreement with the Existing Manager, (xii) any
commissions due to Existing Manager with respect to leases executed on or after
January 1, 2000, (xiii) any obligation, liability, cost or expense related to
any requirement, obligation or demand to construct or provide additional parking
or a parking deck for the benefit of Macy's or any affiliate of Macy's, and
(xiv) any other costs or liabilities imposed on Seller hereunder or under the
Operating Agreement, including the obligations of Seller thereunder as to the
Retained Debt. Notwithstanding anything to the contrary contained herein,
Seller's Liabilities shall not include (i) any liabilities or obligations to the
extent that the Company has received a credit therefor under the provisions of
Article V and (ii) subject to the provisions of Section 2.3(c), the cost of
repair, remediation or correction of any
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physical defect in the Property (but do include damages, fines or other amounts
owing to Parties, Governmental Authorities or others on account of any such
physical defect to the extent that such damages, fines or other amounts are not
for the cost of repair, remediation or correction thereof).
(c) Nothing contained in this Section 2.3 shall impair the rights
of the Company for a breach of any representation or warranty contained herein
or in the Seller Closing Documents.
ARTICLE III.
COSTS AND EXPENSES
3.1. Title and Survey Costs. Title and Survey costs shall be paid
as follows:
(a) The Company shall pay the cost of obtaining the Title
Commitment and the cost of recording any documents required to release, cure or
remove Defects;
(b) The Company shall pay the cost of obtaining the Survey;
(c) The Company shall pay the cost of recording any other
documents;
(d) Subject to any separate agreement between Seller and the
Company, the Company shall be solely responsible for the payment of any real
property transfer taxes levied or imposed upon Seller, MPLLC, the Original
Venture or the Property as a result of the transfers to MPLLC or the Company,
gains taxes levied or imposed upon Seller, MPLLC or the Original Venture as a
result of the transfers to MPLLC or the Company, sales taxes levied or imposed
upon Seller, MPLLC, or the Original Venture or the Property as a result of the
transfers to MPLLC or the Company and documentary stamps and other taxes, fees
or charges imposed in connection with the conveyance of the Seller's Interest or
any portion thereof;
(e) The Company shall pay all filing fees and charges and any
personal property sales taxes in connection with the indirect transfer of the
Personalty to the Company; and
(f) The Company shall pay the costs of the Lien Search.
3.2. Other Costs. Except for expenses and costs related to the
termination of any existing management agreement and the termination of any
employees, the Company shall pay any and all costs or expenses in connection
with the termination of any Contracts, other than the termination of management
contracts (which shall be at the cost and expense of Seller), to be terminated
in accordance with the terms of this Agreement. The Company shall pay the legal
fees of its counsel and Seller shall pay the legal fees of Willkie Farr &
Gallagher incurred in connection with the drafting and negotiation of this
Agreement and the Closing of the Transactions.
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ARTICLE IV.
CLOSING
4.1. Closing. The closing of the Transactions (the "CLOSING") shall
take place at the offices of Neal, Gerber & Eisenberg, Two North LaSalle Street,
Chicago, Illinois 60602, commencing at 10:00 a.m., local time, on the date
hereof (the "CLOSING DATE").
4.2. Seller Closing Documents. On or prior to the Closing Date, Seller
shall deliver, or cause to be delivered, to the Company the following documents
(collectively, the "SELLER CLOSING DOCUMENTS"), duly executed by Seller and the
other parties thereto (other than the Company) and in form and substance
reasonably acceptable to the Company and to Seller unless the form thereof is
attached hereto:
(a) Grant Deed and Assignments conveying the Seller's Interest to
MPLLC.
(b) An affidavit of the Original Venture stating its U.S. taxpayer
identification number and that it is a "United States person", as defined by
Sections 1445(f)(3) and 7701(b) of the Code.
(c) Certificates issued by the Delaware Secretary of State, dated
not more than ten (10) days prior to the Closing Date, certifying the good
standing of Original Venture.
(d) Originals or certified copies of the organizational documents
for the Original Venture, including articles of organization, by-laws, minute
books and records of meetings, including all amendments thereof.
(e) Original, or copies certified by Seller as true, complete and
correct, of each of the Leases and the REA, together with all Books and Records
including current real estate tax bills, water, sewer and utility bills and all
Tenant correspondence.
(f) Any instruments, documents or certificates required to be
executed by the Original Venture with respect to any state, county or local
transfer taxes applicable to the conveyance of Seller's Interest pursuant to
this Agreement.
(g) Keys and combinations to locked compartments within the
Property.
(h) The Existing Indebtedness Documents.
(i) Such other documents, instruments or agreements which Seller
or the Original Venture is required to deliver to the Company pursuant to the
other provisions of this Agreement or which the Company reasonably may deem
necessary or desirable in order to consummate the Transactions in accordance
with the terms hereof.
(j) Any Tenant security deposits in Seller's or the Original
Venture's possession or control.
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4.3. Company Closing Documents. On or prior to the Closing Date, the
Company shall deliver to Seller the following documents (herein referred to
collectively as the "COMPANY CLOSING DOCUMENTS"), duly executed by an authorized
officer on behalf of the Company and the other parties thereto (other than
Seller) and in form and substance reasonably acceptable to Seller and to the
Company unless the form thereof is attached hereto:
(a) An agreement or agreements pursuant to which MPLLC accepts
assignment of Seller's Interest.
(b) Duly executed and acknowledged Secretary's Certificates,
certifying that the members of both the Company and of MPLLC have duly adopted
resolutions authorizing the consummation of the Transactions and certifying the
authority of the respective authorized signatories of the Company and MPLLC,
respectively, executing and delivering, as applicable, this Agreement and the
Company Closing Documents in their capacities as officers of the Company and
MPLLC, respectively.
(c) A certificate issued by the Secretary of State of Delaware
dated not earlier than ten (10) days prior to the Closing Date certifying the
existence and good standing of the Company as of the date of such certificate.
(d) Copies of the Certificates of Formation of the Company and
MPLCC and any amendments thereto, as of the Closing Date certified by the
Secretary of State of the State of Delaware as of a date not more than twenty
(20) days prior to the Closing Date, together with a certificate of an officer
of the Company to the effect that the Certificates of Formation of the Company,
as certified by the Secretary of State of Delaware, has not been further
amended, revised, restated, canceled or rescinded up to and including the
Closing Date.
(e) Any instruments, documents or certificates required to be
executed by the Company and MPLLC with respect to any state, county or local
transfer taxes applicable to the conveyance of Seller's Interest pursuant to
this Agreement.
(f) Such other documents, instruments or agreements which the
Company and/or MPLLC may be required to deliver to Seller pursuant to the other
provisions of this Agreement or which Seller reasonably may deem necessary or
desirable to consummate the Transactions; provided, however, that any such other
document, instrument or agreement which Seller reasonably deems necessary or
desirable shall not impose upon the Company any obligation or liability other
than an obligation or liability expressly imposed upon the Company pursuant to
the terms of this Agreement or pursuant to the terms of the other the Company
Closing Documents specified in this Section 4.3.
4.4. Joint Deliveries. Seller and the Company shall jointly execute and
deliver a Preliminary Proration Date Balance Sheet.
ARTICLE V.
Net Equity Adjustment
5.1 Net Equity Adjustment.
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(a) At or prior to Closing, Seller shall prepare and deliver to
the Company a balance sheet with respect to the Property and the Original
Venture (the "PRELIMINARY PRORATION DATE BALANCE SHEET") prepared as of the last
day of the month prior to the Closing Date, or, if the data as of such date are
unavailable, the last day of the second month prior to the Closing Date. No
later than one hundred twenty (120) days after the Closing Date, the Company
shall cause to be prepared and delivered to Seller an unaudited balance sheet
with respect to the Property and MPLLC as of the Proration Date (the "PRORATION
DATE BALANCE SHEET" and, together with the Preliminary Proration Date Balance
Sheet, the "CLOSING BALANCE SHEETS"), showing Closing Net Equity. The Closing
Balance Sheets shall be prepared on an accrual basis in accordance with GAAP
applied in a manner consistent with that utilized in the preparation of the
financial statements for General Growth Properties, Inc., without regard to any
special provisions relating to its REIT status, provided however, that the
following rules shall be employed:
(i) The following assets shall be excluded or eliminated:
deferred rent receivables; deferred financing, leasing and other costs;
tenant lease incentives; prepaid expenses to the extent the full amount
thereof could not reasonably be expected to inure to the benefit of the
MPLLC and/or the Original Venture (including but not limited to prepaid
insurance premiums);
(ii) no amount shall be recorded under the classification
"Building & Improvements", "Fixtures & Equipment", "Tenant Improvements"
and "Land;"
(iii) net carrying amounts for or in respect of the following
shall be eliminated, with such elimination to be done, in each case net
of accumulated amortization and depreciation, allowances for bad debts
and other contra accounts: building and improvements, fixtures and
equipment, land, capitalized taxes, tangible personal property and
goodwill;
(iv) the following assets shall be included (and shall be
deemed to be part of the assets of the Original Venture and transferred
to the Company): all cash in the Original Venture;
(v) the following liabilities shall be excluded or
eliminated: Retained Debt, deferred revenues and income tax accounts;
(vi) at Seller's election, a liability may be excluded to
the extent that it is a Seller's Liability and any reserves or other
assets relating to such excluded liability shall be excluded or
distributed to Seller;
(vii) there shall be excluded from assets an amount equal to
proceeds from condemnation awards (or payments in lieu thereof),
casualty insurance or the termination of any Lease, in each case
received after the date hereof;
(viii) reserves for billed accounts receivable, including Rent
and all other tenant charges, shall be calculated so that (A) accounts
receivable from Tenants in bankruptcy shall utilize a reserve of 100%,
(B) accounts receivable that are 90 days (but less than 120 days) past
due shall utilize a reserve of 25%, and (C) accounts receivable that are
more than 120 days past due shall utilize a reserve of 50%, and in each
case
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accounts receivable shall also include a reserve of five percent (5%)
for unbilled tenant charges, and an accrual shall be recorded for
insurance deductibles based upon insurance company estimates; and
(ix) any distribution made by the Original Venture or MPLLC
during November shall be treated as though not made.
(b) If based on the Preliminary Proration Date Balance Sheet,
Closing Net Equity exceeds zero, the Contribution Amount will be increased by
the amount of such excess. If, based on the Preliminary Proration Date Balance
Sheet, Closing Net Equity is less than zero, the Company will receive a credit
against the Contribution Amount equal to the amount of such shortfall.
(c) If, based on the Proration Date Balance Sheet, Closing Net
Equity, adjusted for the amount of any adjustment made pursuant to Section
5.1(b), exceeds zero, the Company will, no later than the later of (i) sixty-one
(61) days following the delivery of the Proration Date Balance Sheet or (ii)
five (5) business days following the resolution of a dispute with respect to an
item on the Proration Date Balance Sheet as set forth in subsection 5.2 hereof
(the "Balance Sheet Settlement Date"), pay to Seller the amount of such excess
by wire transfer of immediately available funds to an account designated by
Seller. If Closing Net Equity, adjusted for the amount of any adjustment made
pursuant to Section 5.1(b), is less than zero, Seller will pay to the Company no
later than the Balance Sheet Settlement Date the amount of such shortfall by
wire transfer of immediately available funds to an account designated by the
Company.
(d) Seller shall use reasonable efforts to cause Existing Manager
to cooperate with and assist the Company in the preparation of the Proration
Date Balance Sheet.
5.2 Resolution of Disputes on Proration Date Balance Sheet.
(a) If Seller disagrees with any item on the Proration Date
Balance Sheet, Seller shall notify the Company in writing of such disagreement
within sixty (60) days after Seller's receipt of the Proration Date Balance
Sheet. Such notice shall set forth the basis for such disagreement in reasonable
detail. During such sixty (60) day period, the Company shall afford Seller and
its duly designated representatives access to all of the Original Venture's
books and records, in each case solely for the purposes of resolving such
disagreement. The Company and Seller shall thereafter negotiate in good faith to
resolve any such disagreements, provided that Seller shall promptly pay to the
Company, or the Company shall promptly pay to Seller, as the case may be, the
amount determined pursuant to Section 5.1(c) that is not subject to dispute.
(b) If the Company and Seller are unable to resolve any such
disagreements within thirty (30) days after the expiration of the sixty (60) day
period referred to in Section 5.2(a), or, if the Company and Seller are unable
to resolve a dispute concerning the final adjustments to the Contribution
Amount, the Company and Seller shall cause Ernst & Young LLP (the "AUDITOR") to
resolve all disagreements on the disputed items as soon as practicable, provided
that the Auditor shall be bound by the provisions of Section 5.1 and may not
assign a value to any item greater than the greatest value for such item claimed
by either party or less than the smallest value for such item claimed by either
party. Each of the Company and Seller
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shall permit the Auditor to have full access to its books, records, key
employees and independent accountants in order to resolve any such
disagreements. The resolution of such disagreements by the Auditor shall be
final and binding on the Company and Seller. The fees and expenses of the
Auditor shall be paid by the party whose position is most at variance with the
decision of the Auditor.
ARTICLE VI.
REPRESENTATIONS AND WARRANTIES
6.1. Seller's Representations and Warranties. Seller represents and
warrants to the Company as follows:
(a) Seller is an instrumentality of the State of New York, validly
existing under the laws of the State of New York with full power and authority
to execute, deliver and perform this Agreement.
(b) The execution, delivery and performance of this Agreement by
Seller have been duly and validly authorized by all necessary action on the part
of Seller. This Agreement has been, and the Seller Closing Documents will be,
duly executed and delivered by Seller or the Original Venture, as applicable.
This Agreement constitutes, and when so executed and delivered the Seller
Closing Documents will constitute, the legal, valid and binding obligations of
Seller or the Original Venture, as applicable, enforceable against Seller or the
Original Venture, as applicable, in accordance with their respective terms.
(c) None of the execution, delivery or performance of this
Agreement by or the Original Venture does or will, with or without the giving of
notice, lapse of time or both, violate, conflict with, constitute a default,
result in a loss of rights, acceleration of payments due or creation of any Lien
upon the Property or require the approval or waiver of or filing with any Person
(including any governmental body, agency or instrumentality) under (i) the
organizational documents of Seller or the Original Venture, any agreement,
instrument or other document to which Seller or the Original Venture is a party
or by which it is bound, (ii) any judgment, decree, order, statute, injunction,
rule, regulation or the like of a governmental unit applicable to the Property,
the Original Venture, or Seller (other than notification of ownership change or
transfer or reissuance of permits as may be required under Environmental Laws),
or (iii) any contract or agreement by which Seller or the Original Venture may
be bound.
(d) All right, title and interest of the Original Venture in and
to the Property have been conveyed to MPLLC. No other property (other than the
Real Property and property owned by any Anchor) comprises "Montclair Plaza".
(e) Schedule 6.1(e) is a true, correct and complete copy of the
rent roll of the Property (the "RENT ROLL") as of November 1, 1999, prepared in
the format prescribed by the MRI software reporting system currently in place at
the Property. All information therein is accurate as of its date. Except as set
forth to the contrary on Schedule 6.1(e), no Tenant has paid any rent in advance
except for the current month.
(f) Schedule 6.1(f) is a true, correct and complete schedule of
delinquencies in Rent, common area maintenance and other similar charges,
showing amounts
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payable as of November 1, 1999 by each Party, which schedule sets forth
separately and certifies the items of Rents with respect to which each such
Party is in arrears, the amount of each item and the period of such arrearage.
(g) Schedule 6.1(g) contains a complete and correct list of all
existing Leases and modifications thereof and supplements thereto regardless of
whether the terms thereof have commenced, setting forth with respect to each (i)
the date thereof and of each modification thereof and supplement thereto and
(ii) the names of the Parties thereto (including the name of the current
assignee, if any, but only if and to the extent Seller has actual notice of any
such assignment). A true and complete copy of each Lease demising space in
excess of 10,000 square feet, together with each modification thereof and
supplement thereto, has heretofore been furnished to the Company for inspection
and has been delivered to the Company on the date hereof. Each Lease constitutes
the entire agreement between the Original Venture and each Party thereto, and
the Original Venture has not made any oral promises or agreements amending or
modifying the same. No Person is using or occupying (or is entitled to use or
occupy) the Real Property except under a Lease or the REA.
(i) There are no leases executed by the Original Venture or
other rights of occupancy or use granted by the Original Venture or, to Seller's
knowledge, its predecessors in title of any portion of the Property other than
the Leases. Each of the Leases is valid and subsisting and in full force and
effect, and no Rents or other payments or deposits are held by Seller, the
Original Venture or the Original Venture's agent, except the security deposits
(together with the amount of accrued and unpaid interest thereon) described on
the Rent Roll and Rents prepaid for the current month. As of the Closing Date,
no Rents due under, or any other interest in, any of the Leases will be assigned
to any party other than the MPLLC, or are otherwise pledged or encumbered in any
way. All Security Deposits are being, and have been, held in compliance with all
Legal Requirements.
(ii) Except as set forth on Schedule 6.1(g), no Tenant has
made any written claim which has been received by Seller or the Original Venture
or, to Seller's knowledge, has any other claim, whether or not in writing (A)
that the Original Venture has defaulted in performing any of its obligations
under any of the Leases which has not heretofore been cured, (B) that any
condition exists which with the passage of time or giving of notice, or both,
would constitute any such default, (C) that such Tenant is entitled to any
reduction in, refund of, or counterclaim or offset against, or is otherwise
disputing, any Rents or other charges paid, payable or to become payable by such
Tenant, or (D) that such Tenant is entitled to cancel its Lease or to be
relieved of its operating covenants thereunder.
(iii) With the exception of delinquencies in the payment of
Rents which are set forth on Schedule 6.1(f), no material default exists under
any of the Leases on the part of the Tenant thereto and Seller has no knowledge
of any condition, which, with the passage of time, or giving of notice, would
constitute a default under any Lease. With the exception of any requirement to
repair any physical defects in the Property, the Original Venture is not in
default under the Leases. The Original Venture has not delivered any default
notices to any Tenant under any Lease which has not been cured.
(iv) There are no rent abatements, offset rights, "free rent
periods" or other tenant concessions or inducements, including lease assumptions
or buy-outs, applicable to any of the Leases or any rights to extend or renew
any of such Leases except as
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set forth in the Leases. There are no expansion rights, options or rights to
renew, extend or terminate the Leases, except as set forth in the Leases.
Neither Seller nor the Original Venture have granted any rights, options or
rights of first refusal of any kind to any Tenant or otherwise, which are
currently in effect, to purchase or to otherwise acquire the Property or any
part thereof or interest therein. All of the improvements to be constructed by
the landlord under each of the Leases, or as required under any collateral
agreement, plans or specifications related to the Leases, have been fully
completed in accordance with the terms thereof and have been paid for.
(v) No condition exists that would permit any Party to any
Lease or REA to cancel or terminate such Lease or REA, be released from
liability from such Lease or REA or reduce its obligations under any Lease or
REA.
(vi) Neither Seller nor the Original Venture or any
Affiliate of any of the foregoing, has made a loan or otherwise extended any
credit to any Tenant.
(h) The REA constitutes the only reciprocal easement agreements or
operating agreements encumbering the Property. A true and complete copy of the
REA has heretofore been furnished to the Company, together with each written
modification thereof and supplement thereto. The REA constitutes the entire
agreement between the Original Venture and each REA Party thereto, and neither
Seller nor the Original Venture have made any oral promises or agreements
amending or modifying the same.
(i) The REA is valid and in full force and effect, and no
Rents or other payments or deposits are held by Seller, the Original Venture or
Seller's agent, except the Rents prepaid for the current month. As of the
Closing Date, no Rents due under, or any other interest in, the REA will be
assigned to any party other than the Existing Lender, or are otherwise pledged
or encumbered in any way.
(ii) Except as set forth on Schedule 6.1(h), none of the REA
Parties has made any written claim which has been received by Seller, the
Original Venture or, to Seller's knowledge, has any other claim, whether or not
in writing (A) that the Original Venture has defaulted in performing any of its
obligations under any of the REAs which has not heretofore been cured, (B) that
any condition exists which with the passage of time or giving of notice, or
both, would constitute any such default, (C) that such REA Party is entitled to
any reduction in, refund of, or counterclaim or offset against, or is otherwise
disputing, any Rents or other charges paid, payable or to become payable by such
REA Party, (D) that such REA Party is entitled to cancel its REA or to be
relieved of its operating covenants thereunder, or (E) that there is a violation
of any of the covenants, conditions or restrictions contained in such REA.
(iii) With the exception of delinquencies in the payment of
Rents which are set forth on Schedule 6.1(f), no material default exists under
the REA on the part of the REA Parties thereto and Seller has no knowledge of
any condition which, with the passage of time or giving of notice, would
constitute a default under any REA. With the exception of any requirement to
repair any physical defects in the Property, the Original Venture is not in
default under the REA. The Original Venture has not delivered any default
notices to any party under the REA which has not been cured.
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(iv) There are no rent abatements, offset rights, "free rent
periods" or other concessions or inducements, including lease assumptions or
buy-outs, applicable to the REA or any rights to extend or renew the REA except
as set forth in Schedule 6.1(h) or the REA. There are no options or rights to
renew, extend, expand or terminate the REA, except as set forth in Schedule
6.1(h). Except as set forth in schedule 6.1(h), neither Seller nor the Original
Venture have granted any rights, options or rights of first refusal of any kind
to any of the REA Parties, which are currently in effect, to purchase or to
otherwise acquire the Property or any part thereof or interest therein. All of
the improvements to be constructed by the developer or owner under the REA, or
as required under any collateral agreement, plans or specifications related to
the REA, have been fully completed in accordance with the terms thereof and paid
for. No party to any REA has given notice that it has ceased or that it intends
to cease operating its store or other property that it is required to operate
under the REA.
(i) Each of the Contracts is in full force and effect. To Seller's
knowledge, there have been no material defaults by any Party to a Contract which
have not heretofore been cured. There has been no material default (without
giving effect to any notice and cure rights) by the Original Venture under any
Contract or any claim received by Seller or the Original Venture of any such
default by any party thereto, which has not heretofore been cured except as set
forth on Schedule 6.1(i)(a). Except as set forth on Schedule 6.1(i)(b), all of
the Contracts are terminable upon notice given sixty (60) days or less before
any such termination, without penalty, fee or cost. A true and complete copy of
each Contract listed on Schedule 6.1(i)(b), together with any modifications,
amendments or supplements thereto, has been delivered or made available to the
Company.
(j) Schedule 6.1(j) contains a list of all permits,
authorizations, approvals and licenses currently maintained with respect to the
Property and all such permits, authorizations, approvals and licenses are in
full force and effect. Neither Seller nor the Original Venture have received any
written notice of violation from any federal, state or municipal entity with
respect to the Property or in connection with the operations conducted thereon
that has not been cured or otherwise resolved to the satisfaction of such
governmental entity. To Seller's knowledge, the permits, authorizations,
approvals and licenses listed on Schedule 6.1(j) are all of the licenses and
permits which are required for the present use of the Property.
(k) Except as disclosed in the Phase I Environmental Assessment
delivered to the Company, and except for non-friable asbestos and as set forth
on Schedule 6.1(k), neither Seller, the Original Venture nor to Seller's
knowledge, any other Person has caused or permitted any Hazardous Material to be
maintained, disposed of, stored, treated, recycled, brought upon, transported
over, released or generated on, under or at the Property or any part thereof or
any real property adjacent thereto, except for the presence, maintenance,
storage, use or transportation of substances commonly present or stored at or
used in the ordinary operation and maintenance of shopping centers in ordinary
quantities commonly present, stored or used at shopping centers and in
compliance with applicable laws, including Environmental Laws. There has been no
release or threatened release of any Hazardous Materials at the Property or any
part thereof that will give rise to any actual or alleged obligation or
liability to conduct or pay for any investigation, removal, remediation,
monitoring, closure, or post-closure care at, on or under the Property or any
part thereof, nor has any release or threatened release of Hazardous Material
at, on or under the Property or any part thereof or
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with respect to any offsite location to which Hazardous Material have, or are
alleged to have, migrated or been transported from the Property or any part
thereof. Except as disclosed in the Phase I Environmental Assessment delivered
to the Company, Seller and the Original Venture are in compliance with, and have
heretofore complied with, all applicable Environmental Laws with respect to the
Property, and as of the date hereof there are no violations of applicable
Environmental Laws at the Property which have not been remediated in accordance
with all applicable Environmental Laws. Neither Seller nor the Original Venture
have received any written notice from any governmental unit or other person that
it or the Property is not in compliance with any Environmental Law or that it
has any liability with respect thereto and there are no administrative,
regulatory or judicial proceedings pending or, to the knowledge of Seller,
threatened with respect to the Property pursuant to, or alleging any violation
of, or liability under any Environmental Law. Except as set forth on Schedule
6.1(k), neither Seller nor the Original Venture have installed any underground
or above ground storage tanks on, under or about the Property and no such tanks
are located on, under or about the Property.
(l) Except as set forth on Schedule 6.1(l), the Original Venture
is under no obligation to make contributions or otherwise provide assistance to
any promotional association or promotional fund and has not customarily in the
past made or provided any such contributions or assistance. The promotional
association established with respect to the Property (the "PROMOTIONAL
ASSOCIATION") is an independent association established by and on behalf of the
Tenants, Seller and the Original Venture having no ownership, management,
fiduciary or monetary interest of any kind therein. Seller and/or the Existing
Venture has remitted to the Promotional Association any amounts received by it
from Tenants and other Parties that constitute contributions to the Promotional
Association. Seller and/or the Original Venture, as the case may be, has made
all required payments to any such Promotional Association or fund, if any.
(m) Except as provided in Schedule 6.1(m), there is no litigation,
including any arbitration, investigation or other proceeding by or before any
court, arbitrator or governmental or regulatory official, body or authority
which is pending or, to Seller's knowledge, threatened against Seller or the
Original Venture relating to the Property, Seller's Interest or the
Transactions, there are no unsatisfied arbitration awards or judicial orders
against the Original Venture and, to Seller's knowledge, there is no basis for
any such arbitration, investigation or other proceeding. Copies of all pleadings
and other documents furnished or made available by Seller to the Company with
respect to the litigation described on Schedule 6.1(m) are true, accurate and
complete in all respects.
(n) No condemnation proceeding or other proceeding or action in
the nature of eminent domain is pending with respect to all or any part of the
Property, and, to Seller's knowledge, no condemnation proceeding or other
proceeding or action in the nature of eminent domain is pending with respect to
any property owned by a Party to the REA which is the subject of such REA and to
Seller's knowledge no Taking is threatened with respect to all or any part of
the Property, or any property owned by a Party to the REA which is the subject
of such REA.
(o) True, correct and complete copies of current real estate tax
bills with respect to the Property, other than tax bills sent to Tenants who
have the obligation to pay such taxes to the collecting authority, have been
delivered or made available to the Company. No portion of the Property comprises
part of a tax parcel which includes property other than
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<PAGE> 20
property comprising all or a portion of the Property. No application or
proceeding is pending with respect to a reduction or an increase of such taxes.
There are no tax refund proceedings relating to the Property which are currently
pending and neither Seller nor the Original Venture, nor any Affiliate thereof
has applied for any such reduction. Seller has no knowledge of any special tax
or assessment to be levied against the Property or any change in the tax
assessment of the Property other than the annual assessment. Neither Seller nor
the Existing Venture has received written notice of any, or has any knowledge of
any special assessments currently affecting the Property.
(p) Neither Seller nor the Original Venture have received (i) any
written notice from any governmental authority having jurisdiction over the
Property of, and to Seller's knowledge there does not exist, (A) any violation
of any law, ordinance, order or regulation (including the ADA) affecting the
Property, or any portion thereof, which has not heretofore been complied with or
(B) any other obligation to any such governmental authority for the performance
of any capital improvements or other work to be performed by Seller or the
Original Venture in or about the Property or donations of monies or land (other
than general real property taxes) which has not been completely performed and
paid for; or (ii) any written notice from any insurance company, insurance
rating organization or Board of Fire Underwriters requiring any alterations,
improvements or changes at the Property, or any portion thereof, which has not
heretofore been complied with.
(q) No approval, consent, waiver, filing, registration or
qualification with any third party, including any governmental bodies, agencies
or instrumentalities is required to be made, obtained or given for the
execution, delivery and performance of this Agreement or any of the Seller
Closing Documents by Seller, the Original Venture or the consummation of the
Transactions (other than notification of ownership change or transfer or
reissuance of permits as may be required under Environmental Laws).
(r) The Original Venture is a corporation duly formed, validly
existing and in good standing under the laws of the State of Delaware with full
power and authority to own the Property and conduct the business now being
conducted by it.
(s) [Intentionally Deleted]
(t) [Intentionally Deleted]
(u) [Intentionally Deleted]
(v) Seller has furnished the Company with the financial statements
of the Original Venture (consisting of balance sheets and income statements) as
of, and for the calendar years ended December 31, 1997 and December 31, 1998
(the "FINANCIAL STATEMENTS"). The Financial Statements are consistent with the
books and records and accounts of the Original Venture and fairly present the
financial condition and results of the Original Venture as of the dates thereof
and for the periods referred to therein, and the Financial Statements have been
prepared in accordance with generally accepted accounting principles,
consistently applied throughout the periods indicated. Since December 31, 1998,
the Original Venture has conducted its business in the ordinary course
consistent with past practice and there have been no material adverse changes in
the financial condition of the
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<PAGE> 21
business, and Seller has no knowledge of any circumstance or event which,
insofar as can be reasonably foreseen, is likely to result in any such material
adverse change.
(w) [Intentionally Deleted]
(x) Schedule 6.1(x) accurately sets forth (i) a true, correct and
complete list of all instruments, agreements and other documents relating to the
Existing Indebtedness and all modifications or amendments thereof and
supplements thereto (including guaranties, indemnity agreements and side
letters) (the "EXISTING INDEBTEDNESS DOCUMENTS"), (ii) the date of the Existing
Indebtedness Documents and of each modification or amendment thereof and
supplement thereto, (iii) the name of the holders of the Existing Indebtedness
as of the date hereof, (iv) the unpaid balances (including any accrued interest
thereon) thereof as of the date hereof, (v) the security therefor as of the date
hereof and (vi) the amount of any deposits or escrows held or established in
connection therewith. The Existing Indebtedness Documents are in full force and
effect, neither Seller nor the Original Venture has received or delivered any
notice of default under any Existing Indebtedness Document which default has not
been cured, and, to the knowledge of Seller, no default on the part of the
Original Venture or any other Party thereto exists thereunder (without regard to
notice and cure provisions). A true and complete copy of the Existing
Indebtedness Documents, including each written modification thereof and
supplement thereto, have heretofore been furnished to the Company. Such
documents constitute the entire agreement between the Original Venture and each
Party thereto, and there are no oral promises or agreements amending or
modifying the same.
(y) Schedule 6.1(y) contains a true, complete and accurate list
including the amounts thereof of all policies of insurance with respect to the
Property, which policies are and will be kept in full force to and including the
Closing Date. All premiums for such insurance have been paid in full. To
Seller's knowledge, neither Seller nor the Original Venture have performed,
permitted or suffered any act or omission which would cause the insurance
coverage provided in said policies to be reduced, cancelled, denied or disputed
and neither Seller nor the Original Venture have received (and has no knowledge
of) any notice or request from any insurance company or Board of Fire
Underwriters (or organization exercising functions similar thereto) canceling or
threatening to cancel any of said policies or denying or disputing coverage
thereunder.
(z) To Seller's knowledge, there are no material structural or
other material physical defects in the Improvements or any component or system
of the Improvements and all such Improvements are in good condition and repair.
(aa) Neither Seller nor, to Seller's knowledge, the Original
Venture has received notice that there is, and, to Seller's knowledge, there
does not now exist, any violation of any restriction, condition or agreement
contained in any easement, restrictive covenant or any similar instrument or
agreement affecting the Real Property or any portion thereof.
(bb) The Original Venture has no employees. There are no
collective bargaining or union agreements with respect to the employees at
Property or to which Seller or the Original Venture is bound. The Original
Venture does not maintain or sponsor any employee benefit plan, including any
plans subject to the Employer Retirement Income Security Act of 1974, as
amended. There are no pending claims or, to Seller's knowledge, any
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<PAGE> 22
threatened claim against the Original Venture by any employee whose employment
related to the Property.
(cc) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of Seller.
(dd) [Intentionally Deleted]
(ee) All material documents and Books and Records have been
delivered or have been made available to the Company. All of the documents and
Books and Records that have been delivered or made available to the Company by
or on behalf of Seller, are true, correct and complete copies of what they
purport to be and have not been modified or amended, except as specifically
noted therein. All information set forth in the exhibits and schedules to this
Agreement is true, correct and complete in all material respects and not
misleading. Seller does not have any knowledge of any significant adverse fact
or condition relating to the Property, which has not been specifically disclosed
in writing by Seller to the Company.
(ff) There are no lease brokerage agreements, leasing commission
agreements or other agreements providing for payments of any amounts for leasing
activities or procuring tenants (including renewing leases at expanding spaces)
with respect to the Property other than as disclosed in Schedule 6.1(ff).
(gg) Schedule 1.1-2 attached hereto contains a true, correct and
complete description of the Personalty (including the name "Montclair Plaza"),
and except as disclosed on said Schedule 1.1-2, the Original Venture has good
title to the Personalty free and clear from Liens and other encumbrances other
than the lien of the Existing Indebtedness Documents and the Permitted
Exceptions. The Personalty is all of the personal property that is necessary in
order to operate and maintain the Real Property as a first class regional
shopping center. The Original Venture has taken all steps necessary in order to
protect its exclusive right to use the name "Montclair Plaza" in connection with
the Real Property.
(hh) As of November 1, 1999, gift certificates having an aggregate
value of $183,360.00 are outstanding.
(ii) Except as set forth in Schedule 6.1(ii) attached hereto,
neither Seller, nor any Affiliate of Seller (other than the Original Venture),
owns (i) any right or interest in any real property adjacent to or neighboring
the Real Property including any outparcel or (ii) any right or interest in any
easement, right of way, development right, water or mineral right or any other
right which in any way affects the Real Property.
(jj) Except for routine work in the ordinary course of operating
the Real Property that will be paid when due, no work has been performed by
Seller or is in progress at Seller's request at the Real Property, and no
materials or supplies have been delivered to the Real Property at Seller's
request, that has resulted in the imposition of, or might provide the basis for
the imposition of, mechanics', materialmen's or other liens against the Real
Property.
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<PAGE> 23
(kk) The sales reports heretofore furnished by Seller to the
Company for calendar years 1996, 1997 and year 1998, and the rolling twelve (12)
months sales report from March 1999, disclose the sales by Tenants at the Retail
Property as reported to Seller by such Tenants.
(ll) All water, storm sewer/sanitary sewer, gas, electricity,
telephone and other utility lines, pipes and other equipment necessary in order
to operate the Real Property as a first class regional shopping center
(collectively, the "Utility Equipment") presently serve the Real Property and to
Seller's knowledge, are in good working order. Neither Seller nor the Original
Venture, has any outstanding unpaid obligation to pay the cost of connection of
any utility lines, pipes or other equipment serving the Real Property.
(mm) The Real Property has not suffered any casualty or other
material damage that has not been fully repaired.
(nn) To Seller's knowledge, all HVAC, electric, gas, fire-safety,
plumbing, mechanical and other systems at the Real Property are in good, working
condition and no portion of same presently require replacement or significant
repair (i.e., repairs which are ordinarily capitalized under generally accepted
accounting principles).
(oo) Except as disclosed on Schedule 6.1(oo) attached hereto, no
capital work is currently in progress or contemplated.
(pp) Neither Seller nor the Original Venture, has received written
notice from any Governmental Authority, from any Party to any REA, any Tenant or
any party to any other agreement or document, or otherwise has knowledge, that
the number of parking spaces at the Real Property is required under any Legal
Requirement, any Lease, or the REA, to be increased above the number of parking
spaces existing on the date hereof.
(qq) The Original Venture has (i) filed all tax returns required
to be filed by it under applicable Legal Requirements and (ii) timely paid all
taxes shown to be due and payable on such tax returns.
(rr) Seller has no knowledge of any defects, liens, encumbrances,
adverse claims or other matters to be insured against under the Title Policy
(collectively, the "Insured Matters") that could result in the issuer of the
Title Policy denying its liability to the Company on the grounds that the
Original Venture or the Company had knowledge of any such Insured Matters solely
by reason of notice thereof imputed to it as a matter of law through either
Seller, the Original Venture or any Affiliate thereof.
(ss) Except as set forth on Schedule 6.1(ss), neither Seller nor
the Original Venture has received any written notice with respect to the Real
Property of any violation of law or municipal ordinances, orders or
requirements, that have been noted in or issued by any federal, state or
municipal department having jurisdiction, and which have not been fully remedied
and discharged of record.
(tt) To Seller's knowledge, Seller has provided the Company with
access to any and all certificates, licenses, permits, leases, ground leases,
operating agreements, books, records, documents and information relating to the
Real Property and the
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<PAGE> 24
ownership and operation thereof which are in the possession and control of
Seller or the Original Venture.
(uu) [Intentionally Deleted]
Notwithstanding anything to the contrary contained herein, (a)
Seller shall have no liability under this Agreement for the cost of repair,
remediation or correction of any physical defect in the Property except as a
result of a breach of the representations and warranties contained in Sections
6.1(k), (z), (mm) and (nn)) (but nothing contained in this paragraph shall limit
Seller's liability for damages or fines or other amounts owing to Parties,
Governmental Authorities or others on account of any such physical defect to the
extent that such damages, fines or other amounts are not for the cost of repair,
remediation or correction thereof) and (b) Seller shall have no liability for a
breach of representation or warranty contained herein or in the Closing
Documents to the extent that the Company has received a credit therefor under
the provisions of Article V.
6.2. Company Representations and Warranties. The Company represents and
warrants to Seller as follows:
(a) The Company is a limited liability company duly formed,
validly existing and in good standing under the laws of the State of Delaware
with full right, power and authority to execute, deliver and perform this
Agreement.
(b) The execution, delivery and performance by the Company of this
Agreement have been duly and validly authorized by all requisite action on the
part of the Company. This Agreement has been, and the Company Closing Documents
will be, duly executed and delivered by the Company. This Agreement constitutes,
and when so executed and delivered the Company Closing Documents will
constitute, the legal, valid and binding obligations of the Company, enforceable
against it in accordance with their terms.
(c) None of the execution, delivery or performance of this
Agreement or the Company Closing Documents by the Company does or will, with or
without the giving of notice, lapse of time or both, violate, conflict with,
constitute a default or result in a loss of rights under or require the approval
or waiver of or filing with any Person (including any governmental body, agency
or instrumentality) under (i) the organizational documents of the Company or any
material agreement, instrument or other document to which the Company is a party
or by which the Company is bound or (ii) any judgment, decree, order, statute,
injunction, rule, regulation or the like of a governmental unit applicable to
the Company, other than notification of ownership change or transfer or
reissuance of permits as may be required under Environmental Laws.
(d) No broker, finder, investment banker or other person is
entitled to any brokerage, finder's or other fee or commission in connection
with the Transactions based upon arrangements made by or on behalf of the
Company.
6.3. No Other Representations. Neither Seller nor any officer,
director, shareholder, member, agent, partner, employee, or representative of
Seller (or any officer, director, partner or employee of any agent of Seller)
has made any representation whatsoever regarding the Property or any part
thereof, or anything relating to the subject matter of this Agreement, except
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<PAGE> 25
as expressly set forth in this Agreement, and the Company, in executing,
delivering and performing this Agreement, has not and does not rely upon any
statement, information, or representation to whomsoever made or given, whether
to the Company or others, and whether directly or indirectly, verbally or in
writing, made by any person, firm or corporation, except as expressly set forth
in this Agreement or in the Seller Closing Documents.
6.4. Knowledge Defined. For the purposes of this Agreement, "knowledge"
(including "actual knowledge" and other similar terms) with respect to Seller
and the Original Venture shall mean matters as to which any of the following
individuals have actual knowledge without any duty or responsibility to make any
inquiry, review or investigation: (i) Jeffrey Barkley, (ii) Robert P. Neiffer,
Jr., (iii) Frank Sullivan, (iv) Vicki Kahn, (v) Marjorie Tsang and (vi) Yvonne
Nelson. Actual knowledge shall not be deemed to exist merely by assertion by the
Company of a claim that any of the foregoing persons should have known of such
facts or circumstances, if such person did not have actual knowledge thereof.
Seller hereby represents and warrants that the foregoing individuals are the
individuals with the primary responsibility for overseeing the sale, management,
and operation of the Property at the level of vice president and above.
ARTICLE VII.
ADDITIONAL COVENANTS
7.1. Record Retention. Until three (3) years after the Closing, the
Company shall provide Seller upon prior written notice and during normal
business hours with reasonable access to the Books and Records and, at Seller's
cost, copies of all or any portion thereof. The Company either shall retain such
Books and Records until the third anniversary of the date hereof or notify
Seller of its desire to dispose of such Books and Records pertaining to any
period prior to the Closing which have been delivered to the Company and turn
them over to Seller if Seller so requests. Seller agrees to keep, and to
instruct its agents, employees and representatives to keep, confidential such
Books and Records (and any information contained therein) and any information
discovered in any such examinations and inspections, except in connection with
any legal proceedings or to the extent required by law. Upon the Company's
request, for a period of three (3) years after the Closing, Seller shall make
all of Seller's records with respect to the Property which are in the possession
or control of Seller available to the Company for inspection, copying and audit
by the Company's designated accountants. The provisions of this Section 7.1
shall survive Closing.
7.2. Publicity. In no event shall either Seller or the Company issue
any press release or otherwise disclose any non-public information regarding
this Agreement or the Transactions unless the other party has consented thereto
in writing as to the form and substance of any such statement or disclosure (and
Seller and the Company agree not unreasonably to withhold, condition or delay
such consent); provided, however, that nothing herein shall be deemed to limit
or impair in any way any party's ability to disclose the details of or
information concerning this Agreement or the Transactions to the extent
necessary to such party's attorneys, accountants or other advisors or to the
extent such party reasonably deems necessary or desirable pursuant to any court
or governmental order or applicable securities laws or regulations or financial
reporting requirements, or to obtain the Existing Indebtedness Consent
Documents. Further, to the extent necessary, either party may disclose any
information regarding this Agreement or the Transactions to its direct or
indirect constituent partners,
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<PAGE> 26
members or shareholders, as the case may be (and to counsel for such constituent
partners, members and shareholders) and as otherwise necessary to comply with
the terms of this Agreement. Any disclosure by a party's advisors or direct or
indirect constituent partners, members or shareholders shall be deemed a breach
hereof by such party. If for any reason this Transaction is not consummated, the
Company will promptly return to Seller all originals and copies of documents,
reports and financial and other information relating to the Property and to
Seller which Seller has furnished to the Company. The obligations of Seller and
the Company under this Section 7.2 shall survive the termination hereof, however
caused.
7.3. Assistance Following Closing. From and after the Closing, Seller
at the Company's reasonable expense shall provide reasonable assistance to the
Company in connection with the preparation of financial statements and bills and
the adjustment of losses and claims and the enforcement or settlement of any
such claims. Without limiting the foregoing, Seller shall, upon the reasonable
request of the Company from time to time, provide signed representation letters
with respect to revenues and expenses of Seller if required under GAAS to enable
the Company's accountants to render an opinion on the Company's financial
statements.
7.4. Further Assurances. Each of Seller and the Company agree, at any
time and from time to time after the Closing, to execute, acknowledge where
appropriate and deliver such further instruments and other documents (and to
bear its own costs and expenses incidental thereto) and to take such other
actions as the other of them may reasonably request in order to carry out the
intent and purpose of this Agreement; provided, however, that neither Seller nor
the Company shall be obligated, pursuant to this Section 7.4 to incur any
expense of a material nature and/or to incur any material obligations in
addition to those set forth in this Agreement and/or its respective Closing
Documents.
7.5. No Intercompany Accounts. Prior to the Closing, Seller shall pay,
distribute, release or otherwise eliminate any and all intercompany debt or
accounts between the Original Venture and Seller or any Affiliate of Seller.
ARTICLE VIII.
INDEMNIFICATION
8.1. Indemnification by Seller. From and after the Closing, Seller
shall indemnify, defend and hold harmless the Company and its members, officers,
directors, managers, employees, representatives and agents, and any direct or
indirect partner, shareholder, officer, director or member of any member of the
Company, and their respective successors and assigns (collectively, the
"INDEMNIFIED COMPANY PERSONS") from and against any Losses asserted against,
incurred or suffered by any Indemnified Company Person that results from,
relates to or arises out of (a) the breach or inaccuracy of any representation
or warranty made by Seller in this Agreement or the Seller Closing Documents,
(b) the breach or non-fulfillment by Seller of any of the covenants or
agreements of Seller under this Agreement or the Seller Closing Documents, or
(c) Seller's Liabilities.
8.2. Indemnification by the Company. From and after the Closing, the
Company shall indemnify, defend and hold harmless Seller and its direct or
indirect shareholders, directors, officers, members, partners employees and
agents, and their respective successors and assigns (collectively the "
INDEMNIFIED SELLER PERSONS") from and against any Losses asserted
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<PAGE> 27
against, incurred or suffered by any Indemnified Seller Person that results
from, relates to or arises out of (a) the breach or inaccuracy of any
representation or warranty made by the Company in this Agreement or the Company
Closing Documents, (b) the breach or non-fulfillment by the Company of any of
the covenants or agreements of the Company under this Agreement or the Company
Closing Documents, or (c) the Assumed Liabilities.
8.3. Indemnification Procedure.
(a) Subject to the provisions of Section 8.3(d), the indemnified
party (the "INDEMNIFIED PARTY") shall give the indemnifying party (the
"INDEMNIFYING PARTY") prompt notice of any Losses (or potential Losses) which
may be covered under this Article VIII and such notice shall state the basis for
the claim, action or proceeding and the amount thereof (to the extent such
amount is determinable at the time when such notice is given). In the event the
notice relates to a claim, assertion, action, suit or proceeding by a
third-party ("THIRD PARTY CLAIM") for which indemnification is provided
hereunder, the Indemnified Party shall permit the Indemnifying Party (or its
insurance company) to assume the defense of such claim, assertion, action, suit
or proceeding and the Indemnifying Party (or its insurance company) may (i)
prior to the commencement of any proceedings in connection with such Losses,
undertake the negotiation of any resolution of the dispute relating to such
Losses, including in accordance with the terms hereof any settlement or release,
or (ii) undertake the defense of any proceeding (including any alternative
dispute resolution proceeding) regarding such Losses by selecting legal counsel
who shall be reasonably acceptable to the Indemnified Party. Failure of the
Indemnifying Party to notify an Indemnified Party of its election to undertake
the Indemnified Party's defense of a Third Party Claim within a reasonable time,
but in no event more than thirty (30) days after notice thereof shall have been
given to the Indemnifying Party, shall be deemed a waiver by the Indemnifying
Party of its right to undertake the defense of such Third Party Claim. Willkie
Farr & Gallagher, Neal, Gerber & Eisenberg and counsel for the Indemnifying
Party's insurance company shall be deemed reasonably acceptable to the
Indemnified Party.
(b) Provided the Indemnifying Party shall have undertaken the
Indemnified Party's defense of a Third Party Claim with legal counsel reasonably
acceptable to the Indemnified Party, and shall have so notified the Indemnified
Party, the Indemnified Party shall be entitled to participate at its own expense
in the aforesaid negotiation or defense of any claim relating to such Losses
(subject to reimbursement to the limited extent provided in Section 8.3(e)), but
such negotiations or defense shall be controlled by counsel to the Indemnifying
Party.
(c) Except as provided in Section 8.3(e), the Indemnifying Party
shall not be liable for payments relating to the resolution of any dispute or
any settlement of any litigation or proceeding effected without the written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld, conditioned or delayed. The Indemnifying Party shall not, in the
defense of any such Third Party Claim, consent to the entry of any judgment or
award, or enter into any settlement, except in either event with the prior
consent of each Indemnified Party, which consent shall not be unreasonably
withheld, conditioned or delayed. To the extent any Indemnified Party declines
to consent to a bona fide offer of settlement or compromise, the Indemnifying
Party shall continue to defend, but the amount of such offer shall be the limit
of the Indemnifying Party's liability with respect to such claim, action or
proceeding with respect to the Indemnified Party that declined such offer.
Notwithstanding the foregoing, the Indemnifying Party shall not, without the
Indemnified Party's written consent, (which consent
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<PAGE> 28
may be withheld in the sole and absolute discretion of the Indemnified Party)
resolve any dispute or settle or compromise any claim regarding Losses from a
Third Party Claim or consent to entry of any judgment which would impose an
injunction or other equitable relief upon the Indemnified Party or which does
not include as an unconditional term thereof the release by the claimant or the
plaintiff of the Indemnified Party from all liability in respect of any such
Losses.
(d) The failure to give notice of a claim under this Article VIII
shall not release the Indemnifying Party of its obligations under this Article
VIII, except to the extent of the actual harm suffered thereby.
(e) In the event the Indemnifying Party fails after notice from
the Indemnified Party to timely undertake negotiation of any dispute or defend,
contest or otherwise protect against any claim or suit with respect to a Third
Party Claim, and to so notify the Indemnified Party, the Indemnified Party may,
but will not be obligated to, defend, contest or otherwise protect against the
same, and make any compromise or settlement thereof and recover the entire costs
thereof from the Indemnifying Party, including reasonable attorneys' and
experts' fees, disbursements and all amounts paid as a result of such claim or
suit or the compromise or settlement thereof. The Indemnified Party shall
cooperate and provide such assistance as the Indemnifying Party may reasonably
request in connection with the negotiation of any dispute and the defense of the
matter subject to indemnification and the Indemnifying Party shall reimburse the
Indemnified Party's reasonable costs incurred thereafter in connection with such
cooperation and assistance.
(f) Notwithstanding anything to the contrary contained herein,
neither Seller nor the Company shall be entitled to indemnification hereunder
for any Losses to the extent it has received a credit therefor pursuant to
Article V.
ARTICLE IX.
MISCELLANEOUS
9.1. Survival. Except for the representations and warranties of Seller
set forth in Section 6.1(k) which representations and warranties and the
indemnification provisions relating thereto shall survive Closing indefinitely,
all other warranties, representations, covenants and agreements of Seller and of
the Company set forth in this Agreement shall survive until the Company ceases
to exist under the terms of the Operating Agreement.
9.2. Notices. Notices must be in writing and sent to the party to whom
or to which such notice is being sent, by (a) certified or registered mail,
postage prepaid and return receipt requested, (b) commercial overnight courier
service, or (c) delivered by hand with receipt acknowledged in writing, as
follows:
To the Company:
GGP/Homart II L.L.C.
110 North Wacker Drive
Chicago, Illinois 60606
Attention: Matthew Bucksbaum
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<PAGE> 29
with a copy thereof to:
The Comptroller of the State of New York
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Deputy Comptroller
Investments and Cash Management
and
The Comptroller of the State of New York
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Counsel
and
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099
Attention: Monty Davis
and
Clarion Partners
335 Madison Avenue
New York, New York 10017
Attn: Jeffrey A. Barclay
and
Neal, Gerber & Eisenberg
Two North LaSalle Street, Suite 2200
Chicago, Illinois 60602
Attention: Marshall E. Eisenberg
To Seller:
The Comptroller of the State of New York
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Deputy Comptroller
Investments ans Cash Management
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<PAGE> 30
with a copy to
The Comptroller of the State of New York
as Trustee of the Common Retirement Fund
633 Third Avenue, 31st Floor
New York, New York 10017
Attention: Assistant Counsel
and
Willkie Farr & Gallagher
787 Seventh Avenue
New York, New York 10019-6099
Attention: Monty Davis
and
Clarion Partners
335 Madison Avenue
New York, New York 10017
Attn: Jeffrey A. Barclay
All notices (i) shall be deemed given when received if delivered by hand or
overnight courier service or, if mailed as described above with appropriate
postage, after 5 business days and (ii) may be given either by a party or by
such party's attorneys. The cost of delivery shall be borne by the party
delivering the notice.
9.3. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which shall
constitute a single document when at least one counterpart has been executed and
delivered by each party hereto.
9.4. Amendments. Except as otherwise provided herein, this Agreement
may not be changed, modified, supplemented or terminated, except by an
instrument executed by the party hereto which is or will be affected by the
terms of such change, modification, supplement or termination.
9.5. Waiver. Each party shall have the right exercisable in its sole
and absolute discretion, but under no circumstances shall be obligated, to waive
or defer compliance by any other party with its obligations hereunder or to
waive satisfaction of any conditions contained herein for its benefit. No waiver
by any party of a breach of any covenant or a failure to satisfy any condition
shall be deemed a waiver of any other or subsequent breach or failure to satisfy
any other condition. All waivers of any term, breach or condition hereof must be
in writing.
9.6. Successors and Assigns. Subject to the provisions of Section 9.10,
the terms, covenants, agreements, conditions, representations and warranties
contained in this Agreement shall inure to the benefit of and be binding upon
the parties hereto and their respective successors and assigns.
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<PAGE> 31
9.7. Third Party Beneficiaries. The provisions of this Agreement are
made for the benefit of the parties hereto, and their respective successors in
interest and assigns and are not intended for, and may not be enforced by, any
other person or entity.
9.8. Partial Invalidity. If any term or provision of this Agreement or
the application thereof to any person or circumstance shall, to any extent, be
invalid or unenforceable, the remainder of this Agreement, or the application of
such term or provision to persons or circumstances other than those as to which
it is held invalid or unenforceable, shall not be affected thereby and each term
and provision of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
9.9. Governing Law. This Agreement has been made pursuant to and shall
be governed by the laws of the State of Delaware (without regard to conflicts of
law rules).
9.10. Assignment. This Agreement may not be assigned or delegated by any
party without the written consent of the other except that the Company may
assign this Agreement to an Affiliate of the Company, it being acknowledged and
agreed by the Company that no such assignment shall relieve the Company of its
obligations under this Agreement.
9.11. Headings; Exhibits. The headings or captions of the various
Articles and Sections of this Agreement have been inserted solely for purposes
of convenience, are not part of this Agreement and shall not be deemed in any
manner to modify, explain, expand or restrict any of the provisions of this
Agreement.
9.12. Gender and Number. Words of any gender shall include the other
gender and the neuter. Whenever the singular is used, the same shall include the
plural wherever appropriate, and whenever the plural is used, the same also
shall include the singular where appropriate.
9.13. Entire Agreement. This Agreement constitutes the entire agreement
among the parties with respect to the subject matter hereof and supersedes any
prior written or oral understandings and/or agreement among them with respect
thereto.
9.14. Costs of Enforcement. In the event that any action is brought by
any party or parties to this Agreement against any other party or parties to
enforce rights under this Agreement, the prevailing party's or parties' costs in
such action, including reasonable attorneys' fees, shall be paid by the other
party or parties. Any amounts owing hereunder which are not paid when due shall
bear interest at the per annum rate equal to the prime rate of Bank of America,
N.A. (or any successor), as the same may change from time to time, plus four
percent.
9.15. Time of the Essence. Time is of the essence with regard to each
provision of this Agreement. If the final date of any period provided for herein
for the performance of an obligation or for the taking of any action falls on a
Saturday, Sunday or banking holiday, then the time of that period shall be
deemed extended to the next day which is not a Sunday, Saturday or banking
holiday. Each and every day described herein shall be deemed to end at 5:00 p.m.
Central Time.
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<PAGE> 32
9.16. Indemnification Against Broker Claims. Seller shall indemnify,
defend and hold harmless the Company from and against all loss, liability,
damages, costs and expenses (including reasonable counsel fees) resulting from
any claim that may be made by any broker or other person claiming to have dealt
with Seller in connection with the Transactions, for a commission, fee or other
compensation by reason of the Transactions including any loss, liability, costs
and expenses (including reasonable counsel fees) incurred in enforcing this
indemnity. The Company shall indemnify, defend and hold harmless Seller from all
loss, liability, costs and expenses (including reasonable counsel fees)
resulting from any claim that may be made by any broker or other person claiming
a commission, fee or other compensation by reason of having dealt with the
Company in connection with the Transactions, including any loss, liability,
costs and expenses (including reasonable counsel fees) incurred in enforcing
this indemnity. The provisions of this Section 9.16 shall survive the Closing or
termination of this Agreement.
9.17. Arbitration. Except as otherwise provided herein, in the event of
any dispute in connection with the terms and provisions of this Agreement, the
parties agree to submit such dispute to arbitration in accordance with the
provisions of Section 14.13 of the Operating Agreement.
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<PAGE> 33
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties
hereto on the day and year first above written.
SELLER: COMPANY:
THE COMPTROLLER OF THE STATE GGP/HOMART II L.L.C.,
OF NEW YORK AS TRUSTEE OF a Delaware limited
THE COMMON RETIREMENT FUND liability company
By: /s/ John E. Hull By: /s/ Joel Bayer
------------------------- ------------------------------
Name: John E. Hull Name: Joel Bayer
Title: Deputy Comptroller of Title: Senior Vice President
Investments & Cash Management
<PAGE> 34
LIST OF EXHIBITS AND SCHEDULES
Exhibits/Schedule Description
Exhibit A Legal Description of the Land
Exhibit B Permitted Exceptions
Schedule 1.1-1 Anchors
Schedule 1.1-2 Personalty
Schedule 6.1(e) Rent Roll
Schedule 6.1(f) Schedule of Arrearages
Schedule 6.1(g) Leases
Schedule 6.1(h) Claims under REA
Schedule 6.1(i) (a) List of all Contracts
Schedule 6.1(i) (b) List of all Contracts not terminable on 60 days or
less notice
Schedule 6.1(j) Permits and Licenses
Schedule 6.1(k) Environmental Disclosure
Schedule 6.1(l) Promotional Association Matters
Schedule 6.1(m) Pending or Threatened litigation
Schedule 6.1(x) List of Existing Indebtedness Documents
Schedule 6.1(y) Insurance Policies
Schedule 6.1(ff) Lease Brokerage Agreements
Schedule 6.1(ii) Seller's Rights in Neighboring Properties
Schedule 6.1(oo) Capital Expenditures in Progress or Contemplated
Schedule 6.1(ss) Notices of Uncured Violations
<PAGE> 1
EXHIBIT 23.1
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-3 Nos. 333-11067, 333-15907, 333-17021, 333-23035, 333-37247, 333-37383,
333-41603, 333-58045, 333-68505, 333-76379, 333-76757, 333-82569, 333-84419,
333-88813, 333-88819, and 333-91621) of General Growth Properties, Inc., the
Registration Statements (Form S-8 Nos. 33-79372, 333-07241, 333-28449, and
333-74461) pertaining to the General Growth Properties, Inc. 1993 Stock
Incentive Plan, the Registration Statement (Form S-8 No. 333-11237) pertaining
to the General Growth Management Savings Plan, and the Registration Statement
(Form S-8 No. 333-79737) pertaining to the General Growth Properties, Inc.
Employee Stock Purchase Plan, of our report dated October 25, 1999 with respect
to the Statement of Revenue and Certain Expenses of Oak View Mall for the year
ended December 31, 1998 and our report dated October 28, 1999 with respect to
the Statement of Revenues and Certain Expenses of Baybrook Mall for the year
ended December 31, 1998 included in this current report on Form 8-K/A.
Deloitte & Touche LLP
Chicago, Illinois
January 11, 2000
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statements
(Form S-3 Nos. 333-11067, 333-15907, 333-17021, 333-23035, 333-37247, 333-37383,
333-41603, 333-58045, 333-68505, 333-76379, 333-76757, 333-82569, 333-84419,
333-88813, 333-88819 and 333-91621) of General Growth Properties, Inc., the
Registration Statements (Form S-8 Nos. 33-79372, 333-07241, 333-28449, and
333-74461) pertaining to the General Growth Properties, Inc. 1993 Stock
Incentive Plan, the Registration Statement (Form S-8 No. 333-11237) pertaining
to the General Growth Management Savings Plan, and the Registration Statement
(Form S-8 No. 333-79737) pertaining to the General Growth Properties, Inc.
Employee Stock Purchase Plan, of our report dated December 20, 1999 with respect
to the Combined Statement of Revenue and Certain Expenses of Alderwood Mall,
Carolina Place Mall and Montclair Plaza for the year ended December 31, 1998
included in this current report on Form 8 K/A.
Ernst & Young LLP
Chicago, Illinois
January 11, 2000
