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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported) May 27, 1999
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URBAN SHOPPING CENTERS, INC.
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(Exact Name of Registrant as Specified in its Charter)
Maryland
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(State or Other Jurisdiction of Incorporation)
1-12278 36-3886885
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(Commission File Number) (I.R.S. Employer Identification No.)
900 North Michigan Ave., Suite 1500, Chicago, IL 60611
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(Address of Principal Executive Offices) (Zip Code)
(312) 915-2000
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 10, 1999, Urban Shopping Centers, Inc. ("Urban") completed the
acquisition, through Urban Shopping Centers, L.P. ("Urban LP"), of Century City
Shopping Center & Marketplace from RREEF USA Fund-II, a California group trust
("RREEF"), and Kenwood Plaza Limited Partnership, an Ohio limited partnership
("KPLP"). As consideration for the shopping center and related assets, which
Urban LP acquired subject to existing nonrecourse indebtedness of $160 million
maturing in July 2008, Urban LP paid RREEF approximately $108 million in cash,
net of prorations, and issued KPLP approximately $3.2 million of partnership
units in Urban LP. The interest rate on $80 million of the existing indebtedness
is fixed at 7.675%. The interest rate on the other $80 million of existing
indebtedness is equal to LIBOR plus 1.25% and must be converted to a fixed rate
equal to the ten-year U.S. Treasury bond rate in effect at the time of the
conversion plus 1.69% on or before August 15, 1999. Urban LP obtained the cash
for the acquisition from the proceeds of the transaction described in Item 5 and
under its revolving credit agreement with Union Bank of Switzerland, as agent. A
copy of the press release relating to the acquisition is filed as an exhibit
hereto and is hereby incorporated herein by reference.
ITEM 5. OTHER EVENTS.
On May 27, 1999, Urban LP sold $40 million of its preferred partnership
units to an institutional investor. A copy of the press release relating to the
sale is filed as an exhibit hereto and is hereby incorporated herein by
reference.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(a) Financial Statements of Businesses Acquired.
The financial statements required by this item are not filed with this initial
report, but will be filed by amendment not later than 60 days after the date
that this initial report is required to be filed.
(c) Exhibits.
Exhibit No. Document Description
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3.1 Articles Supplementary relating to Urban's Series C Cumulative
Redeemable Preferred Stock.
10.1 Contribution Agreement dated June 10, 1999 among KPLP, Century
City Mall, LLC, a Delaware limited liability company, Urban LP,
and Chicago Deferred Exchange Corporation
10.2 Agreement of Purchase and Sale dated June 10, 1999 between RREEF
and USC Century, Inc.
10.3 Registration Rights Agreement dated June 10, 1999 among KPLP,
Urban and Urban LP.
10.4 Fifth Amendment to Second Amended and Restated Agreement of
Limited Partnership of Urban LP dated May 27, 1999.
10.5 Registration Rights Agreement dated May 27, 1999 between Urban
and the unit holder named therein.
99.1 Press Release dated June 10, 1999 by Urban Shopping Centers, Inc.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
URBAN SHOPPING CENTERS, INC.
Dated: June 15, 1999 By: /s/ Michael Hilborn
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Senior Vice President
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EXHIBIT 3.1
URBAN SHOPPING CENTERS, INC.
ARTICLES SUPPLEMENTARY
SERIES C CUMULATIVE REDEEMABLE PREFERRED STOCK
Urban Shopping Centers, Inc., a Maryland corporation (hereinafter
called the "Corporation"), hereby certifies to the Department of Assessments and
Taxation of the State of Maryland that:
FIRST: The Board of Directors of the Corporation has classified and
designated 800,000 unissued shares of series preferred stock, par value $.01 per
share, of the Corporation as shares of Series C Cumulative Redeemable Preferred
Stock ("Series C Preferred Stock"), with the preferences, rights, voting powers,
restrictions, limitations as to dividends, qualifications and terms and
conditions of redemption thereof as follows, which upon any restatement of the
Corporation's charter (the "Charter") shall be made part of Article Fifth
thereof, with any necessary or appropriate changes to the enumeration or
lettering of sections or subsections hereof:
SECTION 1. DESIGNATION AND NUMBER. A series of series preferred stock,
designated the Series C Cumulative Redeemable Preferred Stock (the "Series C
Preferred Stock") is hereby established. The number of shares of Series C
Preferred Stock shall be 800,000, which number may be decreased from time to
time by the Board of Directors of the Corporation (the "Board") pursuant to
Section 5(e) upon redemption or reacquisition thereof in any manner.
SECTION 2. RANK. The Series C Preferred Stock shall, with respect to
distributions or rights upon voluntary or involuntary liquidation, winding-up or
dissolution of the Corporation, or both, rank senior to all classes or series of
Common Stock (as defined in the Charter) and to all other classes or series of
capital stock of the Corporation now or hereafter authorized, issued or
outstanding, other than any class or series of capital stock of the Corporation
expressly designated as ranking on a parity with or senior to the Series C
Preferred Stock with respect to distributions or rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Corporation, or both.
For purposes of these Articles Supplementary, the term "Parity Preferred Stock"
shall be used to refer to the Corporation's Series A Cumulative Convertible
Redeemable Preferred Stock, the Corporation's Series B Cumulative Convertible
Redeemable Preferred Stock, and any other class or series of capital stock of
the Corporation now or hereafter authorized, issued or outstanding expressly
designated by the Corporation to rank on a parity with the Series C Preferred
Stock with respect to distributions or rights upon voluntary or involuntary
liquidation, winding-up or dissolution of the Corporation, or both, as the
context may require, whether or not the dividend rates, dividend payment dates
or redemption or liquidation prices per share or conversion rights or exchange
rights shall be different from those of the Series C Preferred Stock.
SECTION 3. DISTRIBUTIONS. (a) Payment of Distributions. Subject to the
rights of holders of Parity Preferred Stock with respect to the payment of
distributions and holders of shares of capital stock issued after the date
hereof in accordance herewith ranking senior to the Series C Preferred Stock
with respect to distributions, holders of Series C Preferred Stock shall
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be entitled to receive, when, as and if authorized and declared by the Board out
of funds legally available for the payment of distributions, cumulative cash
distributions at the rate per annum of 9 1/8% of the $50.00 liquidation
preference per share of the Series C Preferred Stock. Such distributions shall
be cumulative, shall accrue from the original date of issuance and all
distributions accrued to the scheduled date of payment shall be payable in cash
(i) quarterly in arrears, on or before March 15, June 15, September 15 and
December 15 of each year commencing on the first of such dates to occur after
the original date of issuance and, (ii) in the event of a redemption, on the
redemption date (each a "Preferred Stock Distribution Payment Date"). The amount
of the distribution payable for any period shall be computed on the basis of a
360-day year of twelve 30-day months and for any period shorter than a full
quarterly period for which distributions are computed, the amount of the
distribution payable shall be computed on the basis of the actual number of days
elapsed. If any date on which distributions are to be made on the Series C
Preferred Stock is not a Business Day (as defined herein), then payment of the
distribution to be made on such date shall be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such date.
Distributions on the Series C Preferred Stock shall be made to the holders of
record of the Series C Preferred Stock on the relevant record dates to be fixed
by the Board, which record dates shall be not more than 60 days prior to the
relevant Preferred Stock Distribution Payment Date (each, a "Distribution Record
Date"). Notwithstanding anything to the contrary set forth herein, each share of
Series C Preferred Stock shall also continue to accrue all accrued and unpaid
distributions, whether or not declared, up to the exchange date of any Series C
Preferred Unit (as defined in the Second Amended and Restated Agreement of
Limited Partnership of Urban Shopping Centers, L.P. dated as of October 14,
1993, as amended from time to time, including by the Fifth Amendment to Second
Amendment and Restated Agreement of Limited Partnership dated as of May 27, 1999
(as amended, the "Partnership Agreement")) validly exchanged into such share of
Series C Preferred Stock in accordance with the provisions of the Partnership
Agreement.
The term "Business Day" shall mean each day, other than a
Saturday or a Sunday, which is not a day on which banking institutions in
Chicago, Illinois are authorized or required by law, regulation or executive
order to close.
(b) Limitation on Distributions. No distribution on the Series
C Preferred Stock shall be declared or paid or set apart for payment by the
Corporation at such time as the terms and provisions of any agreement of the
Corporation (other than any agreement with a holder or an affiliate of a holder
of capital stock of the Corporation) relating to its indebtedness, prohibit such
declaration, payment or setting apart for payment or provide that such
declaration, payment or setting apart for payment would constitute a breach
thereof or a default thereunder, or if such declaration, payment or setting
apart for payment shall be restricted or prohibited by law. Nothing in this
Section 3(b) shall be deemed to modify or in any manner limit the provisions of
Sections 3(c) and 3(d).
(c) Distributions Cumulative. Distributions on the Series C
Preferred Stock shall accrue whether or not the terms and provisions of any
agreement of the Corporation (including any agreement relating to its
indebtedness) at any time prohibit the current payment of distributions,
whether or not (i) the Corporation has earnings, (ii) there are funds legally
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available for the payment of such distributions and (iii) such distributions are
authorized or declared. Accrued but unpaid distributions on the Series C
Preferred Stock shall accumulate as of the Preferred Stock Distribution Payment
Date on which they first become payable. Distributions on account of arrears for
any past distribution periods may be declared and paid at any time, without
reference to a regular Preferred Stock Distribution Payment Date, to holders of
record of the Series C Preferred Stock on the record date fixed by the Board,
which date shall be not more than 45 days prior to the payment date.
Accumulated and unpaid distributions shall not bear interest.
(d) Priority as to Distributions.
(i) So long as any shares of Series C Preferred Stock
are outstanding, no distribution of cash or other property shall be authorized,
declared, paid or set apart for payment on or with respect to any class or
series of Common Stock or any class or series of other stock of the Corporation
ranking junior to the Series C Preferred Stock with respect to distributions
(such Common Stock or other junior stock, collectively, "Junior Stock"), nor
shall any cash or other property be set aside for or applied to the purchase,
redemption or other acquisition for consideration of any Series C Preferred
Stock, any Parity Preferred Stock with respect to distributions or any Junior
Stock (other than for purposes of an employee incentive or benefit plan of the
Corporation or any subsidiary), unless, in each case, all distributions
accumulated on all Series C Preferred Stock and all classes and series of
outstanding Parity Preferred Stock with respect to distributions have been paid
in full or declared and set apart for payment. The foregoing sentence shall not
prohibit (A) distributions payable solely in Junior Stock or in options,
warrants or rights to subscribe for or purchase Junior Stock, (B) the conversion
of Junior Stock or Parity Preferred Stock into Junior Stock, and (C) purchases
by the Corporation of such Series C Preferred Stock or Parity Preferred Stock
with respect to distributions or Junior Stock pursuant to Article 7 of the
Charter to the extent required to preserve the Corporation's status as a real
estate investment trust.
(ii) So long as distributions have not been paid in
full (or a sum sufficient for such full payment is not irrevocably deposited in
trust for payment) upon the Series C Preferred Stock, all distributions
authorized and declared on the Series C Preferred Stock and all classes or
series of outstanding Parity Preferred Stock with respect to distributions shall
be authorized and declared so that the amount of distributions authorized and
declared per share of Series C Preferred Stock and such other classes or series
of Parity Preferred Stock shall in all cases bear to each other the same ratio
that accrued distributions per share on the Series C Preferred Stock and such
other classes or series of Parity Preferred Stock (which shall not include any
accumulation in respect of unpaid distributions for prior distribution periods
if such class or series of Parity Preferred Stock does not have cumulative
distribution rights) bear to each other.
(e) No Further Rights. Holders of Series C Preferred Stock
shall not be entitled to any distributions, whether payable in cash, stock,
other property or otherwise, in excess of the full cumulative distributions
described herein.
SECTION 4. LIQUIDATION PREFERENCE. (a) Payment of Liquidation
Distributions. Subject to the rights of holders of Parity Preferred Stock with
respect to rights upon any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation and subject to the rights of holders of any class
of capital stock of the Corporation ranking senior to the Series
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C Preferred Stock with respect to rights upon any voluntary or involuntary
liquidation, dissolution or winding up of the Corporation ("Senior Stock"), the
holders of Series C Preferred Stock shall be entitled to receive out of the
assets of the Corporation legally available for distribution or the proceeds
thereof, after payment or provision for debts and other liabilities of the
Corporation, but before any payment or distributions of the assets shall be made
to holders of Common Stock or any other class or series of stock of the
Corporation that ranks junior to the Series C Preferred Stock with respect to
rights upon liquidation, dissolution or winding up of the Corporation, an amount
equal to the sum of (i) a liquidation preference of $50.00 per share of Series C
Preferred Stock and (ii) any accumulated and unpaid distributions thereon,
whether or not declared, to the date of payment. If, upon such voluntary or
involuntary liquidation, dissolution or winding up, there are insufficient
assets to permit full payment of liquidating distributions to the holders of
Series C Preferred Stock and any Parity Preferred Stock with respect to rights
upon liquidation, dissolution or winding up of the Corporation, all payments of
liquidating distributions on the Series C Preferred Stock and such Parity
Preferred Stock shall be made so that the payments on the Series C Preferred
Stock and such Parity Preferred Stock shall in all cases bear to each other the
same ratio that the respective rights of the Series C Preferred Stock and such
other Parity Preferred Stock (which shall not include any accumulation in
respect of unpaid distributions for prior distribution periods if such Parity
Preferred Stock does not have cumulative distribution rights) upon liquidation,
dissolution or winding up of the Corporation bear to each other.
(b) Notice. Written notice of any such voluntary or
involuntary liquidation, dissolution or winding up of the Corporation, stating
the payment date or dates when, and the place or places where, the amounts
distributable in such circumstances shall be payable, shall be given by first
class mail, postage pre-paid, not less than 30 and not more than 60 days prior
to the payment date stated therein, to each record holder of the Series C
Preferred Stock at the respective addresses of such holders as the same shall
appear on the share transfer records of the Corporation.
(c) No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series C
Preferred Stock shall have no right or claim to any of the remaining assets of
the Corporation.
(d) Consolidation, Merger or Certain Other Transactions. The
voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or assets of the Corporation to, or the consolidation or merger or
other business combination of the Corporation with or into, any corporation,
trust or other entity (or of any corporation, trust or other entity with or into
the Corporation) or a statutory share exchange shall not be deemed to constitute
a liquidation, dissolution or winding up of the Corporation.
SECTION 5. REDEMPTION. (a) Right of Optional Redemption. The Series C
Preferred Stock may not be redeemed prior to the fifth anniversary of the date
of issuance of the Series C Preferred Stock. On or after such date, the
Corporation shall have the right to redeem the Series C Preferred Stock, in
whole or in part, at any time or from time to time, upon not less than 30 nor
more than 60 days' written notice, at a redemption price, payable in cash, equal
to $50.00 per share of Series C Preferred Stock plus accumulated and unpaid
distributions, whether or not declared, to the date of redemption. If fewer than
all of the outstanding shares of Series C Preferred Stock are to be redeemed,
the shares of Series C Preferred Stock to be redeemed shall
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be selected pro rata (as nearly as practicable without creating fractional
shares). Notwithstanding the foregoing, the Corporation shall be required to
redeem all of the outstanding shares of Series C Preferred Stock by the tenth
anniversary of their date of issuance, at a redemption price, payable in cash,
equal to $50.00 per share of Series C Preferred Stock plus accumulated and
unpaid distributions, whether or not declared, to the date of redemption.
(b) Limitation on Redemption. The Corporation may not redeem
fewer than all of the outstanding shares of Series C Preferred Stock unless all
accumulated and unpaid distributions have been paid or declared and set apart
for payment on all shares of Series C Preferred Stock for all quarterly
distribution periods terminating on or prior to the date of redemption.
(c) Notice of Redemption. Notice of redemption will be mailed
by the Corporation, postage prepaid, not less than 30 nor more than 60 days
prior to the redemption date, addressed to the holders of record of the shares
of Series C Preferred Stock to be redeemed at their respective addresses as they
appear on the transfer records of the Corporation. No failure to give or defect
in such notice shall affect the validity of the proceedings for the redemption
of any shares of Series C Preferred Stock except as to the holder to whom such
notice was defective or not given. In addition to any information required by
law or by the applicable rules of any exchange upon which the Series C Preferred
Stock may be listed or admitted to trading, each such notice shall state: (i)
the redemption date, (ii) the redemption price, (iii) the number of shares of
Series C Preferred Stock to be redeemed and (iv) the place or places where
certificates representing such shares of Series C Preferred Stock are to be
surrendered for payment of the redemption price. If fewer then all of the shares
of Series C Preferred Stock held by any holder are to be redeemed, the notice
mailed to such holder shall also specify the number of shares of Series C
Preferred Stock held by such holder to be redeemed.
(d) Procedures for Redemption. If the Corporation gives a
notice of redemption in respect of Series C Preferred Stock (which notice will
be irrevocable) then, the Corporation's obligation to make available the
redemption price shall be deemed fulfilled if, on or before the redemption date
the Corporation pays each holder of Series C Preferred Stock in cash directly or
the Corporation deposits, irrevocably in trust for the benefit of the shares of
Series C Preferred Stock being redeemed funds sufficient to pay the applicable
redemption price, plus any accumulated and unpaid distributions, whether or not
declared, if any, on such shares to the date fixed for redemption, without
interest, with irrevocable instructions and authority to pay such redemption
price and any accumulated and unpaid distributions on such shares to the holders
of the Series C Preferred Stock upon surrender of the certificate evidencing the
Series C Preferred Stock by such holders at the place designated in the notice
of redemption. If fewer than all shares of Series C Preferred Stock evidenced by
any certificate are being redeemed, a new certificate shall be issued upon
surrender of the certificate evidencing all shares of Series C Preferred Stock,
evidencing the unredeemed shares of Series C Preferred Stock without cost to the
holder thereof. On and after the redemption date (i) distributions shall cease
to accumulate on the shares of Series C Preferred Stock or portions thereof
called for redemption, (ii) such shares shall no longer be deemed to be
outstanding and (iii) all rights of the holders thereof as holders of Series C
Preferred Stock shall cease (except the right to receive the redemption price
and any accumulated and unpaid distributions), unless the Corporation defaults
in the payment thereof. If any date fixed for redemption of Series C Preferred
Stock is not a Business Day, then payment of the
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redemption price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, n
each case with the same force and effect as if made on such date fixed for
redemption. If payment of the redemption price or any accumulated or unpaid
distributions in respect of the Series C Preferred Stock is improperly withheld
or refused and not paid by the Corporation, distributions on such Series C
Preferred Stock will continue to accumulate from the original redemption date to
the date of payment, in which case the actual payment date will be considered
the date fixed for redemption for purposes of calculating the applicable
redemption price and any accumulated and unpaid distributions.
(e) Status of Redeemed Stock. Any Series C Preferred Stock
that shall at any time have been redeemed or otherwise acquired by the
Corporation shall after such redemption have the status of authorized but
unissued shares of series preferred stock, without designation as to class or
series until such shares are once more designated as part of a particular class
or series by the Board.
SECTION 6. VOTING RIGHTS. (a) General. Holders of the Series C
Preferred Stock shall not have any voting rights, except as set forth below.
(b) Right to Elect Directors.
(i) If at any time distributions shall be in arrears (which means that
as to any such quarterly distributions, the same have not been paid in full)
with respect to six (6) prior quarterly distribution periods (including
quarterly periods on the Series C Preferred Units prior to the exchange into
Series C Preferred Stock), whether or not consecutive (a "Preferred Distribution
Default"), the number of members of the Board shall automatically be increased
by two if not already increased by reason of similar types of provisions with
respect to Parity Securities (as defined below) and the holders of record of
such Series C Preferred Stock, voting together as a single class with the
holders of each class or series of Parity Preferred Stock upon which like voting
rights have been conferred and are exercisable (collectively, the "Parity
Securities"), shall be entitled to fill the vacancies so created by electing two
additional directors to serve on the Board (the "Preferred Stock Directors") at
a special meeting called in accordance with Section 6(b)(ii) at the next annual
meeting of stockholders, and at each subsequent annual meeting of stockholders
or special meeting held in place thereof, until all such distributions in
arrears and distributions for the current quarterly period on the Series C
Preferred Stock and each such class or series of Parity Preferred Stock have
been paid in full or declared and set apart for payment.
(ii) At any time when such voting rights shall have vested, a proper
officer of the Corporation shall call or cause to be called, upon written
request of holders of record of at least 10% of the outstanding shares of Series
C Preferred Stock, a special meeting of the holders of the Series C Preferred
Stock and the Parity Securities by giving notice of such special meeting as
provided in the Bylaws of the Corporation. At any such special meeting, all of
the holders of the Parity Securities, voting together as a single class without
regard to series, shall be entitled to elect two directors on the basis of one
vote per $100 of liquidation
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preference to which such Parity Securities are entitled by their terms
(excluding amounts in respect of accumulated and unpaid dividends) and not
cumulatively. Notice of all meetings at which holders of the Series C Preferred
Stock shall be entitled to vote shall be given to such holders at their
addresses as they appear in the transfer records.
(iii) If and when all accumulated distributions and the distribution
for the current distribution period on the Series C Preferred Stock shall have
been paid in full or a sum sufficient for such payment is irrevocably deposited
in trust for payment, the holders of the Series C Preferred Stock shall be
divested of the voting rights set forth in this Section 6(b) (subject to
revesting in the event of each and every Preferred Distribution Default) and, if
all distributions in arrears and the distributions for the current distribution
period have been paid in full or set aside for payment in full on all other
classes or series of Parity Preferred Stock upon which like voting rights have
been conferred and are exercisable, the term and office of each Preferred Stock
Director so elected shall terminate and the number of directors constituting the
Board shall be reduced accordingly. So long as a Preferred Distribution Default
shall continue, any vacancy in the office of a Preferred Stock Director shall be
filled by the Board, upon the nomination of the Preferred Stock Director
remaining in office.
(b) Certain Voting Rights. So long as any shares of Series C Preferred
Stock remain outstanding, the Corporation shall not, without the affirmative
vote of the holders of at least two-thirds of the shares of Series C Preferred
Stock outstanding at the time (i) designate or create, or increase the
authorized or issued amount of any class or series of stock ranking senior to
the Series C Preferred Stock with respect to distributions or rights upon
liquidation, dissolution or winding up or reclassify any authorized shares of
stock of the Corporation into any such stock, or create, authorize or issue any
obligations or securities convertible into or evidencing the right to purchase
any such stock; provided, however, that no such vote of the holders of Series C
Preferred Stock shall be required if, at or prior to the time when such action
is to take effect, the Corporation provides for the redemption of all of the
shares of Series C Preferred Stock then outstanding, (ii) designate or create,
or increase the authorized or issued amount of, any Parity Preferred Stock or
reclassify any authorized shares of stock of the Corporation into any such
stock, or create, authorize or issue any obligations or securities convertible
into or evidencing the right to purchase any such stock, but only to the extent
such Parity Preferred Stock is issued to JMB Realty Corporation or any of its
Affiliates (provided that the Corporation may issue Parity Preferred Stock in a
public offering to JMB Realty Corporation and its Affiliates up to the extent
necessary for JMB Realty Corporation and its Affiliates to maintain their
percentage ownership of Common Stock on a fully diluted basis), or (iii) amend,
alter or repeal the provisions of the Corporation's Charter (including these
Articles Supplementary) or By-laws, in a manner that would materially and
adversely affect the powers, rights, preferences, privileges or voting power of
the Series C Preferred Stock or the holders thereof; provided, however, that any
increase in the amount of authorized series preferred stock or Common Stock or
the creation or issuance of any other class or series of series preferred stock
or Common Stock, or any increase in the amount of authorized shares of any other
class or series of series preferred stock, in each case ranking either (A)
junior to the Series C Preferred Stock with respect to distributions and rights
upon liquidation, dissolution or winding up, or (B) on a parity with the Series
C Preferred Stock with respect to distributions and rights upon liquidation,
dissolution or winding up shall not be deemed to materially and adversely affect
such rights, preferences, privileges or voting powers and no vote of the holders
of the Series C Preferred Stock shall be required in such case.
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SECTION 7. NO CONVERSION RIGHTS. The holders of the Series C Preferred
Stock shall not have any rights to convert such shares into shares of any other
class or series of stock or into any other securities of, or interest in, the
Corporation.
SECTION 8. NO SINKING FUND. No sinking fund shall be established for
the retirement or redemption of the Series C Preferred Stock.
SECTION 9. NO PREEMPTIVE RIGHTS. No holder of the Series C Preferred
Stock of the Corporation shall, as such holder, have any preemptive rights to
purchase or subscribe for additional shares of stock of the Corporation or any
other security of the Corporation which it may issue or sell.
SECTION 10. RECORD HOLDERS. The Corporation and the transfer agent for
the Series C Preferred Stock may deem and treat the record holder of any shares
of Series C Preferred Stock as the true and lawful owner thereof for all
purposes and neither the Corporation nor such transfer agent shall be affected
by any notice to the contrary.
SECTION 11. OWNERSHIP RESTRICTIONS. The Series C Preferred Stock shall
be subject to the restrictions and limitations set forth in Article Seventh of
the Charter.
SECOND: The Series C Preferred Stock has been classified and designated
by the Board under the authority contained in the Charter.
THIRD: These Articles Supplementary have been approved by the Board in
the manner and by the vote required by law.
FOURTH: The undersigned Senior Vice President of the Corporation
acknowledges these Articles Supplementary to be the corporate act of the
Corporation and, as to all matters or facts required to be verified under oath,
the undersigned Senior Vice President acknowledges that to the best of his
knowledge, information and belief, these matters and facts are true in all
material respects and that this statement is made under the penalties for
perjury.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Corporation has caused these Articles
Supplementary to be executed under seal in its name and on its behalf by its
Senior Vice President and attested to by its Assistant Secretary on this 27th
day of May, 1999.
URBAN SHOPPING CENTERS, INC.
By: /s/ Michael G. Hilborn
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Michael G. Hilborn
Senior Vice President
ATTEST:
/s/ Kimberly Schwartz
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EXHIBIT 10.1
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (the "Agreement") made effective June 10,
1999, by and among (i) KENWOOD PLAZA LIMITED PARTNERSHIP, an Ohio limited
partnership, ("KPLP") (ii) CENTURY CITY MALL, LLC, a Delaware limited liability
company, ("CCM LLC") (iii) URBAN SHOPPING CENTERS, L.P., an Illinois limited
partnership, ("Urban") and (iv) CHICAGO DEFERRED EXCHANGE CORPORATION (the
"Intermediary").
RECITALS
A. Until December 15, 1998, KPLP owned the real property and
improvements commonly known as the "Kenwood Towne Centre," consisting primarily
of an approximately 1,106,789 rentable square foot retail center, situated on
approximately 80 acres of land, more or less, located in Sycamore Township,
Hamilton County, Ohio (the "Kenwood Property"), subject to aggregate
indebtedness of approximately $193,403,128 (the "Kenwood Debt") as of that date.
Pursuant to that certain Consent Order and Judgment entered on November 6, 1998,
by the Court of Common Pleas, Hamilton County, Ohio, in Case No. A 9803127 (the
"Consent Order"), KPLP was obligated to convey the Kenwood Property, subject to
the Kenwood Debt, to OTR, an Ohio general partnership as nominee for The State
Teachers Retirement System of Ohio ("STRS").
B. In order to dispose of the Kenwood Property in a manner that is
intended to qualify as a tax-deferred exchange of like-kind properties (the
"Exchange") under section 1031(a) of the Internal Revenue Code of 1986 (the
"Code"), KPLP and the Intermediary, a "qualified intermediary" as that term is
defined in section 1.1031(k)-1(g)(4)(iii) of the Income Tax Regulations (the
"Regulations"), entered into and executed the Qualified Intermediary Exchange
Agreement dated December 11, 1998, (the "Exchange Agreement") attached hereto
(without exhibits) as Exhibit "A". Pursuant to the Exchange Agreement, KPLP
assigned its rights (but not its obligations) under the Consent Order to the
Intermediary.
C. In accordance with the Exchange Agreement, the Intermediary closed
on the disposition of the Kenwood Property, caused KPLP to convey the Kenwood
Property to STRS and received from STRS the sum of $6,897,453.75, after
repayment of the Kenwood Debt, and closing costs and adjustments charged by STRS
(the "Exchange Proceeds").
<PAGE> 2
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D. On or about December 18, 1998, the Intermediary closed on the
acquisition of the Woodland Hills Mall in Tulsa, Oklahoma, expending $6,695,795
of the Exchange Proceeds, leaving Exchange Proceeds of $207,685, including
interest earned to April 30, 1999, (the "Remaining Exchange Proceeds").
E. CCM LLC was formed as a single-owner limited liability company under
the laws of the State of Delaware and KPLP acquired 100 percent of its
membership interests in exchange for a capital contribution of $100. KPLP has
caused CCM LLC to elect to be disregarded as a separate entity in accordance
with section 301.7701-1(a)(4) of the Regulations, which election is attached
hereto as Exhibit "B".
F. RREEF USA Fund-II, a California group trust, ("RREEF") is the owner
of the real property and improvements commonly known as the "Century City
Shopping Center and Marketplace" located in the City of Los Angeles, County of
Los Angeles, State of California (the "Century City Property"), more
particularly described in Section 1.1.1 of that certain Agreement of Purchase
and Sale dated this date by and between CCM LLC, as the Purchaser, and RREEF as
the Seller (the "Century City Agreement"), annexed hereto as Exhibit "C". RREEF
desires to sell an undivided interest in the Century City Property to CCM LLC
upon the terms and conditions set forth in the Century City Agreement.
G. In order to effect a tax deferred exchange, KPLP desires to acquire
a 9.6134125 percent undivided interest, as tenant in common with RREEF, in the
Century City Property (the "CCM Undivided Interest"). In order to facilitate
that exchange, RREEF is willing (i) to consent to CCM LLC's assignment of its
right (but not its obligations) to acquire the CCM Undivided Interest to the
Intermediary, (ii), prior to the Closing, to encumber the Century City Property
by borrowing the sum of $160,000,000 from Lehman Brothers Holdings, Inc.,
("Lehman Brothers") secured by a nonrecourse mortgage encumbering the Century
City Property upon the terms and conditions stated in the Loan Documents listed
in Exhibit "D" annexed hereto (the "Lehman Loan") and (iii) to close under the
Century City Agreement in accordance with this Agreement by conveying the CCM
Undivided Interest subject to the Lehman Loan to the extent of $22,953,628.
H. In order to effect the Exchange, KPLP desires to cause CCM LLC to
acquire, through the Intermediary, the CCM Undivided Interest, subject to the
Lehman Loan to the extent of $22,953,628, upon the terms and conditions stated
in the Century City Agreement and this Agreement.
<PAGE> 3
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I. Following CCM LLC's acquisition of the CCM Undivided Interest, KPLP
desires to contribute all of the membership interests of CCM LLC to Urban solely
in exchange for units of limited partnership interest in Urban ("OP Units"),
which KPLP intends to be a nontaxable contribution to Urban's capital, upon the
terms and conditions stated in this Agreement.
J. USC Century, Inc., a Delaware corporation that is a qualified REIT
subsidiary owned by Urban REIT (defined below), ("USC") is the Purchaser under a
second Agreement of Purchase and Sale dated this date (the "USC/RREEF
Agreement") pursuant to which RREEF will sell and USC will purchase the
remaining 90.3865875 percent undivided interest in the Century City Property
(the "Urban Undivided Interest"), subject to the Lehman Loan to the extent of
$137,046,172. Following Urban's acquisition of all of the membership interests
of CCM LLC and Urban's contribution of such membership interests to Century City
Mall Partners, LLC, a Delaware limited liability company, ("CCP"), USC is
willing, with RREEF's consent, to assign the USC/RREEF Agreement to CCM LLC,
pursuant to an Assignment of Contract Interest annexed hereto as Exhibit "E"
(the "Assignment of Contract Interest"), allowing CCM LLC to acquire the Urban
Undivided Interest. RREEF is willing (i) to consent to the Assignment of
Contract Interest by USC to CCM LLC and (ii) to close under the USC/RREEF
Agreement in accordance with this Agreement and the Assignment of Contract
Interest by conveying to CCM LLC the Urban Undivided Interest, subject to the
Lehman Loan to the extent of $137,046,172.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, receipt and
sufficiency of which are hereby acknowledged, the parties hereto do mutually
agree as follows:
1. EXCHANGE. On or prior to the Closing Date, subject to all of the
terms and conditions of this Agreement:
(a) CCM LLC shall acquire the CCM Undivided Interest, subject to the
Lehman Loan to the extent of $22,953,628. CCM LLC shall agree to perform all of
the Purchaser's obligations under the Century City Agreement with respect to the
CCM Undivided Interest and under the Lehman Loan Documents to the extent of
$22,953,628. CCM LLC shall assign its rights (but not its obligations) under the
Century City Agreement to the Intermediary pursuant to the Exchange Agreement.
KPLP shall cause CCM LLC and the Intermediary to perform their respective rights
and obligations under the Century City Agreement and the Lehman Loan Documents.
(b) The net purchase price of the CCM Undivided Interest, subject to
the Lehman Loan of $22,953,628, shall be $3,194,854 (the "CCM Purchase Price").
The Intermediary shall (i) pay (and KPLP shall cause Intermediary to pay) the
CCM Purchase Price in immediately available funds
<PAGE> 4
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out of the Remaining Exchange Proceeds and funds advanced for that purpose by
KPLP and (ii) assign to CCM LLC all of its rights under the Century City
Agreement that survive the Closing. KPLP shall advance in immediately available
funds to the Intermediary the amount required to permit the Intermediary to pay
the CCM Purchase Price at Closing.
2. CONTRIBUTION TO URBAN. On the Closing Date, immediately after
closing of the Exchange in accordance with Section 1 above, and subject to all
of the terms and conditions of this Agreement:
(a) KPLP shall assign and transfer, without recourse or warranty
(except as otherwise provided herein), its entire membership interest in CCM LLC
to Urban as a contribution to the capital of Urban.
(b) In consideration of KPLP's assignment and transfer of the entire
membership interests in CCM LLC, Urban shall issue and deliver to KPLP the
number of OP Units equal in value to the CCM Purchase Price, which OP Units
shall (for purposes of calculating the number of OP Units needed to equal the
CCM Purchase Price) be valued at $39.42 per OP Unit. Assuming that the CCM
Purchase Price is $3,194,854, Urban shall issue 81,047 OP Units at Closing. The
issuance of such OP Units shall be evidenced by a certificate relating to such
OP Units (the "Certificate"), together with the joinder (the "Joinder") to the
OP's partnership agreement (the "OP Agreement") therein executed by Urban and
KPLP, which Certificate and Joinder are substantially in the form attached
hereto as Exhibit "F".
3. CLOSING. The closing (the "Closing") of the transactions provided
for in this Agreement shall occur at the place for closing set forth under the
Century City Agreement on the date (the "Closing Date") designated for closing
under the Century City Agreement, but in no event later than June 15, 1999, time
being of the essence. Accordingly, if Urban elects to extend the date for
closing as provided in the Century City Agreement (for example, on account of
delays in delivery of estoppels), the Closing Date hereunder shall automatically
be extended for a similar period (but in no event later than June 15, 1999). The
Closing shall be consummated through escrow pursuant to requisite and
appropriate escrow instructions to Intermediary and the Title Insurer identified
in the Century City Agreement (the "Escrow Agent") in accordance with this
Agreement.
(a) Escrow. On or before 2:00 p.m., Central Daylight Time on the day
prior to the Closing Date, the parties shall take the following actions and
deliver to the Escrow Agent the following documents and instruments:
(i) CCM LLC shall execute, acknowledge (where required) and
deliver all of the Century City Conveyance Documents required to be executed,
acknowledged and delivered by
<PAGE> 5
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CC LLC in order to convey the CCM Undivided Interest to CCM LLC.
(ii) The Intermediary will deposit the CCM Purchase Price and
deliver an assignment to CCM LLC of all of its rights under the Century City
Agreement that survive the Closing.
(iii) KPLP shall execute, acknowledge (where required) and
deliver (A) an assignment of its entire membership interest in CCM LLC (the
"Membership Interests Assignment") to Urban, in the form of Exhibit "G" hereto,
and (B) the Joinder.
(iv) Urban shall execute, acknowledge (where required) and
deliver the Certificate evidencing the issuance of the OP Units to KPLP. On the
Closing Date, Urban shall deposit its share of the closing costs in accordance
with paragraph (c) below.
(v) Following Urban's contribution of the membership
interests in CCM LLC to CCP, USC shall execute, acknowledge (where required) and
deliver the Assignment of Contract Interest.
(vi) KPLP shall deliver an opinion of counsel in the form
attached hereto as Exhibit "P".
(b) Adjustments and Prorations. No adjustments or prorations for taxes,
rental and other income, operating and other expenses shall be made with respect
to the conveyance of the CCM Undivided Interest; all such adjustments and
prorations shall be made in accordance with the Century City Agreement with
respect to the Urban Undivided Interest.
(c) Closing Costs. Urban shall pay all closing costs incident to the
conveyance of the Century City Property, as provided in Section 7.4 of the
Century City Agreement. Each party to this Agreement shall pay its own
attorneys' and other professional fees and costs. KPLP shall indemnify and hold
Urban harmless from and against liability for (A) the additional costs and
expenses (as reasonably allocated by counsel to Lehman Brothers) incurred by
Urban in connection with and as a result of RREEF's borrowing the Lehman Loan
and (B) the additional costs and expenses (as reasonably allocated by counsel to
RREEF) incurred by Urban in connection with and as a result of the separate
conveyance of the CCM Undivided Interest to CCM LLC or the Lehman Loan.
(d) Conditions to Closing; Delivery to Parties. The conditions to the
Closing shall be (i) closing of the Lehman Loan, (ii) satisfaction of (or waiver
by the party entitled to the benefit of) the conditions to closing set forth in
Section 6 below and (iii) the receipt by the Escrow Agent of the funds and
documents described in paragraph (a) above and the items to be delivered by
third parties
<PAGE> 6
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as described below. Upon the satisfaction of the above conditions, then the
Escrow Agent shall take the following actions in the following sequence:
(i) Record or cause to be recorded (or file or caused to be
filed, as appropriate) in the land records and security assignment records of
the City of Los Angeles, County of Los Angeles, State of California, the Lehman
Loan Documents securing the Lehman Loan;
(ii) Wire the amount due to RREEF as proceeds of the Lehman
Loan and under the Closing Statement delivered under Section 7.8.1 of the
Century City Agreement, in accordance with written wiring instructions from
RREEF;
(iii) Record in the land records for the City of Los Angeles,
County of Los Angeles, State of California, the Deed (as defined in Section 7.1
of the Century City Agreement) conveying the CCM Undivided Interest to CCM LLC;
(iv) Deliver the Membership Interest Assignment to Urban;
(v) Deliver the Certificate evidencing the issuance of the
OP Units to KPLP;
(vi) Following Urban's contribution of the membership
interests in CCM to CCP, deliver the Assignment of Contract Interest to CCM LLC;
(vii) After USC is admitted to CCM LLC as a member, record in
the land records for the City of Los Angeles, County of Los Angeles, State of
California, the Deed conveying the Urban Undivided Interest to CCM LLC;
(viii) Deliver the respective amounts due to RREEF and third
parties (e.g., brokers and the holders of existing liens against the Property
other than the Lehman Loan) in accordance with a Closing Statement and the
respective instructions from such persons;
(ix) Issue the owner's policy (with an effective date that
is the same as the date and time of the recordation of the Deeds) and deliver
the same to CCM LLC in accordance with the escrow instructions delivered to the
Escrow Agent;
(x) File all information returns required under section
6045 of the Internal Revenue Code and take all other reporting actions as may be
required in connection therewith; and
(xi) Deliver the amount due to KPLP, if any, under the
Closing Statement to the Intermediary in accordance with separate wiring
instructions to be delivered to Intermediary on or
<PAGE> 7
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before the Closing Date.
4. REPRESENTATIONS AND WARRANTIES; CERTAIN COVENANTS.
(a) Representations and Warranties of KPLP to Urban. KPLP hereby
represents to Urban as follows:
(i) Formation; Authority. CCM LLC is a limited liability
company, duly organized, validly existing and in good standing under the laws of
the State of Delaware and duly authorized and qualified to do all things
required of it under this Agreement and the Century City Agreement. CCM LLC has
all requisite power and authority to execute and deliver and to perform all of
its obligations under this Agreement and the Century City Agreement and nothing
prohibits or restricts the right or ability of CCM LLC to close the transactions
contemplated hereunder and carry out the terms hereof. This Agreement and all
agreements, instruments and documents herein provided to be executed or to be
caused to be executed by CCM LLC are duly authorized, executed and delivered by
and are binding upon CCM LLC. CCM LLC has obtained all consents and permissions
related to the transactions herein contemplated and required under any covenant,
agreement, encumbrance or laws. Neither this Agreement, the Century City
Agreement nor any agreement, document or instrument executed or to be executed
in connection with the same, nor anything provided in or contemplated by this
Agreement, the Century City Agreement or any such other agreement, document or
instrument, does now or shall hereafter breach, invalidate, cancel, make
inoperative or interfere with, or result in the acceleration or maturity of, any
agreement, document, instrument, right or interest, affecting or relating to CCM
LLC.
(ii) Federal Income Tax Classification. CCM LLC has elected to
be disregarded as a separate entity for Federal income tax purposes.
(iii) Due Execution. The execution of all documents,
instruments, deeds, certificates and representations referred to in this
Agreement have been fully authorized and, when executed and delivered in
accordance herewith, will be duly executed and delivered by or on behalf of CCM
LLC will be valid and binding agreements, enforceable in accordance with their
terms.
(iv) No Violation. The execution, delivery and performance by
CCM LLC of its obligations under this Agreement, the Century City Agreement and
all documents, instruments, deeds, certificates and representations referred to
in this Agreement will not contravene any provision of applicable law,
certificate of formation, operating agreement or other constituent document of
CCM LLC, or any agreement or other instrument binding upon CCM LLC or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over CCM LLC, and no consent, approval, authorization or order of
or qualification with any governmental
<PAGE> 8
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body or agency is required for the performance by CCM LLC of its obligations
under this Agreement and all documents, instruments, deeds, certificates and
representations referred to in this Agreement.
(v) ERISA Representations. The representations and
warranties made by the Purchaser in Section 5.2.2 of the Century City Agreement
are true and correct when applied to KPLP, CCM LLC and the Intermediary.
(b) Representations and Warranties of KPLP to Urban. KPLP hereby
represents and warrants the following to Urban:
(i) Formation; Authority. KPLP is a limited partnership,
duly organized, validly existing and in good standing under the laws of the
State of Ohio and duly authorized and qualified to do all things required of it
under this Agreement. KPLP has all requisite power and authority to execute and
deliver, and to perform all of its obligations under, this Agreement and nothing
prohibits or restricts the right or ability of KPLP to close the transactions
contemplated hereunder and carry out the terms hereof. This Agreement and all
agreements, instruments and documents herein provided to be executed or to be
caused to be executed by KPLP are duly authorized, executed and delivered by and
are binding upon KPLP. KPLP has obtained all consents and permissions related to
the transactions herein contemplated and required under any covenant, agreement,
encumbrance or laws. Neither this Agreement nor any agreement, document or
instrument executed or to be executed in connection with the same, nor anything
provided in or contemplated by this Agreement or any such other agreement,
document or instrument, does now or shall hereafter breach, invalidate, cancel,
make inoperative or interfere with, or result in the acceleration or maturity
of, any agreement, document, instrument, right or interest, affecting or
relating to KPLP.
(ii) OP Agreement. KPLP has reviewed the OP Agreement,
discussed it with its counsel, understands that KPLP will be bound by its terms
and reconfirms the representations and warranties.
(iii) Due Execution. The Certificate and Joinder and all
documents, instruments, deeds, certificates and representations referred to in
this Agreement have been fully authorized, and when executed and delivered in
accordance herewith will be duly executed and delivered by or on behalf of KPLP
and will be valid and binding agreements, enforceable in accordance with their
terms.
(iv) No Violation. The execution, delivery and performance by
KPLP of its obligations under the OP Agreement and all documents, instruments,
deeds, certificates and representations referred to in this Agreement will not
contravene any provision of the partnership
<PAGE> 9
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agreement or other constituent document of KPLP, or any agreement or other
instrument binding upon KPLP or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over KPLP, including but
not limited to the Consent Order, and no consent, approval, authorization or
order of or qualification with any governmental body or agency is required for
the performance by KPLP of its obligations under the OP Agreement and all
documents, instruments, deeds, certificates and representations referred to in
this Agreement.
(v) Valid Title and Authority. KPLP has, and on the Closing
Date will have, valid title to all of the membership interests of CCM LLC, free
and clear of all claims and indebtedness, and the power and authority to enter
into the OP Agreement and all documents, instruments, deeds, certificates and
representations referred to in this Agreement, and to assign, transfer and
deliver the membership interests in CCM LLC to USC;
(vi) No Ownership of Stock of Urban REIT. Except as a result
of the exercise of "Exchange Rights" pursuant to the OP Agreement pertaining to
144,495 OP Units previously acquired by KPLP, neither KPLP, nor any direct or
indirect owner (the "KPLP Owners") of any interest in KPLP or CCM LLC, owns or
will actually own or "Constructively Own" (as defined in Exhibit "H") any common
shares of Urban Shopping Centers, Inc., a Maryland corporation ("Urban REIT").
All of the direct and indirect owners of KPLP are listed in Exhibit "I" hereto
(the "KPLP Organizational Chart").
(vii) Liabilities of CCM LLC. CCM LLC was formed on May 6,
1999, by filing of articles of formation, a true, complete and correct copy of
which is attached hereto as Exhibit "J" and made a part hereof. CCM LLC is
governed by an operating agreement (the "Operating Agreement") dated as of May
6, 1999, a true, complete and correct copy of which is attached hereto as
Exhibit "K" and made a part hereof. CCM LLC has no obligations or liabilities of
any kind or nature and CCM LLC is not party to any agreement other than this
Agreement. The Operating Agreement shall not be amended without the prior
written consent of Urban. At all times through and including the conveyance of
the membership interests in CCM LLC to USC, CCM LLC shall execute no document or
agreement, and will not incur any liability, without the express written consent
of Urban. Without limitation on the generality of the foregoing, any consent,
approval or waiver by CCM LLC under the Century City Agreement shall be given or
withheld as directed by Urban.
(viii) Indemnity. KPLP shall, at its sole cost and expense,
indemnify and hold harmless Urban, USC and CCM LLC from and against any and all
claims --
(A) for losses, damages or expenses under the
indemnification, if any, given by Urban or USC to RREEF with respect to the
Lehman Loan or the Lehman Loan
<PAGE> 10
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Documents, if and to the extent that such claim arose solely on account of
KPLP's acts or failure to act with respect to the Lehman Loan or the Lehman Loan
Documents; provided, however, nothing herein, however, shall be construed as an
assumption by KPLP of any liability for amounts due under and in accordance with
the terms of the Lehman Loan or the Lehman Loan Documents; and
(B) for any documentary stamp tax imposed by the
State of California or the County of Los Angeles upon the assignment by KPLP of
the membership interests of CCM LLC to Urban; provided, however, that Urban and
USC shall give KPLP timely notice of any claim for any such tax and shall permit
KPLP, at its sole expense, to defend against such claim and provide cooperation
in order to permit KPLP to prosecute a claim for refund of any such tax, if paid
by KPLP.
(ix) No Implied Representations. Except as otherwise expressly
set forth in this Agreement, neither Urban, CCM LLC nor any other person or
entity has made any representation or warranty to KPLP with respect to the
Century City Property, the Century City Agreement, Urban, the assets and
liabilities of Urban and Urban REIT or the tax consequences of the matters
contemplated hereby. Without limitation on the generality of the foregoing, KPLP
acknowledges that it is entering into this Agreement and consummating the
matters herein set forth without relying on any representations and warranties
of any kind whatsoever, express or implied, except as otherwise expressly set
forth in this Agreement.
(c) Representations and Warranties of Urban. Urban hereby represents
and warrants the following to KPLP that:
(i) On the Closing Date, Urban REIT will be a real estate
investment trust duly organized, validly existing and in good standing under the
laws of the State of Maryland authorized to transact business under the laws of
any state in which the character of the properties owned or leased by it or in
which the transaction of its business makes such qualification necessary except
where the failure to be so qualified could reasonably be expected to have no
material adverse effect on its financial condition or business, and will have
all requisite corporate power and authority to perform its obligations under and
in accordance with the terms and conditions of the OP Agreement.
(ii) On the Closing Date, Urban will be a limited partnership
duly formed and validly existing under the laws of the State of Illinois, will
be duly authorized to transact business under the laws of any state in which the
character of the properties owned or leased by it or in which the transaction of
its business makes such qualification necessary, except where the failure to be
so qualified could reasonably be expected to have no material adverse effect on
its financial condition or business, and will have all requisite partnership
power and authority under the OP Agreement to execute and deliver this Agreement
and all other documents and instruments to be executed and
<PAGE> 11
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delivered by it hereunder and to perform its obligations hereunder and
thereunder in accordance with the terms and conditions hereof and thereof. A
true and complete copy of the limited partnership agreement of Urban as of the
date hereof is attached as Exhibit "L".
(iii) Assuming the due and valid authorization, execution and
delivery of this Agreement by the other parties hereto, this Agreement and the
other agreements and documents to be executed and delivered by Urban, when
executed and delivered, will be the legal, valid and binding obligation of
Urban, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, moratorium or similar laws relating to
creditors' rights and general principles of equity. The performance by Urban of
any of its duties and obligations under this Agreement and the documents and
instruments to be executed and delivered by Urban hereunder will not (i)
conflict with, or result in a breach of, or default under, any provision of any
of the organizational documents of Urban or any agreement, instruments or laws
to which it is a party or by which it is or may be bound, or (ii) require any
consent, approval or authorization of, or declaration, filing or registration
with, any governmental authority.
(iv) At the Closing, the OP Units to be issued to KPLP will
be duly issued by Urban, free and clear of any mortgage, pledge, lien,
encumbrance, security interest, claim or rights of interest of any third party
of any nature whatsoever claiming through Urban or Urban REIT. The common stock
which may be issued by Urban REIT upon redemption of the OP Units will be duly
authorized and, when and if issued, will be fully paid and non-assessable, free
and clear of any mortgage, pledge, lien, encumbrance, security interest, claim
or rights of interest of any third party of any nature whatsoever claiming
through Urban or Urban REIT. Urban REIT shall cause the common stock which may
be issued by Urban REIT upon redemption of the OP Units to be registered, at its
sole expense, with the United States Securities and Exchange Commission (the
"SEC") in accordance with the Registration Rights Agreement attached hereto as
Exhibit "M". Urban REIT shall maintain the listing of its common stock if the
common stock of Urban REIT are then so listed generally.
(v) The financial statements of Urban REIT, copies of which
are to be attached hereto as Exhibit "N", as at and for the years ended December
31, 1998 and 1997, have been prepared in accordance with generally accepted
accounting principles on a consistent basis from year to year and fairly present
the financial condition of Urban REIT, as of such periods and the results of
operations for the respective periods indicated. There have been no material
adverse changes to the financial condition of Urban REIT or Urban since December
31, 1998. Except as set forth in such financial statements, Urban REIT does not
have any liabilities or obligations of any nature (whether accrued, absolute,
contingent or otherwise) required by generally accepted accounting principles to
be set forth on a balance sheet of Urban REIT or in the notes thereto and which,
individually or in the aggregate, would reasonably be expected to have a
material adverse effect on the business, property or assets, operations or
condition (financial or otherwise) of Urban REIT.
<PAGE> 12
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(vi) There is not pending or, to Urban's knowledge, threatened
any litigation, administrative proceeding or investigation against Urban REIT or
Urban that, if adversely determined, could reasonably be expected to have a
material adverse effect either on Urban REIT or Urban or the ability of either
one to perform its obligations under this Agreement in a timely manner.
(vii) From and after the Closing Date, Urban agrees that,
subject to the concurrence of its joint venture partner or partners (which for
purposes hereof shall include members of limited liability companies) and of its
lender or lenders, Urban will permit the general and limited partners of KPLP
(the "Guarantors") to guarantee on a "bottom dollar basis" (collectively, a
"Guarantee") such indebtedness of Urban as they may reasonably request in order
to avoid gain recognition under Code section 731(a)(1). Any such Guarantee
executed by the Guarantors will be in substantially the form attached hereto as
Exhibit "O". Notwithstanding anything to the contrary in this Agreement, Urban
shall not be restricted in its ability to change the amount or character of its
liabilities, but Urban shall allow the Guarantors to enter into such reasonable
agreements or arrangements similar to those set forth herein for the purpose of
enabling the Guarantors to the extent possible to prevent gain recognition under
Code section 731(a)(1) by the Guarantors.
5. [Intentionally omitted]
6. CONDITIONS TO CLOSING.
(a) KPLP's Conditions to Closing. In addition to the conditions
provided in other provisions of this Agreement, the obligations of CCM LLC, KPLP
and the Intermediary to perform their respective undertakings provided in this
Agreement are conditioned on the following:
(i) Performance by RREEF. The due performance by RREEF of
the Century City Agreement;
(ii) Performance by Urban. The due performance by Urban of
each and every undertaking and agreement to be performed by it hereunder in all
material respects and the truth of each representation and warranty made by
Urban in this Agreement in all material respects at the time as of which the
same is made and as of the Closing Date as if made on and as of the Closing
Date; and
(iii) No Suspension of Trading. Trading of the common stock of
Urban REIT is not subject to suspension, and has not been suspended as of the
Closing Date, under the rules of the New York Stock Exchange.
<PAGE> 13
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(b) Urban's Conditions to Closing. In addition to the conditions
provided in other provisions of this Agreement, Urban's obligations to perform
its undertakings provided in this Agreement are conditioned on the following:
(i) Performance by Others. The due performance by RREEF,
KPLP, the Intermediary and CCM LLC of each and every of their respective
undertakings and agreements to be performed hereunder and under the Century City
Agreement and the USC/RREEF Agreement in all material respects, and the truth of
each representation and warranty made by RREEF, KPLP and CCM LLC in the Century
City Agreement, the USC/RREEF Agreement or this Agreement in all material
respects at the time as of which the same is made and as of the Closing Date as
if made on and as of the Closing Date.
(ii) Determination by Urban to Permit Closing under USC/RREEF
Agreement. The determination made by Urban (which it may make in its sole and
absolute discretion) to permit the closing under the USC/RREEF Agreement.
Without limitation on the generality of the foregoing, KPLP and CCM LLC
acknowledge that Urban's and RREEF's obligations to close under the USC/RREEF
Agreement are each subject to various conditions, and that neither Urban nor
RREEF is under any obligation of any kind or nature to KPLP or CCM LLC to waive
any such condition. Further, Urban is under no obligation of any kind or nature
to KPLP to permit the closing under the USC/RREEF Agreement, regardless of
whether the conditions to Urban's obligations thereunder are satisfied.
7. OP UNITS. KPLP acknowledges its understanding that the OP
Units to be acquired pursuant to the Agreement are intended to be exempt from
registration under the Securities Act of 1933, as amended (the "Act"). In
furtherance thereof, KPLP represents and warrants to Urban that:
(a) KPLP is acquiring the OP Units solely for KPLP's own account
for the purpose of investment and not as a nominee or agent for any other person
and not with a view to, or for offer or sale in connection with, any
distribution of any thereof. Except as otherwise provided in the OP Agreement,
KPLP agrees and acknowledges that KPLP will not, directly or indirectly, offer,
transfer, sell, assign, pledge, hypothecate or otherwise dispose of
(hereinafter, "Transfer") any of the OP Units or and the common stock of Urban
REIT into which they are convertible (the "Urban REIT Stock") unless such
Transfer complies with the OP Agreement and all applicable laws and regulations.
(b) KPLP is knowledgeable, sophisticated and experienced in
business and financial matters and fully understands the limitations on transfer
described in this Agreement and the OP Agreement. KPLP is able to bear the
economic risk of holding the OP Units and the Urban REIT
<PAGE> 14
-14-
Stock for an indefinite period and is able to afford the complete loss of its
investment in the OP Units and the Urban REIT Stock; KPLP has been given the
opportunity to obtain any additional information or documents and to ask
questions and receive answers about such documents, Urban and Urban REIT and the
business and prospects of Urban and Urban REIT which KPLP deems necessary to
evaluate the merits and risks related to its investment in the OP Units and the
Urban REIT Stock; and KPLP understands and has taken cognizance of all risk
factors related to the acquisition of the OP Units and the Urban REIT Stock.
(c) KPLP acknowledges that (i) the exchange of OP Units into Urban REIT
Stock are subject to certain restrictions contained in the OP Agreement and (ii)
the Urban REIT Stock which may be received upon such an exchange will be subject
to certain limitations on ownership, transfer or redemption set forth in the
charter of Urban REIT.
(d) KPLP is an accredited investor within the meaning of Rule 501 of
Regulation D under the Act and no consent of its partners was received or
solicited for the consummation of the transactions contemplated hereby.
8. MISCELLANEOUS.
(a) Brokerage Issues. Each of the parties hereto represents and
warrants to the other parties that no broker or finder has been engaged by it in
connection with any of the transactions contemplated by this Agreement or to its
knowledge is in any way connected with any of such transactions. In the event of
a claim for broker's or finder's fee or commissions in connection herewith, then
each party shall indemnify, protect, defend and hold the other parties harmless
from and against the same if it shall be based upon any statement or agreement
alleged to have been made by the indemnifying party.
(b) Limitation of Liability.
(i) No present or future partner, member, director, officer,
shareholder, employee, advisor, affiliate or agent of or in Urban or any
affiliate of Urban, including, without limitation, Urban REIT shall have any
personal liability, directly or indirectly, under or in connection with this
Agreement or any agreement made or entered into under or in connection with the
provisions of this Agreement, or any amendment or amendments to any of the
foregoing made at any time or times, heretofore or hereafter, and KPLP and its
successors and assigns and, without limitation, all other persons and entities,
shall look solely to Urban's assets for the payment of any claim or for any
performance, and KPLP hereby waives any and all such personal liability. For
purposes of this subparagraph (b), no negative capital account or any
contribution or payment obligation of any partner or member in Urban shall
constitute an asset of Urban. The limitations of
<PAGE> 15
-15-
liability contained in this subparagraph are in addition to, and not in
limitation of, any limitation on liability applicable to Urban provided
elsewhere in this Agreement or by law or by any other contract, agreement or
instrument.
(ii) No present or future partner, advisor, affiliate or agent
of or in KPLP or any affiliate of KPLP, including, without limitation, Herbert
S. Miller and Western Development Corporation, shall have any personal
liability, directly or indirectly, under or in connection with this Agreement or
any agreement made or entered into under or in connection with the provisions of
this Agreement, or any amendment or amendments to any of the foregoing made at
any time or times, heretofore or hereafter, and Urban and its successors and
assigns and, without limitation, all other persons and entities, shall look
solely to KPLP's assets for the payment of any claim or for any performance, and
Urban hereby waives any and all such personal liability. The limitations of
liability contained in this subparagraph are in addition to, and not in
limitation of, any limitation on liability applicable to KPLP provided elsewhere
in this Agreement or by law or by any other contract, agreement or instrument.
(c) Successors and Assigns. No party to this Agreement may assign or
transfer its rights or obligations under this Agreement without the prior
written consent of the other parties (in which event such transferee shall
assume in writing all of the assignor's obligations hereunder, but such assignor
shall not be released from its obligations hereunder). No consent given by a
party to any transfer or assignment of the assignor's rights or obligations
hereunder shall be construed as a consent to any other transfer or assignment of
the assignor's rights or obligations hereunder. No transfer or assignment in
violation of the provisions hereof shall be valid or enforceable. Subject to the
foregoing, this Agreement and the terms and provisions hereof shall inure to the
benefit of and be binding upon the successors and assigns of the parties.
(d) Notices. Any notice which a party is required or may desire to give
the other shall be in writing and shall be sent by personal delivery or by mail
(either (i) by United States registered or certified mail, return receipt
requested, postage prepaid, or (ii) by Federal Express or similar generally
recognized overnight carrier regularly providing proof of delivery), addressed
as follows (subject to the right of a party to designate a different address for
itself by notice similarly given at least five (5) days in advance):
<PAGE> 16
-16-
To Urban:
Urban Shopping Centers, L.P.
900 North Michigan Avenue
Suite 1500
Chicago, Illinois 60611-1580
Attention: Mr. Adam S. Metz
Office (Gen.): (312) 915-3568
Telecopier: (312) 915-2001
With Copy To:
Urban Shopping Centers, Inc.
900 North Michigan Avenue
Suite 1500
Chicago, Illinois 60611-1580
Attention: Michael G. Hilborn, General Counsel
Office (Gen.): (312) 915-3568
Telecopier: (312) 915-2001
And Additional Copy To:
Pircher, Nichols & Meeks
1999 Avenue of the Stars
Suite 2600
Los Angeles, California 90067
Attention: Real Estate Notices (PGN)
Office (Gen.): (310) 201-8900
Telecopier: (310) 201-8922
<PAGE> 17
-17-
To KPLP:
Kenwood Plaza Limited Partnership
% Western Development Corporation
1000 Potomac Street, N.W.
Suite 200
Washington, D.C. 20007
Attention: Mr. Herbert S. Miller
Office (Gen.): (202) 338-5200
Telecopier: (202) 338-6014
With Copy To:
Robins, Kaplan, Miller & Ciresi L.L.P.
1801 K Street, N.W.
Suite 1200
Washington, D.C. 20006
Attention: Robert E. Falb, Esq.
Office (Gen.): (202) 736-2650
Telecopier: (202) 223-8604
To Intermediary:
Chicago Deferred Exchange Corporation
171 North Clark Street, Ninth Floor
Chicago, Illinois 60601-3294
Office (Gen.): (312) 223 2931
Telecopier: (312) 223 3301
Any notice so given by mail shall be deemed to have been given as of the date of
delivery (whether accepted or refused) established by U.S. Post Office return
receipt or the overnight carrier's proof of delivery, as the case may be. Any
such notice not so given shall be deemed given upon actual receipt of the same
by the party to whom the same is to be given. Notices may be given by facsimile
transmission and shall be deemed given upon the actual receipt of the same by
the individual to which they are addressed, and shall be promptly followed by a
hard copy notice by mail as provided above.
(e) Legal Costs. In the event any action be instituted by a party to
enforce this Agreement, the prevailing party in such action (as determined by
the court, agency or other authority
<PAGE> 18
-18-
before which such suit or proceeding is commenced) shall be entitled to such
reasonable attorneys' fees, costs and expenses as may be fixed by the decision
maker. The foregoing includes, but is not limited to, reasonable attorneys'
fees, expenses and costs of investigation incurred in (i) appellate proceedings;
(ii) in any post-judgment proceedings to collect or enforce the judgment; and
(iii) establishing the right to indemnification.
(f) Further Instruments. KPLP will, whenever and as often as it
shall be requested so to do by Urban, cause to be executed, acknowledged or
delivered any and all such further instruments and documents as may be necessary
or proper, in the reasonable opinion of the requesting party, in order to carry
out the intent and purpose of this Agreement. Without limitation on the
generality of the foregoing, KPLP shall cause each KPLP Owner to execute, prior
to the Closing Date, a representation and covenant, in form and substance
reasonably satisfactory to Urban, that such KPLP Owner (i) is an accredited
investor within the meaning of Rule 501 of Regulation D under the Act, and (ii)
does not own, and will not at any hereafter acquire, any interest in Urban or
Urban REIT, except for the OP Units issued pursuant to this Agreement and the
Urban REIT Stock issued upon conversion of such OP Units.
(g) Matters of Construction.
(i) Incorporation of Exhibits. All exhibits attached and
referred to in this Agreement are hereby incorporated herein as fully set forth
in (and shall be deemed to be a part of) this Agreement.
(ii) Entire Agreement. This Agreement contains the entire
agreement between the parties respecting the matters herein set forth and
supersedes all prior agreements between the parties hereto respecting such
matters except the Qualified Intermediary Exchange Agreement.
(iii) Time of the Essence. Subject to subparagraph (iv) below,
time is of the essence of this Agreement.
(iv) Non-Business Days. Whenever action must be taken
(including the giving of notice or the delivery of documents) under this
Agreement during a certain period of time (or by a particular date) that ends
(or occurs) on a non-business day, then such period (or date) shall be extended
until the immediately following business day. As used herein, "business day"
means any day other than a Saturday, Sunday or federal holiday.
(v) Severability. 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
<PAGE> 19
-19-
than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each such term and provision of this Agreement shall be
valid and be enforced to the fullest extent permitted by law.
(vi) Interpretation. Words used in the singular shall
include the plural, and vice-versa, and any gender shall be deemed to include
the other. Whenever the words "including", "include" or "includes" are used in
this Agreement, they should be interpreted in a non-exclusive manner. The
captions and headings of the sections of this Agreement are for convenience of
reference only and shall not be deemed to define or limit the provisions hereof.
Except as otherwise indicated, all Exhibit and section references in this
Agreement shall be deemed to refer to the Exhibits and sections in this
Agreement. Each party acknowledges and agrees that this Agreement (A) has been
reviewed by it and its counsel; (B) is the product of negotiations between the
parties, and (C) shall not be deemed prepared or drafted by any one party. In
the event of any dispute between parties concerning this Agreement, the parties
agree that any ambiguity in the language of the Agreement is to not to be
resolved against any party, but shall be given a reasonable interpretation in
accordance with the plain meaning of the terms of this Agreement and the intent
of the parties as manifested hereby.
(vii) No Waiver. Any party may at any time or times, at its
election, waive any of the conditions to its obligations hereunder, but any such
waiver shall be effective only if contained in a writing signed by such party
(except that if a party proceeds to the Closing, notwithstanding the failure of
a condition to its obligation to close, then such condition shall be deemed
waived by the Closing). No such waiver shall reduce the rights or remedies of a
party by reason of any breach by the other party hereunder. Waiver by one party
of the performance of any covenant, condition or promise of the other party
shall not invalidate this Agreement, nor shall it be deemed to be a waiver by
such party of the performance of any other covenant, condition or promise by
such other party (whether preceding or succeeding and whether or not of the same
or similar nature). No failure or delay by one party to exercise any right it
may have by reason of the default of the other party shall operate as a waiver
of default or modification of this Agreement or shall prevent the exercise of
any right by such party while the other party continues to be so in default.
(viii) Consents and Approvals. Except as otherwise expressly
provided herein, any approval or consent provided to be given by a party
hereunder may be given or withheld in the absolute discretion of such party.
(ix) Governing Law. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF ILLINOIS (WITHOUT
REGARD TO CONFLICTS OF LAW).
<PAGE> 20
-20-
(x) Third Party Beneficiaries. Except as otherwise
expressly provided in this Agreement, the parties do not intend by any provision
of this Agreement to confer any right, remedy or benefit upon any third party
(express or implied), and no third party shall be entitled to enforce or
otherwise shall acquire any right, remedy or benefit by reason of any provision
of this Agreement.
(xi) Amendments. This Agreement may be amended by written
agreement of amendment executed by all parties, but not otherwise.
(xii) Survival. Unless otherwise expressly provided for in
this Agreement, the representations, warranties, indemnification obligations and
covenants of the parties set forth in this Agreement shall survive the
consummation of the transaction contemplated by this Agreement and shall not be
deemed merged into or with the delivery and recordation of the Deed.
Notwithstanding the foregoing, the representations and warranties of Urban under
section 4(d)(v) shall lapse as of June 15, 2000.
(xiii) Cumulative Remedies. No remedy conferred upon a party
in this Agreement is intended to be exclusive of any other remedy herein or by
law provided or permitted, but each shall be cumulative and shall be in addition
to every other remedy given hereunder or now or hereafter existing at law, in
equity or by statute (except as otherwise expressly herein provided).
(h) Waiver of Trial by Jury. The parties hereby irrevocably waive their
respective rights to a jury trial of any claim or cause of action based upon or
arising out of this Agreement. This waiver shall apply to any subsequent
amendments, renewals, supplements or modifications to this Agreement. In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.
(i) Press Releases. Any press release issued with respect to the
transactions contemplated by this Agreement shall be subject to the prior
approval of all parties.
(j) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to constitute an original, but all
of which, when taken together, shall constitute one and the same instrument,
with the same effect as if all of the parties to this Agreement had executed the
same counterpart.
(k) Confidentiality. Until the Closing or the earlier termination of
this Agreement, the existence and contents of this Agreement shall not be
disclosed to any third party not reasonably necessary to effectuate this
transaction without the consent of all the parties hereto.
<PAGE> 21
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first above written.
KPLP:
KENWOOD PLAZA LIMITED PARTNERSHIP
an Ohio Limited Partnership
By: Herbet S. Miller
----------------------------------------
Name: Herbert S. Miller
Title: General Partner
CCM LLC:
Century City Mall, LLC
a Delaware limited liability company
By: Robert E. Falb
----------------------------------------
Robert E. Falb, Assistant Manager
[Signatures Continue on Next Page]
<PAGE> 22
URBAN:
URBAN SHOPPING CENTERS, L.P.
an Illinois limited partnership
By: Urban Shopping Centers, Inc.
a Maryland corporation,
its General Partner
By: \s\ Michael G. Hilborn
------------------------------
Michael G. Hilborn
Sr. Vice President
QUALIFIED INTERMEDIARY:
CHICAGO DEFERRED EXCHANGE CORPORATION
By: \s\ Karen Cholipski
---------------------------------------
Name: Karen Cholipski
-------------------------------------
Title: Vice President
<PAGE> 23
CONTRIBUTION AGREEMENT
EXHIBIT LIST
Exhibit "A" - Qualified Intermediary Exchange Agreement
Exhibit "B" - Entity Election Classification (Form 8832)
Exhibit "C" - Century City Agreement
Exhibit "D" - List of Lehman Loan Documents
Exhibit "E" - Assignment of Contract Interest
Exhibit "F" - OP Unit Certificate and Joinder
Exhibit "G" - Membership Interests Assignment
Exhibit "H" - Definition of "Constructively Own"
Exhibit "I" - KPLP Organization Chart
Exhibit "J" - CCM LLC Articles of Formation
Exhibit "K" - CCM LLC Operating Agreement
Exhibit "L" - Urban Limited Partnership Agreement
Exhibit "M" - Registration Rights Agreement
Exhibit "N" - Urban Financial Statements as at December 31, 1998,
and 1997
Exhibit "O" - KPLP Partners' Guaranty
Exhibit "P" - Opinion of Counsel
<PAGE> 24
EXHIBIT C
CCM - CENTURY CITY SHOPPING CENTER AND MARKETPLACE
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT made and entered into, as of the "Effective Date" (as
hereinafter defined in Paragraph 8.21 below), by and CENTURY CITY MALL LLC, a
Delaware limited liability company (hereinafter collectively referred to as
"Purchaser") and RREEF USA FUND-II, a California group trust (hereinafter
referred to as "Seller").
WHEREAS:
A. Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, a 9.6134125% undivided interest in the "Property"
described below (the "CCM Interest"), which Property consists of a shopping
center commonly known as Century City Shopping Center and Marketplace.
B. Concurrently with the execution of this Agreement by both parties,
Seller shall enter into a purchase agreement with USC CENTURY, INC., a Delaware
corporation ("USC") (the "Other Sale Agreement"), whereby Seller shall sell to
USC and USC shall purchase from Seller, a 90.3865875% undivided interest in the
Property (the "USC Interest").
C. Said Century City Shopping Center and Marketplace also includes
department stores commonly known as Macy's and Bloomingdale's (the "Department
Stores").
D. The parties desire to set forth their agreement as to the matters
herein set forth.
NOW, THEREFORE, for good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, the parties hereto do hereby agree
as follows:
1. Sale of Property; Purchase Price.
1.1 Sale of Property. On the terms and conditions hereinafter
set forth, Purchaser agrees to purchase, and Seller agrees to sell, a 9.6134125%
undivided interest only in all of the following (collectively, the "Property"):
1.1.1 That certain real property owned by Seller
located in the City of Los Angeles, County of Los Angeles, State of California,
as more particularly described on EXHIBIT A, together with all and singular, the
tenements, hereditaments, easements, rights-of-way and appurtenances belonging
or in anywise appertaining to the same and owned by Seller, and all right, title
and interest of Seller, if any, in and to any land lying in the bed of any
street, road or avenue open or proposed, public or private, in front of or
adjoining the Land, to the centerline thereof, and all right, title and interest
of Seller, if any, in and to any award hereafter made in lieu thereof and in and
to any award for damage to the Property by reason of a change of grade of any
street hereafter occurring, but excluding any oil, gas and other minerals and
rights incident thereto previously reserved or conveyed (the "Land");
<PAGE> 25
1.1.2 All improvements, structures and fixtures owned
by Seller now or on the Closing Date (as defined below) located upon the Land
(the "Improvements") subject to those terms and conditions contained in that
certain ground lease, as amended, by and between Seller's predecessor in
interest, Century City, Inc. and Federated Department Stores, Inc. dated
December 31, 1974;
1.1.3 All tangible personal property owned by Seller
now or on the Closing Date located on or about the Land or the Improvements
described in SCHEDULE 1.1.3 attached hereto and made a part hereof (the
"Personal Property") and excluding the personal property in the Manager's office
described in SCHEDULE 1.1.3A; and
1.1.4 All intangible property owned by Seller now or
on the Closing Date owned or held in connection with the Land, the Improvements
or the Personal Property, or any business or businesses owned by Seller now or
hereafter conducted thereon or in connection with the use thereof (other than
those businesses conducted by tenants under Leases (as defined in Paragraph
5.1.10 below) in their capacity as tenants and those assets owned by Seller's
management company) including, without limitation, all leases, prepaid rent,
security deposits, guaranties of leases, mineral rights, air rights, contract
rights and agreements (including the Leases, and any service or equipment
leasing contracts with respect to or affecting the Property), operating,
maintenance and other records, building and trade names and logos used by Seller
in connection with the Property (including the name "Century City Shopping
Center and Marketplace" but not including the name "RREEF," however, Seller
provides no warranty that Seller has any rights with respect to ownership or use
of such trade names or logos, licenses (excluding computer software), written
authorizations necessary for the use, operation or ownership of the Property,
warranties (including those relating to construction or fabrication), utility
contracts, telephone exchange numbers, advertising materials, studies or other
materials related to the marketing of the Property to the public and prospective
tenants and other occupants of the Property, including leasing brochures and
tenant data sheets, plans and specifications, governmental approvals, permits
and development rights related to the Land, the Improvements or the Personal
Property or any part thereof but excluding (i) the rights to rents and other
sums due for any period of time prior to Closing, as defined below, (ii) any
claims of Seller against third parties for delinquent rents and other sums
payable under the Leases (as defined below), relating to any period of time
prior to Closing, (iii) any claims arising out of or related to any rights and
claims against Seller by third parties for any period of time prior to Closing
(including, without limitation, any claims related to the obligations of Seller
set forth in Paragraph 7.2(b) herein) and including, without limitation, all
rights and claims against: (w) Federated Department Stores, Inc. ("Federated's")
regarding supplemental taxes associated with Federated's acquisition of the
space occupied by Bloomingdale's and the space occupied by Macy's for the period
prior to Closing; (x) any other tenants regarding supplemental taxes or
mechanic's liens for the period prior to Closing; (y) Broadway Stores, Inc.
("Broadway's") regarding recovery of rental premium insurance fees; (z) Fast
Frame, a former tenant for monthly payments in the amount of $208.33 until
January 2000 for past rent due to Seller; and (aa) AMC regarding the
installation of a new underground storage tank more fully described in Section
8.29 herein (the "AMC Tank Issue") (all items referred to in this clause (iii)
are defined as "Reserved Claims") (provided however, Seller's rights hereunder
shall in no way limit Purchaser's rights for any claims for
2
<PAGE> 26
matters arising from and after the Closing), (iv) any bank accounts or similar
accounts and (v) Seller's rights pursuant to Paragraph 8.26 herein (the
"Intangible Property"). All items of the Property which are not real property
shall constitute part of the Intangible Property and Personal Property.
1.2 Purchase Price. The purchase price for the CCM Interest
("Purchase Price") is Twenty Six Million One Hundred Forty Eight Thousand Four
Hundred Eighty Two and No/100 Dollars ($26,148,482.00), payable at Closing as
defined in Paragraph 7.1 pursuant to the terms set forth herein. Purchaser shall
pay a portion of the Purchase Price in the amount of Twenty Two Million Nine
Hundred Fifty Three Thousand Six Hundred Twenty Eight and No/100 Dollars
($22,953,628.00) by assuming the Lehman Loan (as defined in Section 4.2 below)
and there shall be a credit against the Purchase Price in the amount of the sums
that Seller actually receives and retains under the Lehman Loan up to a maximum
credit amount of Twenty Two Million Nine Hundred Fifty Three Thousand Six
Hundred Twenty Eight and No/100 Dollars ($22,953,628.00), provided there shall
be no other credit against the Purchase Price with respect to any principal,
interest or other amounts outstanding under the Lehman Loan or distributed under
the Lehman Loan. Purchaser shall pay the remainder of the Purchase Price by wire
transfer in immediately available funds.
2. Intentionally Deleted.
3. Review of the Property.
3.1 Prior to the Effective Date, Seller has provided Purchaser
and its agents or consultants with access to the Property to inspect each and
every part thereof to determine its present condition and to conduct such
physical and environmental studies (including a mechanical and roof study and
Phase I environmental assessment) as it deemed appropriate.
3.2 Prior to the Effective Date, Seller has delivered to
Purchaser, or made copies available to Purchaser at the Property, all to the
extent in the possession of Seller or its managing agent:
3.2.1 a copy of any existing occupancy and equipment
leases, service contracts and maintenance or other contracts pertaining to the
operations of the Property that will survive Closing, copies of all real estate
tax bills for the years 1996, 1997 and 1998 and through the period ending June
30, 1999, both inclusive, and unaudited operating statements for the Property
for the years 1996, 1997 and 1998, and for the first three months of 1999.
3.2.2 a copy of any environmental reports relating to
the Property prepared by third party consultants.
3.2.3 a copy of all current franchises, business or
other licenses, bonds, permits, certificates, authorizations and other evidences
of consent, approval, authorization or permission relating to or affecting the
Property of or from any person, including any governmental authority, held by
Seller, including any pending applications.
3
<PAGE> 27
3.2.4 a copy of all material third party warranties
and guaranties, if any, which are in effect with respect to the Property.
3.2.5 a copy of those other materials set forth on
SCHEDULE 3.2.5.
3.2.6 as-built plans and specifications for the
improvements on the Property, including the plans and specifications for and a
complete description of all existing renovations to the Property and the
leasable space therein, if available.
3.2.7 as-built drawings of underground utilities
(including sewer, water, gas, telephone and electrical service cables) located
under the Land, if available.
3.3 Purchaser agrees that any information obtained by
Purchaser or its authorized agents in the conduct of its due diligence will be
treated as confidential pursuant to Paragraph 8.17.
3.4 As and when Seller obtains updated or new information,
which, if presently in Seller's possession, would have been delivered to
Purchaser pursuant to Paragraph 3.2 (including additional monthly reports on the
Property), Seller shall deliver such updated and new information to Purchaser.
4. Title.
4.1 Purchaser hereby agrees to acquire title to the CCM
Interest subject to those exceptions (collectively, the "Acceptable Exceptions")
set forth on the Pro Form Title Policy (the "Pro Forma") issued by Title Insurer
attached hereto as SCHEDULE 4.1. If any other recorded or unrecorded exception
to title is discovered after the Effective Date which would prevent the Title
Insurer from issuing a title policy in the form of the Pro Forma, and Purchaser
does not elect to waive such exception, upon the first to occur of (a) the
Closing Date or (b) seven (7) days after being notified of such exception, and
to proceed with the consummation of the Closing, Seller will have fifteen (15)
days after the expiration of said seven (7) day period (and Closing will be
delayed if necessary, so that it occurs not earlier than twenty-two (22) days
after Purchaser is notified of such exception) after notifying Purchaser of such
discovery in which to use commercially reasonable efforts to eliminate or to
induce the Title Insurer to insure over (subject to Purchaser's approval, not to
be unreasonably withheld) such exception, and if such exception is not
eliminated or insured over as aforesaid within said 15-day period, Purchaser may
either: (1) terminate this Agreement and neither party will have any further
rights or obligations hereunder except as provided in Paragraphs 8.8, 8.15 and
8.17 or (2) close the sale subject to such exception without deduction or setoff
as to the Purchase Price and without any other rights against Seller with
respect thereto. Notwithstanding the foregoing, Seller shall discharge any
monetary lien that arises after the Effective Date and prior to Closing due to
any act of Seller to enter into a deed of trust or mortgage evidencing such lien
except for the lien of the Lehman Loan.
4.2 Lehman Loan Documents. Solely and exclusively as an
accommodation to Purchaser and USC, Seller will borrow the amount of One Hundred
Sixty Million and 00/100
4
<PAGE> 28
Dollars ($160,000,000) (the "Lehman Loan") from Lehman Brothers Holdings Inc., a
Delaware corporation, doing business as Lehman Capital, a division of Lehman
Brothers Holdings Inc. ("Lehman"), to be secured by, among other things, by a
nonrecourse mortgage which will encumber the Property (said Mortgage along with
all other documents evidencing or securing the Lehman Loan or to be executed in
connection therewith are referred to herein collectively as the "Lehman Loan
Documents"). Concurrently with Closing, Purchaser and USC pursuant to the Other
Sale Agreement collectively shall assume all of the obligations under the Lehman
Loan and the Lehman Loan Documents and Seller shall be completely released of
any and all obligations under the Lehman Loan and the Lehman Loan Documents.
Purchaser shall execute a release and assumption agreement with respect to the
Lehman Loan in a form satisfactory to Seller in Seller's sole discretion (the
"Release and Assumption Agreement"). The Lehman Loan Documents must be in form
and substance acceptable to Seller in Seller's sole discretion. From and after
the Closing Date, Seller will have no responsibility in any way for any payment,
obligation, liability, debt and claim arising out of the Lehman Loan or the
Lehman Loan Documents. Purchaser shall, at its sole cost and expense, protect,
defend, indemnify, release and hold harmless Seller from and against any and all
claims, suits, liabilities (including, without limitation, strict liabilities),
actions, proceedings, obligations, debts, damages, losses, costs, expenses,
fines, penalties, charges, fees, expenses, judgments, awards, and amounts paid
in settlement, of whatever kind of nature whatsoever, and whether known or
unknown, foreseeable or unforeseeable (including, but not limited to, attorneys'
fees and other costs of defense) imposed upon or incurred by or asserted against
Seller and directly or indirectly arising out of or in any way relating to the
Lehman Loan or the Lehman Loan Documents. The obligations of Purchaser under
this Paragraph 4.2 shall survive the Closing.
5. Representations and Warranties.
5.1 Representations and Warranties of Seller. Subject to the
provisions of Section 5.3 below, Seller hereby makes the following
representations and warranties with respect to the Property, provided that,
Seller makes no representations or warranties with respect to the matters
disclosed in SCHEDULE 5.1 (the "Disclosure Schedule") or with respect to the
matters described or referred to in that certain letter from Adam Metz of
Purchaser to Seller dated March 19, 1999 and the attached memorandum from Adam
Metz to Seller dated March 19, 1999 (said letter and memorandum are collectively
referred to herein as "Purchaser's Due Diligence Letter"). Notwithstanding
anything to the contrary contained herein or in any document delivered in
connection herewith, except as specifically set forth in the following sentence
with respect to the dispute between Federated's and Seller, Seller shall have no
liability with respect to the items disclosed, described or referred to in the
Disclosure Schedule. Notwithstanding the foregoing, with respect to the matters
described in Paragraph A11 (such matters referred to herein as
"Broadway/Federated Insurance Dispute") of Purchaser's Due Diligence Letter,
Seller shall be responsible after Closing for any sums owed by Seller to
Federated's for pass-through charges paid by such tenant for rental income
coverage insurance and taxes prior to Closing and Seller shall indemnify
Purchaser and hold harmless and defend Purchaser from and against 9.6134125% of
all claims, damages, liabilities, costs and expenses (including, without
limitation, reasonable attorneys' fees) arising out of the Broadway/Federated
Insurance Dispute with respect to sums, if any, that Seller may owe to such
tenant for the period prior to Closing.
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As used in this Paragraph 5.1 and elsewhere in this Agreement, the phrase "to
the knowledge of Seller" or phrases of similar import mean and are limited to
the actual knowledge of Seller's portfolio manager, Jerry Egan, Seller's local
manager having ongoing management responsibility with respect to the Property,
Doug Roscoe and Lee Letchford, and not to any constructive knowledge of any of
the foregoing individuals or of Seller or any investment advisor to Seller, any
entity that is a partner or member in such investment advisor, or any affiliates
of any thereof, or to any trustee, beneficiary, member, officer, agent,
representative, or employee of Seller or such investment advisor, any such
constituent partner or member of any such affiliate. Purchaser hereby
acknowledges that Seller has named Jerry Egan, Doug Roscoe and Lee Letchford as
those representatives constituting Seller's knowledge, in good faith, without
intent as to deceive Purchaser or to withhold information from Purchaser and
that Jerry Egan, Doug Roscoe and Lee Letchford are familiar with the Property
and its operations. In addition, as used in this Paragraph 5.1 and elsewhere in
this Agreement, Seller's receipt of any written notice shall mean the actual
receipt of any written notice by Jerry Egan, Doug Roscoe and Lee Letchford, or
by any officer of RREEF America L.L.C., a Delaware limited liability company
holding the position of Vice President or higher in the corporate headquarters
of Seller located in Chicago, Illinois. Seller hereby warrants and represents to
Purchaser as follows:
5.1.1 Pending Proceedings. With the exception of the
items set forth in the Disclosure Schedule or the Proforma Policy, Seller has
received no written notice of special assessment, condemnation, environmental,
zoning or other land use regulation proceedings, either pending or planned to be
instituted, with respect to the Property or any part thereof.
5.1.2 Status of Seller and Closing Documents. This
Agreement has been, and all the documents to be delivered by Seller to Purchaser
at Closing are or will be, duly authorized, executed, and delivered by Seller,
are legal, valid, and binding obligations of Seller, are enforceable in
accordance with their respective terms, and do not violate any provisions of any
agreement to which Seller or the Property is subject or bound. Seller is duly
organized and validly existing or duly qualified to transact business in the
State in which the Property is located.
5.1.3 Non-Foreign Status. Seller is not a "foreign
person" within the meaning of Section 1445(f)(3) of the Internal Revenue Code of
1986, as amended, and that Seller will furnish to Purchaser, prior to Closing,
an affidavit in form satisfactory to Purchaser confirming the same.
5.1.4 Compliance with Laws. With the exception of the
items set forth in the Disclosure Schedule, Seller has received no governmental
notice, not heretofore corrected, alleging that the Property or its current uses
are in violation of any zoning, building, health, traffic, environmental, flood
control or all other applicable rules, regulations, codes, ordinances, or
statutes of any local, state and federal authorities and any other governmental
authority (collectively, the "Laws") asserting jurisdiction over the Property.
5.1.5 Service Contracts. With the exception of the
equipment leases and the Schindler service contract for passenger elevators
listed in SCHEDULE 5.1.5 attached hereto
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(which leases and contract Purchaser shall assume at Closing), and the items set
forth in the Disclosure Schedule or in Purchaser's Due Diligence Letter, the
service agreements and service contracts affecting the Property (including,
without limitation, any management, leasing, brokerage, services or maintenance
agreements) listed on SCHEDULE 5.1.5 are terminable at will by Seller without
further liability, upon not more than 30 days' prior written notice and which
shall be binding on Purchaser. With the exception of the items set forth in the
Disclosure Schedule or in Purchaser's Due Diligence Letter, Seller has received
no written notice of, and Seller has no knowledge of, any defaults by Seller or
any other party with respect to such service agreements, service contracts and
equipment leases affecting the Property.
5.1.6 No Default. The execution and delivery of this
Agreement, and consummation of the transaction described in this Agreement, does
not and will not constitute a default under any contract, lease, or agreement to
which Seller is a party or by which Seller is bound.
5.1.7 No Suits. Except as set forth in the Disclosure
Schedule or in Purchaser's Due Diligence Letter, and except for personal injury
or property damage actions for which there is adequate insurance coverage and
where the insurance carrier has accepted the tender of the defense without
reservation, there is no action, suit or proceeding pending or, to Seller's
knowledge, threatened, in writing against or affecting the Property or any
portion thereof, or relating to or arising out of the ownership, management or
operation of the Property, in any court or before or by any federal, state, or
municipal department, commission, board, bureau or agency or other governmental
instrumentality.
5.1.8 Environmental Condition. Each of the following
representations contained in this Paragraph 5.1.8 is wholly qualified and
limited by (a) any matters disclosed in any materials made available or
delivered to Purchaser by Seller pursuant to Paragraph 3 above or otherwise, (b)
any matters disclosed in any environmental reports or studies obtained by
Purchaser, and (c) any other matters of which Purchaser has actual knowledge or
obtains actual knowledge. Subject to the foregoing, Seller represents:
5.1.8.1 With the exception of items described
or referred to in the Disclosure Schedule or in Purchaser's Due Diligence
Letter, and except (i) in amounts customarily found in retail uses and in the
other uses for which the Property is suited and used and (ii) in compliance with
applicable law, to Seller's knowledge, Seller has not released, generated or
handled Hazardous Materials on the Property, and Seller has no knowledge of any
release, generation or handling of Hazardous Materials on the Property in
violation of applicable law. For the purposes hereof, "Hazardous Material" means
any substance, chemical, waste or other material which is listed, defined or
otherwise identified as "hazardous" or "toxic" under any federal, state, local
or administrative agency ordinance or law, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U. S.C.
ss.ss. 9601 et seq. and the Resource Conservation and Recovery Act, 42 U. S.C.
ss.ss. 6901 et seq., or any regulation, order, rule or requirement adopted
hereunder, as well as any formaldehyde, urea, polychlorinated biphenyls,
petroleum, petroleum product or by-product, crude oil, natural gas, natural gas
liquids, liquefied natural gas, or synthetic gas usable for fuel or mixture
thereof,
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radon, asbestos, and "source," "special nuclear" and "by-product" material as
defined in the Atomic Energy Act of 1985, 42 U. S.C. ss.ss. 3011 et seq.
5.1.8.2 Seller has not received any summons,
citation, directive, letter or other communication, written or oral, from the
United States Environmental Protection Agency or the State environmental
protection agency having jurisdiction over the Property.
5.1.9 Options. Except as disclosed in the Disclosure
Statement or the Other Sale Agreement, Seller has granted no options or rights
of first refusal to acquire any fee simple interest in the Property and no such
options are contained in the tenant leases delivered to Purchaser or in
documents of record disclosed in the title commitment.
5.1.10 Rent Roll. The information set forth on the
rent roll dated as of May 29, 1999 and attached hereto as SCHEDULE 5.1.10 is
true and accurate in all material respects and is complete with respect to the
existence of any and all occupancy arrangements and leases (including all
amendments) (the "Leases"). Seller has delivered to Purchaser true, complete and
correct copies of all the Leases (including all amendments). Seller certifies
that attached hereto as EXHIBIT B are the true, complete and correct copies of
the Leases for the following four tenants: (a) Macy's, (b) Bloomingdale's, (c)
Gelson's Market and (d) AMC.
5.1.11 Tenant Rights. There are no termination,
extension, cancellation, or expansion rights under any occupancy arrangements
with respect to the Property except as contained in the Leases. With the
exception of items described or referred to in the Disclosure Schedule or in
Purchaser's Due Diligence Letter, as of May 25, 1999, Seller has not received
nor given any written notice of, and Seller has no knowledge of, any defaults by
any party with respect to such Leases.
5.1.12 Leasing Commissions. Except as set forth in
SCHEDULE 5.1.12, all leasing commissions due and payable as of the date hereof
by Seller have been paid or will have been paid on or before Closing, or Seller
will remain liable therefor.
5.1.13 Defects. With the exception of items listed in
the Disclosure Schedule or in Purchaser's Due Diligence Letter, Seller has not
received any written notice of any claims by tenants of the Property with
respect to any material defects in the Improvements.
5.1.14 No Employees. Purchaser has no obligation to
hire, or to cause any property management company engaged by Purchaser to hire,
any person presently employed in connection with the Property. Seller is not a
party to any collective bargaining agreement with respect to the Property.
5.1.15 Ownership of Personal Property. Seller owns
the Personal Property, free and clear of all liens and encumbrances except for
the security interests and other liens and interests created by the Lehman Loan
and the Lehman Loan Documents.
5.1.16 Tenant Improvement Work. There is no tenant
improvement work scheduled to be performed by Seller, as landlord, six (6)
months or more after the Closing Date
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except as set forth in SCHEDULE 5.1.16 attached hereto and made a part hereof.
5.1.17 Outstanding Leasing Commissions. There are no
outstanding leasing commissions in connection with existing Leases relating to
renewal or expansion options exercisable after the Closing Date.
5.1.18 Operating Statements. To Seller's knowledge
and subject to the items described or referred to in Purchaser's Due Diligence
Letter, the year-end cash and accrual operating statements for 1996, 1997 and
1998 delivered pursuant to Paragraph 3.2.1 are true and correct in all material
respects.
5.1.19 QPAM. Subject to Purchaser's representation
set forth in Section 5.2.2.3, Seller is acting as a Qualified Professional Asset
Manager in accordance with U. S. Department of Labor Prohibited Transaction
Class Exemption ("PTCE") No. 84-14.
5.2 Representations and Warranties of Purchaser.
Purchaser hereby represents and warrants to Seller as follows:
5.2.1 Status of Purchaser and Closing Documents. This
Agreement has been, and all the documents to be delivered by Purchaser to Seller
at Closing will be duly authorized, executed, and are or will be legal, valid,
and binding obligations of Purchaser, are or will be enforceable in accordance
with their respective terms, and do not and will not at Closing violate any
provisions of any agreement to which Purchaser is subject.
5.2.2 ERISA. The following representations and
warranties with respect to the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), and the Internal Revenue Code of 1986, as amended ("Code")
are required to ensure that the purchase of the Property by Purchaser from
Seller will not, in and of itself, violate either Section 406(a)(1)(A) through
(F) of ERISA or Section 4975(c)(1)(A) through (E) of the Code. Notwithstanding
anything contained herein to the contrary, the representations and warranties
contained in this Paragraph 5.2.2 are made as of the date of this Agreement,
will be deemed to be remade by Purchaser, and to be true in all material
respects, as of Closing, and will survive the Closing. Accordingly, Purchaser
hereby represents and warrants the following:
5.2.2.1 No asset of the Purchaser constitute
"plan assets" and at the sale of the Property, the Property will not be a "plan
asset," within the meaning of U. S. Department of Labor Regulations Section
2510.3-101, with respect to any "employee benefit plan" (within the meaning of
Section 3(3) of ERISA) which is subject to ERISA.
5.2.2.2 There is no employee benefit plan
(within the meaning of Section 3(3) of and subject to ERISA) that is invested in
Seller and with respect to which Purchaser is, or, within the last twelve (12)
months, was an appointing authority (as described in Section I(a) of PTCE
84-14).
5.3 Limitations. Each of the representations and
warranties of Seller contained in Section 5.1: (i) is made as of the date of
this Agreement; (ii) will be deemed to be
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remade by Seller, and to be true in all material respects, as of Closing (except
that the representations made in the first sentence of Section 5.1.10 and in the
second sentence of Section 5.1.11 will be made only as of the dates stated
therein), subject to (a) any Exception Matters (as defined below), (b) any
matters described or referred to in the Disclosure Schedule or in Purchaser's
Due Diligence Letter, and (c) other matters expressly permitted in this
Agreement or otherwise specifically approved in writing by Purchaser; and (iii)
will survive for a period of one (1) year after the Closing Date, as defined in
Paragraph 7.1. Any claim that Purchaser may have at any time against Seller for
a breach of any such representation or warranty, whether known or unknown, which
is not asserted by notice from Purchaser to Seller within such one (1) year
period will not be valid or effective, and Seller will have no liability with
respect thereto, nor will Seller have any liability to Purchaser for a breach of
any representation or warranty unless such valid claims for such breaches
aggregate to the amount of Two Hundred Fifty Thousand Dollars ($250,000), in
which event the maximum amount of such valid claims shall be actionable up to
the aggregate amount of Two Hundred Eighty Eight Thousand Four Hundred Two and
38/100 Dollars ($288,402.38). The foregoing maximum aggregate liability of
Seller hereunder of Two Hundred Eighty Eight Thousand Four Hundred Two and
38/100 Dollars ($288,402.38) shall apply to liabilities for breaches of
representations and warranties hereunder and any claims made under the Deed, the
Bill of Sale, the Lease Assignment, Contracts Assignment, Intangibles Assignment
(all as hereinafter defined in Paragraph 7.6), and any and all other documents
executed pursuant to Paragraph 7.6 or otherwise pursuant to this Agreement and
to any liabilities to Purchaser arising out of or in any way related to this
Agreement or the Property, whether known or unknown, but not to the proration
obligations of Seller under Paragraphs 7.2 and 8.26. Seller shall retain assets
at the time of Closing (excluding the Nine Hundred Sixty Thousand Dollars
($960,000) referred to in Paragraph 8.26 herein and the liabilities to which it
relates and the Fifty Thousand Dollars ($50,000) referred to in Paragraph 8.29
and the liabilities to which it relates) sufficient to give it a net worth of
Three Million Dollars ($3,000,000) at the time of Closing and shall not
distribute those assets to Seller's beneficiaries for a period of one (1) year
after Closing; provided however, if Purchaser makes a claim in written notice
delivered to Seller as a result of a breach of Seller under its obligations
under this Agreement during such one (1) year period, then Seller shall retain a
reasonable amount of said assets beyond such one (1) year period to cover the
claim alleged by Purchaser until such claim is resolved. The continued accuracy
in all material respects of the aforesaid representations and warranties is a
condition precedent to Purchaser's obligation to close. As used herein, the term
"Exception Matter" shall refer to a matter disclosed to Purchaser in writing or
discovered by Purchaser before the Closing that would make any of said
representations and warranties of Seller untrue or incorrect in all material
respects at the time the same is made or as of Closing, including, without
limitation, matters disclosed to Purchaser by Seller or by any other person,
provided that Seller had no actual knowledge of such inaccuracy, as such actual
knowledge is defined in Paragraph 5.1, when the representation or warranty was
made on the execution of this Agreement. If a representation or warranty becomes
inaccurate because of an Exception Matter or if such warranty or representation
becomes inaccurate on or prior to Closing other than by reason of Seller's
default hereunder, Purchaser may, upon being notified of such occurrence on or
prior to Closing either (a) terminate this Agreement and neither party shall
have any further rights or obligations hereunder except as provided in
Paragraphs 8.8, 8.15 and 8.17 below, or (b) waive such matter and proceed to
Closing, by notice to Seller given
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within ten (10) days after Purchaser is notified of such occurrence, but in no
event later than Closing, which made any representations or warranties
inaccurate, in which event Seller shall have no liability with respect thereto.
If Purchaser fails to give any notice on or before the Closing Date, Purchaser
will be deemed to have elected to waive such matter and to proceed to Closing.
5.4 Condition of Property. Except as expressly set forth in
this Agreement, Seller has not made and does not hereby make any
representations, warranties or other statements as to the condition of the
Property and Purchaser acknowledges that at Closing it is purchasing the
Property on an "AS IS, WHERE IS" basis and without relying on any
representations and warranties of any kind whatsoever, express or implied, from
Seller, its agents or brokers as to any matters concerning the Property. Except
as expressly set forth in this Agreement, no representations or warranties have
been made or are made and no responsibility has been or is assumed by Seller or
by any partner, officer, person, firm, agent or representative acting or
purporting to act on behalf of Seller as to the condition or repair of the
Property or the value, expense of operation, or income potential thereof or as
to any other fact or condition which has or might affect the Property or the
condition, repair, value, expense of operation or income potential of the
Property or any portion thereof. The parties agree that all understandings and
agreements heretofore made between them or their respective agents or
representatives are merged in this Agreement and the Schedules and Exhibits
hereto annexed, which alone fully and completely express their agreement, and
that this Agreement has been entered into after full investigation, or with the
parties satisfied with the opportunity afforded for investigation, neither party
relying upon any statement or representation by the other unless such statement
or representation is specifically embodied in this Agreement or the Exhibits
annexed hereto. Purchaser acknowledges that Seller has requested Purchaser to
inspect fully the Property and investigate all matters relevant thereto and,
with respect to the condition of the Property, to rely solely upon the results
of Purchaser's own inspections or other information obtained or otherwise
available to Purchaser, rather than any information that may have been provided
by Seller to Purchaser.
6. Closing Conditions. Purchaser's obligation to proceed to
Closing is conditioned upon Seller's performance of the following obligations
and satisfaction of the following conditions, in addition to all of its other
obligations and conditions contained in this Agreement, provided that Purchaser
may in its sole discretion elect to waive failure by Seller to perform any
particular obligation and proceed to close hereunder without deduction or offset
to the Purchase Price, or terminate this Agreement by written notice to Seller.
The failure of any of the conditions set forth in Paragraphs 6.1, 6.2 and 6.7
shall not constitute a default by the Seller for purposes of this Agreement. In
addition, if the condition set forth in Paragraph 6.3 is not satisfied by reason
of a change in facts or circumstances for which Seller is not at fault or
because of an Exception Matter, such failure of the condition shall not
constitute a default by the Seller for purposes of this Agreement. Purchaser's
sole remedy for such failure of the condition set forth in Paragraph 6.3 is set
forth in Paragraph 5.3.
6.1 The Title Insurer is prepared to issue a policy of title
insurance in the form of the Pro Forma.
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6.2 Seller has delivered to Purchaser not later than the
date of Closing, estoppel letters substantially in the forms of SCHEDULE 6.2
("Required Estoppel Form") or in form otherwise reasonably acceptable to
Purchaser or required by the tenant's lease, prepared by Seller and addressed to
Purchaser, from all Major Tenants (defined as all tenants occupying at least
5,000 rentable square feet of the Property) and from other tenants, who together
with the Major Tenants from whom Seller has received estoppel letters occupy at
least 80% of the rentable square feet of the Property under lease as of the date
hereof. All estoppel letters must be dated no earlier than forty-five (45) days
prior to the Closing. An estoppel letter form, even though not in the Required
Estoppel Form, will be deemed reasonably acceptable to Purchaser if said letter
is in the form required by the tenant lease or if it contains the following
information: confirming rent and all other charges, security deposit, square
footage and termination date; that no rent has been paid more than one month in
advance; that the lease is in full force and effect and that a true and correct
copy of the lease with all amendments and modifications is attached; that the
tenant has no right of termination or extension other than as shown on the rent
roll; and that all work to be performed by Landlord has been performed and that
the tenant has no knowledge of any Landlord default. Notwithstanding anything to
the contrary contained herein, Purchaser acknowledges and agrees that the
condition contained in this Section 6.2 has been satisfied.
6.2.1 If Seller is unable to obtain the requisite
estoppel letters as described above, Seller may (but is not required to)
substitute for any unsigned estoppel letter an estoppel letter in the form
attached as SCHEDULE 6.2.1, which may be completed, executed and delivered by
Seller and warranted and represented by Seller, provided that Seller may not
substitute or provide its own estoppel for any Major Tenants. Seller's
representations and warranties in the certificates will survive the Closing,
subject to the dollar limitations of Paragraph 5.3, until the earlier to occur
of: (a) four (4) years after the date of Closing, (b) the termination of the
lease with respect to which the estoppel executed by Seller was delivered, or
(c) the substitution for the Seller estoppel of an estoppel letter executed by
the respective Tenant substantially in the form required under Section 6.2. In
the event that, following the Closing Date, Seller obtains an estoppel letter
complying with the requirements of Paragraph 6.2 with respect to any lease for
which Seller delivered a substituted estoppel letter, Seller will deliver such
estoppel letter to Purchaser and, upon such delivery, Seller will be
automatically released from any liability or obligation under the substituted
estoppel letter previously delivered by Seller with respect to such lease.
6.2.2 If Seller is unable to obtain and deliver
sufficient tenant estoppel certificates as required under Paragraph 6.2, or if
the letters received under Paragraph 6.2 or substituted estoppels permitted
under Paragraph 6.2.1 contain information or omissions unacceptable to Purchaser
in its reasonable discretion, then Seller will not be in default by reason
thereof, but Purchaser may, by notice given to Seller before the Closing, elect
(i) to waive said conditions and proceed with the Closing or (ii) to terminate
this Agreement and neither party shall have any further rights or obligations
hereunder except as provided in Paragraphs 8.8, 8.15 and 8.17 below. Seller
hereby acknowledges that the Purchaser's determination of whether information or
omissions contained in the estoppels are unacceptable will be reasonable if such
incorrect information or omissions relate to rent, square footage, or other key
provisions of the lease which have an economic effect.
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6.3 All of Seller's representations and warranties made
pursuant to Paragraph 5.1 remain true and correct in all material respects.
6.4 Seller has delivered all of the documents and other items
required pursuant to Paragraph 7.6 and has performed all other covenants,
undertakings and obligations required by this Agreement, to be performed or
complied with by Seller at or prior to Closing.
6.5 Seller has not voluntarily filed a petition under federal
bankruptcy law nor has an involuntary petition alleging an act of bankruptcy
been filed against Seller under federal bankruptcy law.
6.6 Intentionally Deleted.
6.7 That there has been no material adverse change with
respect to the Property (including, but not limited to, the bankruptcy of any of
AMC, Bloomingdale's, Macy's or Gelson's Market or the closing of any of the
Department Stores) from the Effective Date through the date of the Closing.
7. Closing.
7.1 Closing of Sale. The purchase and sale contemplated herein
shall close (herein referred to as the "Closing") at the office of Chicago Title
Company, or unless otherwise mutually agreed, on June 10, 1999, except as
otherwise extended pursuant to Paragraph 4.1 of this Agreement (the "Closing
Date"), time being of the essence. Seller and Purchaser have agreed that this
Agreement shall be executed and delivered concurrently with the Closing and upon
execution and delivery, Purchaser acknowledges and agrees that Purchaser has
reviewed and approved all matters with respect to the Property and that all of
Purchaser's conditions to Closing will be satisfied. Seller will deliver to
Purchaser a Grant Deed ("Deed") in the form of SCHEDULE 7.6.1 and other closing
documents required hereunder and Purchaser will cause payment of the Purchase
Price, subject to the prorations, credits and adjustments set forth in the
Closing Statement delivered pursuant to Paragraph 7.8.1.
7.2 Prorations, Adjustments.
(a) The parties will prorate taxes and assessments, annual
license and permit fees for permits that are assigned, interest on security
deposits of tenants, payments made under service contracts or equipment leases,
rental and other income (including, but not limited to, all contributions by
tenants for expenses and taxes and assessments), and operating or other expenses
(including, but not limited to, all contributions made by Seller to the Century
City Shopping Center Merchants Association (the "Association")) of the Property
as of 12:01 a.m. on the date of Closing (i.e., Purchaser is entitled to the
income and responsible for the expenses of the day of Closing and thereafter
with Seller being entitled to the income and being responsible for the expenses
prior to Closing); provided, however, that in the event the Purchaser has not
authorized release of the Purchase Price to Seller prior to Noon California time
on the date of Closing, then such prorations shall be made as of 12:01 a.m. on
the date after Closing and Seller will be entitled to the income and shall be
responsible for the expenses of the day of Closing.
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Notwithstanding the foregoing and anything else to the contrary contained
herein, the prorations and adjustments in Paragraphs 7.2(a), 7.2(b), 7.2.1,
7.2.2 and 7.2.3 and Purchaser's rights and obligations with respect thereto and
other rights under said paragraphs shall be based upon Purchaser having a
9.6134125% undivided interest with respect thereto and shall be adjusted
accordingly. The parties intend that Purchaser's rights and obligations with
respect thereto when added to the rights and obligations of USC pursuant to the
Other Sale Agreement shall equal and not exceed a 100% undivided interest
therein. Without limiting the foregoing, Seller and Purchaser have agreed that
solely with respect to base rental income received for the month of June,
initial estimated prorations for the date of Closing will be made on the Closing
Date for all such rental income received as of 12:01 a.m. of June 2, 1999. On or
before June 15, 1999, each party will deliver to the other party such other
party's share of base rental income received through June 13, 1999 and on or
before July 2, 1999, each party will deliver to the other party such other
party's share of base rental income received through June 30, 1999. All income
will be prorated on the basis of income actually received by Seller, as opposed
to income which is due or for which Seller has rendered invoices. Real estate
taxes and assessments, shall be prorated on an accrual basis. Seller hereby
agrees to be liable for all escape assessments of property taxes applicable to
the period prior to Closing, if any, (the "Escape Assessments") made during the
period within two (2) years after the Closing Date, provided Seller retains the
right to obtain appropriate reimbursement from the tenants of the Property
therefore. Seller agrees that any claim made by Purchaser with respect to Escape
Assessments shall not be subject to the monetary limitations set forth in
Section 5.3 herein. Any expenses, other than real estate taxes and assessments,
of the Property for any period prior to Closing which are payable directly by
tenants of the Property, will reduce the credit to Purchaser for such items
(i.e., no credit to Purchaser for expenses, other than real estate taxes and
assessments, payable directly by tenants). To the extent that the taxes or
assessments to be prorated are not known with certainty, such proration will be
based upon the most recent tax bill or county estimate, to be re-prorated upon
issuance of final bills. Seller also agrees to give Purchaser a credit against
the Purchase Price for all security deposits held pursuant to the leases and all
interest due thereon and shall assign to Purchaser any other tenant deposits
held by Seller. Security deposits in the form of letters of credit or
certificates of deposit shall either be reissued in the name of Purchaser at
Closing, or Seller will assign its rights therein to Purchaser at Closing, and
will reasonably cooperate with Purchaser post Closing, at no expense to Seller,
to facilitate the transfer to Purchaser. Seller shall use reasonable efforts to
cause all security deposits in the form of letters of credit or certificates of
deposit to be amended or reissued in the name of Purchaser as soon as possible
after the Closing, and Purchaser shall cooperate with Seller in such efforts.
Until delivery to Purchaser of the reissued or amended letters of credit or
certificates of deposit, in the event of an occurrence of an event of default
pursuant to the lease for which a letter of credit or certificate of deposit was
issued and upon delivery by Purchaser to Seller of a written statement
certifying on behalf of Purchaser that an event of default has occurred and said
event has not been cured or waived, then in that event, Seller will take all
commercially reasonable steps required under the original letter of credit or
certificate of deposit to claim all such amounts as Seller is entitled to claim
thereunder as a result of said event of default. Seller will thereafter deliver
to Purchaser any and all sums paid by the issuer of the original letter of
credit or certificate of deposit pursuant to the original letter of credit or
certificate of deposit as a result of Seller taking such steps. Upon delivery to
Purchaser of the reissued or amended letter of credit or certificate of deposit,
Seller's
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obligations with respect to such letter of credit or certificate of deposit
shall immediately terminate, and, from and after such delivery of the reissued
or amended letter of credit or certificate of deposit, Purchaser shall indemnify
Seller and hold harmless and defend Seller from and against any and all claims,
damages, liabilities, losses, costs and expenses (including, without limitation,
reasonable attorneys' fees) arising out of the letter of credit or certificate
of deposit. Seller and Purchaser agree that Seller will receive a payment at
Closing from Purchaser and USC jointly in the amount of One Hundred Twenty Five
Thousand and 00/100 Dollars ($125,000) for the turnover of expansion space
pursuant to the lease by and between Seller and Pottery Barn if Seller has not
been previously paid such amount by Pottery Barn prior to Closing. Purchaser
will pay all amounts subsequently received by it from tenants attributable to
Seller's period of ownership, but not collected as of the date of Closing, to
Seller within twenty (20) days after the end of the calendar month in which
Purchaser receives the same; provided that amounts received from tenants by
Purchaser will be first applied to Purchaser's cost of collection, then to
current charges, and the balance will be applied to payments due to Seller. To
the extent Seller has received amounts from tenants for 1999 operating expenses
and taxes which are known as of the date of Closing to be in excess of amounts
paid by Seller with respect to such expenses and taxes, Seller will credit such
excess to Purchaser at Closing, and Seller will provide adequate backup
information in connection with such credit.
(b) With respect to the matter described in B2 ("Credit
Allocation Agreement") of Purchaser's Due Diligence Letter, Purchaser shall, at
Closing: (i) assume all obligations with respect thereto for the period from and
after Closing, and Seller shall have no further obligations or liabilities with
respect to such matter for the period from and after Closing and (ii) except for
any sums owing to the tenant with respect to the period of Seller's ownership of
the Property, Purchaser shall indemnify Seller and hold harmless and defend
Seller from and against any and all claims, damages, liabilities, losses, costs
and expenses (including, without limitation, reasonable attorneys' fees) arising
out of such matter from and after the Closing Date. With respect to claims of
Stephen Levy against Century City Shopping Center (as set forth in Case No.:
SCO52340, Los Angeles County Superior Court), Seller shall indemnify Purchaser
and hold harmless and defend Purchaser from and against 9.6134125% of any and
all claims, damages, liabilities, losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) arising out of such claims. With respect
to potential claims against Purchaser by Carlton Hair International, a tenant of
the Property alleging unfair competition by Kristy's, another tenant of the
Property, Seller shall indemnify Purchaser and hold harmless and defend
Purchaser from and against 9.6134125% of any and all claims, damages,
liabilities, losses, costs and expenses (including, without limitation
reasonable attorneys' fees) arising out of such claims to the extent arising out
of facts and circumstance alleged to have occurred during the period of Seller's
ownership of the Property. With respect to the matters described in B3 (entitled
"Gelson's Recapture of Valet Costs") of the Purchaser's Due Diligence Letter,
Purchaser shall assume all pre- and post-Closing obligations of the Seller, and
indemnify Seller and hold harmless and defend Seller from and against 9.6134125%
of any and all claims, damages, liabilities, losses, costs and expenses
(including, without limitation, reasonable attorneys' fees) arising out of such
matters, and Seller shall have no further obligations or liabilities with
respect to such matter from and after Closing. With respect to the matters
described in Paragraph A8 (entitled "Recovery Methodology") and A9 (entitled
"Garage Expenses through CAM") of the
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Purchaser's Due Diligence Letter, (i) Seller shall remain responsible for
obligations with respect thereto relating to the period of Seller's ownership of
the Property, and Seller shall indemnify Purchaser and hold harmless and defend
Purchaser from and against 9.6134125% of all claims, damages, liabilities,
losses, costs and expenses (including, without limitation, reasonable attorneys'
fees) arising out of such matters prior to the date of Closing, and (ii)
Purchaser shall assume all obligations with respect thereto for the period from
and after the Closing and Seller shall have no further obligations or
liabilities with respect to such matters from and after Closing, and Purchaser
shall indemnify Seller and hold harmless and defend Seller from and against
9.6134125% of any and all claims, damages, liabilities, losses, costs and
expenses (including, without limitation, reasonable attorneys' fees) arising out
of such matters. The provisions of this Paragraphs 7.2(a) and (b) shall survive
Closing.
7.2.1 The following is the general principle under
which Seller and Purchaser shall allocate between each other the amounts
collected from tenants for taxes and assessments and other expenses incurred
during 1999: such amounts collected from tenants shall be allocated between
Seller and Purchaser in the ratio of the 1999 expenses which were borne by
Seller and Purchaser, respectively. For example, if twenty-five percent of the
electricity expenses for 1999 are incurred during Seller's period of ownership
of the Property during 1999, then Seller shall be allocated twenty-five percent
of the amounts collected from tenants for such electricity expenses, regardless
of the actual time period that Seller owned the Property during 1999. Similarly,
if a tenant overpays for such 1999 expenses, Purchaser and Seller shall be
responsible to pay the refund to the tenant (and to make such payments to each
other) in such amounts as will leave Purchaser and Seller each in the position
of having received collections from the tenant equal to, and not exceeding, such
expenses borne by Purchaser or Seller, as the case may be. Seller and Purchaser
hereby agree to use their reasonable efforts to calculate prorations (including
real estate tax and assessments prorations) so as to permit settlement thereof
on the Closing Date, provided, however, that if any of such prorations cannot be
calculated accurately on the Closing Date, then the same will be calculated as
soon as reasonably practicable after the Closing Date, but in no event later
than the "Due Date" which is the later to occur of (i) thirty (30) days after
Seller receives its final audited cost certification for the year in which
Closing occurs, (ii) March 31 of the year following the year in which Closing
occurs, or (iii) as to the real estate tax and assessments, prorations, thirty
(30) days after the issuance of the final tax and assessment bills, and either
party owing the other party a sum of money based on such subsequent proration(s)
shall promptly pay said sum to the other party, together with interest thereon
at the rate of two percent (2%) per annum over the "prime rate" (as announced
from time to time in the Wall Street Journal) from the Due Date to the date of
payment if payment is not made within thirty (30) days after delivery of a bill
therefor together with reasonable back-up documentation. In the event tenants of
the Property are billed for their proportionate share of taxes and assessments
or expenses for amounts in excess of amounts previously paid by such tenants
which are attributable to the period of Seller's ownership of the Property,
Purchaser shall, to the extent such billings are actually collected, remit a
portion thereof to Seller in accordance with the principles of proration set
forth herein. To the extent such real estate taxes and assessments payable
directly by tenants and prorated at Closing are paid by such tenants, upon
evidence of such taxes and assessments paid directly by tenants, such
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taxes and assessments prorated at Closing shall be remitted to Seller. The
obligations of the parties under this Paragraph 7.2.1 will survive Closing.
7.2.2 In the event that any tenant of the Property is
obligated to pay percentage rent based upon any period (whether monthly,
quarterly, annually, or otherwise) in which the date of Closing occurs,
Purchaser shall, within the later of (a) thirty (30) days after receipt of such
payment with respect to such period, or (b) March 31, 2000, remit to Seller that
portion which is equal to the number of days which elapsed between the
commencement date of the period in question for each such tenant, and the
Closing Date, and the total number of days in such period, less a pro rata share
of any collections by Seller for such period based on estimated payments by a
tenant. If Seller has received payments of percentage rent based on any period
in which the date of Closing occurs, in excess of Seller's share as calculated
as set forth above in this Paragraph 7.2.2, it shall promptly pay such excess to
Purchaser. Seller retains the right to collect any delinquent rents or other
sums from tenants after Closing, provided that Seller shall not have right to
terminate any lease after Closing or exercise any other remedy except sue for
damages from such tenants. The obligations of the parties under this Paragraph
7.2.2 will survive Closing.
7.3 Proration of Service Charges. To the extent Seller,
as opposed to tenants, is responsible for payment of utility charges, Seller
will attempt to have utility meters read as of the Closing Date. To the extent
that this is not possible and to the extent that any other obligation for
continuing services is incurred, and statements are rendered for such services
covering periods both before and after the Closing Date, the amount will be
estimated and prorated on the Closing Date on a per-diem basis. Seller will
forward any such statements which it receives to Purchaser and Purchaser will
pay the same. If the estimated proration made on the Closing Date under this
Paragraph 7.3 is incorrect based on the actual statements received for utility
charges, the Purchaser or the Seller, as the case may be, shall make a
corrective payment to the other on the Due Date. Purchaser acknowledges that
certain tenants have the right, under the Leases, to audit the books and records
of the Property with respect to taxes, utilities, common area charges, and other
related charges relating to the period of Seller's ownership of the Property.
Accordingly, as set forth in Section 8.25 herein, Purchaser agrees to allow
Seller the right to audit the books and records related to the period of
Seller's ownership of the Property after the Closing Date and further agrees to
cooperate with Seller, to the fullest extent possible, in order for Seller to
settle any claims or discrepancies with respect to such charges. The provisions
of this Paragraph 7.3 shall survive the Closing.
7.3.1 Employees. As set forth in Paragraph 5.1.14,
Purchaser has no obligation to hire, or to cause any property management company
engaged by Purchaser to hire, any person presently employed in connection with
the Property. All employees of any affiliate of Seller performing services at
the Property shall be terminated by Seller on or prior to the Closing Date and
Seller shall fully pay such employees prior to the Closing Date all accrued
salaries, wages, bonuses and benefits (including vacation, personal days and
sick pay) pursuant to Seller's normal procedures with respect to such payments,
and neither Purchaser nor the management company engaged by Purchaser shall be
obligated to rehire such employees or to be responsible or obligated for any
such salaries, wages, bonuses and benefits. However, if the
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management company engaged by Purchaser elects to hire any such employee,
notifies Seller thereof prior to the Closing Date, and subsequently terminates
such employee within ninety (90) days after the Closing, Seller shall, within
thirty (30) days after Purchaser's notice of such employee termination, pay to
any such employee in accordance with Seller's normal operating procedures, the
severance pay with respect to base salary which such employee would have
received if the management company employed by Purchaser did not hire the
employee; provided, however, Seller shall be under no obligation to (i) provide
Consolidated Omnibus Budget Reconsideration Act (COBRA) coverage for such
employees, or (ii) make any other payment to or provide any other benefits to
any such employee.
7.4 Closing Costs. Purchaser shall pay (i) all of the Title
Insurer's escrow and/or closing fees (including any payment to the closing
officer of the Title Insurer as may be the local custom at the Closing), (ii)
the incremental costs of obtaining the ALTA title insurance policy, extended
coverage, (iii) the cost of any endorsements to the title policy required by
Purchaser, (iv) all costs of Purchaser's physical inspections of the Property
(environmental, engineering) and other due diligence activities, (v) the cost of
the survey and (vi) any recording charges or other charges in connection with
the Lehman Loan. Seller shall pay (i) all transfer taxes and recording fees
applicable to the sale and (ii) the costs of obtaining a CLTA title insurance
policy. Except as otherwise provided herein or in Paragraph 8.9, each party is
responsible for its own attorneys' and other professional fees. All other
closing costs shall be payable by the Purchaser. Seller and Purchaser shall
agree upon a closing statement reflecting the prorations and adjustments set
forth herein to be made at Closing. The obligation of Seller to pay the transfer
taxes set forth herein shall survive Closing.
7.5 Possession. Subject to the rights of tenants pursuant to
leases of the Property delivered to Purchaser and the other exceptions to title
shown on the Proforma Policy, Seller will deliver possession of a 9.6134125%
undivided interest in the Property and of any conveyed 9.6134125% undivided
interest in the personal property to the Purchaser on the date of Closing and
Seller will thereupon deliver to Purchaser, to the extent in Seller's
possession, the originals of all leases for tenants of the Property, all
correspondence with tenants, tenant/lease files, operating statements, plans and
specifications, supplies and advertising materials, booklets, keys, and other
items used in connection with operation of the Property.
7.6 Seller's Closing Documents. At the Closing, Seller will
deliver to Purchaser:
7.6.1 a Deed for the CCM Interest in the form of SCHEDULE
7.6.1;
7.6.2 an affidavit in customary form that Seller is not a
"foreign person" within the meaning of Section 1445(e) of the Internal Revenue
Code of 1986, in the form of SCHEDULE 7.6.2;
7.6.3 such affidavits as are customarily required by Title
Insurer and reasonably approved by Seller in connection with issuance of the
owner's title insurance policy;
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7.6.4 an assignment of leases in the form of SCHEDULE
7.6.4 ("Lease Assignment");
7.6.5 an assignment of contracts and warranties in the
form of SCHEDULE 7.6.5 ("Contracts Assignment");
7.6.6 an assignment of intangibles in the form of
SCHEDULE 7.6.6 ("Intangibles Assignment");
7.6.7 letters, in form to be supplied by Purchaser and
reasonably approved by Seller, to the tenants at the Property, instructing the
tenants to pay rent to Purchaser and to recognize Purchaser as landlord under
their leases; and letters, in form to be supplied by Purchaser and reasonably
approved by Seller, to such other persons and entities as may be determined by
Purchaser, giving notification of the sale to Purchaser including, without
limitation, notices to vendors under the service contracts;
7.6.8 a bill of sale conveying all personal property of
Seller, if any, located at the Property and used in connection with the
maintenance or operation thereof, in the form of SCHEDULE 7.6.8;
7.6.9 [Intentionally Deleted];
7.6.10 [Intentionally Deleted];
7.6.11 estoppel certificates, to the extent obtained
pursuant to Paragraph 6.2 herein;
7.6.12 evidence of Seller's authority to enter into and
consummate all of the transactions contemplated in this Agreement;
7.6.13 all keys in Seller's possession or control
(including keys held by any property manager or security service engaged by
Seller) with respect to the Property; and originals, to the extent in Seller's
possession or control (including those held by any property manager engaged by
Seller), of Leases and any services contracts assigned to and accepted by
Purchaser;
7.6.14 all books and records with respect to the Property,
including, but not limited to, leasing files and records with respect to common
area maintenance charges and tax charges; provided, however, that Seller may
retain copies of such books and records for its own files;
7.6.15 all other documents, instruments or writings which
may be reasonably required to consummate the transactions contemplated herein;
and
7.6.16 California 590 Certificate.
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7.7 Purchaser's Closing Documents. As part of the Closing,
Purchaser will deliver to Seller:
7.7.1 good federal funds in an amount equal to the
Purchase Price plus or minus prorations as provided herein and plus funds
sufficient to pay Purchaser's closing costs hereunder;
7.7.2 such affidavits, with respect to Purchaser's own
activities in connection with the Property, as are customarily required by Title
Insurer in connection with issuance of the owner's title insurance policy;
7.7.3 executed counterpart of the Lease Assignment;
7.7.4 executed counterpart of the Contracts Assignment;
7.7.5 executed counterpart of the Intangibles Assignment;
7.7.6 Natural Hazard Disclosure Statements in the forms
delivered by Seller's broker and Seller; and
7.7.7 all other documents, instruments or writings which
may be reasonably required to consummate the transactions contemplated herein.
7.8 Joint Deliveries. At the Closing, Seller and Purchaser
will execute and deliver to each other the following documents in proper form:
7.8.1 Closing Statement;
7.8.2 City, county and state transfer tax declarations or
similar instruments;
7.8.3 All other documents, instruments or writings which
may be reasonably required to consummate the transactions contemplated herein;
and
7.8.4 The Release and Assumption Agreement.
8. Miscellaneous.
8.1 Modifications. This Agreement can be amended only in
writing signed by both of the parties.
8.2 Casualty and Condemnation. Seller agrees to keep its
customary replacement cost insurance covering the Property in effect until the
Closing. If between the Effective Date and the Closing the improvements on the
Property are destroyed or damaged to the extent that repairs cost in excess of
One Million and No/100 Dollars ($1,000,000) in the estimate of an architect or
contractor selected by Seller and reasonably acceptable to Purchaser, or if
condemnation proceedings are commenced against the Property, Purchaser may (i)
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terminate this Agreement and neither party shall have any further rights or
obligations hereunder except as provided in Paragraphs 8.8, 8.15 and 8.17, or
(ii) elect to accept a 9.6134125% undivided interest in the Property in its then
condition, in which event Seller will pay or assign to Purchaser at Closing a
9.6134125% interest in all proceeds of insurance (plus the applicable
deductible) or condemnation awards payable to Seller by reason of such damage or
condemnation. In the event Purchaser makes neither election by the earlier of
(a) Closing or (b) ten (10) days after being advised of such casualty or
condemnation, Purchaser will be deemed to have elected to accept a 9.6134125%
undivided interest in the Property in its then condition. In the event of any
other damage to the Property, Seller may either repair the damage or give
Purchaser a reduction in the Purchase Price equal to the cost of repairing such
damage, as certified by an architect or contractor selected by Seller and
reasonably acceptable to Purchaser. In the event of any damage where Purchaser
does not have the right to terminate and Seller elects to repair such damage,
then Purchaser may elect to either: (x) have the Closing Date delayed for the
number of days required to repair the damage, which Seller agrees to do in
accordance with all Laws and in a good and workmanlike manner, or (z) proceed to
Closing without Seller performing such repairs in which event Seller will assign
to Purchaser at Closing a 9.6134125% interest in all proceeds of insurance (and
credit Purchaser for the amount of the applicable deductible). At all times from
the Effective Date through the Closing Date, Seller shall, at its expense,
maintain its existing casualty insurance and rental income loss insurance with
respect to the Property, with such changes thereto that Seller is making on its
blanket insurance coverage for other properties.
8.3 Time of Essence. Time (including, without limitation, the
date specified as the Closing Date) is of the essence of this Agreement.
8.4 Notices. All notices required or permitted hereunder must
be in writing and shall be served on the parties at the following address with
the understanding by both parties that the telephone numbers stated herein are
for the purpose of convenience only and do not constitute a sufficient form of
providing notice:
If to Purchaser: Century City Mall LLC
c/o Western Development Corporation
1000 Potomac Street, NW, Suite 200
Washington, DC 20007
Attention: Robert A. Singer
Telephone: (202) 295-3066
Facsimile: (202) 338-6014
with a copy to: Robbins, Kaplan, Miller & Ciresi LLP
1501 "K" Street, NW, Suite 1200
Washington, DC 20006
Attention: Robert E. Falb
Telephone: (202) 736-2650
Facsimile: (202) 223-8604
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If to Seller: RREEF USA FUND-II
c/o The RREEF Funds
875 North Michigan Avenue, Suite 4100
Chicago, Illinois 60611
Attn: Mr. Jerry Egan
Telephone: (312) 266-9300
Facsimile: (312) 266-9346
The RREEF Funds
101 California Street, 26th Floor
San Francisco, CA 94111
Attn: Mr. Mark Carlson
Telephone: (415) 781-3300
Facsimile: (415) 391-9015
The RREEF Funds
875 North Michigan Avenue, Suite 4100
Chicago, Illinois 60611
Attn: Laura James Bittman
Telephone: (312) 266-9300
Facsimile: (312) 266-9346
with a copy to: Orrick, Herrington & Sutcliffe LLP
400 Sansome Street
San Francisco, California 94111
Attn: Michael H. Liever, Esq.
Telephone: (415) 773-5808
Facsimile: (415) 773-4285
Any such notices may be sent by (a) a nationally recognized overnight courier,
in which case notice will be deemed delivered one business day after deposit
with such courier; (b) facsimile transmission, in which case notice will be
deemed delivered upon electronic verification that transmission to recipient was
completed, provided that notices sent by facsimile transmission on a day other
than a business day shall be deemed given on the first business day following
the date of transmission; or (c) personal delivery. The above addresses and
facsimile numbers may be changed by notice to the other party; provided that no
notice of a change of address or facsimile number will be effective until actual
receipt of such notice.
8.5 Parties Bound. Neither party may assign this Agreement
without the prior written consent of the other, and any such prohibited
assignment shall be void. Subject to the foregoing, this Agreement is binding
upon and inures to the benefit of the respective legal representatives,
successors, assigns, heirs, and devisees of the parties. For the purposes of
this Paragraph, the term "Affiliate" means (a) an entity that directly or
indirectly controls, is controlled by or is under common control with the
Purchaser; or (b) an entity at least fifty percent (50%) of whose economic
interest is owned by Purchaser; and the term "control" means
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<PAGE> 46
the power to direct the management of such entity through voting rights,
ownership or contractual obligations. No such assignment permitted pursuant to
this Paragraph 8.5 shall excuse or relieve Purchaser from full performance of
its obligations hereunder.
8.6 Governing Law. The performance and interpretation of this
Agreement is controlled by the law of the State in which the Property is
located.
8.7 Continuation Until Closing, Leasing.
8.7.1 Between the Effective Date and the Closing, Seller
agrees to keep and perform all of the obligations to be performed by landlord
under any Leases and Laws, provided that Seller shall have no obligation to make
any capital repairs or replacements to the Property. Seller agrees to operate
the Property in the same manner as before the making of this Agreement, the same
as though Seller were retaining the Property, provided that Seller shall have no
obligation to make any capital repairs or replacements to the Property. After
the Effective Date, Seller agrees not to convey the Property, nor to grant any
liens or easements with respect thereto.
8.7.2 After the Effective Date, Seller agrees not to
permit or consent to any new leases, amendments, extensions, renewals (other
than pursuant to tenant renewal options, if any), assignments of Leases or
subleases without first submitting them to Purchaser for Purchaser's approval,
which approval Purchaser agrees not to unreasonably withhold or delay. Purchaser
will have five (5) business days to notify Seller of its disapproval of such
leases, amendments, extensions, renewals, assignments or subleases, and in the
event that Purchaser does not so notify Seller, the leases, amendments,
extensions, renewals, assignments or subleases, as the case may be, will be
deemed approved. Notwithstanding the foregoing, Seller may continue its ongoing
operations with respect to seasonal cart and kiosk rentals and promotions
without Purchaser's approval.
8.8 Brokers. Except as provided in Paragraph 8.11 below,
Seller represents and warrants to Purchaser, and Purchaser represents and
warrants to Seller, that no broker or finder has been engaged by it,
respectively, in connection with the transaction contemplated by this Agreement.
In the event of a claim for broker's or finder's fees or commissions in
connection with the transaction contemplated by this Agreement, then Seller
shall protect and hold harmless Purchaser from the same if it shall be based
upon any agreement alleged to have been made by Seller, and Purchaser shall
protect and hold harmless Seller from the same if it shall be based upon any
agreement alleged to have been made by Purchaser. The indemnification
obligations under this Paragraph 8.8 shall survive the Closing or any earlier
termination of this Agreement.
8.9 Attorneys' Fees. Notwithstanding any limitation on
remedies or amounts recoverable set forth elsewhere herein, if any action is
brought by either party against the other party, the party in whose favor final
judgment is entered will be entitled to recover court costs incurred and
reasonable attorneys' fees at trial, upon appeal and on any petition for review.
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8.10 Remedies for Non-Performance. Purchaser's remedies
regarding breach of warranty or representation by Seller are governed by
Paragraph 5.3 hereof. Notwithstanding anything to the contrary contained herein,
if the Closing does not occur on or before June 10, 1999, neither party shall
have any further rights or obligations hereunder and this Agreement shall be
null and void.
8.11 Brokers Commission. If the Closing occurs, Seller agrees
to pay the brokerage commission due CB Richard Ellis, pursuant to a separate
agreement.
8.12 Survival of Representations and Warranties, Covenants.
Seller's representations and warranties contained herein and not specifically
described in Paragraph 5.1 and claims, damages or injury for the breach thereof
will survive the Closing for a period of one (1) year. Purchaser must give
Seller written notice of any claim it may have against Seller for any breach
within one (1) year after the date of Closing. Any claim which Purchaser may
have which is not asserted within the one (1) year period will not be valid or
effective and Seller will have no liability with respect thereto. All covenants
hereunder which, by their terms, are intended to survive Closing will survive
Closing hereunder. Otherwise, all other covenants hereunder shall not survive
Closing.
8.13 Merger of Prior Agreements. This Agreement constitutes
the entire agreement between the parties with respect to the purchase and sale
of a 9.6134125% undivided interest in the Property and supersedes all prior
agreements and understandings between the parties hereto relating to the subject
matter of this Agreement.
8.14 Invalidity of Provisions. In the event any provisions of
this Agreement are declared invalid or are unenforceable for any reason, such
provisions shall be deleted from such document and shall not invalidate any
other provision.
8.15 Entry and Indemnity. In connection with any entry by
Purchaser, or its agents, employees, consultants, investors, advisors,
affiliates or contractors (collectively "Purchaser's Disclosees") onto the
Property, Purchaser shall give Seller reasonable advance notice of such entry
and shall conduct such entry and any inspections in connection therewith so as
to minimize, to the greatest extent possible, interference with Seller's
business and the business of Seller's tenants and otherwise in a manner
reasonably acceptable to Seller. Without limiting the foregoing, prior to any
entry to perform any on-site testing, Purchaser shall give Seller notice
thereof, including the identity of the company or persons who will perform such
testing and the proposed scope of the testing. Seller shall approve or
disapprove the scope and methodology of such proposed testing within two (2)
business days after receipt of such notice, such approval may be given or
withheld in Seller's sole discretion. Seller's failure to notify Purchaser of
its approval or disapproval shall be deemed to be Seller's disapproval thereof.
If Purchaser or Purchaser's Disclosees take any sample from the Property in
connection with any such approved testing, upon Seller's request, Purchaser
shall provide to Seller a portion of such sample being tested to allow Seller,
if it so chooses, to perform its own testing. Seller or its representative may
be present to observe any testing or other inspection performed on the Property.
Upon Seller's request, Purchaser shall promptly deliver to Seller copies of any
reports
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<PAGE> 48
relating to any testing or other inspection of the Property performed by
Purchaser or Purchaser's Disclosees. Purchaser shall maintain, and shall assure
that its contractors maintain, public liability and property damage insurance in
amounts (public liability in a combined single limit of not less than
$5,000,000) and in form and substance adequate to insure against all liability
of Purchaser and Purchaser's Disclosees arising out of any entry or inspections
of the Property pursuant to the provisions hereof, and Purchaser shall provide
Seller with evidence of such insurance coverage upon request by Seller including
evidence that Seller is an additional insured on the public liability policy.
Purchaser shall protect, defend and hold Seller harmless from and against any
costs, damages, liabilities, losses, expenses, liens or claims (including,
without limitation, reasonable attorney's fees) arising out of or relating to
any liens or claims of liens or to damage to property or injury to persons on
account of any entry on the Property by Purchaser and Purchaser's Disclosees in
the course of performing the inspections, testings or inquiries provided for in
this Agreement, including without limitation damage to the Property or release
of hazardous substances or materials onto the Property, excluding, however, any
costs incurred by Seller in supervising Purchaser's testing. The foregoing
provisions contained in this Paragraph 8.15 are collectively herein referred to
as the "Protection Provision." The foregoing Protection Provision shall survive
beyond the Closing, or if the sale is not consummated, beyond the termination of
this Agreement.
8.16 Release. Except to the extent of the representations and
warranties of Seller expressly set forth in this Agreement and except for
Seller's obligations set forth in Paragraphs 7.2(b), 8.26 and 8.29, but
otherwise notwithstanding any other provision of this Agreement to the contrary,
Purchaser, on behalf of itself and its successors and assigns, waives its right
to recover from, and forever releases and discharges, Seller, Seller's
affiliates, Seller's investment manager, the partners, trustees, shareholders,
beneficiaries, members, directors, officers, employees and agents of each of
them, and their respective heirs, successors, personal representatives and
assigns (collectively, the "Seller Related Parties"), from any and all demands,
claims, legal or administrative proceedings, losses, liabilities, damages,
penalties, fines, liens, judgments, costs or expenses whatsoever (including,
without limitation, attorneys' fees and costs), whether direct or indirect,
known or unknown, foreseen or unforeseen, which may arise on account of or in
any way be connected with (i) those items described or referred to in
Purchaser's Due Diligence Letter, or (ii) the physical condition of the
Property, including, without limitation, the environmental condition thereof, or
any law or regulation applicable thereto, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U. S.C. Sections 9601 et seq.), the Resources Conservation and
Recovery Act of 1976 (42 U. S.C. Section 6901 et seq.), the Clean Water Act (33
U. S.C. Section 466 et seq.), the Safe Drinking Water Act (14 U. S.C. Sections
1401-1450), the Hazardous Materials Transportation Act (49 U. S.C. Section 1801
et seq.), the Toxic Substance Control Act (15 U. S.C. Sections 2601-2629), the
California Hazardous Waste Control Law (California Health and Safety Code
Section 25100, et seq.), the Porter-Cologne Water Quality Control Act
(California Water Code Section 13000, et seq.), and the Safe Drinking Water and
Toxic Enforcement Act of 1986 (California Health and Safety Code Section
25249.5, et seq.) and any other applicable federal, state or local laws.
Notwithstanding the foregoing, Purchaser acknowledges and agrees that the
release contained in this Paragraph 8.16 is binding on the Purchaser. However,
Seller acknowledges that Purchaser makes no representation
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<PAGE> 49
or warranties as to whether this release is in fact binding upon any third
parties who subsequently purchase the Property from the Purchaser.
Notwithstanding anything contained herein to the contrary, if a third party
(including a governmental agency) asserts an obligation or liability against
Purchaser arising out of matters (x) described in clause (ii) of this Paragraph
and not described or referred to in Purchaser's Due Diligence Letter, and (y)
arising out of events occurring during Seller's period of ownership of the
Property, as to which such third party would also have a claim against Seller,
then Purchaser may seek to join Seller in any administrative or legal proceeding
relating to such third party claim.
26
<PAGE> 50
In connection with Section 8.16 above, Purchaser expressly waives the
benefits of Section 1542 of the California Civil Code, which provides as
follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
Purchaser's Initials.
------------
The provisions of this Paragraph 8.16 shall survive the Closing.
8.17 Confidential Information. Purchaser hereby acknowledges
and agrees that all information furnished by Seller to Purchaser or obtained by
Purchaser in the course of Purchaser's investigation of the Property, or in any
way arising from or relating to any and all studies or entries upon the Property
or in any way relating to Seller and the transactions contemplated by the
parties shall be treated as confidential by Purchaser, and Purchaser shall
instruct Purchaser's Disclosees that such information is confidential. Purchaser
understands, acknowledges and agrees not to disclose any of the contents or
information contained in any information provided by Seller, any reports or
studies made in connection with Purchaser's investigation of the Property or
results thereof, in any form whatsoever (including, but not limited to, any oral
information received by Purchaser during the course of Purchaser's inspection of
the Property), to any party other than Seller, Seller's agents or
representatives, Purchaser's Disclosees (inclusive for purposes of this
Paragraph of USC, Purchaser's members, directors, officers, employees,
representatives, attorneys, consultants, advisors, partners or potential equity
investors or institutional lenders) Purchaser's assignees or the agents of such
assignees, without the prior express written consent of Seller, except as may be
required by law or court order. Without limiting the generality of the
foregoing, any press release or other public disclosure regarding this Agreement
or any transactions contemplated herein, and the wording of same, must be
approved in advance by both parties. The parties acknowledge that the
transaction described herein is of a confidential nature and shall not be
disclosed except to Purchaser's Disclosees, or as required by law. No party will
make any public disclosure of the specific terms of this Agreement, except as
required by law. In connection with the negotiation of this Agreement and the
preparation for the consummation of the transactions contemplated hereby, each
party acknowledges that it will have access to confidential information relating
to the other party. Each party shall treat such information as confidential,
preserve the confidentiality thereof, and not duplicate or use such information,
except to Purchaser's Disclosees. In the event of the termination of this
Agreement for any reason whatsoever, Purchaser will return to Seller, at
Seller's request, all documents, work papers, and other material (including all
copies thereof) obtained from Seller in connection with the transactions
contemplated hereby, and each party shall use its good faith efforts, including
instructing its employees and others who have had access to such information, to
keep confidential and not to use any such information. The provisions of this
Paragraph 8.17 will survive any termination of this Agreement, and will not be
subject to the limitation set forth in Paragraph 8.12. Notwithstanding the
foregoing, if the
27
<PAGE> 51
Closing occurs, Purchaser and Seller shall be under no further obligations under
this Paragraph 8.17.
8.18 Calculation of Time Periods. Unless otherwise specified,
in computing any period of time described herein, the day of the act or event,
after which the designated period of time begins to run, is not to be included
and the last day of the period so computed is to be included, unless such last
day is a Saturday, Sunday or legal holiday, in which event the period shall run
until the end of the next day which is neither a Saturday, Sunday, or legal
holiday (i.e., a day on which federally chartered banks are not open for
business in Los Angeles, California). The last day of any period of time
described herein shall be deemed to end at 5 p.m. Los Angeles, California time
on the last day of such period of time. All days other than Saturdays, Sundays
and legal holidays in which national banks are closed in Los Angeles, California
are business days hereunder.
8.19 Facsimile Signatures. Executed facsimile copies of this
Agreement or any amendments hereto shall be binding upon the parties, and
facsimile signatures appearing hereon or on any amendments hereto shall be
deemed to be original signatures.
8.20 Further Assurances. In addition to the acts and deeds
recited herein and contemplated to be performed, executed and/or delivered by
Seller to Purchaser at Closing, Seller agrees to perform, execute and deliver,
but without any obligation to incur any additional liability or expense, on or
after the Closing any further deliveries and assurances as may be reasonably
necessary to consummate the transactions contemplated hereby or to further
perfect the conveyance, transfer and assignment of a 9.6134125% undivided
interest in the Property to Purchaser.
8.21 Effective Date. Delivery by a party of a copy of the
fully-executed Agreement by facsimile transmission, followed by a
manually-signed copy thereof delivered the next business day after transmission
of such copy, shall constitute acceptance by such party as of the date of the
facsimile transmission. The date on which a fully-executed copy of this
Agreement is delivered by both Seller and Purchaser is referred to herein as the
"Effective Date."
8.22 Seller's Exculpation Clause. The obligations of Seller
contained herein are intended to be binding only on the property of the trust
party to this Agreement of Purchase and Sale and shall not be personally binding
upon, nor shall any resort be had to the private properties of, any of the
trustees, beneficiaries, shareholders, partners, members, managers, directors,
officers, employees or agents of Seller or any affiliates thereof, or any
trustees, beneficiaries, investment managers, any general partners thereof, or
any employees or agents of the trustees or investment managers. All documents to
be executed by Seller shall also contain the foregoing exculpation.
8.23 Purchaser's Exculpation Clause. The obligations of
Purchaser contained herein are intended to be binding only on the property of
Purchaser and shall not be personally binding upon, nor shall any resort be had
to the private properties of, any of the trustees, beneficiaries, shareholders,
partners, members, managers, directors, officers, employees or agents of
Purchaser or any affiliate thereof, or any trustees, beneficiaries, investment
managers, or any
28
<PAGE> 52
employees or agents of the trustees or investment managers. All documents to be
executed by Purchaser shall also contain the foregoing exculpation. USC and CCM
shall be jointly and severally liable for the obligations of Purchaser
hereunder.
8.24 Counterparts. This Agreement may be executed in any
number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument.
8.25 Right of Access to Records. Purchaser and Seller
acknowledge and agree that each party may require access after the Closing Date
to personnel, employment, financial, engineering, tenant and other documents,
books, records or items with respect to the Property and under the other party's
control. Each of Purchaser and Seller agree that each party retain all such
records and shall have the ability from time to time during normal business
hours after giving advance notice of one (1) full business day to the other
party, to review any and all such items relating to the Property and its
operations in such party's possession during Seller's period of ownership. This
obligation of each party to provide the other party with access pursuant to this
Section shall survive for a period of eighty four (84) months from the Closing
Date.
8.26
<PAGE> 53
Credit Allocation Agreement. (a) Seller and Purchaser acknowledge and agree that
Seller presently is liable for any and all amounts due to Bloomingdale's or
Macy's with respect to the period prior to the date of Closing pursuant to that
certain Credit Allocation Agreement by and among Seller, Bloomingdale's, Inc.
("Bloomingdale's") and Macy's Primary Real Estate, Inc. ("Macy's"), dated as of
July 1996 (the "Credit Allocation Agreement"). In connection with such amounts
due to Bloomingdale's and Macy's pursuant to the Credit Allocation Agreement,
upon Closing, Seller shall open an interest bearing escrow account (the "Escrow
Account") with Chicago Title Insurance Company (the "Title Company") and Seller
shall place in such Escrow Account the amount of Nine Hundred Sixty Thousand
Dollars ($960,000) (the "Holdback") under instructions that the Title Company
shall hold and disburse the Holdback as provided in this Paragraph 8.26. After
Closing, Seller, along with Macy's or Bloomingdale's, as applicable, shall
attempt to reach final settlement for the amounts owed to Macy's or
Bloomingdale's pursuant to the Credit Allocation Agreement for the period prior
to Closing ending with the end of the lease year immediately prior to the lease
year in which the Closing occurs (the "Prior Lease Year"). Seller may use the
Holdback to pay to Bloomingdale's or Macy's any such funds owed to either of
them upon final settlement as mutually agreed upon by Seller and Macy's or
Bloomingdale's, as applicable, provided, that Seller has also paid to Purchaser
and USC any "Rent Offset" (as hereinafter defined) theretofore incurred by
Purchaser or USC. Seller shall provide Purchaser with prior written notice of
the final settlement, together with written evidence executed by such tenants of
such final settlement, at least five (5) business days before the funds are to
be disbursed by the Title Company. At the end of the fifth (5th) business day
after said notice and deliveries have been sent by Seller to Purchaser or USC,
the Title Company shall disburse such funds to Seller upon Seller's unilateral
request therefor to make such payments. After Seller has used such funds to make
the payments due to Bloomingdale's and Macy's, any sums remaining in the Escrow
Account shall be disbursed to Seller upon Seller's unilateral request therefor
to the Title Company. If either Macy's or Bloomingdale's withholds rent or other
payments as a result of funds due to either of them for the period prior to
Closing ending with the end of the Prior Lease Year, pursuant to the Credit
Allocation Agreement ("Rent Offset") during the four (4) month period after the
Closing Date and Seller has failed to pay such amounts to Purchaser pursuant to
Paragraph 8.26(b) below, then after said four (4) month period, Purchaser and
USC shall have the right to use the Holdback to cover such Rent Offset by
delivering to Seller written notices from either Bloomingdale's or Macy's (or
other written evidence reasonably satisfactory to Seller), confirming that the
Rent Offset is a result of funds owed to either tenant for the period prior to
Closing ending with the end of the Prior Lease Year, under the Credit Allocation
Agreement; the foregoing is not a limitation on the obligations of the Seller
under the provisions of Paragraph 8.26(b) below. At the end of the fifth (5th)
business day after said notice and deliveries have been sent to Seller by
Purchaser or USC, then the funds being requested by Purchaser or USC for the
Rent Offset shall be disbursed to Purchaser or USC upon Purchaser's or USC's
unilateral request to the Title Company. After such four (4) month period until
Seller has reached final settlement with such tenants and has paid such sums due
to such tenants, if either Bloomingdale's or Macy's uses a Rent Offset,
Purchaser shall have the right monthly to use the Holdback to cover such Rent
Offset by delivering to Seller written notices from either Bloomingdale's or
Macy's confirming that the Rent Offset is a result of funds owed to either
tenant for the period prior to Closing under the Credit Allocation Agreement;
the foregoing is not a limitation on the obligations of the Seller under the
provisions of
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<PAGE> 54
Paragraph 8.26(b) below. At the end of the fifth (5th) business day after said
notice and deliveries have been sent to Seller by Purchaser or USC, then the
funds being requested by Purchaser or USC for the Rent Offset shall be disbursed
to Purchaser or USC upon Purchaser's or USC's unilateral request to the Title
Company. If any funds in the Holdback are used for Rent Offset, then, to the
extent that the funds so used exceed the amount owing under the Credit
Allocation Agreement for the period prior to the Closing ending with the end of
the Prior Lease Year, Seller reserves all rights and remedies against Macy's or
Bloomingdale's to recover such funds (provided that Seller shall not have the
right to terminate any lease or exercise any other remedy except to sue to
recover such funds). Seller's share of the amount owing under the Credit
Allocation Agreement for the period of time after the end of the Prior Lease
Year to the day before the Closing Date will be handled between Seller and
Purchaser through normal post-closing prorations as provided in Paragraph
7.2(a). If Seller is unable to agree with Bloomingdale's and Macy's as to the
amounts owed to them under the Credit Allocation Agreement for the period prior
to Closing ending with the end of the Prior Lease Year, on or before the date
which is six (6) months after the Closing Date, then within a reasonable period
of time (but not later than 30 days) after Seller's receipt of written request
therefor from Purchaser, Seller shall bring a declaratory relief action to
determine such amount.
(b) Seller shall indemnify Purchaser and hold harmless and defend
Purchaser from and against 9.6134125% of all claims, damages, liabilities,
losses, costs and expenses (including, without limitation, reasonable attorneys'
fees) arising out of any sums owed by Seller to Macy's or Bloomingdale's
pursuant to the Credit Allocation Agreement with respect to the period prior to
the date of Closing ending with the end of the Prior Lease Year.
(c) Purchaser may assign its rights under this Paragraph 8.26
(including, but not limited to, the right of indemnification and the right to
receive the funds for reimbursement from the Rent Offset) to Lehman to the
extent of a 9.6134125% interest in the Property. The provisions of this
Paragraph 8.26 shall survive Closing.
8.27 Purchaser Approval of Conditions. Notwithstanding anything to
the contrary contained herein, Purchaser acknowledges that Purchaser has
approved the Property and all matters related thereto, including, without
limitation, all of the documents, books, records, reports and other items
described or referred to in Section 3 hereof, and that all of the conditions to
Purchaser's obligations hereunder have been satisfied except the conditions
which will be satisfied at the Closing.
8.28 Gift Certificates / Advertising Agency Agreement. Purchaser
acknowledges that all gift certificates with respect to the Property are the
responsibility of the Association and that Seller currently has, and after
Closing shall have, no obligations or liabilities with respect to such gift
certificates. Seller has agreed to give Purchaser a credit in the amount of Two
Thousand Eighteen and 82/100 Dollars ($2,018.82) at Closing for a portion of
unredeemed gift certificates. Purchaser shall indemnify Seller and hold harmless
and defend Seller from and against any and all claims, damages, liabilities,
losses, costs and expenses (including, without limitation, reasonable attorneys'
fees) to the extent of any payment obligations pursuant to such gift
certificates and Seller shall have no further obligations or
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<PAGE> 55
liabilities with respect to such matter. Purchaser further acknowledges receipt
of a copy of the written notice issued by the Association necessary to terminate
that certain letter agreement dated October 28, 1998 with advertising agency
Fattal and Collins, and that Seller currently has, and after Closing shall have,
no obligations or liabilities with respect to such agreement. The provisions of
this Paragraph 8.28 shall survive the Closing.
8.29 AMC Tank. Upon Closing, Seller shall open an interest bearing
account with the Title Company (the "AMC Account") and Seller shall place in the
AMC Account the amount of Fifty Thousand Dollars ($50,000) (the "AMC Holdback").
During the period of twelve (12) months following Closing, Seller, Purchaser and
USC shall jointly use reasonable best efforts to have AMC install and bear all
costs and expenses for a new underground storage tank in accordance with all
current applicable law. If after such twelve (12) month period, AMC has failed
to agree to bear the costs and responsibility for the installation of the new
underground storage tank (the "UST Installation"), Purchaser, to the extent of
its 9.6134125% interest in the Property, may use the AMC Holdback to cover all
reasonable out-of-pocket third-party costs of the UST Installation incurred by
Purchaser by delivering to the Title Company, copies of all invoices submitted
by Purchaser's contractor, subcontractors and materialmen marked "paid." Within
two (2) business days of receipt of any such demand together with the applicable
documents described herein, the Title Company shall notify the Seller in writing
of the same and forward to Seller copies of all Purchaser's deliveries. At the
end of the fifth (5th) business day after said notice and deliveries have been
sent to Seller, and provided that the Title Company has not been notified of any
objection to the disbursement by Seller, then the funds being held for the UST
Installation requested by Purchaser shall be disbursed to Purchaser.
Notwithstanding the foregoing, if the installation costs for UST Installation
(a) exceed the amount of the AMC Holdback, Seller shall not be liable for any
amounts in excess of such amount; or (b) is less than the amounts allocated for
such installation as set forth herein Seller shall be reimbursed the funds
remaining in the Escrow Account after Purchaser has been paid. Seller, however,
shall reserve all rights and remedies against AMC related to the UST
Installation. The provisions of this Section 8.29 shall survive Closing.
8.30 Concurrent Closings. As an accommodation to Purchaser, Seller
has agreed to enter into this Agreement and the Other Sale Agreement to
facilitate Purchaser purchasing the CCM Interest and USC purchasing the USC
Interest concurrently in a single closing. Seller would not have entered into
this Agreement and the Other Sale Agreement without receiving assurances from
Purchaser and USC that the sale of the CCM Interest and the USC Interest would
close concurrently. Consequently, Purchaser acknowledges and agrees that if for
any reason whatsoever, (i) either this Agreement or the Other Sale Agreement is
terminated, or (ii) the closing of sale of the CCM Interest and the USC Interest
will not take place concurrently pursuant to the terms of this Agreement and the
Other Sale Agreement, then Seller may, at its option, elect to terminate this
Agreement after Seller is informed either that this Agreement or the Other Sale
Agreement has been terminated or that the sale of the CCM Interest and the USC
Interest will not close concurrently.
[SIGNATURE PAGE FOLLOWS]
32
<PAGE> 56
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the dates set forth below.
SELLER: PURCHASER:
RREEF USA FUND-II, CENTURY CITY MALL, LLC,
a California group trust a Delaware limited liability
company
By: RREEF AMERICA L.L.C.,
a Delaware limited liability company By:
----------------------------
Its: Investment Manager Name: Robert E. Falb
Title: Assistant Manager
By:
---------------------------------
Name: Mark D. Carlson Dated: June , 1999
Title: Authorized Representative ----
Dated: June , 1999
----
<PAGE> 57
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1.1.3 Personal Property
Schedule 1.1.3A Excluded Personal Property
Schedule 3.2.5 Additional Due Diligence Materials
Schedule 4.1 Pro Forma Title Policy
Schedule 5.1 Disclosure Schedule
Schedule 5.1.5 List of Service Contracts and Equipment Leases
Schedule 5.1.10 Rent Roll
Schedule 5.1.12 Leasing Commissions Due and Payable
Schedule 5.1.16 Tenant Improvement Work
Schedule 6.2 Form of Tenant Estoppel Letter
Schedule 6.2.1 Seller Estoppel Letter
Schedule 7.6.1 Form of Grant Deed
Schedule 7.6.2 FIRPTA Certificate
Schedule 7.6.4 Assignment and Assumption of Leases
Schedule 7.6.5 Assignment and Assumption of Contracts and Warranties
Schedule 7.6.6 Assignment of Intangibles
Schedule 7.6.8 Bill of Sale
EXHIBITS
Exhibit A Legal Description of Property
Exhibit B Leases of Major Tenants
35
<PAGE> 1
EXHIBIT 10.2
USC - CENTURY CITY SHOPPING CENTER AND MARKETPLACE
AGREEMENT OF PURCHASE AND SALE
THIS AGREEMENT made and entered into, as of the "Effective Date" (as
hereinafter defined in Paragraph 8.21 below), by and USC CENTURY, INC., a
Delaware corporation (hereinafter collectively referred to as "Purchaser") and
RREEF USA FUND-II, a California group trust (hereinafter referred to as
"Seller").
WHEREAS:
A. Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, a 90.3865785% undivided interest in the "Property"
described below (the "USC Interest"), which Property consists of a shopping
center commonly known as Century City Shopping Center and Marketplace.
B. Concurrently with the execution of this Agreement by both parties,
Seller shall enter into a purchase agreement with CENTURY CITY MALL, LLC, a
Delaware limited liability company ("CCM") (the "Other Sale Agreement"), whereby
Seller shall sell to USC and USC shall purchase from Seller, a 9.6134125%
undivided interest in the Property (the "CCM Interest").
C. Said Century City Shopping Center and Marketplace also includes
department stores commonly known as Macy's and Bloomingdale's (the "Department
Stores").
D. The parties desire to set forth their agreement as to the matters
herein set forth.
NOW, THEREFORE, for good and valuable consideration, receipt and
sufficiency of which is hereby acknowledged, the parties hereto do hereby agree
as follows:
1. Sale of Property; Purchase Price.
1.1 Sale of Property. On the terms and conditions hereinafter set
forth, Purchaser agrees to purchase, and Seller agrees to sell, a 90.3865785%
undivided interest only in all of the following (collectively, the "Property"):
1.1.1 That certain real property owned by Seller located in the
City of Los Angeles, County of Los Angeles, State of California, as more
particularly described on EXHIBIT A, together with all and singular, the
tenements, hereditaments, easements, rights-of-way and appurtenances belonging
or in anywise appertaining to the same and owned by Seller, and all right, title
and interest of Seller, if any, in and to any land lying in the bed of any
street, road or avenue open or proposed, public or private, in front of or
adjoining the Land, to the centerline thereof, and all right, title and interest
of Seller, if any, in and to any award hereafter made in lieu thereof and in and
to any award for damage to the Property by reason of a change of
<PAGE> 2
grade of any street hereafter occurring, but excluding any oil, gas and other
minerals and rights incident thereto previously reserved or conveyed (the
"Land");
1.1.2 All improvements, structures and fixtures owned by Seller
now or on the Closing Date (as defined below) located upon the Land (the
"Improvements") subject to those terms and conditions contained in that certain
ground lease, as amended, by and between Seller's predecessor in interest,
Century City, Inc. and Federated Department Stores, Inc. dated December 31,
1974;
1.1.3 All tangible personal property owned by Seller now or on
the Closing Date located on or about the Land or the Improvements described in
SCHEDULE 1.1.3 attached hereto and made a part hereof (the "Personal Property")
and excluding the personal property in the Manager's office described in
SCHEDULE 1.1.3A; and
1.1.4 All intangible property owned by Seller now or on the
Closing Date owned or held in connection with the Land, the Improvements or the
Personal Property, or any business or businesses owned by Seller now or
hereafter conducted thereon or in connection with the use thereof (other than
those businesses conducted by tenants under Leases (as defined in Paragraph
5.1.10 below) in their capacity as tenants and those assets owned by Seller's
management company) including, without limitation, all leases, prepaid rent,
security deposits, guaranties of leases, mineral rights, air rights, contract
rights and agreements (including the Leases, and any service or equipment
leasing contracts with respect to or affecting the Property), operating,
maintenance and other records, building and trade names and logos used by Seller
in connection with the Property (including the name "Century City Shopping
Center and Marketplace" but not including the name "RREEF," however, Seller
provides no warranty that Seller has any rights with respect to ownership or use
of such trade names or logos, licenses (excluding computer software), written
authorizations necessary for the use, operation or ownership of the Property,
warranties (including those relating to construction or fabrication), utility
contracts, telephone exchange numbers, advertising materials, studies or other
materials related to the marketing of the Property to the public and prospective
tenants and other occupants of the Property, including leasing brochures and
tenant data sheets, plans and specifications, governmental approvals, permits
and development rights related to the Land, the Improvements or the Personal
Property or any part thereof but excluding (i) the rights to rents and other
sums due for any period of time prior to Closing, as defined below, (ii) any
claims of Seller against third parties for delinquent rents and other sums
payable under the Leases (as defined below), relating to any period of time
prior to Closing, (iii) any claims arising out of or related to any rights and
claims against Seller by third parties for any period of time prior to Closing
(including, without limitation, any claims related to the obligations of Seller
set forth in Paragraph 7.2(b) herein) and including, without limitation, all
rights and claims against: (w) Federated Department Stores, Inc. ("Federated's")
regarding supplemental taxes associated with Federated's acquisition of the
space occupied by Bloomingdale's and the space occupied by Macy's for the period
prior to Closing; (x) any other tenants regarding supplemental taxes or
mechanic's liens for the period prior to Closing; (y) Broadway Stores, Inc.
("Broadway's") regarding recovery of rental premium insurance fees; (z) Fast
Frame, a former tenant for monthly payments in the amount of $208.33 until
January 2000 for past rent due to Seller; and (aa) AMC regarding the
installation of
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a new underground storage tank more fully described in Section 8.29 herein (the
"AMC Tank Issue") (all items referred to in this clause (iii) are defined as
"Reserved Claims") (provided however, Seller's rights hereunder shall in no way
limit Purchaser's rights for any claims for matters arising from and after the
Closing), (iv) any bank accounts or similar accounts and (v) Seller's rights
pursuant to Paragraph 8.26 herein (the "Intangible Property"). All items of the
Property which are not real property shall constitute part of the Intangible
Property and Personal Property.
1.2 Purchase Price. The purchase price for the CCM Interest
("Purchase Price") is Two Hundred Forty Five Million Eight Hundred Fifty One
Thousand Five Hundred Eighteen and No/100 Dollars ($245,851,518.00), payable at
Closing as defined in Paragraph 7.1 pursuant to the terms set forth herein.
Purchaser shall pay a portion of the Purchase Price by assuming the Lehman Loan
(as defined in Section 4.2 below) and there shall be a credit against the
Purchase Price in the amount that Seller actually receives and retains in excess
of Twenty Two Million Nine Hundred Fifty Three Thousand Six Hundred Twenty Eight
and No/100 Dollars ($22,953,628.00) under the Lehman Loan, provided there shall
be no other credit against the Purchase Price with respect to any principal,
interest or other amounts outstanding under the Lehman Loan or distributed under
the Lehman Loan. Purchaser shall pay the remainder of the Purchase Price by wire
transfer in immediately available funds.
2. Intentionally Deleted.
3. Review of the Property.
3.1 Prior to the Effective Date, Seller has provided Purchaser and
its agents or consultants with access to the Property to inspect each and every
part thereof to determine its present condition and to conduct such physical and
environmental studies (including a mechanical and roof study and Phase I
environmental assessment) as it deemed appropriate.
3.2 Prior to the Effective Date, Seller has delivered to Purchaser,
or made copies available to Purchaser at the Property, all to the extent in the
possession of Seller or its managing agent:
3.2.1 a copy of any existing occupancy and equipment leases,
service contracts and maintenance or other contracts pertaining to the
operations of the Property that will survive Closing, copies of all real estate
tax bills for the years 1996, 1997 and 1998 and through the period ending June
30, 1999, both inclusive, and unaudited operating statements for the Property
for the years 1996, 1997 and 1998, and for the first three months of 1999.
3.2.2 a copy of any environmental reports relating to the
Property prepared by third party consultants.
3.2.3 a copy of all current franchises, business or other
licenses, bonds, permits, certificates, authorizations and other evidences of
consent, approval, authorization or permission relating to or affecting the
Property of or from any person, including any governmental authority, held by
Seller, including any pending applications.
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3.2.4 a copy of all material third party warranties and
guaranties, if any, which are in effect with respect to the Property.
3.2.5 a copy of those other materials set forth on SCHEDULE
3.2.5.
3.2.6 as-built plans and specifications for the improvements on
the Property, including the plans and specifications for and a complete
description of all existing renovations to the Property and the leasable space
therein, if available.
3.2.7 as-built drawings of underground utilities (including
sewer, water, gas, telephone and electrical service cables) located under the
Land, if available.
3.3 Purchaser agrees that any information obtained by Purchaser or
its authorized agents in the conduct of its due diligence will be treated as
confidential pursuant to Paragraph 8.17.
3.4 As and when Seller obtains updated or new information, which, if
presently in Seller's possession, would have been delivered to Purchaser
pursuant to Paragraph 3.2 (including additional monthly reports on the
Property), Seller shall deliver such updated and new information to Purchaser.
4. Title.
4.1 Purchaser hereby agrees to acquire title to the USC Interest
subject to those exceptions (collectively, the "Acceptable Exceptions") set
forth on the Pro Form Title Policy (the "Pro Forma") issued by Title Insurer
attached hereto as SCHEDULE 4.1. If any other recorded or unrecorded exception
to title is discovered after the Effective Date which would prevent the Title
Insurer from issuing a title policy in the form of the Pro Forma, and Purchaser
does not elect to waive such exception, upon the first to occur of (a) the
Closing Date or (b) seven (7) days after being notified of such exception, and
to proceed with the consummation of the Closing, Seller will have fifteen (15)
days after the expiration of said seven (7) day period (and Closing will be
delayed if necessary, so that it occurs not earlier than twenty-two (22) days
after Purchaser is notified of such exception) after notifying Purchaser of such
discovery in which to use commercially reasonable efforts to eliminate or to
induce the Title Insurer to insure over (subject to Purchaser's approval, not to
be unreasonably withheld) such exception, and if such exception is not
eliminated or insured over as aforesaid within said 15-day period, Purchaser may
either: (1) terminate this Agreement and neither party will have any further
rights or obligations hereunder except as provided in Paragraphs 8.8, 8.15 and
8.17 or (2) close the sale subject to such exception without deduction or setoff
as to the Purchase Price and without any other rights against Seller with
respect thereto. Notwithstanding the foregoing, Seller shall discharge any
monetary lien that arises after the Effective Date and prior to Closing due to
any act of Seller to enter into a deed of trust or mortgage evidencing such lien
except for the lien of the Lehman Loan.
4.2 Lehman Loan Documents. Solely and exclusively as an
accommodation to Purchaser and CCM, Seller will borrow the amount of One Hundred
Sixty Million and 00/100
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Dollars ($160,000,000) (the "Lehman Loan") from Lehman Brothers Holdings Inc., a
Delaware corporation, doing business as Lehman Capital, a division of Lehman
Brothers Holdings Inc. ("Lehman"), to be secured by, among other things, by a
nonrecourse mortgage which will encumber the Property (said Mortgage along with
all other documents evidencing or securing the Lehman Loan or to be executed in
connection therewith are referred to herein collectively as the "Lehman Loan
Documents"). Concurrently with Closing, Purchaser and CCM pursuant to the Other
Sale Agreement, collectively shall assume all of the obligations under the
Lehman Loan and the Lehman Loan Documents and Seller shall be completely
released of any and all obligations under the Lehman Loan and the Lehman Loan
Documents. Purchaser shall execute a release and assumption agreement with
respect to the Lehman Loan in a form satisfactory to Seller in Seller's sole
discretion (the "Release and Assumption Agreement"). The Lehman Loan Documents
must be in form and substance acceptable to Seller in Seller's sole discretion.
From and after the Closing Date, Seller will have no responsibility in any way
for any payment, obligation, liability, debt and claim arising out of the Lehman
Loan or the Lehman Loan Documents. Purchaser shall, at its sole cost and
expense, protect, defend, indemnify, release and hold harmless Seller from and
against any and all claims, suits, liabilities (including, without limitation,
strict liabilities), actions, proceedings, obligations, debts, damages, losses,
costs, expenses, fines, penalties, charges, fees, expenses, judgments, awards,
and amounts paid in settlement, of whatever kind of nature whatsoever, and
whether known or unknown, foreseeable or unforeseeable (including, but not
limited to, attorneys' fees and other costs of defense) imposed upon or incurred
by or asserted against Seller and directly or indirectly arising out of or in
any way relating to the Lehman Loan or the Lehman Loan Documents. The
obligations of Purchaser under this Paragraph 4.2 shall survive the Closing.
5. Representations and Warranties.
5.1 Representations and Warranties of Seller. Subject to the
provisions of Section 5.3 below, Seller hereby makes the following
representations and warranties with respect to the Property, provided that
Seller makes no representations or warranties with respect to the matters
disclosed in SCHEDULE 5.1 (the "Disclosure Schedule") or with respect to the
matters described or referred to in that certain letter from Adam Metz of
Purchaser to Seller dated March 19, 1999 and the attached memorandum from Adam
Metz to Seller dated March 19, 1999 (said letter and memorandum are collectively
referred to herein as "Purchaser's Due Diligence Letter"). Notwithstanding
anything to the contrary contained herein or in any document delivered in
connection herewith, except as specifically set forth in the following sentence
with respect to the dispute between Federated's and Seller, Seller shall have no
liability with respect to the items disclosed, described or referred to in the
Disclosure Schedule. Notwithstanding the foregoing, with respect to the matters
described in Paragraph A11 (such matters referred to herein as
"Broadway/Federated Insurance Dispute") of Purchaser's Due Diligence Letter,
Seller shall be responsible after Closing for any sums owed by Seller to
Federated's for pass-through charges paid by such tenant for rental income
coverage insurance and taxes prior to Closing and Seller shall indemnify
Purchaser and hold harmless and defend Purchaser from and against 9.6134125% of
all claims, damages, liabilities, costs and expenses (including, without
limitation, reasonable attorneys' fees) arising out of the Broadway/Federated
Insurance Dispute with respect to sums, if any, that Seller may owe to such
tenant for the period prior to Closing.
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As used in this Paragraph 5.1 and elsewhere in this Agreement, the phrase "to
the knowledge of Seller" or phrases of similar import mean and are limited to
the actual knowledge of Seller's portfolio manager, Jerry Egan, Seller's local
manager having ongoing management responsibility with respect to the Property,
Doug Roscoe and Lee Letchford, and not to any constructive knowledge of any of
the foregoing individuals or of Seller or any investment advisor to Seller, any
entity that is a partner or member in such investment advisor, or any affiliates
of any thereof, or to any trustee, beneficiary, member, officer, agent,
representative, or employee of Seller or such investment advisor, any such
constituent partner or member of any such affiliate. Purchaser hereby
acknowledges that Seller has named Jerry Egan, Doug Roscoe and Lee Letchford as
those representatives constituting Seller's knowledge, in good faith, without
intent as to deceive Purchaser or to withhold information from Purchaser and
that Jerry Egan, Doug Roscoe and Lee Letchford are familiar with the Property
and its operations. In addition, as used in this Paragraph 5.1 and elsewhere in
this Agreement, Seller's receipt of any written notice shall mean the actual
receipt of any written notice by Jerry Egan, Doug Roscoe and Lee Letchford, or
by any officer of RREEF America L.L.C., a Delaware limited liability company
holding the position of Vice President or higher in the corporate headquarters
of Seller located in Chicago, Illinois. Seller hereby warrants and represents to
Purchaser as follows:
5.1.1 Pending Proceedings. With the exception of the items set
forth in the Disclosure Schedule or the Proforma Policy, Seller has received no
written notice of special assessment, condemnation, environmental, zoning or
other land use regulation proceedings, either pending or planned to be
instituted, with respect to the Property or any part thereof.
5.1.2 Status of Seller and Closing Documents. This Agreement has
been, and all the documents to be delivered by Seller to Purchaser at Closing
are or will be, duly authorized, executed, and delivered by Seller, are legal,
valid, and binding obligations of Seller, are enforceable in accordance with
their respective terms, and do not violate any provisions of any agreement to
which Seller or the Property is subject or bound. Seller is duly organized and
validly existing or duly qualified to transact business in the State in which
the Property is located.
5.1.3 Non-Foreign Status. Seller is not a "foreign person"
within the meaning of Section 1445(f)(3) of the Internal Revenue Code of 1986,
as amended, and that Seller will furnish to Purchaser, prior to Closing, an
affidavit in form satisfactory to Purchaser confirming the same.
5.1.4 Compliance with Laws. With the exception of the items set
forth in the Disclosure Schedule, Seller has received no governmental notice,
not heretofore corrected, alleging that the Property or its current uses are in
violation of any zoning, building, health, traffic, environmental, flood control
or all other applicable rules, regulations, codes, ordinances, or statutes of
any local, state and federal authorities and any other governmental authority
(collectively, the "Laws") asserting jurisdiction over the Property.
5.1.5 Service Contracts. With the exception of the equipment
leases and the Schindler service contract for passenger elevators listed in
SCHEDULE 5.1.5 attached hereto
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(which leases and contract Purchaser shall assume at Closing), and the items set
forth in the Disclosure Schedule or in Purchaser's Due Diligence Letter, the
service agreements and service contracts affecting the Property (including,
without limitation, any management, leasing, brokerage, services or maintenance
agreements) listed on SCHEDULE 5.1.5 are terminable at will by Seller without
further liability, upon not more than 30 days' prior written notice and which
shall be binding on Purchaser. With the exception of the items set forth in the
Disclosure Schedule or in Purchaser's Due Diligence Letter, Seller has received
no written notice of, and Seller has no knowledge of, any defaults by Seller or
any other party with respect to such service agreements, service contracts and
equipment leases affecting the Property.
5.1.6 No Default. The execution and delivery of this Agreement,
and consummation of the transaction described in this Agreement, does not and
will not constitute a default under any contract, lease, or agreement to which
Seller is a party or by which Seller is bound.
5.1.7 No Suits. Except as set forth in the Disclosure Schedule
or in Purchaser's Due Diligence Letter, and except for personal injury or
property damage actions for which there is adequate insurance coverage and where
the insurance carrier has accepted the tender of the defense without
reservation, there is no action, suit or proceeding pending or, to Seller's
knowledge, threatened, in writing against or affecting the Property or any
portion thereof, or relating to or arising out of the ownership, management or
operation of the Property, in any court or before or by any federal, state, or
municipal department, commission, board, bureau or agency or other governmental
instrumentality.
5.1.8 Environmental Condition. Each of the following
representations contained in this Paragraph 5.1.8 is wholly qualified and
limited by (a) any matters disclosed in any materials made available or
delivered to Purchaser by Seller pursuant to Paragraph 3 above or otherwise, (b)
any matters disclosed in any environmental reports or studies obtained by
Purchaser, and (c) any other matters of which Purchaser has actual knowledge or
obtains actual knowledge. Subject to the foregoing, Seller represents:
5.1.8.1 With the exception of items described or referred
to in the Disclosure Schedule or in Purchaser's Due Diligence Letter, and except
(i) in amounts customarily found in retail uses and in the other uses for which
the Property is suited and used and (ii) in compliance with applicable law, to
Seller's knowledge, Seller has not released, generated or handled Hazardous
Materials on the Property, and Seller has no knowledge of any release,
generation or handling of Hazardous Materials on the Property in violation of
applicable law. For the purposes hereof, "Hazardous Material" means any
substance, chemical, waste or other material which is listed, defined or
otherwise identified as "hazardous" or "toxic" under any federal, state, local
or administrative agency ordinance or law, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act, 42 U. S.C.
ss.ss. 9601 et seq. and the Resource Conservation and Recovery Act, 42 U. S.C.
ss.ss. 6901 et seq., or any regulation, order, rule or requirement adopted
hereunder, as well as any formaldehyde, urea, polychlorinated biphenyls,
petroleum, petroleum product or by-product, crude oil, natural gas, natural gas
liquids, liquefied natural gas, or synthetic gas usable for fuel or mixture
thereof,
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radon, asbestos, and "source," "special nuclear" and "by-product" material as
defined in the Atomic Energy Act of 1985, 42 U. S.C. ss.ss. 3011 et seq.
5.1.8.2 Seller has not received any summons, citation,
directive, letter or other communication, written or oral, from the United
States Environmental Protection Agency or the State environmental protection
agency having jurisdiction over the Property.
5.1.9 Options. Except as disclosed in the Disclosure Statement
or the Other Sale Agreement, Seller has granted no options or rights of first
refusal to acquire any fee simple interest in the Property and no such options
are contained in the tenant leases delivered to Purchaser or in documents of
record disclosed in the title commitment.
5.1.10 Rent Roll. The information set forth on the rent roll
dated as of May 29, 1999 and attached hereto as SCHEDULE 5.1.10 is true and
accurate in all material respects and is complete with respect to the existence
of any and all occupancy arrangements and leases (including all amendments) (the
"Leases"). Seller has delivered to Purchaser true, complete and correct copies
of all the Leases (including all amendments). Seller certifies that attached
hereto as EXHIBIT B are the true, complete and correct copies of the Leases for
the following four tenants: (a) Macy's, (b) Bloomingdale's, (c) Gelson's Market
and (d) AMC.
5.1.11 Tenant Rights. There are no termination, extension,
cancellation, or expansion rights under any occupancy arrangements with respect
to the Property except as contained in the Leases. With the exception of items
described or referred to in the Disclosure Schedule or in Purchaser's Due
Diligence Letter, as of May 25, 1999, Seller has not received nor given any
written notice of, and Seller has no knowledge of, any defaults by any party
with respect to such Leases.
5.1.12 Leasing Commissions. Except as set forth in SCHEDULE
5.1.12, all leasing commissions due and payable as of the date hereof by Seller
have been paid or will have been paid on or before Closing, or Seller will
remain liable therefor.
5.1.13 Defects. With the exception of items listed in the
Disclosure Schedule or in Purchaser's Due Diligence Letter, Seller has not
received any written notice of any claims by tenants of the Property with
respect to any material defects in the Improvements.
5.1.14 No Employees. Purchaser has no obligation to hire, or to
cause any property management company engaged by Purchaser to hire, any person
presently employed in connection with the Property. Seller is not a party to any
collective bargaining agreement with respect to the Property.
5.1.15 Ownership of Personal Property. Seller owns the Personal
Property, free and clear of all liens and encumbrances except for the security
interests and other liens and interests created by the Lehman Loan and the
Lehman Loan Documents.
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5.1.16 Tenant Improvement Work. There is no tenant improvement
work scheduled to be performed by Seller, as landlord, six (6) months or more
after the Closing Date except as set forth in SCHEDULE 5.1.16 attached hereto
and made a part hereof.
5.1.17 Outstanding Leasing Commissions. There are no outstanding
leasing commissions in connection with existing Leases relating to renewal or
expansion options exercisable after the Closing Date.
5.1.18 Operating Statements. To Seller's knowledge and subject
to the items described or referred to in Purchaser's Due Diligence Letter, the
year-end cash and accrual operating statements for 1996, 1997 and 1998 delivered
pursuant to Paragraph 3.2.1 are true and correct in all material respects.
5.1.19 QPAM. Subject to Purchaser's representation set forth in
Section 5.2.2.3, Seller is acting as a Qualified Professional Asset Manager in
accordance with U. S. Department of Labor Prohibited Transaction Class Exemption
("PTCE") No. 84-14.
5.2 Representations and Warranties of Purchaser. Purchaser hereby
represents and warrants to Seller as follows:
5.2.1 Status of Purchaser and Closing Documents. This Agreement
has been, and all the documents to be delivered by Purchaser to Seller at
Closing will be duly authorized, executed, and are or will be legal, valid, and
binding obligations of Purchaser, are or will be enforceable in accordance with
their respective terms, and do not and will not at Closing violate any
provisions of any agreement to which Purchaser is subject.
5.2.2 ERISA. The following representations and warranties with
respect to the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and the Internal Revenue Code of 1986, as amended ("Code") are
required to ensure that the purchase of the Property by Purchaser from Seller
will not, in and of itself, violate either Section 406(a)(1)(A) through (F) of
ERISA or Section 4975(c)(1)(A) through (E) of the Code. Notwithstanding anything
contained herein to the contrary, the representations and warranties contained
in this Paragraph 5.2.2 are made as of the date of this Agreement, will be
deemed to be remade by Purchaser, and to be true in all material respects, as of
Closing, and will survive the Closing. Accordingly, Purchaser hereby represents
and warrants the following:
5.2.2.1 No asset of the Purchaser constitute "plan assets"
and at the sale of the Property, the Property will not be a "plan asset," within
the meaning of U. S. Department of Labor Regulations Section 2510.3-101, with
respect to any "employee benefit plan" (within the meaning of Section 3(3) of
ERISA) which is subject to ERISA.
5.2.2.2 There is no employee benefit plan (within the
meaning of Section 3(3) of and subject to ERISA) that is invested in Seller and
with respect to which Purchaser is, or, within the last twelve (12) months, was
an appointing authority (as described in Section I(a) of PTCE 84-14).
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5.3 Limitations. Each of the representations and warranties of
Seller contained in Section 5.1: (i) is made as of the date of this Agreement;
(ii) will be deemed to be remade by Seller, and to be true in all material
respects, as of Closing (except that the representations made in the first
sentence of Section 5.1.10 and in the second sentence of Section 5.1.11 will be
made only as of the dates stated therein), subject to (a) any Exception Matters
(as defined below), (b) any matters described or referred to in the Disclosure
Schedule or in Purchaser's Due Diligence Letter, and (c) other matters expressly
permitted in this Agreement or otherwise specifically approved in writing by
Purchaser; and (iii) will survive for a period of one (1) year after the Closing
Date, as defined in Paragraph 7.1. Any claim that Purchaser may have at any time
against Seller for a breach of any such representation or warranty, whether
known or unknown, which is not asserted by notice from Purchaser to Seller
within such one (1) year period will not be valid or effective, and Seller will
have no liability with respect thereto, nor will Seller have any liability to
Purchaser for a breach of any representation or warranty unless such valid
claims for such breaches aggregate to the amount of Two Hundred Fifty Thousand
Dollars ($250,000), in which event the maximum amount of such valid claims shall
be actionable up to the aggregate amount of Two Million Seven Hundred Eleven
Thousand Five Hundred Ninety Seven and 63/100 ($2,711,597.63). The foregoing
maximum aggregate liability of Seller hereunder of Two Million Seven Hundred
Eleven Thousand Five Hundred Ninety Seven and 63/100 ($2,711,597.63)shall apply
to liabilities for breaches of representations and warranties hereunder and any
claims made under the Deed, the Bill of Sale, the Lease Assignment, Contracts
Assignment, Intangibles Assignment (all as hereinafter defined in Paragraph
7.6), and any and all other documents executed pursuant to Paragraph 7.6 or
otherwise pursuant to this Agreement and to any liabilities to Purchaser arising
out of or in any way related to this Agreement or the Property, whether known or
unknown, but not to the proration obligations of Seller under Paragraphs 7.2 and
8.26. Seller shall retain assets at the time of Closing (excluding the Nine
Hundred Sixty Thousand Dollars ($960,000) referred to in Paragraph 8.26 herein
and the liabilities to which it relates and the Fifty Thousand Dollars ($50,000)
referred to in Paragraph 8.29 and the liabilities to which it relates)
sufficient to give it a net worth of Three Million Dollars ($3,000,000) at the
time of Closing and shall not distribute those assets to Seller's beneficiaries
for a period of one (1) year after Closing; provided however, if Purchaser makes
a claim in written notice delivered to Seller as a result of a breach of Seller
under its obligations under this Agreement during such one (1) year period, then
Seller shall retain a reasonable amount of said assets beyond such one (1) year
period to cover the claim alleged by Purchaser until such claim is resolved. The
continued accuracy in all material respects of the aforesaid representations and
warranties is a condition precedent to Purchaser's obligation to close. As used
herein, the term "Exception Matter" shall refer to a matter disclosed to
Purchaser in writing or discovered by Purchaser before the Closing that would
make any of said representations and warranties of Seller untrue or incorrect in
all material respects at the time the same is made or as of Closing, including,
without limitation, matters disclosed to Purchaser by Seller or by any other
person, provided that Seller had no actual knowledge of such inaccuracy, as such
actual knowledge is defined in Paragraph 5.1, when the representation or
warranty was made on the execution of this Agreement. If a representation or
warranty becomes inaccurate because of an Exception Matter or if such warranty
or representation becomes inaccurate on or prior to Closing other than by reason
of Seller's default hereunder, Purchaser may, upon being notified of such
occurrence on or prior to Closing either (a) terminate this
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Agreement and neither party shall have any further rights or obligations
hereunder except as provided in Paragraphs 8.8, 8.15 and 8.17 below, or (b)
waive such matter and proceed to Closing, by notice to Seller given within ten
(10) days after Purchaser is notified of such occurrence, but in no event later
than Closing, which made any representations or warranties inaccurate, in which
event Seller shall have no liability with respect thereto. If Purchaser fails to
give any notice on or before the Closing Date, Purchaser will be deemed to have
elected to waive such matter and to proceed to Closing.
5.4 Condition of Property. Except as expressly set forth in this
Agreement, Seller has not made and does not hereby make any representations,
warranties or other statements as to the condition of the Property and Purchaser
acknowledges that at Closing it is purchasing the Property on an "AS IS, WHERE
IS" basis and without relying on any representations and warranties of any kind
whatsoever, express or implied, from Seller, its agents or brokers as to any
matters concerning the Property. Except as expressly set forth in this
Agreement, no representations or warranties have been made or are made and no
responsibility has been or is assumed by Seller or by any partner, officer,
person, firm, agent or representative acting or purporting to act on behalf of
Seller as to the condition or repair of the Property or the value, expense of
operation, or income potential thereof or as to any other fact or condition
which has or might affect the Property or the condition, repair, value, expense
of operation or income potential of the Property or any portion thereof. The
parties agree that all understandings and agreements heretofore made between
them or their respective agents or representatives are merged in this Agreement
and the Schedules and Exhibits hereto annexed, which alone fully and completely
express their agreement, and that this Agreement has been entered into after
full investigation, or with the parties satisfied with the opportunity afforded
for investigation, neither party relying upon any statement or representation by
the other unless such statement or representation is specifically embodied in
this Agreement or the Exhibits annexed hereto. Purchaser acknowledges that
Seller has requested Purchaser to inspect fully the Property and investigate all
matters relevant thereto and, with respect to the condition of the Property, to
rely solely upon the results of Purchaser's own inspections or other information
obtained or otherwise available to Purchaser, rather than any information that
may have been provided by Seller to Purchaser.
6. Closing Conditions. Purchaser's obligation to proceed to Closing is
conditioned upon Seller's performance of the following obligations and
satisfaction of the following conditions, in addition to all of its other
obligations and conditions contained in this Agreement, provided that Purchaser
may in its sole discretion elect to waive failure by Seller to perform any
particular obligation and proceed to close hereunder without deduction or offset
to the Purchase Price, or terminate this Agreement by written notice to Seller.
The failure of any of the conditions set forth in Paragraphs 6.1, 6.2 and 6.7
shall not constitute a default by the Seller for purposes of this Agreement. In
addition, if the condition set forth in Paragraph 6.3 is not satisfied by reason
of a change in facts or circumstances for which Seller is not at fault or
because of an Exception Matter, such failure of the condition shall not
constitute a default by the Seller for purposes of this Agreement. Purchaser's
sole remedy for such failure of the condition set forth in Paragraph 6.3 is set
forth in Paragraph 5.3.
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6.1 The Title Insurer is prepared to issue a policy of title
insurance in the form of the Pro Forma.
6.2 Seller has delivered to Purchaser not later than the date of
Closing, estoppel letters substantially in the forms of SCHEDULE 6.2 ("Required
Estoppel Form") or in form otherwise reasonably acceptable to Purchaser or
required by the tenant's lease, prepared by Seller and addressed to Purchaser,
from all Major Tenants (defined as all tenants occupying at least 5,000 rentable
square feet of the Property) and from other tenants, who together with the Major
Tenants from whom Seller has received estoppel letters occupy at least 80% of
the rentable square feet of the Property under lease as of the date hereof. All
estoppel letters must be dated no earlier than forty-five (45) days prior to the
Closing. An estoppel letter form, even though not in the Required Estoppel Form,
will be deemed reasonably acceptable to Purchaser if said letter is in the form
required by the tenant lease or if it contains the following information:
confirming rent and all other charges, security deposit, square footage and
termination date; that no rent has been paid more than one month in advance;
that the lease is in full force and effect and that a true and correct copy of
the lease with all amendments and modifications is attached; that the tenant has
no right of termination or extension other than as shown on the rent roll; and
that all work to be performed by Landlord has been performed and that the tenant
has no knowledge of any Landlord default. Notwithstanding anything to the
contrary contained herein, Purchaser acknowledges and agrees that the condition
contained in this Section 6.2 has been satisfied.
6.2.1 If Seller is unable to obtain the requisite estoppel
letters as described above, Seller may (but is not required to) substitute for
any unsigned estoppel letter an estoppel letter in the form attached as SCHEDULE
6.2.1, which may be completed, executed and delivered by Seller and warranted
and represented by Seller, provided that Seller may not substitute or provide
its own estoppel for any Major Tenants. Seller's representations and warranties
in the certificates will survive the Closing, subject to the dollar limitations
of Paragraph 5.3, until the earlier to occur of: (a) four (4) years after the
date of Closing, (b) the termination of the lease with respect to which the
estoppel executed by Seller was delivered, or (c) the substitution for the
Seller estoppel of an estoppel letter executed by the respective Tenant
substantially in the form required under Section 6.2. In the event that,
following the Closing Date, Seller obtains an estoppel letter complying with the
requirements of Paragraph 6.2 with respect to any lease for which Seller
delivered a substituted estoppel letter, Seller will deliver such estoppel
letter to Purchaser and, upon such delivery, Seller will be automatically
released from any liability or obligation under the substituted estoppel letter
previously delivered by Seller with respect to such lease.
6.2.2 If Seller is unable to obtain and deliver sufficient
tenant estoppel certificates as required under Paragraph 6.2, or if the letters
received under Paragraph 6.2 or substituted estoppels permitted under Paragraph
6.2.1 contain information or omissions unacceptable to Purchaser in its
reasonable discretion, then Seller will not be in default by reason thereof, but
Purchaser may, by notice given to Seller before the Closing, elect (i) to waive
said conditions and proceed with the Closing or (ii) to terminate this Agreement
and neither party shall have any further rights or obligations hereunder except
as provided in Paragraphs 8.8, 8.15 and 8.17 below. Seller hereby acknowledges
that the Purchaser's determination of whether
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information or omissions contained in the estoppels are unacceptable will be
reasonable if such incorrect information or omissions relate to rent, square
footage, or other key provisions of the lease which have an economic effect.
6.3 All of Seller's representations and warranties made pursuant to
Paragraph 5.1 remain true and correct in all material respects.
6.4 Seller has delivered all of the documents and other items
required pursuant to Paragraph 7.6 and has performed all other covenants,
undertakings and obligations required by this Agreement, to be performed or
complied with by Seller at or prior to Closing.
6.5 Seller has not voluntarily filed a petition under federal
bankruptcy law nor has an involuntary petition alleging an act of bankruptcy
been filed against Seller under federal bankruptcy law.
6.6 Intentionally Deleted.
6.7 That there has been no material adverse change with respect to
the Property (including, but not limited to, the bankruptcy of any of AMC,
Bloomingdale's, Macy's or Gelson's Market or the closing of any of the
Department Stores) from the Effective Date through the date of the Closing.
7. Closing.
7.1 Closing of Sale. The purchase and sale contemplated herein shall
close (herein referred to as the "Closing") at the office of Chicago Title
Company, or unless otherwise mutually agreed, on June 10, 1999, except as
otherwise extended pursuant to Paragraph 4.1 of this Agreement (the "Closing
Date"), time being of the essence. Seller and Purchaser have agreed that this
Agreement shall be executed and delivered concurrently with the Closing and upon
execution and delivery, Purchaser acknowledges and agrees that Purchaser has
reviewed and approved all matters with respect to the Property and that all of
Purchaser's conditions to Closing will be satisfied. Seller will deliver to
Purchaser a Grant Deed ("Deed") in the form of SCHEDULE 7.6.1 and other closing
documents required hereunder and Purchaser will cause payment of the Purchase
Price, subject to the prorations, credits and adjustments set forth in the
Closing Statement delivered pursuant to Paragraph 7.8.1.
7.2 Prorations, Adjustments.
(a) The parties will prorate taxes and assessments, annual license
and permit fees for permits that are assigned, interest on security deposits of
tenants, payments made under service contracts or equipment leases, rental and
other income (including, but not limited to, all contributions by tenants for
expenses and taxes and assessments), and operating or other expenses (including,
but not limited to, all contributions made by Seller to the Century City
Shopping Center Merchants Association (the "Association")) of the Property as of
12:01 a.m. on the date of Closing (i.e., Purchaser is entitled to the income and
responsible for the expenses of the day of Closing and thereafter with Seller
being entitled to the income and being responsible
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for the expenses prior to Closing); provided, however, that in the event the
Purchaser has not authorized release of the Purchase Price to Seller prior to
Noon California time on the date of Closing, then such prorations shall be made
as of 12:01 a.m. on the date after Closing and Seller will be entitled to the
income and shall be responsible for the expenses of the day of Closing.
Notwithstanding the foregoing and anything else to the contrary contained
herein, the prorations and adjustments in Paragraphs 7.2(a), 7.2(b), 7.2.1,
7.2.2 and 7.2.3 and Purchaser's rights and obligations with respect thereto and
other rights under said paragraphs shall be based upon Purchaser having a
90.3865875% undivided interest with respect thereto and shall be adjusted
accordingly. The parties intend that Purchaser's rights and obligations with
respect thereto when added to the rights and obligations of CCM pursuant to the
Other Sale Agreement shall equal and not exceed a 100% undivided interest
therein. Without limiting the foregoing, Seller and Purchaser have agreed that
solely with respect to base rental income received for the month of June,
initial estimated prorations for the date of Closing will be made on the Closing
Date for all such rental income received as of 12:01 a.m. of June 2, 1999. On or
before June 15, 1999, each party will deliver to the other party such other
party's share of base rental income received through June 13, 1999 and on or
before July 2, 1999, each party will deliver to the other party such other
party's share of base rental income received through June 30, 1999. All income
will be prorated on the basis of income actually received by Seller, as opposed
to income which is due or for which Seller has rendered invoices. Real estate
taxes and assessments, shall be prorated on an accrual basis. Seller hereby
agrees to be liable for all escape assessments of property taxes applicable to
the period prior to Closing, if any, (the "Escape Assessments") made during the
period within two (2) years after the Closing Date, provided Seller retains the
right to obtain appropriate reimbursement from the tenants of the Property
therefore. Seller agrees that any claim made by Purchaser with respect to Escape
Assessments shall not be subject to the monetary limitations set forth in
Section 5.3 herein. Any expenses, other than real estate taxes and assessments,
of the Property for any period prior to Closing which are payable directly by
tenants of the Property, will reduce the credit to Purchaser for such items
(i.e., no credit to Purchaser for expenses, other than real estate taxes and
assessments, payable directly by tenants). To the extent that the taxes or
assessments to be prorated are not known with certainty, such proration will be
based upon the most recent tax bill or county estimate, to be re-prorated upon
issuance of final bills. Seller also agrees to give Purchaser a credit against
the Purchase Price for all security deposits held pursuant to the leases and all
interest due thereon and shall assign to Purchaser any other tenant deposits
held by Seller. Security deposits in the form of letters of credit or
certificates of deposit shall either be reissued in the name of Purchaser at
Closing, or Seller will assign its rights therein to Purchaser at Closing, and
will reasonably cooperate with Purchaser post Closing, at no expense to Seller,
to facilitate the transfer to Purchaser. Seller shall use reasonable efforts to
cause all security deposits in the form of letters of credit or certificates of
deposit to be amended or reissued in the name of Purchaser as soon as possible
after the Closing, and Purchaser shall cooperate with Seller in such efforts.
Until delivery to Purchaser of the reissued or amended letters of credit or
certificates of deposit, in the event of an occurrence of an event of default
pursuant to the lease for which a letter of credit or certificate of deposit was
issued and upon delivery by Purchaser to Seller of a written statement
certifying on behalf of Purchaser that an event of default has occurred and said
event has not been cured or waived, then in that event, Seller will take all
commercially reasonable steps required under the original letter of credit or
certificate of deposit to claim all such amounts as Seller is entitled to claim
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thereunder as a result of said event of default. Seller will thereafter deliver
to Purchaser any and all sums paid by the issuer of the original letter of
credit or certificate of deposit pursuant to the original letter of credit or
certificate of deposit as a result of Seller taking such steps. Upon delivery to
Purchaser of the reissued or amended letter of credit or certificate of deposit,
Seller's obligations with respect to such letter of credit or certificate of
deposit shall immediately terminate, and, from and after such delivery of the
reissued or amended letter of credit or certificate of deposit, Purchaser shall
indemnify Seller and hold harmless and defend Seller from and against any and
all claims, damages, liabilities, losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) arising out of the letter of credit or
certificate of deposit. Seller and Purchaser agree that Seller will receive a
payment at Closing from Purchaser and CCM jointly in the amount of One Hundred
Twenty Five Thousand and 00/100 Dollars ($125,000) for the turnover of expansion
space pursuant to the lease by and between Seller and Pottery Barn if Seller has
not been previously paid such amount by Pottery Barn prior to Closing. Purchaser
will pay all amounts subsequently received by it from tenants attributable to
Seller's period of ownership, but not collected as of the date of Closing, to
Seller within twenty (20) days after the end of the calendar month in which
Purchaser receives the same; provided that amounts received from tenants by
Purchaser will be first applied to Purchaser's cost of collection, then to
current charges, and the balance will be applied to payments due to Seller. To
the extent Seller has received amounts from tenants for 1999 operating expenses
and taxes which are known as of the date of Closing to be in excess of amounts
paid by Seller with respect to such expenses and taxes, Seller will credit such
excess to Purchaser at Closing, and Seller will provide adequate backup
information in connection with such credit.
(b) With respect to the matter described in B2 ("Credit Allocation
Agreement") of Purchaser's Due Diligence Letter, Purchaser shall, at Closing:
(i) assume all obligations with respect thereto for the period from and after
Closing, and Seller shall have no further obligations or liabilities with
respect to such matter for the period from and after Closing and (ii) except for
any sums owing to the tenant with respect to the period of Seller's ownership of
the Property, Purchaser shall indemnify Seller and hold harmless and defend
Seller from and against 90.3865875% of any and all claims, damages, liabilities,
losses, costs and expenses (including, without limitation, reasonable attorneys'
fees) arising out of such matter from and after the Closing Date. With respect
to claims of Stephen Levy against Century City Shopping Center (as set forth in
Case No.: SCO52340, Los Angeles County Superior Court), Seller shall indemnify
Purchaser and hold harmless and defend Purchaser from and against 90.3865875% of
any and all claims, damages, liabilities, losses, costs and expenses (including,
without limitation, reasonable attorneys' fees) arising out of such claims. With
respect to potential claims against Purchaser by Carlton Hair International, a
tenant of the Property alleging unfair competition by Kristy's, another tenant
of the Property, Seller shall indemnify Purchaser and hold harmless and defend
Purchaser from and against 90.3865875% of any and all claims, damages,
liabilities, losses, costs and expenses (including, without limitation
reasonable attorneys' fees) arising out of such claims to the extent arising out
of facts and circumstance alleged to have occurred during the period of Seller's
ownership of the Property. With respect to the matters described in B3 (entitled
"Gelson's Recapture of Valet Costs") of the Purchaser's Due Diligence Letter,
Purchaser shall assume all pre- and post-Closing obligations of the Seller, and
indemnify Seller and hold harmless and defend Seller from and against
90.3865875% of any and all claims,
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damages, liabilities, losses, costs and expenses (including, without
limitation, reasonable attorneys' fees) arising out of such matters, and Seller
shall have no further obligations or liabilities with respect to such matter
from and after Closing. With respect to the matters described in Paragraph A8
(entitled "Recovery Methodology") and A9 (entitled "Garage Expenses through
CAM") of the Purchaser's Due Diligence Letter, (i) Seller shall remain
responsible for obligations with respect thereto relating to the period of
Seller's ownership of the Property, and Seller shall indemnify Purchaser and
hold harmless and defend Purchaser from and against 90.3865875% of all claims,
damages, liabilities, losses, costs and expenses (including, without limitation,
reasonable attorneys' fees) arising out of such matters prior to the date of
Closing, and (ii) Purchaser shall assume all obligations with respect thereto
for the period from and after the Closing and Seller shall have no further
obligations or liabilities with respect to such matters from and after Closing,
and Purchaser shall indemnify Seller and hold harmless and defend Seller from
and against 90.3865875 of any and all claims, damages, liabilities, losses,
costs and expenses (including, without limitation, reasonable attorneys' fees)
arising out of such matters. The provisions of this Paragraphs 7.2(a) and (b)
shall survive Closing.
7.2.1 The following is the general principle under which Seller
and Purchaser shall allocate between each other the amounts collected from
tenants for taxes and assessments and other expenses incurred during 1999: such
amounts collected from tenants shall be allocated between Seller and Purchaser
in the ratio of the 1999 expenses which were borne by Seller and Purchaser,
respectively. For example, if twenty-five percent of the electricity expenses
for 1999 are incurred during Seller's period of ownership of the Property during
1999, then Seller shall be allocated twenty-five percent of the amounts
collected from tenants for such electricity expenses, regardless of the actual
time period that Seller owned the Property during 1999. Similarly, if a tenant
overpays for such 1999 expenses, Purchaser and Seller shall be responsible to
pay the refund to the tenant (and to make such payments to each other) in such
amounts as will leave Purchaser and Seller each in the position of having
received collections from the tenant equal to, and not exceeding, such expenses
borne by Purchaser or Seller, as the case may be. Seller and Purchaser hereby
agree to use their reasonable efforts to calculate prorations (including real
estate tax and assessments prorations) so as to permit settlement thereof on the
Closing Date, provided, however, that if any of such prorations cannot be
calculated accurately on the Closing Date, then the same will be calculated as
soon as reasonably practicable after the Closing Date, but in no event later
than the "Due Date" which is the later to occur of (i) thirty (30) days after
Seller receives its final audited cost certification for the year in which
Closing occurs, (ii) March 31 of the year following the year in which Closing
occurs, or (iii) as to the real estate tax and assessments, prorations, thirty
(30) days after the issuance of the final tax and assessment bills, and either
party owing the other party a sum of money based on such subsequent proration(s)
shall promptly pay said sum to the other party, together with interest thereon
at the rate of two percent (2%) per annum over the "prime rate" (as announced
from time to time in the Wall Street Journal) from the Due Date to the date of
payment if payment is not made within thirty (30) days after delivery of a bill
therefor together with reasonable back-up documentation. In the event tenants of
the Property are billed for their proportionate share of taxes and assessments
or expenses for amounts in excess of amounts previously paid by such tenants
which are attributable to the period of Seller's ownership of the Property,
Purchaser shall, to the extent such billings are actually collected, remit a
portion
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thereof to Seller in accordance with the principles of proration set forth
herein. To the extent such real estate taxes and assessments payable directly by
tenants and prorated at Closing are paid by such tenants, upon evidence of such
taxes and assessments paid directly by tenants, such taxes and assessments
prorated at Closing shall be remitted to Seller. The obligations of the parties
under this Paragraph 7.2.1 will survive Closing.
7.2.2 In the event that any tenant of the Property is obligated
to pay percentage rent based upon any period (whether monthly, quarterly,
annually, or otherwise) in which the date of Closing occurs, Purchaser shall,
within the later of (a) thirty (30) days after receipt of such payment with
respect to such period, or (b) March 31, 2000, remit to Seller that portion
which is equal to the number of days which elapsed between the commencement date
of the period in question for each such tenant, and the Closing Date, and the
total number of days in such period, less a pro rata share of any collections by
Seller for such period based on estimated payments by a tenant. If Seller has
received payments of percentage rent based on any period in which the date of
Closing occurs, in excess of Seller's share as calculated as set forth above in
this Paragraph 7.2.2, it shall promptly pay such excess to Purchaser. Seller
retains the right to collect any delinquent rents or other sums from tenants
after Closing, provided that Seller shall not have right to terminate any lease
after Closing or exercise any other remedy except sue for damages from such
tenants. The obligations of the parties under this Paragraph 7.2.2 will survive
Closing.
7.3 Proration of Service Charges. To the extent Seller, as opposed
to tenants, is responsible for payment of utility charges, Seller will attempt
to have utility meters read as of the Closing Date. To the extent that this is
not possible and to the extent that any other obligation for continuing services
is incurred, and statements are rendered for such services covering periods both
before and after the Closing Date, the amount will be estimated and prorated on
the Closing Date on a per-diem basis. Seller will forward any such statements
which it receives to Purchaser and Purchaser will pay the same. If the estimated
proration made on the Closing Date under this Paragraph 7.3 is incorrect based
on the actual statements received for utility charges, the Purchaser or the
Seller, as the case may be, shall make a corrective payment to the other on the
Due Date. Purchaser acknowledges that certain tenants have the right, under the
Leases, to audit the books and records of the Property with respect to taxes,
utilities, common area charges, and other related charges relating to the period
of Seller's ownership of the Property. Accordingly, as set forth in Section 8.25
herein, Purchaser agrees to allow Seller the right to audit the books and
records related to the period of Seller's ownership of the Property after the
Closing Date and further agrees to cooperate with Seller, to the fullest extent
possible, in order for Seller to settle any claims or discrepancies with respect
to such charges. The provisions of this Paragraph 7.3 shall survive the Closing.
7.3.1 Employees. As set forth in Paragraph 5.1.14, Purchaser has
no obligation to hire, or to cause any property management company engaged by
Purchaser to hire, any person presently employed in connection with the
Property. All employees of any affiliate of Seller performing services at the
Property shall be terminated by Seller on or prior to the Closing Date and
Seller shall fully pay such employees prior to the Closing Date all accrued
salaries, wages, bonuses and benefits (including vacation, personal days and
sick pay) pursuant
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to Seller's normal procedures with respect to such payments, and neither
Purchaser nor the management company engaged by Purchaser shall be obligated to
rehire such employees or to be responsible or obligated for any such salaries,
wages, bonuses and benefits. However, if the management company engaged by
Purchaser elects to hire any such employee, notifies Seller thereof prior to the
Closing Date, and subsequently terminates such employee within ninety (90) days
after the Closing, Seller shall, within thirty (30) days after Purchaser's
notice of such employee termination, pay to any such employee in accordance with
Seller's normal operating procedures, the severance pay with respect to base
salary which such employee would have received if the management company
employed by Purchaser did not hire the employee; provided, however, Seller shall
be under no obligation to (i) provide Consolidated Omnibus Budget
Reconsideration Act (COBRA) coverage for such employees, or (ii) make any other
payment to or provide any other benefits to any such employee.
7.4 Closing Costs. Purchaser shall pay (i) all of the Title
Insurer's escrow and/or closing fees (including any payment to the closing
officer of the Title Insurer as may be the local custom at the Closing), (ii)
the incremental costs of obtaining the ALTA title insurance policy, extended
coverage, (iii) the cost of any endorsements to the title policy required by
Purchaser, (iv) all costs of Purchaser's physical inspections of the Property
(environmental, engineering) and other due diligence activities, (v) the cost of
the survey and (vi) any recording charges or other charges in connection with
the Lehman Loan. Seller shall pay (i) all transfer taxes and recording fees
applicable to the sale and (ii) the costs of obtaining a CLTA title insurance
policy. Except as otherwise provided herein or in Paragraph 8.9, each party is
responsible for its own attorneys' and other professional fees. All other
closing costs shall be payable by the Purchaser. Seller and Purchaser shall
agree upon a closing statement reflecting the prorations and adjustments set
forth herein to be made at Closing. The obligation of Seller to pay the transfer
taxes set forth herein shall survive Closing.
7.5 Possession. Subject to the rights of tenants pursuant to leases
of the Property delivered to Purchaser and the other exceptions to title shown
on the Proforma Policy, Seller will deliver possession of a 90.3865875%
undivided interest in the Property and of any conveyed 90.3865875% undivided
interest in the personal property to the Purchaser on the date of Closing and
Seller will thereupon deliver to Purchaser, to the extent in Seller's
possession, the originals of all leases for tenants of the Property, all
correspondence with tenants, tenant/lease files, operating statements, plans and
specifications, supplies and advertising materials, booklets, keys, and other
items used in connection with operation of the Property.
7.6 Seller's Closing Documents. At the Closing, Seller will deliver
to Purchaser:
7.6.1 a Deed for the CCM Interest in the form of SCHEDULE 7.6.1;
7.6.2 an affidavit in customary form that Seller is not a
"foreign person" within the meaning of Section 1445(e) of the Internal Revenue
Code of 1986, in the form of SCHEDULE 7.6.2;
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7.6.3 such affidavits as are customarily required by Title
Insurer and reasonably approved by Seller in connection with issuance of the
owner's title insurance policy;
7.6.4 an assignment of leases in the form of SCHEDULE 7.6.4
("Lease Assignment");
7.6.5 an assignment of contracts and warranties in the form of
SCHEDULE 7.6.5 ("Contracts Assignment");
7.6.6 an assignment of intangibles in the form of SCHEDULE
7.6.6 ("Intangibles Assignment");
7.6.7 letters, in form to be supplied by Purchaser and
reasonably approved by Seller, to the tenants at the Property, instructing the
tenants to pay rent to Purchaser and to recognize Purchaser as landlord under
their leases; and letters, in form to be supplied by Purchaser and reasonably
approved by Seller, to such other persons and entities as may be determined by
Purchaser, giving notification of the sale to Purchaser including, without
limitation, notices to vendors under the service contracts;
7.6.8 a bill of sale conveying all personal property of Seller,
if any, located at the Property and used in connection with the maintenance or
operation thereof, in the form of SCHEDULE 7.6.8;
7.6.9 [Intentionally Deleted];
7.6.10 [Intentionally Deleted];
7.6.11 estoppel certificates, to the extent obtained pursuant to
Paragraph 6.2 herein;
7.6.12 evidence of Seller's authority to enter into and
consummate all of the transactions contemplated in this Agreement;
7.6.13 all keys in Seller's possession or control (including
keys held by any property manager or security service engaged by Seller) with
respect to the Property; and originals, to the extent in Seller's possession or
control (including those held by any property manager engaged by Seller), of
Leases and any services contracts assigned to and accepted by Purchaser;
7.6.14 all books and records with respect to the Property,
including, but not limited to, leasing files and records with respect to common
area maintenance charges and tax charges; provided, however, that Seller may
retain copies of such books and records for its own files;
7.6.15 all other documents, instruments or writings which may be
reasonably required to consummate the transactions contemplated herein; and
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7.6.16 California 590 Certificate.
7.7 Purchaser's Closing Documents. As part of the Closing, Purchaser
will deliver to Seller:
7.7.1 good federal funds in an amount equal to the Purchase
Price plus or minus prorations as provided herein and plus funds sufficient to
pay Purchaser's closing costs hereunder;
7.7.2 such affidavits, with respect to Purchaser's own
activities in connection with the Property, as are customarily required by Title
Insurer in connection with issuance of the owner's title insurance policy;
7.7.3 executed counterpart of the Lease Assignment;
7.7.4 executed counterpart of the Contracts Assignment;
7.7.5 executed counterpart of the Intangibles Assignment;
7.7.6 Natural Hazard Disclosure Statements in the forms
delivered by Seller's broker and Seller; and
7.7.7 all other documents, instruments or writings which may be
reasonably required to consummate the transactions contemplated herein.
7.8 Joint Deliveries. At the Closing, Seller and Purchaser will
execute and deliver to each other the following documents in proper form:
7.8.1 Closing Statement;
7.8.2 City, county and state transfer tax declarations or
similar instruments;
7.8.3 All other documents, instruments or writings which may be
reasonably required to consummate the transactions contemplated herein; and
7.8.4 The Release and Assumption Agreement.
8. Miscellaneous.
8.1 Modifications. This Agreement can be amended only in writing
signed by both of the parties.
8.2 Casualty and Condemnation. Seller agrees to keep its customary
replacement cost insurance covering the Property in effect until the Closing. If
between the Effective Date and the Closing the improvements on the Property are
destroyed or damaged to the extent that repairs cost in excess of One Million
and No/100 Dollars ($1,000,000) in the
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estimate of an architect or contractor selected by Seller and reasonably
acceptable to Purchaser, or if condemnation proceedings are commenced against
the Property, Purchaser may (i) terminate this Agreement and neither party shall
have any further rights or obligations hereunder except as provided in
Paragraphs 8.8, 8.15 and 8.17, or (ii) elect to accept a 90.3865875% undivided
interest in the Property in its then condition, in which event Seller will pay
or assign to Purchaser at Closing a 90.3865875% interest in all proceeds of
insurance (plus the applicable deductible) or condemnation awards payable to
Seller by reason of such damage or condemnation. In the event Purchaser makes
neither election by the earlier of (a) Closing or (b) ten (10) days after being
advised of such casualty or condemnation, Purchaser will be deemed to have
elected to accept a 90.3865875% undivided interest in the Property in its then
condition. In the event of any other damage to the Property, Seller may either
repair the damage or give Purchaser a reduction in the Purchase Price equal to
the cost of repairing such damage, as certified by an architect or contractor
selected by Seller and reasonably acceptable to Purchaser. In the event of any
damage where Purchaser does not have the right to terminate and Seller elects to
repair such damage, then Purchaser may elect to either: (x) have the Closing
Date delayed for the number of days required to repair the damage, which Seller
agrees to do in accordance with all Laws and in a good and workmanlike manner,
or (z) proceed to Closing without Seller performing such repairs in which event
Seller will assign to Purchaser at Closing a 90.3865875% interest in all
proceeds of insurance (and credit Purchaser for the amount of the applicable
deductible). At all times from the Effective Date through the Closing Date,
Seller shall, at its expense, maintain its existing casualty insurance and
rental income loss insurance with respect to the Property, with such changes
thereto that Seller is making on its blanket insurance coverage for other
properties.
8.3 Time of Essence. Time (including, without limitation, the date
specified as the Closing Date) is of the essence of this Agreement.
8.4 Notices. All notices required or permitted hereunder must be in
writing and shall be served on the parties at the following address with the
understanding by both parties that the telephone numbers stated herein are for
the purpose of convenience only and do not constitute a sufficient form of
providing notice:
If to Purchaser: Urban Shopping Centers, L. P.
900 North Michigan Avenue, Suite 1500
Chicago, Illinois 60611
Attn: Mr. Adam S. Metz and
Michael Hilborn, Esq.
Telephone: (312) 915-3568 (Metz)
(312) 915-3483 (Hilborn)
Facsimile: (312) 915-2001
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with a copy to: Pircher, Nichols & Meeks
1999 Avenue of the Stars, Suite 2600
Los Angeles, California 90067
Attn: Phil Nichols, Esq.
Telephone: (310) 201-8902
Facsimile: (310) 201-8922
If to Seller: RREEF USA FUND-II
c/o The RREEF Funds
875 North Michigan Avenue, Suite 4100
Chicago, Illinois 60611
Attn: Mr. Jerry Egan
Telephone: (312) 266-9300
Facsimile: (312) 266-9346
The RREEF Funds
101 California Street, 26th Floor
San Francisco, CA 94111
Attn: Mr. Mark Carlson
Telephone: (415) 781-3300
Facsimile: (415) 391-9015
The RREEF Funds
875 North Michigan Avenue, Suite 4100
Chicago, Illinois 60611
Attn: Laura James Bittman
Telephone: (312) 266-9300
Facsimile: (312) 266-9346
with a copy to: Orrick, Herrington & Sutcliffe LLP
400 Sansome Street
San Francisco, California 94111
Attn: Michael H. Liever, Esq.
Telephone: (415) 773-5808
Facsimile: (415) 773-4285
Any such notices may be sent by (a) a nationally recognized overnight courier,
in which case notice will be deemed delivered one business day after deposit
with such courier; (b) facsimile transmission, in which case notice will be
deemed delivered upon electronic verification that transmission to recipient was
completed, provided that notices sent by facsimile transmission on a day other
than a business day shall be deemed given on the first business day following
the date of transmission; or (c) personal delivery. The above addresses and
facsimile numbers may be changed by notice to the other party; provided that no
notice of a change of address or facsimile number will be effective until actual
receipt of such notice.
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8.5 Parties Bound. Neither party may assign this Agreement
without the prior written consent of the other, and any such prohibited
assignment shall be void. Subject to the foregoing, this Agreement is binding
upon and inures to the benefit of the respective legal representatives,
successors, assigns, heirs, and devisees of the parties. For the purposes of
this Paragraph, the term "Affiliate" means (a) an entity that directly or
indirectly controls, is controlled by or is under common control with the
Purchaser; or (b) an entity at least fifty percent (50%) of whose economic
interest is owned by Purchaser; and the term "control" means the power to direct
the management of such entity through voting rights, ownership or contractual
obligations. No such assignment permitted pursuant to this Paragraph 8.5 shall
excuse or relieve Purchaser from full performance of its obligations hereunder.
8.6 Governing Law. The performance and interpretation of this
Agreement is controlled by the law of the State in which the Property is
located.
8.7 Continuation Until Closing, Leasing.
8.7.1 Between the Effective Date and the Closing, Seller agrees
to keep and perform all of the obligations to be performed by landlord under any
Leases and Laws, provided that Seller shall have no obligation to make any
capital repairs or replacements to the Property. Seller agrees to operate the
Property in the same manner as before the making of this Agreement, the same as
though Seller were retaining the Property, provided that Seller shall have no
obligation to make any capital repairs or replacements to the Property. After
the Effective Date, Seller agrees not to convey the Property, nor to grant any
liens or easements with respect thereto.
8.7.2 After the Effective Date, Seller agrees not to permit or
consent to any new leases, amendments, extensions, renewals (other than pursuant
to tenant renewal options, if any), assignments of Leases or subleases without
first submitting them to Purchaser for Purchaser's approval, which approval
Purchaser agrees not to unreasonably withhold or delay. Purchaser will have five
(5) business days to notify Seller of its disapproval of such leases,
amendments, extensions, renewals, assignments or subleases, and in the event
that Purchaser does not so notify Seller, the leases, amendments, extensions,
renewals, assignments or subleases, as the case may be, will be deemed approved.
Notwithstanding the foregoing, Seller may continue its ongoing operations with
respect to seasonal cart and kiosk rentals and promotions without Purchaser's
approval.
8.8 Brokers. Except as provided in Paragraph 8.11 below, Seller
represents and warrants to Purchaser, and Purchaser represents and warrants to
Seller, that no broker or finder has been engaged by it, respectively, in
connection with the transaction contemplated by this Agreement. In the event of
a claim for broker's or finder's fees or commissions in connection with the
transaction contemplated by this Agreement, then Seller shall protect and hold
harmless Purchaser from the same if it shall be based upon any agreement alleged
to have been made by Seller, and Purchaser shall protect and hold harmless
Seller from the same if it shall be based upon any agreement alleged to have
been made by Purchaser. The
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indemnification obligations under this Paragraph 8.8 shall survive the Closing
or any earlier termination of this Agreement.
8.9 Attorneys' Fees. Notwithstanding any limitation on remedies or
amounts recoverable set forth elsewhere herein, if any action is brought by
either party against the other party, the party in whose favor final judgment is
entered will be entitled to recover court costs incurred and reasonable
attorneys' fees at trial, upon appeal and on any petition for review.
8.10 Remedies for Non-Performance. Purchaser's remedies regarding
breach of warranty or representation by Seller are governed by Paragraph 5.3
hereof. Notwithstanding anything to the contrary contained herein, if the
Closing does not occur on or before June 10, 1999, neither party shall have any
further rights or obligations hereunder and this Agreement shall be null and
void.
8.11 Brokers Commission. If the Closing occurs, Seller agrees to pay
the brokerage commission due CB Richard Ellis, pursuant to a separate agreement.
8.12 Survival of Representations and Warranties, Covenants. Seller's
representations and warranties contained herein and not specifically described
in Paragraph 5.1 and claims, damages or injury for the breach thereof will
survive the Closing for a period of one (1) year. Purchaser must give Seller
written notice of any claim it may have against Seller for any breach within one
(1) year after the date of Closing. Any claim which Purchaser may have which is
not asserted within the one (1) year period will not be valid or effective and
Seller will have no liability with respect thereto. All covenants hereunder
which, by their terms, are intended to survive Closing will survive Closing
hereunder. Otherwise, all other covenants hereunder shall not survive Closing.
8.13 Merger of Prior Agreements. This Agreement constitutes the
entire agreement between the parties with respect to the purchase and sale of a
90.3865875% undivided interest in the Property and supersedes all prior
agreements and understandings between the parties hereto relating to the subject
matter of this Agreement.
8.14 Invalidity of Provisions. In the event any provisions of this
Agreement are declared invalid or are unenforceable for any reason, such
provisions shall be deleted from such document and shall not invalidate any
other provision.
8.15 Entry and Indemnity. In connection with any entry by Purchaser,
or its agents, employees, consultants, investors, advisors, affiliates or
contractors (collectively "Purchaser's Disclosees") onto the Property, Purchaser
shall give Seller reasonable advance notice of such entry and shall conduct such
entry and any inspections in connection therewith so as to minimize, to the
greatest extent possible, interference with Seller's business and the business
of Seller's tenants and otherwise in a manner reasonably acceptable to Seller.
Without limiting the foregoing, prior to any entry to perform any on-site
testing, Purchaser shall give Seller notice thereof, including the identity of
the company or persons who will perform such testing and the proposed scope of
the testing. Seller shall approve or disapprove the scope and methodology of
such proposed testing within two (2) business days after receipt of such notice,
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such approval may be given or withheld in Seller's sole discretion. Seller's
failure to notify Purchaser of its approval or disapproval shall be deemed to be
Seller's disapproval thereof. If Purchaser or Purchaser's Disclosees take any
sample from the Property in connection with any such approved testing, upon
Seller's request, Purchaser shall provide to Seller a portion of such sample
being tested to allow Seller, if it so chooses, to perform its own testing.
Seller or its representative may be present to observe any testing or other
inspection performed on the Property. Upon Seller's request, Purchaser shall
promptly deliver to Seller copies of any reports relating to any testing or
other inspection of the Property performed by Purchaser or Purchaser's
Disclosees. Purchaser shall maintain, and shall assure that its contractors
maintain, public liability and property damage insurance in amounts (public
liability in a combined single limit of not less than $5,000,000) and in form
and substance adequate to insure against all liability of Purchaser and
Purchaser's Disclosees arising out of any entry or inspections of the Property
pursuant to the provisions hereof, and Purchaser shall provide Seller with
evidence of such insurance coverage upon request by Seller including evidence
that Seller is an additional insured on the public liability policy. Purchaser
shall protect, defend and hold Seller harmless from and against any costs,
damages, liabilities, losses, expenses, liens or claims (including, without
limitation, reasonable attorney's fees) arising out of or relating to any liens
or claims of liens or to damage to property or injury to persons on account of
any entry on the Property by Purchaser and Purchaser's Disclosees in the course
of performing the inspections, testings or inquiries provided for in this
Agreement, including without limitation damage to the Property or release of
hazardous substances or materials onto the Property, excluding, however, any
costs incurred by Seller in supervising Purchaser's testing. The foregoing
provisions contained in this Paragraph 8.15 are collectively herein referred to
as the "Protection Provision." The foregoing Protection Provision shall survive
beyond the Closing, or if the sale is not consummated, beyond the termination of
this Agreement.
8.16 Release. Except to the extent of the representations and
warranties of Seller expressly set forth in this Agreement and except for
Seller's obligations set forth in Paragraphs 7.2(b), 8.26 and 8.29, but
otherwise notwithstanding any other provision of this Agreement to the contrary,
Purchaser, on behalf of itself and its successors and assigns, waives its right
to recover from, and forever releases and discharges, Seller, Seller's
affiliates, Seller's investment manager, the partners, trustees, shareholders,
beneficiaries, members, directors, officers, employees and agents of each of
them, and their respective heirs, successors, personal representatives and
assigns (collectively, the "Seller Related Parties"), from any and all demands,
claims, legal or administrative proceedings, losses, liabilities, damages,
penalties, fines, liens, judgments, costs or expenses whatsoever (including,
without limitation, attorneys' fees and costs), whether direct or indirect,
known or unknown, foreseen or unforeseen, which may arise on account of or in
any way be connected with (i) those items described or referred to in
Purchaser's Due Diligence Letter, or (ii) the physical condition of the
Property, including, without limitation, the environmental condition thereof, or
any law or regulation applicable thereto, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended (42 U. S.C. Sections 9601 et seq.), the Resources Conservation and
Recovery Act of 1976 (42 U. S.C. Section 6901 et seq.), the Clean Water Act (33
U. S.C. Section 466 et seq.), the Safe Drinking Water Act (14 U. S.C. Sections
1401-1450), the Hazardous Materials Transportation Act (49 U. S.C. Section 1801
et seq.), the
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Toxic Substance Control Act (15 U. S.C. Sections 2601-2629), the California
Hazardous Waste Control Law (California Health and Safety Code Section 25100, et
seq.), the Porter-Cologne Water Quality Control Act (California Water Code
Section 13000, et seq.), and the Safe Drinking Water and Toxic Enforcement Act
of 1986 (California Health and Safety Code Section 25249.5, et seq.) and any
other applicable federal, state or local laws. Notwithstanding the foregoing,
Purchaser acknowledges and agrees that the release contained in this Paragraph
8.16 is binding on the Purchaser. However, Seller acknowledges that Purchaser
makes no representation or warranties as to whether this release is in fact
binding upon any third parties who subsequently purchase the Property from the
Purchaser. Notwithstanding anything contained herein to the contrary, if a third
party (including a governmental agency) asserts an obligation or liability
against Purchaser arising out of matters (x) described in clause (ii) of this
Paragraph and not described or referred to in Purchaser's Due Diligence Letter,
and (y) arising out of events occurring during Seller's period of ownership of
the Property, as to which such third party would also have a claim against
Seller, then Purchaser may seek to join Seller in any administrative or legal
proceeding relating to such third party claim.
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In connection with Section 8.16 above, Purchaser expressly waives the
benefits of Section 1542 of the California Civil Code, which provides as
follows: "A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICH THE CREDITOR DOES
NOT KNOW OR SUSPECT TO EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE RELEASE,
WHICH IF KNOWN BY HIM MUST HAVE MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
DEBTOR."
____________ Purchaser's Initials.
The provisions of this Paragraph 8.16 shall survive the Closing.
8.17 Confidential Information. Purchaser hereby acknowledges
and agrees that all information furnished by Seller to Purchaser or obtained by
Purchaser in the course of Purchaser's investigation of the Property, or in any
way arising from or relating to any and all studies or entries upon the Property
or in any way relating to Seller and the transactions contemplated by the
parties shall be treated as confidential by Purchaser, and Purchaser shall
instruct Purchaser's Disclosees that such information is confidential. Purchaser
understands, acknowledges and agrees not to disclose any of the contents or
information contained in any information provided by Seller, any reports or
studies made in connection with Purchaser's investigation of the Property or
results thereof, in any form whatsoever (including, but not limited to, any oral
information received by Purchaser during the course of Purchaser's inspection of
the Property), to any party other than Seller, Seller's agents or
representatives, Purchaser's Disclosees (inclusive for purposes of this
Paragraph of CCM, Purchaser's members, directors, officers, employees,
representatives, attorneys, consultants, advisors, partners or potential equity
investors or institutional lenders) Purchaser's assignees or the agents of such
assignees, without the prior express written consent of Seller, except as may be
required by law or court order. Without limiting the generality of the
foregoing, any press release or other public disclosure regarding this Agreement
or any transactions contemplated herein, and the wording of same, must be
approved in advance by both parties. The parties acknowledge that the
transaction described herein is of a confidential nature and shall not be
disclosed except to Purchaser's Disclosees, or as required by law. No party will
make any public disclosure of the specific terms of this Agreement, except as
required by law. In connection with the negotiation of this Agreement and the
preparation for the consummation of the transactions contemplated hereby, each
party acknowledges that it will have access to confidential information relating
to the other party. Each party shall treat such information as confidential,
preserve the confidentiality thereof, and not duplicate or use such information,
except to Purchaser's Disclosees. In the event of the termination of this
Agreement for any reason whatsoever, Purchaser will return to Seller, at
Seller's request, all documents, work papers, and other material (including all
copies thereof) obtained from Seller in connection with the transactions
contemplated hereby, and each party shall use its good faith efforts, including
instructing its employees and others who have had access to such information, to
keep confidential and not to use any such information. The provisions of this
Paragraph 8.17 will survive any termination of this Agreement, and will not be
subject to the limitation set forth in Paragraph 8.12. Notwithstanding the
foregoing, if the Closing occurs, Purchaser and Seller shall be under no further
obligations under this Paragraph 8.17.
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8.18 Calculation of Time Periods. Unless otherwise specified, in
computing any period of time described herein, the day of the act or event,
after which the designated period of time begins to run, is not to be included
and the last day of the period so computed is to be included, unless such last
day is a Saturday, Sunday or legal holiday, in which event the period shall run
until the end of the next day which is neither a Saturday, Sunday, or legal
holiday (i.e., a day on which federally chartered banks are not open for
business in Los Angeles, California). The last day of any period of time
described herein shall be deemed to end at 5 p.m. Los Angeles, California time
on the last day of such period of time. All days other than Saturdays, Sundays
and legal holidays in which national banks are closed in Los Angeles, California
are business days hereunder.
8.19 Facsimile Signatures. Executed facsimile copies of this
Agreement or any amendments hereto shall be binding upon the parties, and
facsimile signatures appearing hereon or on any amendments hereto shall be
deemed to be original signatures.
8.20 Further Assurances. In addition to the acts and deeds recited
herein and contemplated to be performed, executed and/or delivered by Seller to
Purchaser at Closing, Seller agrees to perform, execute and deliver, but without
any obligation to incur any additional liability or expense, on or after the
Closing any further deliveries and assurances as may be reasonably necessary to
consummate the transactions contemplated hereby or to further perfect the
conveyance, transfer and assignment of a 90.3865875% undivided interest in the
Property to Purchaser.
8.21 Effective Date. Delivery by a party of a copy of the
fully-executed Agreement by facsimile transmission, followed by a
manually-signed copy thereof delivered the next business day after transmission
of such copy, shall constitute acceptance by such party as of the date of the
facsimile transmission. The date on which a fully-executed copy of this
Agreement is delivered by both Seller and Purchaser is referred to herein as the
"Effective Date."
8.22 Seller's Exculpation Clause. The obligations of Seller
contained herein are intended to be binding only on the property of the trust
party to this Agreement of Purchase and Sale and shall not be personally binding
upon, nor shall any resort be had to the private properties of, any of the
trustees, beneficiaries, shareholders, partners, members, managers, directors,
officers, employees or agents of Seller or any affiliates thereof, or any
trustees, beneficiaries, investment managers, any general partners thereof, or
any employees or agents of the trustees or investment managers. All documents to
be executed by Seller shall also contain the foregoing exculpation.
8.23 Purchaser's Exculpation Clause. The obligations of Purchaser
contained herein are intended to be binding only on the property of Purchaser
and shall not be personally binding upon, nor shall any resort be had to the
private properties of, any of the trustees, beneficiaries, shareholders,
partners, members, managers, directors, officers, employees or agents of
Purchaser or any affiliate thereof, or any trustees, beneficiaries, investment
managers, or any employees or agents of the trustees or investment managers. All
documents to be executed by
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Purchaser shall also contain the foregoing exculpation. USC and CCM shall be
jointly and severally liable for the obligations of Purchaser hereunder.
8.24 Counterparts. This Agreement may be executed in any number
of counterparts and by the different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same
instrument.
8.25 Right of Access to Records. Purchaser and Seller acknowledge
and agree that each party may require access after the Closing Date to
personnel, employment, financial, engineering, tenant and other documents,
books, records or items with respect to the Property and under the other party's
control. Each of Purchaser and Seller agree that each party retain all such
records and shall have the ability from time to time during normal business
hours after giving advance notice of one (1) full business day to the other
party, to review any and all such items relating to the Property and its
operations in such party's possession during Seller's period of ownership. This
obligation of each party to provide the other party with access pursuant to this
Section shall survive for a period of eighty four (84) months from the Closing
Date.
8.26 Credit Allocation Agreement. (a) Seller and Purchaser
acknowledge and agree that Seller presently is liable for any and all amounts
due to Bloomingdale's or Macy's with respect to the period prior to the date of
Closing pursuant to that certain Credit Allocation Agreement by and among
Seller, Bloomingdale's, Inc. ("Bloomingdale's") and Macy's Primary Real Estate,
Inc. ("Macy's"), dated as of July 1996 (the "Credit Allocation Agreement"). In
connection with such amounts due to Bloomingdale's and Macy's pursuant to the
Credit Allocation Agreement, upon Closing, Seller shall open an interest bearing
escrow account (the "Escrow Account") with Chicago Title Insurance Company (the
"Title Company") and Seller shall place in such Escrow Account the amount of
Nine Hundred Sixty Thousand Dollars ($960,000) (the "Holdback") under
instructions that the Title Company shall hold and disburse the Holdback as
provided in this Paragraph 8.26. After Closing, Seller, along with Macy's or
Bloomingdale's, as applicable, shall attempt to reach final settlement for the
amounts owed to Macy's or Bloomingdale's pursuant to the Credit Allocation
Agreement for the period prior to Closing ending with the end of the lease year
immediately prior to the lease year in which the Closing occurs (the "Prior
Lease Year"). Seller may use the Holdback to pay to Bloomingdale's or Macy's any
such funds owed to either of them upon final settlement as mutually agreed upon
by Seller and Macy's or Bloomingdale's, as applicable, provided, that Seller has
also paid to Purchaser and CCM any "Rent Offset" (as hereinafter defined)
theretofore incurred by Purchaser or CCM. Seller shall provide Purchaser with
prior written notice of the final settlement, together with written evidence
executed by such tenants of such final settlement, at least five (5) business
days before the funds are to be disbursed by the Title Company. At the end of
the fifth (5th) business day after said notice and deliveries have been sent by
Seller to Purchaser or CCM, the Title Company shall disburse such funds to
Seller upon Seller's unilateral request therefor to make such payments. After
Seller has used such funds to make the payments due to Bloomingdale's and
Macy's, any sums remaining in the Escrow Account shall be disbursed to Seller
upon Seller's unilateral request therefor to the Title Company. If either Macy's
or Bloomingdale's withholds rent or other payments as a result of funds due to
either of them for
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the period prior to Closing ending with the end of the Prior Lease Year,
pursuant to the Credit Allocation Agreement ("Rent Offset") during the four (4)
month period after the Closing Date and Seller has failed to pay such amounts to
Purchaser pursuant to Paragraph 8.26(b) below, then after said four (4) month
period, Purchaser and CCM shall have the right to use the Holdback to cover such
Rent Offset by delivering to Seller written notices from either Bloomingdale's
or Macy's (or other written evidence reasonably satisfactory to Seller),
confirming that the Rent Offset is a result of funds owed to either tenant for
the period prior to Closing ending with the end of the Prior Lease Year, under
the Credit Allocation Agreement; the foregoing is not a limitation on the
obligations of the Seller under the provisions of Paragraph 8.26(b) below. At
the end of the fifth (5th) business day after said notice and deliveries have
been sent to Seller by Purchaser or CCM, then the funds being requested by
Purchaser or CCM for the Rent Offset shall be disbursed to Purchaser or CCM upon
Purchaser's or CCM's unilateral request to the Title Company. After such four
(4) month period until Seller has reached final settlement with such tenants and
has paid such sums due to such tenants, if either Bloomingdale's or Macy's uses
a Rent Offset, Purchaser shall have the right monthly to use the Holdback to
cover such Rent Offset by delivering to Seller written notices from either
Bloomingdale's or Macy's confirming that the Rent Offset is a result of funds
owed to either tenant for the period prior to Closing under the Credit
Allocation Agreement; the foregoing is not a limitation on the obligations of
the Seller under the provisions of Paragraph 8.26(b) below. At the end of the
fifth (5th) business day after said notice and deliveries have been sent to
Seller by Purchaser or CCM, then the funds being requested by Purchaser or CCM
for the Rent Offset shall be disbursed to Purchaser or CCM upon Purchaser's or
CCM's unilateral request to the Title Company. If any funds in the Holdback are
used for Rent Offset, then, to the extent that the funds so used exceed the
amount owing under the Credit Allocation Agreement for the period prior to the
Closing ending with the end of the Prior Lease Year, Seller reserves all rights
and remedies against Macy's or Bloomingdale's to recover such funds (provided
that Seller shall not have the right to terminate any lease or exercise any
other remedy except to sue to recover such funds). Seller's share of the amount
owing under the Credit Allocation Agreement for the period of time after the end
of the Prior Lease Year to the day before the Closing Date will be handled
between Seller and Purchaser through normal post-closing prorations as provided
in Paragraph 7.2(a). If Seller is unable to agree with Bloomingdale's and Macy's
as to the amounts owed to them under the Credit Allocation Agreement for the
period prior to Closing ending with end of the Prior Lease Year on or before the
date which is six (6) months after the Closing Date, then within a reasonable
period of time (but not later than 30 days) after Seller's receipt of written
request therefor from Purchaser, Seller shall bring a declaratory relief action
to determine such amount.
(b) Seller shall indemnify Purchaser and hold harmless and defend
Purchaser from and against 90.3865875% of all claims, damages, liabilities,
losses, costs and expenses (including, without limitation, reasonable attorneys'
fees) arising out of any sums owed by Seller to Macy's or Bloomingdale's
pursuant to the Credit Allocation Agreement with respect to the period prior to
the date of Closing ending with end of the Prior Lease Year.
(c) Purchaser may assign its rights under this Paragraph 8.26
(including but not limited to, the right of indemnification and the right to
receive the funds for reimbursement from the Rent Offset) to Lehman to the
extent of a 90.3865875% interest in the Property. The
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provisions of this Paragraph 8.26 shall survive Closing.
8.27 Purchaser Approval of Conditions. Notwithstanding anything to
the contrary contained herein, Purchaser acknowledges that Purchaser has
approved the Property and all matters related thereto, including, without
limitation, all of the documents, books, records, reports and other items
described or referred to in Section 3 hereof, and that all of the conditions to
Purchaser's obligations hereunder have been satisfied except the conditions
which will be satisfied at the Closing.
8.28 Gift Certificates / Advertising Agency Agreement. Purchaser
acknowledges that all gift certificates with respect to the Property are the
responsibility of the Association and that Seller currently has, and after
Closing shall have, no obligations or liabilities with respect to such gift
certificates. Seller has agreed to give Purchaser a credit in the amount of
Eighteen Thousand Nine Hundred Eighty-One and 18/100 Dollars ($18,981.18) at
Closing for a portion of unredeemed gift certificates. Purchaser shall indemnify
Seller and hold harmless and defend Seller from and against any and all claims,
damages, liabilities, losses, costs and expenses (including, without limitation,
reasonable attorneys' fees) to the extent of any payment obligations pursuant to
such gift certificates and Seller shall have no further obligations or
liabilities with respect to such matter. Purchaser further acknowledges receipt
of a copy of the written notice issued by the Association necessary to terminate
that certain letter agreement dated October 28, 1998 with advertising agency
Fattal and Collins, and that Seller currently has, and after Closing shall have,
no obligations or liabilities with respect to such agreement. The provisions of
this Paragraph 8.28 shall survive the Closing.
8.29 AMC Tank. Upon Closing, Seller shall open an interest bearing
account with the Title Company (the "AMC Account") and Seller shall place in the
AMC Account the amount of Fifty Thousand Dollars ($50,000) (the "AMC Holdback").
During the period of twelve (12) months following Closing, Seller, Purchaser and
USC shall jointly use reasonable best efforts to have AMC install and bear all
costs and expenses for a new underground storage tank in accordance with all
current applicable law. If after such twelve (12) month period, AMC has failed
to agree to bear the costs and responsibility for the installation of the new
underground storage tank (the "UST Installation"), Purchaser, to the extent of
its 90.3865875% interest in the Property, may use the AMC Holdback to cover all
reasonable out-of-pocket third-party costs of the UST Installation incurred by
Purchaser by delivering to the Title Company, copies of all invoices submitted
by Purchaser's contractor, subcontractors and materialmen marked "paid." Within
two (2) business days of receipt of any such demand together with the applicable
documents described herein, the Title Company shall notify the Seller in writing
of the same and forward to Seller copies of all Purchaser's deliveries. At the
end of the fifth (5th) business day after said notice and deliveries have been
sent to Seller, and provided that the Title Company has not been notified of any
objection to the disbursement by Seller, then the funds being held for the UST
Installation requested by Purchaser shall be disbursed to Purchaser.
Notwithstanding the foregoing, if the installation costs for UST Installation
(a) exceed the amount of the AMC Holdback, Seller shall not be liable for any
amounts in excess of such amount; or (b) is less than the amounts allocated for
such installation as set forth herein Seller shall be reimbursed the funds
remaining in the Escrow Account after Purchaser has been paid. Seller, however,
shall reserve
31
<PAGE> 32
all rights and remedies against AMC related to the UST Installation. The
provisions of this Section 8.29 shall survive Closing.
8.30 Concurrent Closings. As an accommodation to Purchaser, Seller
has agreed to enter into this Agreement and the Other Sale Agreement to
facilitate Purchaser purchasing the USC Interest and CCM purchasing the CCM
Interest concurrently in a single closing. Seller would not have entered into
this Agreement and the Other Sale Agreement without receiving assurances from
Purchaser and CCM that the sale of the USC Interest and the CCM Interest would
close concurrently. Consequently, Purchaser acknowledges and agrees that if for
any reason whatsoever, (i) either this Agreement or the Other Sale Agreement is
terminated, or (ii) the closing of sale of the USC Interest and the CCM Interest
will not take place concurrently pursuant to the terms of this Agreement and the
Other Sale Agreement, then Seller may, at its option, elect to terminate this
Agreement after Seller is informed either that this Agreement or the Other Sale
Agreement has been terminated or that the sale of the USC Interest and the CCM
Interest will not close concurrently.
[SIGNATURE PAGE FOLLOWS]
32
<PAGE> 33
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the dates set forth below.
SELLER: PURCHASER:
RREEF USA FUND-II, USC CENTURY, INC.,
a California group trust a Delaware corporation
By: RREEF AMERICA L.L.C.,
a Delaware limited liability company By: /s/ Michael Hilborn
Its: Investment Manager ---------------------------
Name: Michael Hilborn
-------------------------
Title: Senior Vice President
By: /s/ Mark D. Carlson ------------------------
--------------------------------
Name: Mark D. Carlson Dated: June 10, 1999
Title: Authorized Representative
Dated: June 10, 1999
33
<PAGE> 34
LIST OF SCHEDULES AND EXHIBITS
SCHEDULES
Schedule 1.1.3 Personal Property
Schedule 1.1.3A Excluded Personal Property
Schedule 3.2.5 Additional Due Diligence Materials
Schedule 4.1 Pro Forma Title Policy
Schedule 5.1 Disclosure Schedule
Schedule 5.1.5 List of Service Contracts and Equipment Leases
Schedule 5.1.10 Rent Roll
Schedule 5.1.12 Leasing Commissions Due and Payable
Schedule 5.1.16 Tenant Improvement Work
Schedule 6.2 Form of Tenant Estoppel Letter
Schedule 6.2.1 Seller Estoppel Letter
Schedule 7.6.1 Form of Grant Deed
Schedule 7.6.2 FIRPTA Certificate
Schedule 7.6.4 Assignment and Assumption of Leases
Schedule 7.6.5 Assignment and Assumption of Contracts and Warranties
Schedule 7.6.6 Assignment of Intangibles
Schedule 7.6.8 Bill of Sale
EXHIBITS
Exhibit A Legal Description of Property
Exhibit B Leases of Major Tenants
34
<PAGE> 1
EXHIBIT 10.3
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (this "Agreement") is entered into
as of the 10th day of June, 1999 by and among Urban Shopping Centers, Inc., a
Maryland corporation (the "Corporation"), Urban Shopping Centers, L.P., an
Illinois limited partnership (the "Operating Partnership"), and Kenwood Plaza
Limited Partnership, an Ohio limited partnership ("KPLP").
WHEREAS, pursuant to that certain Contribution Agreement, dated as of
the date hereof (the "Contribution "Agreement"), among the Operating
Partnership, KPLP and others, KPLP is being issued units of limited partnership
interest in the Operating Partnership ("Units"), which are exchangeable for
shares of common stock, par value $.01 per share (the "Common Shares"), of the
Corporation as provided in the partnership agreement of the Operating
Partnership; and
WHEREAS, in connection with the Contribution Agreement, the Corporation
has agreed to register for sale by KPLP the Common Shares issuable to KPLP upon
exchange of Units issued pursuant to the Contribution Agreement (the
"Registrable Shares"); and
WHEREAS, the parties hereto desire to enter into this Agreement to
evidence the foregoing agreement of the Corporation and the mutual covenants of
the parties relating thereto;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants, agreements and warranties contained herein and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:
SECTION 1. CERTAIN DEFINITIONS. In this Agreement, the following
terms shall have the following respective meanings:
"Affiliate" shall mean, when used with respect to any Person,
another Person which directly, or indirectly through one or more intermediaries,
controls or is controlled by or is under common control with the Person
specified.
"Commission" shall mean the Securities and Exchange Commission
or any other Federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission thereunder, all as
the same are in effect at the relevant time.
"Holders" shall mean (a) KPLP and (b) each Person holding
Registrable Shares as a result of a transfer or assignment to such Person of
Registrable Shares which is not prohibited by
<PAGE> 2
any agreement, law or regulation, other than pursuant to an effective
registration statement or Rule 144.
"Lock-up Period" shall mean a period of one year from the date
hereof.
"Person" shall mean an individual, corporation, partnership,
limited liability company, estate, trust, association, private foundation, joint
stock company or other entity.
"Register," "Registered" and "Registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with, and pursuant to Rule 415 under, the Securities Act providing
for the sale by the Holders of Registrable Shares in accordance with the method
or methods of distribution designated by the Holders, and the declaration or
ordering of the effectiveness of such registration statement by the Commission.
"Rule 144" shall mean Rule 144 under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission thereunder, all as the
same are in effect at the relevant time.
SECTION 2. REGISTRATION.
a. The Corporation shall, prior to 60 days after the
expiration of the Lock-up Period, prepare and file with the Commission a
registration statement for the purpose of effecting a Registration of the sale
of Registrable Shares by the Holders thereof; shall use its best efforts to
effect such Registration as soon as practicable but not later than 120 days
after the expiration of the Lock-up Period (including, without limitation, the
execution of an undertaking to file post-effective amendments and appropriate
qualification under applicable state securities and real estate syndication
laws); and shall keep such Registration continuously effective until the earlier
of (i) the third anniversary of the date hereof, (ii) the date on which all
Registrable Shares have been sold pursuant to such registration statement or
Rule 144 and (iii) the date on which all of the Registrable Shares may be sold
in accordance with Rule 144(k); provided, however, that the Corporation shall
not be obligated to take any action to effect any such Registration,
qualification or compliance pursuant to this Section 2 in any particular
jurisdiction in which the Corporation would be required to execute a general
consent to service of process in effecting such Registration, qualification or
compliance unless the Corporation is already subject to service in such
jurisdiction.
Notwithstanding the foregoing, the Corporation shall have the
right (the "Suspension Right") to defer such filing (or suspend sales under any
filed registration statement or defer the updating of any filed registration
statement and suspend sales thereunder) for two periods of not more than 90 days
each during any twelve-month period, if the Corporation furnishes to the Holders
a certificate signed by the President or any other executive officer or any
Director of the Corporation stating that, in the good faith judgment of the
Corporation, it would be detrimental to the
2
<PAGE> 3
Corporation and its shareholders to file such registration statement or
amendment thereto at such time (or to continue sales under a filed registration
statement) and therefore the Corporation has elected to defer the filing of such
registration statement (or to suspend sales under a filed registration
statement). If the Corporation exercises its Suspension Right pursuant to this
paragraph, the period in clause (i) of the preceding paragraph shall be extended
by the length of any such deferrals or suspensions.
b. The Corporation shall promptly notify the Holders of
the occurrence of the following events:
i. when any registration statement relating to
the Registrable Shares or post-effective
amendment thereto filed with the Commission
has become effective;
ii. the issuance by the Commission of any stop
order suspending the effectiveness of any
registration statement relating to the
Registrable Shares;
iii. the suspension of an effective registration
statement by the Corporation in accordance
with the last paragraph of Section 2(a);
iv. the Corporation's receipt of any
notification of the suspension of the
qualification of any Registrable Shares
covered by a registration statement for sale
in any jurisdiction; and
v. the existence of any event, fact or
circumstance which results in a registration
statement or prospectus relating to
Registrable Shares or any document
incorporated therein by reference containing
an untrue statement of a material fact or
omitting to state a material fact required
to be stated therein or necessary to make
the statements therein not misleading.
The Corporation shall use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of any such registration statement or
any state qualification as promptly as possible.
c. The Corporation shall provide to the Holders, at no cost to
the Holders, a copy of the registration statement and any amendment thereto used
to effect the Registration of the Registrable Shares, each prospectus contained
in such registration statement or post-effective amendment and any amendment or
supplement thereto and such other documents in such quantities as the requesting
Holders may reasonably request in order to facilitate the disposition of the
Registrable Shares covered by such registration statement. The Corporation
consents to the use of
3
<PAGE> 4
each such prospectus and any supplement thereto by the Holders in connection
with the offering and sale of the Registrable Shares covered by such
registration statement or any amendment thereto. The Corporation shall also file
a sufficient number of copies of the prospectus and any post-effective amendment
or supplement thereto with any securities exchange or market on which the Common
Shares are then listed so as to enable the Holders to have the benefits of the
prospectus delivery provisions of Rule 153 under the Securities Act.
d. The Corporation shall use its best efforts to cause the
Registrable Shares covered by a registration statement to be registered with or
approved by such state securities authorities as may be necessary to enable the
Holders to consummate the disposition of such shares pursuant to the plan of
distribution set forth in the registration statement.
e. Subject to the Corporation's Suspension Right, if any
event, fact or circumstance exists requiring an amendment to a registration
statement relating to the Registrable Shares or supplement to a prospectus
relating to the Registrable Shares, immediately upon becoming aware thereof the
Corporation shall notify the Holders and to prepare and furnish to the Holders
reasonably promptly a post-effective amendment to the registration statement or
supplement to the prospectus or any document incorporated therein by reference
or to file any other required document so that, as thereafter delivered to the
purchasers of the Registrable Shares, the prospectus will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading.
f. The Corporation shall use its reasonable best efforts
(including the payment of any listing fees) to obtain the listing of all
Registrable Shares covered by the registration statement on each securities
exchange on which the Common Shares are then listed.
g. The Corporation shall use its best efforts to comply with
the Securities Act and the Exchange Act and, as soon as reasonably practicable
following the end of any fiscal year during which a registration statement
effecting a Registration of the Registrable Shares was effective, to make
available to its security holders an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act.
h. The Corporation shall cooperate with the selling Holders to
facilitate the timely preparation and delivery of certificates representing
Registrable Shares to be sold pursuant to a Registration and not bearing any
Securities Act legend; and to enable certificates for such Registrable Shares to
be issued for such numbers of shares and registered in such names as the Holders
may reasonably request at least two business days prior to any sale of
Registrable Shares.
SECTION 3. EXPENSES OF REGISTRATION.
(a) Except as set forth in Section 3(b), all expenses (not to
exceed $25,000) incurred in connection with the Registration, qualification or
compliance pursuant to Section 2 shall
4
<PAGE> 5
be paid by the Holders of Registrable Shares pro rata based on the number of
Registrable Shares to be registered. Any such expenses in excess of $25,000
shall be paid by the Corporation. The expenses shall include, without
limitation, printing and photocopying expenses, fees and disbursements of
counsel for the Holders of Registrable Shares, all registration and filing fees
under Federal and state securities laws, and expenses of complying with the
securities or blue sky laws of any jurisdictions.
(b) The Corporation shall pay the expenses of its counsel to
prepare the registration statement and the prospectus used in connection
therewith and any amendment or supplement thereto, and necessary accounting
expenses, including any audits to which the Corporation shall agree and which
shall be necessary to comply with governmental requirements in connection with
such registration.
SECTION 4. INDEMNIFICATION.
a. The Corporation shall indemnify each Holder, each Holder=s
officers and directors, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (including reasonable legal fees and expenses),
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement or prospectus relating
to the Registrable Shares, or any amendment or supplement thereto, or based on
any omission (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Corporation shall not be liable in any such case to
the extent that any such claim, loss, damage or liability arises out of or is
based on any untrue statement or omission or alleged untrue statement or
omission made in reliance on and in conformity with information furnished in
writing to the Corporation by such Holder for inclusion therein.
b. Each Holder shall indemnify the Corporation, each of its
Directors and officers, each underwriter, if any, of the Corporation's
securities covered by such registration statement, and each person who controls
the Corporation or such underwriter within the meaning of Section 15 of the
Securities Act, each other Holder with Registrable Shares covered by such
registration statement, and each officer, director and controlling person of
each such other Holder, against all expenses, claims, losses, damages and
liabilities (including reasonable legal fees and expenses) arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement or prospectus, or any amendment or
supplement thereto, or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such registration statement or prospectus in
reliance on and in conformity with information furnished in writing to the
Corporation or such underwriter by such Holder for inclusion therein.
5
<PAGE> 6
c. Each party entitled to indemnification under this Section 4
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, but the
omission to so notify the Indemnifying Party shall not relieve it from any
liability which it may have to the Indemnified Party pursuant to the provisions
of this Section 4 except to the extent of the actual damages suffered by such
delay in notification. The Indemnifying Party shall assume the defense of such
action, including the employment of counsel to be chosen by the Indemnifying
Party to be reasonably satisfactory to the Indemnified Party, and payment of
expenses. The Indemnified Party shall have the right to employ its own counsel
in any such case, but the legal fees and expenses of such counsel shall be at
the expense of the Indemnified Party, unless the employment of such counsel was
authorized in writing by the Indemnifying Party in connection with the defense
of such action, or the Indemnifying Party did not employ counsel to take charge
of the defense of such action or the Indemnified Party reasonably concluded that
there may be defenses available to it or them which are different from or
additional to those available to the Indemnifying Party (in which case the
Indemnifying Party shall not have the right to direct the defense of such action
on behalf of the Indemnified Party), in any of which events such fees and
expenses shall be borne by the Indemnifying Party. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to the entry of any judgment or enter into any
settlement which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability in respect of such claim or litigation.
d. If the indemnification provided for in this Section 4 is
unavailable to a party which would have been an Indemnified Party under this
Section 4 in respect of any expenses, claims, losses, damages and liabilities
referred to herein, then each party which would have been an Indemnifying Party
hereunder shall, in lieu of indemnifying such Indemnified Party, contribute to
the amount paid or payable by such Indemnified Party as a result of such
expenses, claims, losses, damages and liabilities in such proportion as is
appropriate to reflect the relative fault of the Indemnifying Party on the one
hand and such Indemnified Party on the other in connection with the statement or
omission which resulted in such expenses, claims, losses, damages and
liabilities, as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Indemnifying Party or such Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Corporation and each holder of Registrable Shares
agree that it would not be just and equitable if contribution pursuant to this
Section were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 4(d).
e. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
6
<PAGE> 7
f. In no event shall any Holder be liable for any expenses,
claims, losses, damages or liabilities pursuant to this Section 4 in excess of
the net proceeds to such Holder of any Registrable Shares sold by such Holder.
SECTION 5. INFORMATION TO BE FURNISHED BY HOLDERS. Each Holder shall
furnish to the Corporation such information as the Corporation may reasonably
request and as is required in connection with the Registration and related
proceedings referred to in Section 2. If any Holder fails to provide the
Corporation with such information within two weeks of the Corporation=s request,
the Corporation's obligations under Section 2 with respect to such Holder or the
Registrable Shares owned by such Holder shall be suspended until such Holder
provides such information.
SECTION 6. RULE 144 SALES.
a. The Corporation covenants that it shall file the reports
required to be filed by the Corporation under the Exchange Act, so as to enable
any Holder to sell Registrable Shares pursuant to Rule 144.
b. In connection with any sale, transfer or other disposition
by any Holder of any Registrable Shares pursuant to Rule 144, the Corporation
shall cooperate with such Holder to facilitate the timely preparation and
delivery of certificates representing Registrable Shares to be sold and not
bearing any Securities Act legend, and enable certificates for such Registrable
Shares to be for such number of shares and registered in such names as the
selling Holder may reasonably request at least two business days prior to any
sale of Registrable Shares.
SECTION 7. MISCELLANEOUS.
a. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Maryland, without giving
effect to the conflict of law provisions thereof.
b. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof.
c. AMENDMENT. No amendment, supplement, modification, waiver
or termination of this Agreement shall be binding unless executed in writing by
the party sought to be bound thereby.
d. NOTICES, ETC. Unless otherwise provided herein, any notice
required or permitted under this Agreement shall be given in writing, and shall
be deemed effectively given (a) upon personal delivery to the party to be
notified, (b) on the fifth business day after deposit with the United States
Post Office, by registered or certified mail, postage prepaid, (c) on the next
business
7
<PAGE> 8
day after dispatch via nationally recognized overnight courier or (d) upon
confirmation of transmission by facsimile, all addressed to the party to be
notified. Notices shall be addressed as follows: (i) if to KPLP, at the address
or fax number set forth below its signature hereto, or at such other address or
fax number as KPLP furnished to the Corporation in writing or (ii) if to any
assignee or transferee of KPLP, at such address or fax number as such assignee
or transferee furnished to the Corporation in writing, or (iii) if to the
Corporation, at the address of its principal executive offices and addressed to
the attention of the President, or at such other address or fax number as the
Corporation furnished to KPLP or any assignee or transferee. Any notice or other
communication required to be given hereunder to a Holder in connection with a
registration may instead be given to the designated representative of such
Holder.
e. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
f. SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
g. TITLES AND SUBTITLES. The title and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
h. SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding on the respective successors and assigns of the parties hereto.
i. REMEDIES. The Corporation and KPLP acknowledge that there
would be no adequate remedy at law if any party fails to perform any of its
obligations hereunder, and accordingly agree that the Corporation and each
Holder, in addition to any other remedy to which it may be entitled at law or in
equity, shall be entitled to compel specific performance of the obligations of
another party under this Agreement in accordance with the terms and conditions
of this Agreement in any court of the United States or any State thereof having
jurisdiction.
j. ATTORNEYS' FEES. If the Corporation or any Holder brings an
action to enforce its rights under this Agreement, the prevailing party in the
action shall be entitled to recover its costs and expenses, including, without
limitation, reasonable attorneys' fees, incurred in connection with such action,
including any appeal of such action.
8
<PAGE> 9
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
URBAN SHOPPING CENTERS, INC.
By: /s/ Michael G. Hilborn
-----------------------------------
Name: Michael G. Hilborn
---------------------------------
Title: Senior Vice President
--------------------------------
URBAN SHOPPING CENTERS, L.P.
By: Urban Shopping Centers, Inc.
By: /s/ Michael G. Hilborn
-----------------------------------
Name: Michael G. Hilborn
---------------------------------
Title: Senior Vice President
--------------------------------
KENWOOD PLAZA LIMITED PARTNERSHIP
1000 Potomac Street, NW
Washington, DC 20007
Attention: Herbert S. Miller
Facsimile: (202) 338-6014
By: /s/ Herbert S. Miller
-----------------------------------
Name: Herbert S. Miller
---------------------------------
Title: General Partner
--------------------------------
9
<PAGE> 1
EXHIBIT 10.4
FIFTH AMENDMENT
TO
SECOND AMENDED AND RESTATED AGREEMENT OF LIMITED PARTNERSHIP
OF
URBAN SHOPPING CENTERS, L.P.
This Fifth Amendment (this "Amendment") to the Second Amended and
Restated Agreement of Limited Partnership, dated as of October 14, 1993 (as
amended through the date hereof, the "Partnership Agreement"), of Urban Shopping
Centers, L.P., an Illinois limited partnership (the "Partnership"), is made as
of the 27th day of May, 1999 by Urban Shopping Centers, Inc., a Maryland
corporation, as general partner (the "General Partner"), with the consent of the
Persons whose names are set forth on Exhibit A to the Partnership Agreement, as
Limited Partners (the "Limited Partners"), and the undersigned Limited Partner
that is being admitted to the Partnership on the date hereof.
WHEREAS, the Partnership is an Illinois limited partnership existing
under the Illinois Revised Uniform Limited Partnership Act (the "Act") pursuant
to the Partnership Agreement;
WHEREAS, the General Partner and the Limited Partners desire to amend
the Partnership Agreement to create a class of Series C Cumulative Redeemable
Preferred Units (the "Series C Preferred Units") and to set forth the rights,
powers, duties and preferences of the Series C Preferred Units;
NOW THEREFORE, pursuant to the authority contained in Section 14.1.3 of
the Partnership Agreement, the General Partner and the Limited Partners hereby
amend the Partnership Agreement as follows:
SECTION 1. DEFINED TERMS. Capitalized terms used in this Amendment and
not otherwise defined herein shall have the meaning assigned thereto in the
Partnership Agreement.
SECTION 2. AMENDMENTS. Effective at (and subject to the occurrence of)
the Effective Time (as defined below), the Partnership Agreement is hereby
amended as follows:
(a) Section 4.2 of the Partnership Agreement is amended by adding the
following new subsection 4.2.9 at the end thereof:
"4.2.9 Issuance of Series C Preferred Units.
4.2.9.1 Designation and Number. The General Partner shall have
the authority to cause the Partnership to issue up to 800,000 Series C
Cumulative Redeemable Preferred Units (the "Series C Preferred Units"), which
shall be Limited Partnership Interests and shall be a separate class thereof.
<PAGE> 2
4.2.9.2 Rank. The Series C Preferred Units shall, with respect
to distributions or rights upon voluntary or involuntary liquidation, winding-up
or dissolution of the Partnership, or both, rank senior to all other classes or
series of Partnership Interests now or hereafter authorized, issued or
outstanding, other than any class or series of Partnership Interests now or
hereafter authorized and issued and expressly designated in accordance with the
Partnership Agreement as ranking on a parity with or senior to the Series C
Preferred Units with respect to distributions or rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Partnership, or both.
The Series C Preferred Units rank on a parity, with respect to distributions and
rights upon voluntary or involuntary liquidation, winding-up or dissolution of
the Partnership, with the Series A Preferred Units and the Series B Preferred
Units of the Partnership. As used in this subsection 4.2.9, the following terms
are defined as follows:
"Parity Preferred Units" shall be used to refer to any class or series
of Partnership Interests now or hereafter authorized, issued or outstanding that
are expressly designated by the Partnership to rank on a parity with Series C
Preferred Units with respect to distributions or rights upon voluntary or
involuntary liquidation, winding-up or dissolution of the Partnership, or both,
as the context may require, whether or not the distribution rates, distribution
payment dates or redemption or liquidation prices per unit or conversion rights
or exchange rights shall be different from those of the Series C Preferred
Units, and shall include, without limitation, the Series A Preferred Units and
the Series B Preferred Units of the Partnership.
"Priority Return" shall mean, with respect to the Series C Preferred
Units, an amount equal to 9 1/8% per annum, determined on the basis of a 360-day
year of twelve 30-day months (or actual days for any month that is shorter than
a full monthly period), cumulative to the extent not distributed for any given
distribution period, of the Stated Value of the Series C Preferred Units,
commencing on the date of issuance of such Series C Preferred Units, and, with
respect to the other Parity Preferred Units, the amount set forth in the
respective amendment of this Agreement establishing the terms of such other
Parity Preferred Units.
"PTP" shall mean a "publicly traded partnership" within the meaning of
Section 7704 of the Code.
"Senior Preferred Units" shall be used to refer to any class or series
of Partnership Interests of the Partnership now or hereafter authorized, issued
or outstanding that are expressly designated by the Partnership to rank senior
to Series C Preferred Units with respect to distributions or rights upon
voluntary or involuntary liquidation, winding-up or dissolution of the
Partnership, or both, as the context may require, whether or not the
distribution rates, distribution payment dates or redemption or liquidation
prices per unit or conversion rights or exchange rights shall be different from
those of the Series C Preferred Units.
"Stated Value" shall mean, with respect to the Series C Preferred
Units, an amount equal to $50.00 per Series C Preferred Unit, the original
Capital Contribution per Series C Preferred Unit, and, with respect to the other
Parity Preferred Units, the amounts set forth in the respective amendment of
this Agreement establishing the terms of such other Parity Preferred Units.
- 2 -
<PAGE> 3
4.2.9.3 Distributions.
(a) Payment of Distributions. Subject to the rights of holders
of Senior Preferred Units and Parity Preferred Units, if any, holders of Series
C Preferred Units shall be entitled to receive, when, as and if authorized and
declared by the Partnership acting through the General Partner, out of Available
Cash, cumulative preferential cash distributions at the rate per annum of 9 1/8%
of the Stated Value of the Series C Preferred Units. Such distributions shall be
cumulative, shall accrue from the original date of issuance and all
distributions accrued to the scheduled date of payment shall be payable in cash
(i) quarterly in arrears, on or before March 15, June 15, September 15 and
December 15 of each year commencing on September 15, 1999 and, (ii) in the event
of (A) an exchange of Series C Preferred Units into Series C Cumulative
Redeemable Preferred Stock of the General Partner (the "Series C Preferred
Stock"), or (B) a redemption of Series C Preferred Units, on the exchange date
or redemption date, as applicable (each a "Preferred Unit Distribution Payment
Date"). The amount of the distribution payable for any period shall be computed
on the basis of a 360-day year of twelve 30-day months and the amount of the
distribution payable on the initial Preferred Unit Distribution Payment Date and
for any other period shorter or longer than a full quarterly period for which
distributions are computed shall be computed on the basis of the actual number
of days elapsed. If any date on which distributions are to be made on the Series
C Preferred Units is not a Business Day, then payment of the distribution to be
made on such date shall be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date. Distributions on the
Series C Preferred Units shall be made to the holders of record of the Series C
Preferred Units on the relevant record dates to be fixed by the Partnership
acting through the General Partner, which record dates shall be not more than 60
days prior to the relevant Preferred Unit Distribution Payment Date (each, a
"Preferred Unit Partnership Record Date").
(b) Limitation on Distributions. No distribution on the Series
C Preferred Units shall be declared or paid or set apart for payment by the
Partnership at such time as the terms and provisions of any agreement of the
Partnership relating to its indebtedness (other than any agreement with a holder
of Partnership Interests or an Affiliate thereof), prohibit such declaration,
payment or setting apart for payment or provide that such declaration, payment
or setting apart for payment would constitute a breach thereof or a default
thereunder, or if such declaration, payment or setting apart for payment shall
be restricted or prohibited by law. Nothing in this Section 4.2.9.3(b) shall be
deemed to modify or in any manner limit the provisions of Sections 4.2.9.3(c) or
4.2.9.3(d).
(c) Distributions Cumulative. Distributions on the Series C
Preferred Units shall accrue whether or not the terms and provisions of any
agreement of the Partnership (including any agreement relating to its
indebtedness) at any time prohibit the current payment of distributions, whether
or not (i) the Partnership has earnings, (ii) there are funds legally available
for the payment of such of such distributions and (iii) such distributions are
authorized. Accrued but unpaid distributions on the Series C Preferred Units
shall accumulate as of the
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<PAGE> 4
Preferred Unit Distribution Payment Date on which they first become payable.
Distributions on account of arrears for any past distribution periods may be
declared and paid at any time, without reference to a regular Preferred Unit
Distribution Payment Date, to holders of record of the Series C Preferred Units
on the record date fixed by the Partnership acting through the General Partner,
which date shall be not more than 45 days prior to the payment date. Accumulated
and unpaid distributions shall not bear interest.
(d) Priority as to Distributions. (i) So long as any Series C
Preferred Units are outstanding, no distribution of cash or other property shall
be authorized, declared, paid or set apart for payment on or with respect to any
class or series of Partnership Interests of the Partnership ranking junior to
the Series C Preferred Units with respect to distributions (collectively,
"Junior Units"), nor shall any cash or other property be set aside for or
applied to the purchase, redemption or other acquisition for consideration of
any Series C Preferred Units, any Parity Preferred Units with respect to
distributions or any Junior Units (other than for purposes of an employee
incentive or benefit plan of the Partnership or any of its Subsidiaries),
unless, in each case, all distributions accumulated on all Series C Preferred
Units and all classes and series of outstanding Parity Preferred Units with
respect to distributions have been paid in full or declared and set apart for
payment. The foregoing sentence shall not prohibit (A) distributions payable
solely in Junior Units or in options, warrants or rights to subscribe or
purchase Junior Units, (B) the conversion of Junior Units or Parity Preferred
Units into Junior Units, or (C) the redemption of Partnership Interests pursuant
to the Partnership Agreement to the extent required to preserve the General
Partner's status as a real estate investment trust.
(ii) So long as distributions have not been paid in
full (or a sum sufficient for such full payment is not irrevocably
deposited in trust for payment) upon the Series C Preferred Units, all
distributions authorized and declared on the Series C Preferred Units
and on all classes or series of outstanding Parity Preferred Units with
respect to distributions shall be authorized and declared so that the
amount of distributions authorized and declared per Series C Preferred
Unit and such other classes or series of Parity Preferred Units shall
in all cases bear to each other the same ratio that accrued
distributions per Series C Preferred Unit and such other classes or
series of Parity Preferred Units (which shall not include any
accumulation in respect of unpaid distributions for prior distribution
periods if such class or series of Parity Preferred Units does not have
cumulative distribution rights) bear to each other.
(e) No Further Rights. Holders of Series C Preferred Units
shall not be entitled to any distributions, whether payable in cash, units,
other property or otherwise, in excess of the full cumulative distributions
described herein.
4.2.9.4 Liquidation Preference.
(a) Payment of Liquidating Distributions. Subject to the
rights of holders of Senior Preferred Units and Parity Preferred Units with
respect to rights upon any voluntary or involuntary liquidation, dissolution or
winding-up of the Partnership, the holders of Series C Preferred Units shall be
entitled to receive out of the assets of the Partnership legally available for
distribution or the proceeds thereof, after payment or provision for debts and
other liabilities
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<PAGE> 5
of the Partnership, but before any payment or distributions of the assets shall
be made to holders of units that rank junior to the Series C Preferred Units
with respect to rights upon liquidation, dissolution or winding-up of the
Partnership, an amount equal to the sum of (i) a liquidation preference equal to
the Stated Value of such Series C Preferred Units, and (ii) any accumulated and
unpaid Priority Return thereon, whether or not declared, to the date of payment.
If, upon such voluntary or involuntary liquidation, dissolution or winding-up,
there are insufficient assets to permit full payment of liquidating
distributions to the holders of Series C Preferred Stock and any Parity
Preferred Units with respect to rights upon liquidation, dissolution or
winding-up of the Partnership, all payments of liquidating distributions on the
Series C Preferred Units and such Parity Preferred Units shall be made so that
the payments on the Series C Preferred Units and such Parity Preferred Units
shall in all cases bear to each other the same ratio that the respective rights
of the Series C Preferred Unit and such other Parity Preferred Units (which
shall not include any accumulation in respect of unpaid distributions for prior
distribution periods if such Parity Preferred Units do not have cumulative
distribution rights) upon liquidation, dissolution or winding-up of the
Partnership bear to each other.
(b) Notice. Written notice of any such voluntary or
involuntary liquidation, dissolution or winding-up of the Partnership, stating
the payment date or dates when, and the place or places where, the amounts
distributable in such circumstances shall be payable, shall be given by first
class mail, postage pre-paid, not less than 30 and not more than 60 days prior
to the payment date stated therein, to each record holder of the Series C
Preferred Units at the respective addresses of such holders as the same shall
appear on the transfer records of the Partnership.
(c) No Further Rights. After payment of the full amount of the
liquidating distributions to which they are entitled, the holders of Series C
Preferred Units shall have no right or claim to any of the remaining assets of
the Partnership.
(d) Consolidation, Merger or Certain Other Transactions. The
voluntary sale, conveyance, lease, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially all of the
property or assets of the General Partner to, or the consolidation or merger or
other business combination of the General Partner or the Partnership with or
into, any corporation, trust or other entity (or of any corporation, trust or
other entity with or into the Partnership) or a statutory share exchange of the
General Partner shall not be deemed to constitute a liquidation, dissolution or
winding-up of the Partnership.
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4.2.9.5 Optional Redemption.
(a) Right of Optional Redemption. The Series C Preferred Units
may not be redeemed prior to the fifth anniversary of the issuance date. On or
after such date, the Partnership shall have the right to redeem the Series C
Preferred Units, in whole or in part, at any time or from time to time, upon not
less than 30 nor more than 60 days' written notice, at a redemption price,
payable in cash, equal to the Capital Account balance of the holder of Series C
Preferred Units (the "Redemption Price"); provided, however, that no redemption
pursuant to this Section 4.2.9.5 will be permitted if the Redemption Price does
not equal or exceed the Stated Value per Series C Preferred Unit and all accrued
and unpaid distributions thereon to the redemption date. If fewer than all of
the outstanding Series C Preferred Units are to be redeemed, the Series C
Preferred Units to be redeemed shall be selected pro rata (as nearly as
practicable without creating fractional units).
Limitation on Redemption. The Partnership may not redeem fewer
than all of the outstanding Series C Preferred Units unless all accumulated and
unpaid distributions have been paid or declared and set apart for payment on all
Series C Preferred Units for all quarterly distribution periods terminating on
or prior to the date of redemption.
(c) Notice of Redemption. Notice of redemption will be mailed
by the Partnership, by certified mail, postage prepaid, not less than 30 nor
more than 60 days prior to the redemption date, addressed to the holders of
record of the Series C Preferred Units to be redeemed at their respective
addresses as they appear on the records of the Partnership. No failure to give
or defect in such notice shall affect the validity of the proceedings for the
redemption of any Series C Preferred Units except as to the holder to whom such
notice was defective or not given. In addition to any information required by
law, each such notice shall state: (i) the redemption date, (ii) the Redemption
Price, (iii) the aggregate number of Series C Preferred Units to be redeemed and
if fewer than all of the outstanding Series C Preferred Units are to be
redeemed, the number of Series C Preferred Units to be redeemed held by such
holder, which number shall equal such holder's pro rata share (based on the
percentage of the total number of outstanding Series C Preferred Units held by
such holder) of the aggregate number of Series C Preferred Units to be redeemed,
and (iv) the place or places where certificates representing such Series C
Preferred Units are to be surrendered for payment of the Redemption Price.
(d) Procedures for Redemption. If the Partnership gives a
notice of redemption in respect of Series C Preferred Units (which notice will
be irrevocable) then the Partnership's obligation to make available the
redemption price shall be deemed fulfilled if, on or before the redemption date,
the Partnership pays each holder of Series C Preferred Units in cash directly or
the Partnership deposits irrevocably in trust for the benefit of the Series C
Preferred Units being redeemed funds sufficient to pay the applicable Redemption
Price with irrevocable instructions and authority to pay such Redemption Price
to the holders of the Series C Preferred Units upon surrender of the Series C
Preferred Units by such holders at the place designated in the notice of
redemption. If the Series C Preferred Units are evidenced by a certificate and
if fewer than all Series C Preferred Units evidenced by any certificate are
being redeemed, a new certificate shall be issued upon surrender of the
certificate evidencing all Series C Preferred Units,
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<PAGE> 7
evidencing the unredeemed Series C Preferred Units without cost to the holder
thereof. On and after the redemption date, (i) distributions shall cease to
accumulate on the Series C Preferred Units or portions thereof called for
redemption, unless the Partnership defaults in the payment thereof, (ii) such
units shall no longer be deemed to be outstanding and (iii) all rights of the
holders thereof as holders of Series C Preferred Units shall cease (except the
right to receive the redemption price and any accumulated and unpaid
distributions), unless the Partnership defaults in the payment thereof. If any
date fixed for redemption of Series C Preferred Units is not a Business Day,
then payment of the Redemption Price payable on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day falls in
the next calendar year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date fixed for redemption. If payment of the Redemption Price is improperly
withheld or refused ad not paid by the Partnership, distributions on such Series
C Preferred Units will continue to accumulate from the original redemption date
to the date of payment, in which case the actual payment date will be considered
the date fixed for redemption for purposes of calculating the applicable
Redemption Price.
4.2.9.6 Voting Rights.
(a) General. Holders of the Series C Preferred Units shall not
have any voting rights or right to consent to any matter requiring the consent
or approval of the Limited Partners, except as otherwise expressly set forth in
the Partnership Agreement and except as set forth below.
(b) Certain Voting Rights. So long as any Series C Preferred
Units remain outstanding, the Partnership shall not, without the affirmative
vote of the holders of at least two-thirds of the Series C Preferred Units
outstanding at the time (i) authorize or create, or increase the authorized or
issued amount of, any class or series of Partnership Interests ranking senior to
the Series C Preferred Units with respect to distributions or rights upon
liquidation, dissolution or winding-up or reclassify any Partnership Interests
of the Partnership into any such Partnership Interests, or create, authorize or
issue any obligations or securities convertible into or evidencing the right to
purchase any such Partnership Interests; provided, however, that no such vote of
the holders of the Series C Preferred Units shall be required if, at or prior to
the time when such action is to take effect, the Partnership provides for the
redemption of all of the Series C Preferred Units then outstanding, (ii)
authorize or create, or increase the authorized or issued amount of, any Parity
Preferred Units or reclassify any Partnership Interest of the Partnership into
any such Parity Preferred Units or create, authorize or issue any obligations or
security convertible into or evidencing the right to purchase any such Parity
Preferred Units but only to the extent such Parity Preferred Units are issued to
JMB Realty Corporation or any of its Affiliates, other than the General Partner
to the extent the issuance of such interests was to allow the General Partner to
issue corresponding preferred stock to persons other than JMB Realty Corporation
or any of its Affiliates (provided that the Partnership may issue Parity
Preferred
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<PAGE> 8
Units corresponding to convertible preferred stock issued by the General Partner
in a public offering to JMB Realty Corporation and its Affiliates up to the
extent necessary for JMB Realty Corporation and its Affiliates to maintain their
percentage ownership of the General Partner's common stock on a fully diluted
basis) or (iii) amend, alter or repeal the provisions of the Partnership
Agreement, in a manner that would materially and adversely affect the powers,
rights, preferences, privileges or voting power of the Series C Preferred Units
or the holders thereof; provided, however, that any increase in the amount of
Partnership Interests or the creation or issuance of any other class or series
of Partnership Interests, in each case ranking either (A) junior to the Series C
Preferred Units with respect to distributions and rights upon liquidation,
dissolution or winding-up, or (B) on a parity with the Series C Preferred Units
with respect to distributions and rights upon liquidation, dissolution or
winding-up, shall not be deemed to materially and adversely affect such rights,
preferences, privileges or voting powers and no vote of the holders of Series C
Preferred Units shall be required in such case.
4.2.9.7 Transfer Restrictions.
(a) The Series C Preferred Units shall be subject to the
provisions of Article 11 of the Partnership Agreement.
No transfer of the Series C Preferred Units may be made without the
consent of the General Partner, which consent may be given or withheld in its
sole and absolute discretion.
4.2.9.8 Exchange Rights.
(a) Right to Exchange.
(i) Series C Preferred Units shall be exchangeable in
whole or in part at any time on or after the tenth anniversary of the
date hereof, at the option of the holders thereof, for authorized but
previously unissued shares of Series C Preferred Stock at an exchange
rate of one share of Series C Preferred Stock for one Series C
Preferred Unit, subject to adjustment as described below (the "Exchange
Price"), provided that the Series C Preferred Units will become
exchangeable at any time, in whole or in part, at the option of the
holders of Series C Preferred Units for Series C Preferred Stock if (A)
at any time full distributions shall be in arrears on any Series C
Preferred Unit with respect to six prior quarterly distribution
periods, whether or not consecutive, or (B) upon receipt by a holder or
holders of Series C Preferred Units of (I) notice from the General
Partner that the General Partner or a Subsidiary of the General Partner
has taken the position that the Partnership is, or upon the occurrence
of a defined event in the immediate future will be, a PTP and (II) an
opinion rendered by an outside nationally recognized independent
counsel familiar with such matters, addressed to a holder or holders of
Series C Preferred Units, that the Partnership is or likely is, or upon
the occurrence of a defined event in the immediate future will be or
likely will be, a PTP. In addition, the Series C Preferred Units may be
exchanged for Series C Preferred Stock, in whole or in part, at the
option of any holder prior to the tenth anniversary of the issuance
date and after the third anniversary thereof if such holder of a Series
C Preferred Units shall deliver to the General Partner either (A) a
private ruling letter addressed to
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<PAGE> 9
such holder of Series C Preferred Units or (B) an opinion of
independent counsel reasonably acceptable to the General Partner based
on the enactment of temporary or final Treasury Regulations or the
publication of a Revenue Ruling, in either case to the effect that an
exchange of the Series C Preferred Units at such earlier time would not
cause the Series C Preferred Units to be considered "stock and
securities" within the meaning of Section 351(e) of the Code, for
purposes of determining whether the holder of such Series C Preferred
Units is an "investment company" under Section 721(b) of the Code if an
exchange is permitted at such earlier date. Furthermore, the Series C
Preferred Units may be exchanged in whole or in part for Series C
Preferred Stock at any time after the date hereof, if both (A) the
holder thereof concludes based on results or projected results that
there exists (in the reasonable judgment of the holder) an imminent and
substantial risk that the holder's interest in the Partnership does or
will represent more than 19.5% of the total profits or capital
interests in the Partnership (determined in accordance with Treasury
Regulations Section 1.731-2(e)(4)) for a taxable year, and (B) the
holder delivers to the General Partner an opinion of nationally
recognized independent counsel to the effect that there is an imminent
and substantial risk that the holder's interest in the Partnership does
or will represent more than 19.5% of the total profits or capital
interests in the Partnership (determined in accordance with Treasury
Regulations Section 1.731-2(e)(4)) for a taxable year.
(ii) Notwithstanding anything to the contrary set
forth in Section 4.2.9.8(a)(i) or 4.2.9.8(a)(iii), if an Exchange
Notice (as defined below) has been delivered to the General Partner,
then the General Partner may, at its option, elect to redeem or cause
the Partnership to redeem all or a portion of the outstanding Series C
Preferred Units for cash in an amount equal to the Stated Value per
Series C Preferred Unit and all accrued and unpaid distributions
thereon to the date of redemption. The General Partner may exercise its
option to redeem the Series C Preferred Units for cash pursuant to this
Section 4.2.9.8(a)(ii) by giving each holder of record of Series C
Preferred Units notice of its election to redeem for cash, within five
Business Days after receipt of the Exchange Notice, by registered mail,
postage paid, at the address of each holder set forth in the records of
the Partnership stating (i) the redemption date, which shall be no
later than 60 days following the receipt of the Exchange Notice, (ii)
the redemption price, (iii) the place or places where the Series C
Preferred Units are to be surrendered for payment of the redemption
price, and (iv) the aggregate number of Series C Preferred Units to be
redeemed, and if fewer than all of the outstanding Series C Preferred
Units are to be redeemed, the number of Series C Preferred Units to be
redeemed held by such holder, which number shall equal such holder's
pro rata share (based on the percentage of the total number of
outstanding Series C Preferred Units held by such holder) of the
aggregate number of Series C Preferred Units being redeemed.
(iii) Upon the occurrence of an event giving rise to
exchange rights pursuant to Section 4.2.9.8(a)(i), in the event an
exchange of all or a portion of Series C Preferred Units pursuant to
Section 4.2.9.8(a)(i) would violate the provisions on ownership
limitation of the General Partner set forth in Article 7 of the
Charter, the General Partner shall give written notice thereof to each
holder of record of Series C Preferred Units, within five Business Days
following receipt of the Exchange Notice, by
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<PAGE> 10
registered mail, postage prepaid, at the address of each such holder
set forth in the records of the Partnership. In such event, each holder
of Series C Preferred Units shall be entitled to exchange, pursuant to
the provision of Section 4.2.9.8(b), a number of Series C Preferred
Units which would comply with the provisions on the ownership
limitation of the General Partner set forth in Article 7 of the Charter
and any Series C Preferred Units not so exchanged (the "Excess Units")
shall be redeemed by the Partnership for cash in an amount equal to the
Stated Value per Excess Unit and all accrued and unpaid distributions
thereon to the date of redemption. The written notice of the General
Partner shall state (A) the number of Excess Units held by such holder,
(B) the redemption price, (C) the redemption date, which date shall be
no later than 60 days following the receipt of the Exchange Notice, and
(D) the place or places where such Excess Units are to be surrendered
for payment of the Redemption Price. If an exchange would result in
Excess Units, as a condition to such exchange, each holder of such
Excess Units agrees to provide representations and covenants reasonably
requested by the General Partner relating to (I) the widely held nature
of the interests in such holder, sufficient to assure the General
Partner that the holder's ownership of stock of the General Partner
(without regard to the limits described above) will not cause any
individual to own in excess of 9.8% of the stock of the General
Partner; (II) to the extent such holder can so represent and covenant
without obtaining information from its owners, the holder's ownership
of tenants of the Partnership and its affiliates and (III) any other
information required by the Charter.
(iv) The redemption of Series C Preferred Units
described in Sections 4.2.9.8(a)(ii) and (iii) shall be subject to the
provisions of Section 4.2.9.5(c)(ii); provided, however, that for
purposes hereof the term "Redemption Price" in Section 4.2.9.5(c)(ii)
shall be read to mean the Stated Value per Series C Preferred Unit
being redeemed plus all accrued and unpaid distributions to the
redemption date.
(b) Procedure for Exchange.
(i) Any exchange shall be exercised pursuant to a
notice of exchange (the "Exchange Notice") delivered to the General
Partner by the holder who is exercising such exchange right, by
certified mail, postage prepaid. Upon request of the General Partner,
such holder delivering the Exchange Notice shall provide to the General
Partner in writing such information as the General Partner may
reasonably request to determine whether any portion of the exchange by
the delivering holder will result in the violation of the restrictions
of Article 7 of the Charter, including the Ownership Limit. The
exchange of Series C Preferred Units, or a specified portion thereof,
may be effected after the fifth Business Day following receipt by the
General Partner of the Exchange Notice and such requested information
by delivering certificates, if any, representing such Series C
Preferred Units to be exchanged together with, if applicable, written
notice of exchange and a proper assignment of such Series C Preferred
Units to the office of the General Partner maintained for such purpose.
Currently, such office is located at 900 N. Michigan Avenue, Suite
1500, Chicago, IL 60611. Each exchange will be deemed to have been
effected immediately prior to the close of business on the date on
which such Series C Preferred Units to be exchanged (together with all
required documentation) shall have
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<PAGE> 11
been surrendered and notice shall have been received by the General
Partner as aforesaid and the Exchange Price shall have been paid. Any
Series C Preferred Shares issued pursuant to this Section 4.2.9.8 shall
be delivered as shares which are duly authorized, validly issued, fully
paid and nonassessable, free of pledge, lien, encumbrance or
restriction other than those provided in the Charter, the Bylaws of the
General Partner, the Securities Act and relevant state securities or
blue sky laws.
(ii) In the event of an exchange of Series C
Preferred Units for shares of Series C Preferred Stock, an amount equal
to the accrued and unpaid distributions that are not paid pursuant to
Section 4.2.9.3(a) hereof, whether or not declared, to the date of
exchange on any Series C Preferred Units tendered for exchange shall
(A) accrue and be payable by the General Partner from and after the
date of exchange on the shares of the Series C Preferred Stock into
which such Series C Preferred Units are exchanged, and (B) continue to
accrue on such Series C Preferred Units, which shall remain outstanding
following such exchange, with the General Partner as the holder of such
Series C Preferred Units. Notwithstanding anything to the contrary set
forth herein, in no event shall a holder of a Series C Preferred Unit
that was validly exchanged into Series C Preferred Stock pursuant to
this section (other than the General Partner now holding such Series C
Preferred Unit), receive a distribution out of Available Cash of the
Partnership with respect to any Series C Preferred Units so exchanged.
(iii) Fractional shares of Series C Preferred Stock
shall not be issued upon exchange but, in lieu thereof, the General
Partner shall pay a cash adjustment based upon the fair market value of
the Series C Preferred Stock on the day prior to the exchange date as
determined in good faith by the Board of Directors of the General
Partner.
(c) Adjustment of Exchange.
(i) The Exchange Price is subject to adjustment upon
certain events, including, (A) subdivisions, combinations and
reclassification of the Series C Preferred Stock, and (B) distributions
to all holders of Series C Preferred Stock of evidences of indebtedness
of the General Partner or assets (including securities, but excluding
dividends and distributions paid in cash out of equity applicable to
Series C Preferred Stock).
(ii) In case the General Partner shall be a party to
any transaction (including, without limitation, a merger,
consolidation, statutory share exchange, tender offer for all or
substantially all of the General Partner's capital stock or sale of all
or substantially all of the General Partner's assets), in each case as
a result of which the Series C Preferred Stock will be converted into
the right to receive shares of capital stock, other securities or other
property (including cash or any combination thereof), each Series C
Preferred Unit will thereafter be exchangeable into the kind and amount
of shares of capital stock and other securities and property receivable
(including cash or any combination thereof) upon the consummation of
such transaction by a holder of that number of shares of Series C
Preferred Stock or fraction thereof into which one Series C Preferred
Unit was exchangeable immediately prior to such transaction. The
General
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<PAGE> 12
Partner may not become a party to any such transaction unless the terms
thereof are consistent with the foregoing.
4.2.9.9 No Conversion Rights. The holders of the Series C
Preferred Units shall not have any rights to convert such shares into shares of
any other class or series of stock or into any other securities of, or interest
in, the Partnership.
4.2.9.10 No Sinking Fund. No sinking fund shall be established
for the retirement or redemption of the Series C Preferred Units.
4.2.9.11 PTP Obligations. Notwithstanding anything contained
in the Partnership Agreement to the contrary, prior to January 1, 2000, no
transfer (or purported transfer) by a Limited Partner of his Partnership Units
(or any economic or other interest, right or attribute therein) may be made to
any Person, and any such transfer (or purported transfer) shall be void ab
initio, and no Person shall otherwise become a Partner if (a) legal counsel to
the Partnership renders an opinion letter to the effect that such transfer
creates a substantial risk that the Partnership would be treated as a PTP within
the meaning of Section 7704 of the Code or (b) such transfer would cause the
Partnership to have more than 100 Partners within the meaning of Treasury
Regulation Section 1.7704-1(h)(3) immediately after such transfer."
(c) Clause (i) of Section 5.1 is amended to read in its
entirety as follows and clause "(ii)" thereof is renumbered as clause "(iii)":
"(i) first, with respect to any class of Partnership Interests
issued pursuant to Section 4.2.1 or 4.2.2 that are entitled to a preference over
Partnership Units on the distribution of Available Cash, (and within and among
such classes, in order of the preferences designated therein and pro rata among
any such classes), (ii) second, accumulated but unpaid distributions with
respect to any class of Partnership Interests described in clause (i) which are
accrued with respect to prior periods (and within and among such classes, in
order of the preferences designated therein and pro rata among any such classes
and within any such class), and".
(d) Sections 6.1.1 and 6.1.2 are amended to read in their
entirety as follows:
"6.1.1 Net Income. After giving effect to the special allocations set
forth in Sections 6.2 and 6.4 below, Net Income shall be allocated (a) first, to
the General Partner to the extent that, on a cumulative basis, Net Losses
previously allocated to the General Partner pursuant to the last sentence of
Section 6.1.2 exceed Net Income previously allocated to the General Partner
pursuant to this clause (a) of Section 6.1.1; (b) second, to each Partner to the
extent of, and in an amount equal to, the cumulative amount of Net Losses, if
any, that have been previously allocated to such Partner pursuant to Section
6.1.2(c) and not previously offset pursuant to this Section 6.1.1(b); (c) third,
to the Parity Preferred Unit holders (and within and among such classes, in
order of the preferences designated therein and pro rata among any such classes)
until each such holder has been allocated a cumulative amount of Net Profits
pursuant to this Section 6.1.1(c) equal to the aggregate amount of Losses
previously allocated to such Parity Preferred Unit holder pursuant to Section
6.1.2(b) and not previously offset pursuant to this Section 6.1.1(c); (d)
fourth, to the
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<PAGE> 13
Parity Preferred Unit holders (and within and among such classes, in the order
of preferences designated therein and pro rata among any such classes) until
each such holder has been allocated a cumulative amount of Net Profits pursuant
to this Section 6.1.1(d) equal to the sum of (x) its applicable Priority Return
for the period, and (y) the aggregate amount of Priority Returns for prior
periods net of amounts previously allocated to such holder pursuant to this
Section 6.1.1(d) with respect to such prior periods and (e) thereafter, Net
Income shall be allocated to the Partners in accordance with their respective
Percentage Interests."
"6.1.2 Net Losses. After giving effect to the special allocations set
forth in Sections 6.2 and 6.4 below, Net Losses shall be allocated (a) first, to
the Partners in accordance with their respective Percentage Interests, to the
extent that Net Profits have been previously allocated to them pursuant to
Section 6.1.1(e); (b) second, to the Parity Preferred Unit holders to the extent
of and in an amount equal to the cumulative amount of Net Profits that have been
allocated to each such Parity Preferred Unit holder pursuant to Section 6.1.1(d)
(net of prior distributions to such holders) and not previously offset pursuant
to this Section 6.1.2(b); and (c) thereafter, to the Partners in accordance with
their respective Percentage Interests, provided that Net Losses shall not be
allocated to any Limited Partner pursuant to this Section 6.1.2 to the extent
that such allocation would cause such Limited Partner to have an Adjusted
Capital Account Deficit at the end of such taxable year (or increase any
existing Adjusted Capital Account Deficit). All Net Losses in excess of the
limitations set forth in this Section 6.1.2 shall be allocated to the General
Partner."
(e) Section 13.2.1 is amended to add the following new subsection
13.2.1.3 thereto and to renumber current subsection "13.2.1.3" as "13.2.1.4":
"13.2.1.3 Third, to the payment, with respect to the holders of Parity
Preferred Units, of a liquidation preference equal to (i) their Stated Value and
(ii) an amount equal to any accumulated but unpaid Priority Return thereon,
whether or not declared, to the date of payment; provided that, if, upon such
voluntary or involuntary liquidation, dissolution or winding-up, there are
insufficient assets to permit full payment of liquidating distributions to the
holders of any class or series of Parity Preferred Units as to rights upon
liquidation, dissolution or winding-up of the Partnership, all payments of
liquidating distributions on such Parity Preferred Units shall be made so that
the payments on such Parity Preferred Units shall in all cases bear to each
other the same ratio that the respective rights of such Parity Preferred Units
(which shall not include any accumulation in respect of unpaid distributions for
prior distribution periods if such Parity Preferred Units do not have cumulative
distribution rights) upon liquidation, dissolution or winding-up of the
Partnership bear to each other; and".
Section 13.3.1 is amended to add the following phrase to the first
sentence of such Section immediately after the phrase "positive Capital
Accounts" therein: "(after such Capital Accounts have been adjusted to take into
account payments accrued but unpaid as Priority Returns and return of the Stated
Value of any Priority Preferred Units)".
(i) Exhibit A to the Partnership Agreement is hereby
amended to include the Series C Preferred Units as Limited Partnership
Interests.
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<PAGE> 14
(ii) Nothing contained in Section 8.4 of the
Partnership Agreement shall be deemed to limit the issuance of, and the
provisions applicable to, the Series C Preferred Units.
(iii) The Partnership Agreement is amended to provide
that references in the Partnership Agreement to "this Agreement" or
"the Agreement" (including indirect references such as "hereunder,"
"hereby," "herein" and "hereof") shall be deemed to be references to
the Partnership Agreement as hereby amended.
SECTION 3. EFFECTIVENESS. The amendments set forth in Section 2 hereof
shall become effective at the time of the first issuance of Series C Preferred
Units (the "Effective Time").
SECTION 4. CONTINUING EFFECTIVENESS. As herein amended, the Partnership
Agreement shall remain in full force and effect and is hereby ratified and
confirmed in all respects.
SECTION 5. GOVERNING LAW. This Amendment shall be governed by the
internal laws of the State of Illinois.
[Signature page follows]
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<PAGE> 15
IN WITNESS WHEREOF, the undersigned, the General Partner of the
Partnership, has executed this Amendment to the Partnership Agreement as of the
date written above.
URBAN SHOPPING CENTERS, INC.,
By:
---------------------------------------
Name: Michael G. Hilborn
Title: Senior Vice President
IN WITNESS WHEREOF, the undersigned, which is hereby being admitted as
a Limited Partner of the Partnership, agrees to be bound by all of the terms and
conditions of the Partnership Agreement as of the date written above.
MEADOWBROOK EQUITY FUND II, LLC
By: Bessemer Trust Company, N.A.,
as its manager
By:
--------------------------------------
Name: Timothy J. Morris
Title: Senior Executive Vice President
<PAGE> 1
EXHIBIT 10.5
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT, dated as of May 27, 1999 (this
"Agreement"), is entered into by and between Urban Shopping Centers, Inc., a
Maryland corporation (the "Company"), and the unit holder whose name is set
forth on the signature page hereto ("Unit Holder").
RECITALS
WHEREAS, in connection with the offering of 800,000 Series C
Cumulative Convertible Redeemable Preferred Units (the "OP Units") of Urban
Shopping Centers, L.P., an Illinois limited partnership (the "Operating
Partnership"), Meadowbrook Equity Fund II, LLC, a New York limited liability
company (the "Contributor"), contributed to the Operating Partnership
$40,000,000 in return for the OP Units on terms and conditions set forth in the
Contribution Agreement dated the date of this Agreement (the "Contribution
Agreement"), between the Company and the Operating Partnership and the
Contributor;
WHEREAS, the Unit Holder will receive the OP Units in exchange for its
cash contribution to the Operating Partnership;
WHEREAS, pursuant to the Partnership Agreement (as defined below), the
OP Units owned by the Unit Holder will be redeemable for cash or exchangeable
for shares of the Company's Series C Cumulative Redeemable Preferred Stock (the
"Preferred Stock") upon the terms and subject to the conditions contained
therein; and
WHEREAS, in order to induce the Contributor to enter into the
Contribution Agreement, the Company has agreed to enter into this Agreement and
to provide registration rights set forth herein to the Contributor and any
subsequent holder or holders of the OP Units.
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained, and for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. DEFINITIONS.
In addition to the definitions set forth above, the following terms, as
used herein, shall have the following meanings:
<PAGE> 2
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under common control with such
Person. For the purposes of this definition, "control", when used with respect
to any Person, means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Amendment" means that certain Fifth Amendment to the Partnership
Agreement, dated as of May 27, 1999, between the Company and the Contributor.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in New York, New York are authorized by law to close.
"Charter" means the Company's charter, as the same may be amended,
modified, supplemented or restated from time to time.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"General Partner" means the Company or its successors as general
partner of the Operating Partnership.
"Holder" means the Unit Holder and any Person who is the record or
beneficial owner of any Registrable Security or any permitted assignee or
permitted transferee of such Registrable Security (including assignments or
transfers of Registrable Securities to such assignees or transferees as a result
of the foreclosure on any loans secured by such Registrable Securities) unless
such Registrable Security is acquired in a public distribution pursuant to a
registration statement under the Securities Act or in a public distribution
pursuant to transactions exempt from registration under the Securities Act, in
each such case where securities sold in such transaction may be resold by
Persons who are not Affiliates of the Company in a public distribution without
subsequent registration under the Securities Act.
"Incapacitated" shall have the meaning set forth in the Partnership
Agreement.
"Indemnified Party" shall have the meaning set forth in Section 2.6
hereof.
"Indemnifying Party" shall have the meaning set forth in Section 2.6
hereof.
"Inspectors" shall have the meaning set forth in Section 2.2(g)
hereof.
"NASD" shall have the meaning set forth in Section 2.2(d) hereof.
"Partnership Agreement" means the Second Amended and Restated
Agreement of Limited Partnership of the Operating Partnership dated as of
October 14, 1993, as amended
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through the date hereof, including by the Amendment, and as the same may be
further amended, modified or restated from time to time.
"Person" means an individual or a corporation, partnership, limited
liability company, association, trust or any other entity or organization,
including a government or political subdivision or an agency or instrumentality
thereof.
"Registrable Securities" means shares of Preferred Stock at any time
owned, either of record or beneficially, by any Holder and no matter how
acquired (including, without limitation, shares of Preferred Stock issued or
issuable upon exchange of OP Units or issued or issuable by way of stock
dividend or stock split, or in connection with a merger, consolidation,
combination of shares, recapitalization or other reorganization and any other
securities issued pursuant to any other distribution with respect to the
Preferred Stock or in exchange for or replacement of such Preferred Stock) until
(i) a registration statement covering such shares has been declared effective by
the Commission and such shares have been sold or transferred pursuant to such
effective registration statement, (ii) such shares are permitted to be
distributed by Persons who are not Affiliates of the Company in a transaction
that would constitute a sale thereof under the Securities Act pursuant to Rule
144(k) or are otherwise freely transferable to the public by Persons who are not
Affiliates of the Company without registration pursuant to Section 4(1) of the
Securities Act under circumstances in which all of the applicable conditions of
Rule 144 are satisfied or (iii) such shares have been otherwise transferred
pursuant to an applicable exemption under the Securities Act, new certificates
for such shares not bearing a legend restricting further transfer shall have
been delivered by the Company and such shares shall be freely transferable to
the public by Person who are not Affiliates of the Company in a transaction that
would constitute a sale thereof without registration under the Securities Act.
"Registration Expenses" shall have the meaning set forth in Section
2.3 hereof.
"Rule 144" means Rule 144 promulgated under the Securities Act, as
such rule may be amended from time to time, or any similar rule (other than Rule
144A) or regulation hereafter adopted by the Commission providing for offers and
sales of securities made in compliance therewith resulting in offers and sales
by subsequent holders of such securities that are not Affiliates of the Company
being free of the registration and prospectus delivery requirements of the
Securities Act.
"Rule 144A" means Rule 144A promulgated under the Securities Act, as
such rule may be amended from time to time, or any similar rule (other than Rule
144) or regulation hereafter adopted by the Commission.
"Rule 415" means Rule 415 promulgated under the Securities Act, as
such rule may be amended from time to time, or any similar rule or regulation
hereafter adopted by the Commission.
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<PAGE> 4
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Selling Holder" means a Holder who is selling Registrable Securities
pursuant to a registration statement under the Securities Act pursuant to this
Agreement.
"Shelf Registration" shall have the meaning set forth in Section
2.1(a) hereof.
"Shelf Registration Statement" means any registration statement
relating to a Shelf Registration that covers any shares of Preferred Stock of
the Company filed with the Commission under the Securities Act, including the
prospectus, amendments and supplements to such registration statement, including
post-effective amendments, all exhibits and all material incorporated by
reference or deemed to be incorporated by reference in such registration
statement.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal and not as part of such dealer's market-making
activities.
"Unit Holder(s)" shall have the meaning set forth in the introductory
paragraphs hereto and shall include any successors, transferees or assigns
permitted under the Amendment other than pursuant to an effective registration
statement or Rule 144.
ARTICLE II
REGISTRATION RIGHTS
SECTION 2.1. SHELF REGISTRATION.
(a) At any time (and from time to time) when OP Units
representing in the aggregate 25% or more of the OP Units issued in accordance
with the Contribution Agreement are exchanged for shares of Preferred Stock, the
Company shall prepare and file a Shelf Registration Statement with respect to
such Registrable Securities covering the resale thereof by the Holders on an
appropriate form for an offering to be made on a continuous or delayed basis
pursuant to Rule 415 (the "Shelf Registration") within 60 days after the date
such OP Units are exchanged for shares of Preferred Stock and shall use its
reasonable best efforts to cause such Shelf Registration Statement to be
declared effective as promptly as practicable. The Company shall use its
reasonable best efforts to keep such Shelf Registration Statement continuously
effective with respect to such Registrable Securities until the earlier of (A)
24 months following the date the Company files such Shelf Registration Statement
and (B) such time as all of the Registrable Securities that are the subject of
such Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement or Rule 144 or are no longer Registrable Securities.
(b) In lieu of the Shelf Registrations set forth in Section
2.1(a), the Company may, at the Company's option, to the extent permitted by
applicable law, rules and regulations, upon the first exchange of OP Units for
shares of Preferred Stock, prepare and file a Shelf Registration Statement with
respect to all Registrable Securities (i) issued in
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<PAGE> 5
exchange for OP Units and (ii) thereafter issuable in exchange for OP Units, and
covering the resale thereof by the Holders on an appropriate form for an
offering to be made on a continuous or delayed basis pursuant to Rule 415 within
60 days after the date OP Units are first exchanged for shares of Preferred
Stock and shall use its reasonable best efforts to cause such Shelf Registration
Statement to be declared effective as promptly as practicable. The Company shall
use its reasonable best efforts to keep such Shelf Registration Statement
continuously effective with respect to all such Registrable Securities
theretofore or thereafter issued until the earlier of (A) 36 months following
the date the Company files such Shelf Registration Statement and (B) such time
as all such Registrable Securities that are the subject of such Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or Rule 144 or are no longer Registrable Securities.
SECTION 2.2. REGISTRATION PROCEDURES; FILINGS; INFORMATION.
In connection with any Shelf Registration Statement under Section 2.1
hereof, the Company shall use its reasonable best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method or methods of disposition thereof as expeditiously as possible
(and in any event within the periods referred to in Section 2.1), and in
connection with any such request:
(a) As provided in Section 2.1 hereof, the Company shall
prepare and file with the Commission a registration statement on any form for
which the Company then qualifies or that counsel for the Company shall deem
appropriate and which form shall be available for the sale by the Selling
Holders of the Registrable Securities to be registered thereunder in accordance
with the intended method of distribution thereof and that shall comply as to
form in all material respects with the requirements of the applicable form and
include or incorporate by reference all financial statements required by the
Commission to be filed therewith, and use its reasonable best efforts to cause
such filed registration statement to become and remain effective for the period
specified elsewhere herein.
(b) The Company shall, if requested, prior to filing a
registration statement or prospectus or any amendment or supplement thereto,
notify each Holder of Registrable Securities that a Shelf Registration Statement
is being filed and advise such Holder that an offering of Registrable Securities
will be made in accordance with the method or methods elected (which method may
also include an underwritten offering by a nationally recognized Underwriter
selected by the Company and reasonably acceptable to the electing Holders) by
the Holders of a majority of the Registrable Securities, furnish to each Selling
Holder and each Underwriter, if any, of the Registrable Securities covered by
such registration statement or prospectus copies of such registration statement
or prospectus or any amendment or supplement thereto as proposed to be filed,
and thereafter furnish to such Selling Holder and Underwriter, if any, such
number of conformed copies of such registration statement, each amendment and
supplement thereto (in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in such registration
statement (including each preliminary prospectus) and such other documents as
such Selling Holder or Underwriter may reasonably request in order to facilitate
the disposition of the Registrable Securities owned by such Selling Holder.
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<PAGE> 6
(c) The Company shall notify each Holder of Registrable
Securities and counsel for such Holder promptly and, if requested by such Holder
or counsel, confirm such advice in writing promptly (i) when a registration
statement has become effective and when any post-effective amendments and
supplements thereto become effective, (ii) of any request by the Commission or
any state securities authority for post-effective amendments and supplements to
a registration statement that has become effective, (iii) of the issuance by the
Commission or any state securities authority of any stop order suspending the
effectiveness of a registration statement or the initiation of any proceedings
for that purpose, (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, and (v) of any determination by the Company that a post-effective
amendment to a registration statement would be appropriate.
(d) The Company shall use its reasonable best efforts to (i)
register or qualify the Registrable Securities under such other securities or
blue sky laws of such jurisdictions in the United States (where an exemption is
not available) as any Selling Holder or managing Underwriter or Underwriters, if
any, reasonably (in light of such Selling Holder's intended plan of
distribution) requests by the time the registration statement relating thereto
is declared effective by the Commission and (ii) cause such Registrable
Securities to be registered with or approved by such other governmental agencies
or authorities, including the National Association of Securities Dealers
("NASD"), as may be necessary by virtue of the business and operations of the
Company and do any and all other acts and things that may be reasonably
necessary or advisable to enable such Selling Holder to consummate the
disposition of the Registrable Securities owned by such Selling Holder; provided
that the Company will not be required to (A) qualify generally to do business in
any jurisdiction where it would not otherwise be required to qualify but for
this paragraph (d), (B) subject itself to taxation in any such jurisdiction or
(C) consent to general service of process in any such jurisdiction except as may
be required by the Securities Act.
(e) The Company shall promptly notify each Selling Holder or
Underwriter of such Registrable Securities, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act, of the
occurrence of an event requiring the preparation of a supplement or amendment to
such prospectus and shall file with the Commission such amendments and
supplements to such prospectus and deliver copies of the same to the Selling
Holders or Underwriters, as the case may be, so that as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they are made, not
misleading and promptly make available to each Selling Holder a reasonable
number of copies of any such supplement or amendment.
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<PAGE> 7
(f) The Company shall enter into customary agreements
(including an underwriting agreement or securities sale agreement, if any, in
customary form) containing such representations and warranties to the Holders of
such Registrable Securities and the Underwriters, if any, in form, substance and
scope as are customarily made by issuers to underwriters in similar underwritten
offerings as may be reasonably requested by them and take such other actions as
are reasonably required in order to expedite or facilitate the disposition of
such Registrable Securities.
(g) The Company shall make available for inspection by any
Selling Holder of such Registrable Securities, any Underwriter participating in
any disposition pursuant to such registration statement and any attorney,
accountant or other professional retained by any such Selling Holder or
Underwriter (collectively, the "Inspectors"), all financial and other records,
pertinent corporate documents and properties of the Company (collectively, the
"Records") as shall be reasonably necessary to enable them to exercise their due
diligence responsibility, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any Inspectors in
connection with such registration statement. Records that the Company
determines, in good faith, to be confidential and that it notifies the
Inspectors are confidential shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid or correct a misstatement
or omission in such registration statement or (ii) the release of such Records
is ordered pursuant to a subpoena or other order from a court of competent
jurisdiction. Each Selling Holder of such Registrable Securities agrees that
information obtained by it as a result of such inspections shall be deemed
confidential and shall not be used by it as the basis for any market
transactions in the securities of the Company or its Affiliates or otherwise
disclosed by it unless and until such is made generally available to the public.
Each Selling Holder of such Registrable Securities further agrees that it will,
upon learning that disclosure of such Records is sought in a court of competent
jurisdiction, give notice to the Company and allow the Company, at its expense,
to undertake appropriate action to prevent disclosure of the Records deemed
confidential.
(h) The Company shall furnish to each Selling Holder and to
each Underwriter, if any, a signed counterpart, addressed to such Selling Holder
or Underwriter, of (i) an opinion or opinions of counsel to the Company and (ii)
a comfort letter or comfort letters from the Company's independent public
accountants (to the extent permitted by the standards of the American Institute
of Certified Public Accountants), each in customary form and covering such
matters of the type customarily covered by opinions or comfort letters, as the
case may be, as the Holders of a majority of the Registrable Securities included
in such offering or the managing Underwriter or Underwriters therefor reasonably
request.
(i) The Company shall otherwise use its reasonable best
efforts to comply with all applicable rules and regulations of the Commission
and make available to its securityholders, as soon as reasonably practicable, an
earnings statement covering a period of twelve (12) months, beginning within
three (3) months after the effective date of the registration statement, which
earnings statement shall satisfy the provisions of Section 11(a) of
the Securities Act and Rule 158 of the Commission promulgated thereunder (or any
successor rule or regulation hereafter adopted by the Commission).
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<PAGE> 8
(j) The Company shall use its reasonable best efforts to cause
all such Registrable Securities to be listed on each securities exchange on
which similar securities issued by the Company are then listed.
(k) The Company shall use its reasonable best efforts to
obtain a CUSIP number for the Preferred Stock not later than the effective date
of the Shelf Registration Statement.
The Company may require, as a condition precedent to the obligations
of the Company under this Agreement, each Selling Holder of Registrable
Securities to promptly furnish in writing to the Company such information
regarding such Selling Holder, the Registrable Securities held by it and the
intended method of distribution of the Registrable Securities as the Company may
from time to time reasonably request and such other information as may be
legally required in connection with such registration.
Each Selling Holder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 2.2(e)
hereof, such Selling Holder will forthwith discontinue disposition of
Registrable Securities pursuant to the registration statement and prospectus
covering such Registrable Securities until such Selling Holder's receipt of the
copies of the supplemented or amended prospectus contemplated by Section 2.2(e)
hereof, and, if so directed by the Company, such Selling Holder will deliver to
the Company all copies, other than permanent file copies then in such Selling
Holder's possession, of the most recent prospectus covering such Registrable
Securities at the time of receipt of such notice. Each Selling Holder of
Registrable Securities agrees that it will immediately notify the Company at any
time when a prospectus relating to the registration of such Registrable
Securities is required to be delivered under the Securities Act, of the
happening of an event as a result of which information previously furnished by
such Selling Holder to the Company in writing for inclusion in such prospectus
contains an untrue statement of a material fact or omits to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading. If
the Company shall give such notice, the Company shall extend the period during
which such registration statement shall be maintained effective (including the
periods referred to in Section 2.1 hereof) by the number of days during the
period from and including the date of the giving of notice pursuant to Section
2.2(e) hereof to the date when the Company shall make available to the Selling
Holders of Registrable Securities covered by such registration statement a
prospectus supplemented or amended to conform with the requirements of Section
2.2(e) hereof.
SECTION 2.3. REGISTRATION EXPENSES.
In connection with any registration statement required to be filed
hereunder, the Company shall pay the following registration expenses incurred in
connection with the registration hereunder (the "Registration Expenses"): (i)
all Commission, stock exchange, NASD or other registration and filing fees, (ii)
fees and expenses of compliance with securities or blue sky laws and compliance
with the rules of the NASD, (iii) printing expenses
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of any Persons in preparing and distributing any Shelf Registration Statement,
any prospectus, any amendments or supplements thereto, certificates representing
the Preferred Stock and any other document relating to the performance of, and
compliance with, this Agreement, (iv) internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), (v) the fees and expenses incurred in connection
with the listing of the Registrable Securities on any securities exchange, (vi)
reasonable fees and disbursements of counsel for the Company and customary fees
and expenses for independent certified public accountants retained by the
Company (including the expenses of any special audits or comfort letters or
costs associated with compliance with such special audits or with the delivery
by independent certified public accountants of a comfort letter or comfort
letters requested pursuant to Section 2.2(h) hereof, and (vii) the reasonable
fees and expenses of any special experts retained by the Company in connection
with such registration. The Company shall have no obligation to pay any
underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities, or any out-of-pocket expenses of the Holders (or the
agents who manage their accounts) or any transfer taxes relating to the
registration or sale of the Registrable Securities.
SECTION 2.4. INDEMNIFICATION BY THE COMPANY.
The Company agrees to indemnify and hold harmless each Selling Holder
of Registrable Securities, its officers, directors and agents, and each Person,
if any, who controls such Selling Holder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act from and against any and all
losses, claims, damages, expenses and liabilities caused by any untrue statement
or alleged untrue statement of a material fact contained in any registration
statement or prospectus relating to the Registrable Securities (as amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) or any preliminary prospectus, or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except insofar as such losses,
claims, damages or liabilities are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
furnished in writing to the Company by such Selling Holder or on such Selling
Holder's behalf expressly for inclusion therein.
SECTION 2.5. INDEMNIFICATION BY HOLDERS OF REGISTRABLE SECURITIES.
Each Selling Holder agrees, severally but not jointly, to indemnify and
hold harmless the Company, its officers, directors and agents and each Person,
if any, who controls the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to such Selling Holder, but only with
respect to information relating to such Selling Holder furnished in writing by
such Selling Holder or on such Selling Holder's behalf expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus. In case any
action or proceeding shall be brought against the Company or its officers,
directors or agents or any such controlling
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Person, in respect of which indemnity may be sought against such Selling Holder,
such Selling Holder shall have the rights and duties given to the Company, and
the Company or its officers, directors or agents or such controlling Person
shall have the rights and duties given to such Selling Holder, by Section 2.4
hereof.
SECTION 2.6. CONDUCT OF INDEMNIFICATION PROCEEDINGS.
In case any proceeding (including any governmental investigation) shall
be instituted involving any Person in respect of which indemnity may be sought
pursuant to Sections 2.4 or 2.5 hereof, such Person (an "Indemnified Party")
shall, as promptly as reasonably practicable, notify the person against whom
such indemnity may be sought (an "Indemnifying Party") in writing and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party, and shall assume the
payment of all fees and expenses. In any such proceeding, any Indemnified Party
shall have the right to retain its own counsel, but the fees and expenses of
such counsel shall be at the expense of such Indemnified Party unless (i) the
Indemnifying Party and the Indemnified Party shall have mutually agreed to the
retention of such counsel or (ii) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnified Party and the
Indemnifying Party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them. It
is understood that the Indemnifying Party shall not, in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for all such Indemnified Parties, and
that all such fees and expenses shall be reimbursed as they are incurred. In the
case of any such separate firm for the Indemnified Parties, such firm shall be
designated in writing (i) in the case of Persons indemnified pursuant to Section
2.4 hereof, by the Selling Holders that owned a majority of the Registrable
Securities sold under the applicable registration statement and (ii) in the case
of Persons indemnified pursuant to Section 2.5 hereof, by the Company. The
Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent but, if settled with such consent, or if
there shall be a final judgment for the plaintiff, the Indemnifying Party shall
indemnify and hold harmless such Indemnified Parties from and against any loss
or liability (to the extent stated above) by reason of such settlement or
judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified
Party shall have requested an Indemnifying Party to reimburse the Indemnified
Party for fees and expenses of counsel as contemplated by the third sentence of
this paragraph, the Indemnifying Party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than thirty (30) Business Days after receipt by
such Indemnifying Party of the aforesaid request, (ii) such Indemnifying Party
shall not have responded to such request (or, if such Indemnifying Party shall
have responded, the same shall be contesting in good faith any portion of the
requested reimbursement) and (iii) such Indemnifying Party shall not have
reimbursed the Indemnified Party for the uncontested fees and expenses of
counsel in accordance with such request prior to the date of such settlement. No
Indemnifying Party shall, without the prior written consent of the Indemnified
Party, effect any settlement of any
10
<PAGE> 11
pending or threatened proceeding in which any Indemnified Party is or could have
been a party and indemnity could have been sought hereunder by such Indemnified
Party, unless such settlement includes an unconditional release of such
Indemnified Party from all liability arising out of such proceeding.
SECTION 2.7. CONTRIBUTION.
If the indemnification provided for in Section 2.4 or 2.5 hereof is
unavailable to an Indemnified Party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such losses,
claims, damages or liabilities as is appropriate to reflect the relative
benefits received by the parties, or if such allocation is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits but also the relative fault of the parties, as well as any
other relevant equitable considerations. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Indemnified Party or the
Indemnifying Party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Selling Holders agree that it would not be just
and equitable if contribution pursuant to this Section 2.7 were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the
losses, claims, damages or liabilities referred to in Sections 2.4 and 2.5
hereof shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. The Selling Holder's
obligations to contribute pursuant to this Section 2.7 are several in the
proportion that the proceeds of the offering received by such Selling Holder
bears to the total proceeds of the offering received by all the Selling Holders
and not joint.
SECTION 2.8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.
No Person may participate in any underwritten registration hereunder
unless such Person (a) agrees to sell such Person's securities on the basis
provided in any underwriting arrangements approved by the Persons entitled
hereunder to approve such arrangements and (b) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents in customary form and reasonably required under the terms of
such underwriting arrangements and these registration rights provided for in
this Article II.
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SECTION 2.9. RULE 144.
The Company shall use its reasonable best efforts to file any reports
required to be filed by it under the Securities Act and the Exchange Act and
shall use its reasonable best efforts to take such further action as any Holder
may reasonably request, all to the extent required from time to time to enable
Holders to sell Registrable Securities without registration under the Securities
Act within the limitation of the exemptions provided by (a) Rule 144 under the
Securities Act, as such Rule may be amended from time to time, or (b) any
similar rule or regulation hereafter adopted by the Commission. Upon the request
of any Holder, the Company will deliver to such Holder a written statement as to
whether it has complied with such requirements.
SECTION 2.10. HOLDBACK AGREEMENT.
(a) If the Board of Directors of the Company determines in its
good faith judgment that the filing of the Shelf Registration Statement under
Section 2.1 hereof or the use of any related prospectus would require the
disclosure of non-public material information that the Company has a bona fide
business purpose for preserving as confidential or the disclosure of which would
impede the Company's ability to consummate a material transaction, and that the
Company is not otherwise required by applicable securities laws or regulations
to disclose, upon written notice of such determination by the Board of Directors
of the Company, the rights of the Holders to offer, sell or distribute any
Registrable Securities pursuant to the Shelf Registration Statement or to
require the Company to take action with respect to the registration or sale of
any Registrable Securities pursuant to the Shelf Registration Statement shall be
suspended until the earlier of (i) the date upon which the Company notifies the
Holders in writing that suspension of such rights for the grounds set forth in
this Section 2.10(a) is no longer necessary and (ii) 60 days; provided however,
the aggregate number of days in any consecutive twelve (12) month period during
which such suspension or suspensions shall continue shall not exceed 120 days.
The Company agrees to give such notice as promptly as practicable following the
date that such suspension of rights is no longer necessary.
(b) The Company shall extend the period during which a
registration statement shall be maintained effective (including the periods
referred to in Section 2.1 hereof) by the number of days of suspension pursuant
to Section 2.10(a).
ARTICLE III
MISCELLANEOUS
SECTION 3.1. REMEDIES.
In addition to being entitled to exercise all rights provided herein
and granted by law, including recovery of damages, the Holders shall be entitled
to specific performance of the rights under this Agreement. The Company agrees
that monetary damages would not be adequate compensation for any loss incurred
by reason of a breach by it of the provisions of this Agreement and hereby
agrees to waive the defense in any action for specific performance that a remedy
at law would be adequate.
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<PAGE> 13
SECTION 3.2. AMENDMENTS AND WAIVERS.
The provisions of this Agreement, including the provisions of this
sentence, may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given without the prior
written consent of the Company and the Holders or any such Holder's
representative if any such Holder is Incapacitated. No failure or delay by any
party to insist upon the strict performance of any covenant, duty, agreement or
condition of this Agreement or to exercise any right or remedy consequent upon
any breach thereof shall constitute a waiver of any such breach or any other
covenant, duty, agreement or condition.
SECTION 3.3. NOTICE. All notices and other communications in
connection with this Agreement shall be made in writing by hand delivery,
registered first-class mail, telex, telecopier or air courier guaranteeing
overnight delivery. All notices and other communications required or permitted
to be given hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered, delivered by nationally recognized overnight
courier with proof of delivery thereof, sent by U.S. registered or certified
mail (postage prepaid, return receipt requested) addressed as hereinafter
provided or via telephonic facsimile transmission with proof of delivery in the
form of a telecopier's transmission confirmation report. Notice shall be sent
and deemed given (a) if personally delivered or via nationally recognized
overnight courier, then upon receipt by the receiving party, or (b) if mailed,
then three (3) days after being postmarked, or (c) if sent via telephonic
facsimile transmission, then at the time set forth in the telecopier's
transmission confirmation report.
Any party listed below may change its address hereunder by notice to
the other party listed below. Until further notice, notice and other
communications hereunder shall be addressed to the parties listed below as
follows:
(1) if to any Unit Holder:
Meadowbrook Equity Fund II, LLC
c/o Bessemer Trust Company N.A.
630 Fifth Avenue
New York, New York 10111
Attn: John G. MacDonald
Facsimile Number: (212) 246-3982
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<PAGE> 14
(2) if to the Company or the Operating Partnership:
Urban Shopping Centers, Inc.
900 N. Michigan Avenue, Suite 1500
Chicago, IL 60611
Attention: Chief Financial Officer
Facsimile Number: (312) 915-2001
With copies to:
Urban Shopping Centers, Inc.
900 N. Michigan Avenue, Suite 1500
Chicago, IL 60611
Attention: General Counsel
Facsimile Number: (312) 915-2001
And to:
Mayer, Brown & Platt
190 South LaSalle Street
Chicago, IL 60603
Attention: Edward J. Schneidman, Esq.
Fax: (312) 701-7711
SECTION 3.4. SUCCESSORS AND ASSIGNS.
The rights and obligations of any Holder hereunder may be assigned to
any other Holder. Except as expressly provided in this Agreement, the rights and
obligations of the Holders under this Agreement shall not be assignable by any
Holder to any Person that is not a Holder. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns.
SECTION 3.5. COUNTERPARTS; FACSIMILE SIGNATURES.
This Agreement may be executed in any number of counterparts and by the
parties hereto in separate counterparts, each of which when so executed shall be
deemed to be an original and all of which taken together shall constitute one
and the same agreement. Each party shall become bound by this Agreement
immediately upon affixing its signature hereto, which may be an original
signature or facsimile thereof.
SECTION 3.6. GOVERNING LAW
This Agreement shall be interpreted and enforced according to the
internal laws of the State of New York.
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<PAGE> 15
SECTION 3.7. SEVERABILITY.
In the event that any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
SECTION 3.8. ENTIRE AGREEMENT.
This Agreement is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter contained herein. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein with respect to
the registration rights granted by the Company with respect to the Registrable
Securities. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
SECTION 3.9. HEADINGS.
The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
SECTION 3.10. NO THIRD PARTY BENEFICIARIES.
Nothing express or implied herein is intended or shall be construed to
confer upon any person or entity, other than the parties hereto and their
respective successors and assigns, any rights, remedies or other benefits under
or by reason of this Agreement.
(Signature Page Follows)
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date above written.
URBAN SHOPPING CENTERS, INC.
By: /s/ Michael G. Hilborn
-------------------------------------------
Name: Michael G. Hilborn
Title: Senior Vice President
MEADOWBROOK EQUITY FUND II, LLC
By: Bessemer Trust Company N.A.,
as its Manager
By: /s/ Timothy J. Morris
-------------------------------------------
Name: Timothy J. Morris
Title: Senior Executive Vice President
1
<PAGE> 1
EXHIBIT 99.1
NEWS RELEASE
AT URBAN SHOPPING CENTERS, INC.:
Adam Metz Michael Goldberg
Chief Financial Officer Senior Vice President
900 N. Michigan Ave., #1500 900 N. Michigan Ave., #1500
Chicago, IL 60611 Chicago, IL 60611
(312) 915-3568 (312) 915-2811
FOR IMMEDIATE RELEASE
URBAN SHOPPING CENTERS, INC. ACQUIRES CENTURY CITY SHOPPING CENTER &
MARKETPLACE
-----------
COMPANY ANNOUNCES PRIVATE PLACEMENT OF $40 MILLION OF PERPETUAL
PREFERRED UNITS
CHICAGO, JUNE 10, 1999 -- URBAN SHOPPING CENTERS, INC. (NYSE: URB) today
announced that it completed the acquisition of Century City Shopping Center &
Marketplace ("Century City"). Century City is a 770,000 square foot, open-air
regional mall located in Los Angeles, California. The mall opened in 1963 and
was expanded in 1985 and 1987.
Century City is currently anchored by Bloomingdale's (222,000 square
feet) and Macy's (135,000 square feet) and features a 50,000 square foot AMC
theater and a 37,000 square foot Gelson's Market. The mall also contains more
than 325,000 square feet of specialty shops and restaurants including: Banana
Republic, Pottery Barn, Restoration Hardware, Joan & David, J. Crew, Coach, Gap,
Crate & Barrel, Talbot's, Ann Taylor, Stage Deli of New York, Houston's and
Johnny Rockets.
"The addition of Century City will complement our existing portfolio of
dominant, high quality regional malls," said Matthew S. Dominski, president and
chief executive officer of Urban Shopping Centers, Inc. "The ambiance of Century
City's open-air marketplace, along with its unique blend of sophisticated
shopping and entertainment make this property one of the most successful and
irreplaceable retail assets in the United States."
"Century City meets our strategic objective of making acquisitions that
will provide long-term enhancement to shareholder value," said Adam S. Metz,
executive vice president and chief financial officer of Urban Shopping Centers,
Inc. "The mall's productivity with sales per square foot in excess of $550 and a
mall shop occupancy rate of 91.6% as of March 31, 1999 is consistent with our
existing portfolio of premier properties."
-More-
<PAGE> 2
Urban Shopping Centers
Add 1
In a related transaction, the company announced that it had issued
approximately 81,000 operating partnership units to a private investor. The
approximate $3.2 million proceeds from the equity issuance were used to finance
a portion of the acquisition of Century City.
The company also announced that its operating partnership, Urban
Shopping Centers, L.P., completed a private sale of $40 million of Series C
Cumulative Redeemable Preferred Partnership Units at $50.00 per unit. The
Preferred Units are entitled to fully cumulative distributions at a rate of
9.125% per annum. Proceeds from the offering were used to fund a portion of the
acquisition of Century City.
The Preferred Units, which may be called by Urban Shopping Centers at
par on or after May 27, 2004, have no stated maturity or mandatory redemption
and are not convertible into any other securities of the operating partnership.
The holders of the Preferred Units may exchange them at any time on or after May
27, 2009 for shares of a new series of preferred stock of Urban Shopping
Centers, Inc. with similar terms.
The Preferred Units were privately placed with an institutional
investor. Merrill Lynch & Co. acted as exclusive placement agent.
SAFE HARBOR STATEMENT. Certain statements set forth herein or
incorporated by reference herein from the company's filings under the Securities
Exchange Act of 1934, as amended, contain forward-looking statements, including,
without limitation, statements relating to the timing and anticipated capital
expenditures of the company's development programs and acquisitions. Although
the company believes that the expectations reflected in such forward-looking
statements are based on reasonable assumptions, the actual results may differ
materially from that set forth in the forward-looking statements. Certain
factors that might cause such differences include general economic conditions,
local real estate conditions, construction delays due to the unavailability of
construction materials, weather conditions or other delays beyond the control of
the company. Consequently, such forward-looking statements should be regarded
solely as reflections of the company's current operating, development and
acquisition plans and estimates. These plans and estimates are subject to
revision from time to time as additional information becomes available, and
actual results may differ from those indicated in the referenced statements.
Urban Shopping Centers, Inc., a self-administered real estate
investment trust (REIT), is in the business of owning, acquiring, managing,
leasing, developing and redeveloping super-regional and regional malls. The
company opened Brandon TownCenter in Tampa, Florida in 1995, Wolfchase Galleria
in Memphis, Tennessee in February 1997 and a second Tampa-area mall, Citrus Park
Town Center, in March 1999. Urban Shopping Centers, Inc. owns interests in
several of the premier shopping centers in the United States including Oakbrook
Center (Oak Brook, Illinois), Century City Shopping Center & Marketplace (Los
Angeles, California), Water Tower Place (Chicago, Illinois), Old Orchard Center
(Skokie, Illinois), Copley Place (Boston, Massachusetts) and San Francisco
Shopping Centre (San Francisco, California), as well as in Urban Retail
Properties Co., its property management, leasing and development affiliate.
Urban Retail Properties Co. is one of the nation's largest retail property
managers, managing more than 50 million square feet of space in 25 states and
the District of Columbia.
TO RECEIVE URBAN SHOPPING CENTERS' LATEST NEWS RELEASE AND OTHER CORPORATE
DOCUMENTS, FREE OF CHARGE VIA FAX, SIMPLY DIAL 1-800-PRO-INFO.
USE COMPANY CODE 026
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